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Research & Commentary: Kentucky Right-to-Work Reform

December 21, 2015

Kentucky could soon become the nation’s 26th right-to-work state (RTW), and Kentuckians have demonstrated they may be ready to support this reform.

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Kentucky could soon become the nation’s 26th right-to-work state (RTW), and Kentuckians have demonstrated they may be ready to support this reform. In a March 2015 poll conducted by Americans for Prosperity–Kentucky, 80 percent of respondents said workers “should not be forced to join a union or pay dues to one they don’t support.” Julia Crigler of AFP reports right-to-work is supported by more than 58 percent of Kentuckians on both sides of the political aisle. 

Public support is not the only reason many states are considering right-to-work. These laws have consistently demonstrated a positive effect on jobs and economic growth. Watchdog.org found “from January 1995 through August 2015 six of the 10 states with the worst private-sector job growth were states without right-to-work laws.” Two of the remaining ten states with low private-sector job growth, Indiana and Michigan, passed right-to-work laws in 2012. 

Conversely, over the same period, seven of the top 10 job-producing states had right-to-work laws, according to the U.S. Department of Labor. Over this 20-year period, Kentucky’s job growth was ranked 34th of the 50 states, with the second-worst decline in its labor force. 

Right-to-work laws have even made inroads in states traditionally considered union strongholds, including several Midwestern states.  Wisconsin became the newest right-to-work state in 2015, joining Indiana and Michigan. Support also has grown among the members of several unions, with union employees expressing some interest in opting out of membership. During Michigan’s debate over right-to-work legislation, Heritage Foundation policy analyst James Sherk noted, “Polling shows a quarter of Michigan's government employees would opt out of unions under a right-to-work law.” Union membership in Michigan fell 7.6 percent during the first year of right-to-work. 

Opponents of right-to-work contend the reforms force wages down, disadvantage unions, and lower people’s standard of living. But research shows states enacting right-to-work have experienced positive economic effects across the board. A study by the Mackinac Center for Public Policy found, “According to the Bureau of Economic Analysis, right-to-work states showed a 42.6 percent gain in total employment from 1990 to 2011, while non-right-to-work states showed gains of only 18.8 percent.” The study also found inflation-adjusted gross personal income in right-to-work states increased 86.5 percent between 1990 and 2013, versus 51.3 percent for forced-unionization states. 

Using years of economic data and empirical evidence from each state, the 2015 edition of the American Legislative Exchange Council’s annual economic competitiveness study, Rich States, Poor States, ranked Kentucky 27th in economic performance and 30th in economic outlook. The study found right-to-work states outperformed their forced-unionization counterparts, providing their citizens with critical economic opportunities and a path to greater prosperity. 

Right-to-work laws create new jobs and foster economic and population growth. Kentucky lawmakers should consider implementing right-to-work and reaping its economic benefits. 

The following documents examine right-to-work laws in greater detail.
 

Kentucky Labor Unions Try to Slow Right-to-Work Momentum
http://watchdog.org/248654/kentucky-unions-rtw/
Jason Hart of Watchdog.org discusses the fight between Kentucky labor leaders and proponents of a right-to-work law that would let Kentuckians opt out of paying union dues. 

Lawmakers: Right-To-Work Is Right For Kentucky
http://dailycaller.com/2015/10/30/lawmakers-right-to-work-is-right-for-kentucky/
Connor Wolf of the Daily Caller reports on a recent panel of Kentucky lawmakers on right-to-work, at which legislators argued the state should outlaw imposition of union dues or fees as a condition of employment.

Right-to-Work Laws Don’t Lower Private-Sector Pay
http://www.heritage.org/research/reports/2015/09/right-to-work-laws-dont-lower-private-sector-pay
James Sherk of The Heritage Foundation argues right-to-work laws have no negative impact on private-sector wages. “RTW laws do appear to slightly reduce the pay of government employees, easing constraints on hard-pressed state budgets,” he writes. 

Unions Charge Higher Dues and Pay Their Officers Larger Salaries in Non–Right-to-Work States
https://www.heartland.org/policy-documents/unions-charge-higher-dues-and-pay-their-officers-larger-salaries-non-right-work-sta
This Heritage Foundation research paper, written by Senior Policy Analyst James Sherk, examines the correlation between union fees, union officials’ pay, and a state’s right-to-work status. According to Sherk’s research, union officials’ median pay in states without right-to-work laws is $20,000 more than pay levels in states with right-to-work laws.

Research & Commentary: Right-to-Work Policies
http://heartland.org/policy-documents/research-commentary-right-work-policies
Alex Monahan, a former government relations coordinator for The Heartland Institute, says states lacking right-to-work laws should consider implementing them. The evidence shows right-to-work reform has positive effects on states’ economies, workers, and population growth. 

Unions Hinder Economic Growth and the Free Market
http://www.aei.org/article/society-and-culture/free-enterprise/unions-hinder-economic-growth-and-the-free-market/
American Enterprise Institute President Arthur Brooks explains how unions hamper economic growth by limiting freedom in the marketplace. Brooks concludes, “States should seek to pass right-to-work laws as part of reforms to strengthen their economies and enhance economic growth.” 

Ten Principles for Improved Business Climates
http://heartland.org/policy-documents/ten-principles-improved-business-climates
Maintaining a good business climate has never been more important. Thanks to the Internet, the collapse of communism around the world, and advances in shipping and logistics, capital and labor are much more mobile than in the past. Businesses must bid for customers and workers, not only from local competitors but also from businesses in other communities, in other states, and even in other countries. Small changes in taxes, regulations, and other cost-drivers may lead to businesses losing customers and possibly failing or relocating. 

Economic Growth and Right-to-Work Laws
http://heartland.org/policy-documents/economic-growth-and-right-work-laws
This study by the Mackinac Center measures the impact of right-to-work laws on states’ economic performance. It uses average annual growth rates in employment, real (inflation-adjusted) personal income, and population to measure the economic well-being of right-to-work states. The results show right-to-work laws have a statistically significant and economically meaningful positive impact, though results vary. 

Right-to-Work Laws: Liberty, Prosperity, and Quality of Life
http://heartland.org/policy-documents/right-work-laws-liberty-prosperity-and-quality-life
Economist Richard Vedder documents the positive impact of right-to-work laws. He concludes, “Americans generally prefer freedom to coercion, high incomes to low ones, and individual decision making to collective resolution of issues. For these reasons, they generally do not like laws that constrain their labor market behavior and force them to join collectives of other workers to negotiate their wages and working conditions.” 

Rich States, Poor States 2015
http://www.alec.org/publications/rich-states-poor-states/
Released in April 2014, the American Legislative Exchange Council’s annual Rich States, Poor States report presents a forward-looking measure of how each state can expect to perform economically based on 15 policy areas that have proven to be the best determinants of economic success.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Budget & Tax News at http://news.heartland.org/fiscal, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Logan Pike, Heartland’s state government relations manager, at lpike@heartland.org or 312/377-4000.

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR