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Research & Commentary: Ohio Right-to-Work

October 27, 2015

Ohio is considering becoming the 26th right-to-work state, a reform that would create new jobs and improve the state’s business climate and economic competitiveness.

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Ohio is considering becoming the 26th right-to-work state, a reform that would create new jobs and improve the state’s business climate and economic competitiveness. Ohio’s proposed right-to-work law would prohibit closed shops, ban fair share fees, and give workers the choice to opt out of unions and their dues. The authority of states to create these laws was affirmed in Section 14(b) of the Labor Management Relations Act of 1947, better known as the Taft-Hartley Act.

Right-to-work laws have made inroads in states traditionally considered union strongholds, including Ohio’s regional neighbors Indiana, Michigan, and Wisconsin. Indiana and Michigan adopted their right-to-work legislation in 2012, and Wisconsin became the newest right-to-work state earlier in 2015. Support for the reform has grown within the membership of several unions.

During Michigan’s debate over right-to-work, 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 legislation.

The Ohio legislation would not apply to public-sector unions. According to the U.S. Bureau of Labor Statistics (BLS), 12.4 percent of Ohio workers belong to a union, above the national average of 11.1 percent. BLS data show Ohio’s union membership rate has fallen steadily since its peak of 21.3 percent in 1989. However, 47.9 percent of Ohio’s public employees were in unions in 2014, much higher than the 35.7 percent of public workers nationwide.

Opponents of right-to-work laws contend the reforms force wages down, hurt unions, and lower people’s standard of living. However, states enacting right-to-work policies have experienced positive economic progress 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 American Legislative Exchange Council’s annual economic competitiveness study, Rich States, Poor States, ranked Ohio 49th in economic performance and 23rd 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 cause population growth. Ohio lawmakers should not give up on passing right-to-work legislation and the tremendous economic benefits it brings.

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

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.

Right-to-Work Increases Jobs and Choices
http://www.heritage.org/research/reports/2011/11/right-to-work-increases-jobs-and-choices
James Sherk, senior policy analyst in labor economics at The Heritage Foundation, argues states can reduce unemployment and increase investment by adopting right-to-work legislation.

Right-to-Work States Lead Way on Income Growth
http://news.heartland.org/newspaper-article/2014/06/16/right-work-states-lead-way-income-growth
Zachary Woodman, a research intern with the Mackinac Center for Public Policy, analyzes government data and concludes over the past few decades, right-to-work states have had stronger income growth compared to forced-unionization states.

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.

Michael LaFaive: Right-to-Work States Have Stronger Growth
http://heartland.org/podcasts/2013/09/26/michael-lafaive-right-work-states-have-stronger-growth
The Mackinac Center for Public Policy has studied many decades of data on right-to-work states—where workers don’t have to join a union to hold a job—and concluded those states enjoy stronger growth in personal incomes, employment, and population. Report coauthor Michael LaFaive of the Mackinac Center discusses the findings of the report in this Heartland Institute podcast.

The Right-to-Freeload Myth
http://www.heritage.org/research/commentary/2012/12/the-right-to-freeload-myth
James Sherk, senior policy analyst for labor economics at The Heritage Foundation, debunks the misleading characterization of employees who opt out of unions as “freeloaders.”

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 state 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 Nathan Makla, Heartland’s state government relations manager, at nmakla@heartland.org or 312/377-4000.

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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