News Story

'Real Jobs' vs. 'Job Announcements' In Right-to-Work Debate

Media cites questionable study

The debate over right-to-work has seen statistics cited about the implications the policy has had on the economics of states that have enacted the legislation.

James Hohman, fiscal analyst at the Mackinac Center for Public Policy, says some of the research cited in a recent news report is dubious at best

The Detroit News cited University of Oregon Associate Professor Gordon Lafer’s study of Oklahoma and its move to become a right-to-work state, and specifically mentioned the study's finding that "new companies setting up shop in the state has fallen by one-third."

But Hohman said Lafer’s study only covered a small fraction of actual firm openings in Oklahoma.

Lafer’s study only included Oklahoma firms that were typically incentivized by the state and that announced openings in press releases. The state report, however, that Lafer used said that many of these reported openings never occur.

For example, Lafer’s report said in 2002, 31 firms announced they were opening. But data from the U.S. Bureau of Labor Statistics shows that there were actually 14,405 firms that opened and employed workers that year. In 2009, Lafer’s report cited 16 firms “announcing” they were opening when there were actually 15,845 firms opening that year.

“Using inflated political job announcements is not an indicator for how well a state is doing,” Hohman said. “There is data from the Bureau of Labor Statistics available and that should be the standard.”

Lafer’s response is below:

The plant opening data from the Oklahoma Department of Commerce serve as corroborating data, on top of the extensive statistical analysis described in the report. This includes multiple versions of regression analysis that myself and my co-author, which assessed the impact of "right to work" by measuring changes in Oklahoma's growth rate compared with its six neighboring states (3 "right to work" and 3 free-bargaining states). We measured in every conceivable way — measuring border counties, all counties, unemployment rates, manufacturing job growth, etc., and every statistical analysis showed the same thing: "right to work" had no impact whatsoever on boosting job growth in Oklahoma. This is further confirmed by other statistical analyses done by other scholars who, like myself, are not paid for our work and conduct research at a level of methodological rigor designed to meet the standards of academic peer-reviewed publication. These other studies — most importantly that of a team of scholars from [the] University of Nevada at Las Vegas — were completely independent, used different but similarly rigorous statistical methods, and came to the same conclusion.

The data from the state of Oklahoma corroborates these findings. If you want to know why the Oklahoma Department of Commerce collects and reports this information, you might ask them yourself. However, as it has been described this is the state's account not of every new job in the state — not a mom-and-pop grocery that adds an employee, for instance — but of what the state considers significant new investment in new companies entering the state or investing in significant expansion. This is the type of company that state economic development officials deal with — that they aim their marketing activities toward, that they meet with, structure deals for, and encourage to come into the state.  As you know, "right to work" advocates told the Oklahoma legislature that, if they passed this bill, they would see an increase of 800%-1000% in the number of companies considering opening up shop in Oklahoma. This is similar to claims made by "right to work" partisans in Michigan and elsewhere, including at the Mackinac Center. If anything like that were true, it would have shown up in these numbers — that, after all, is why the state tracks these kind of significant-scale investment — but it didn't. So the state economic development data shows the same thing that serious statistical analysis shows. Ten years later, one would hope that people of any political belief could at least accept the reality of the data.

Michigan was a leader in job announcements and speculated business expansions through the Michigan Economic Development Corp., the state government’s “economic development” arm, for much of the past decade — but the state lead the nation in jobs lost.

Since Oklahoma became a right-to-work state in 2001, jobs are up 3.8 percent. Michigan lost 13.8 percent of its jobs in the same period.


See also:

Facts On Right to Work vs. Forced Unionization States

The Union 'Free-Rider Problem' Myth In Right-to-Work Debate

The Public Employee Union Problem

10 Stories Showing Why Mandatory Government Collective Bargaining Is Counterproductive

Right-to-Work Law Would Help Ensure Government Unions Could Not Elect Their Own Bosses

Commentary: Michigan Still Worse Economically Than RTW Oklahoma