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December 16, 2012 8:15 PM “Right to Work” States Employment Rates Deserve Scrutiny, Receive Some Here

By Samuel Knight

One issue that would have featured prominently on Sunday talk shows before the tragic events in Newtown unfolded is “right to work” legislation.

The discourse would have been courtesy of the union busting bill that Michigan Governor Rick Snyder signed into law last Tuesday.

But the issue - whether or not employees working for a unionized company should be able to opt out of mandatory fees (read: freeload off collective bargaining) - will almost certainly grab the national spotlight again in the near future. That the law passed in a state with a strong labor tradition can only embolden corporate lobbyists in closed shop states - especially when considering that wealthy donors, allegedly, were able to push the bill through the Michigan legislature in part by threatening to make primary season a living hell for hesitant Republicans.

It is, therefore, worth discussing that the stated rationale behind these laws contains about as much integrity as your run-of-the-mill three card monte stand. Which isn’t surprising when considering that the term “right to work” seems to be exactly what George Orwell had in mind when he defined “doublespeak” (“Americans for Prosperity” comes in a close second).

Even the most seemingly logical defense of open shop laws (if we don’t stop calling it “right to work” the PR consultants win) - that states who adopt them see unemployment drop - doesn’t appear to pass the smell test.

Take a look at BLS November unemployment rates by state. Half of the 22 states that had open shop laws before 2012 can be found in the bottom half of the employment rate table:

50th - Nevada (11.5%); 46th - North Carolina (9.3%); 43rd - Mississippi (8.9%); 40th - Georgia (8.7%); 39th - South Carolina (8.6%); 37th - Florida (8.5%), 36th - Kentucky (8.4%); 34th - Tennessee (8.2%), 31st (tie) - Arizona, Alabama (8.1%), and 26th - Arkansas (7.2%).

While this, alone, doesn’t suggest causality, it seems reasonable to hypothesize that it could. Liberal economist Lawrence Mishel found in 2001 that real wages in open shop states are 4% lower, rendering workers there with less money to spend, and the state with weaker aggregate demand.

“But what about all the open shop states in the top half of the employment rate table, Sam? The states with the seven highest employment rates have open shop laws!”

Relax. I was getting there. And its true. The states with the most enviable employment rates are open shop:

1st - North Dakota (3.1%); 2nd - Nebraska (3.8%); 3rd - South Dakota (4.5%); 4th - Iowa (4.5%); 5th (tie) Wyoming, Utah (5.2%); 7th - Oklahoma (5.3%), 10th - Kansas (5.7%)

But if recent history is any indication, these figures could have less to do with labor law and more to do with the fact that, just a few years ago, nine out of ten of these states were net beneficiaries of federal largesse - some to a staggering degree.

In 2007, North Dakota netted $4,856 per capita from DC. South Dakota netted $4,414 per capita. The average Iowan took $1,075 more than he or she spent in federal taxes. And the average man, woman and child in Wyoming, Utah, Oklahoma, and Kansas netted $1,205, $792, $376 and $154 from the federal tax regime.

This leads one (a.k.a. me) to hypothesize that, thanks to the Federal government, there is higher employment in these open shop states than there otherwise would be. These income transfers - assuming they’re of similar size today - mean that there’s more to spend, which likely means that there are more jobs.

And it wouldn’t be unreasonable to expect 2012 data on net federal spending by state to corroborate this, based on the aforementioned above average employment numbers and the fact that these states have low population densities.

This might not exactly be a peer reviewed stuff here. But it certainly should lead one (a.k.a. you) to cast aspersions on the alleged jobs boom created by open shop laws.

Samuel Knight is a freelance journalist living in DC and a former intern at the Washington Monthly.

Comments

  • low-tech cyclist on December 16, 2012 9:58 PM:

    "Half of the 22 states that had open shop laws before 2012 can be found in the bottom half of the employment rate table....While this, alone, doesn’t suggest causality, it seems reasonable to hypothesize that it could."

    :headslap:

    This is right up there with Dilbert's pointy-haired boss accusing his staff of abuse of sick leave by pointing out that 40% of sick days are taken on Mondays and Fridays.

    They both, in fact, suggest that the two things being discussed are independent of one another.

    Half of the 22 states were in the bottom half of the employment rate table...so the other half were in the top half of the table.

    There are plenty of good reasons to be against right-to-work laws, but good God, man, please pull this post down before any conservatives see it and, after pointing and laughing, hold it up as exemplary of liberal thinking. PLEASE???

  • mathguy on December 16, 2012 11:08 PM:

    low-tech cyclist is right. You should delete this or modify it, because the evidence points to independence.

  • OKDem on December 16, 2012 11:09 PM:

    Of the open shop states in the top ten employment, both Datokas, Nebraska, Oklahoma, Wyoming and to an extent Kansas are experiencing oil and gas booms. Kansas, Nebraska and Iowa are in a farm land speculation bubble. These factors have at least as much to do with their high employment as Federal aide and enormouly more than their open shop laws. As Oklahoma discovered in the 80's after a boom there is a bust.

    Oil and gas booms account for Louisiana and Texas tied with Massachusetts at 16.

    Also note that population wise, the open shop giant in the top 10 list is Oklahoma at 3.75 million. Texas and Florida [37th wost] are the only large states that are open shop and Texas is propped up by oil and gas while its government is bankrupt at a scale per capita as bad as California. Except the people of California fixed their crisis while Texas is spiraling down the toilet.

  • emjayay on December 17, 2012 12:15 AM:

    The basic problem is states competing for businesses by bribing companies to locate there at huge cost to thier taxpayers and allowing open shops when other states have closed shops. This stuff should be the same nationally. Both of these are a major cause of devastating previously industrialized cities and states. It's actually amazing that we have looked the other way for decades while this has happened. What could be stupider than tearing down half of cities in Michigan while building new ones in Tennessee while ruining all kinds of people's lives?

    On the other hand, we would be doing unions a favor by getting sources of corruption away from them and restricting their power to enforce stupid work rules and whatever else they do that gives them all a bad reputation, even the saintly ones. We need a new un-Taft-Hartley bill that balances advantages for workers of unionization with union reform, and putting basic worker protections into law, not union contracts. Not that there's any chance whatsoever of anything like that happening.

    We haven't been able to think comprehensively and seriously about much of anything major on a national level and do anything intelligent about it for decades. OK, the half assed sold out Rube Goldbergian ACA is big and better than nothing and I'm greatly relieved that it's not getting trashed since we managed to not elect that evil POS sociopath to the presidency. But what's next for Obama's second term, besides royally screwing older people for no good reason? Oh, and now a small stab at reinstituting a bit of reasonable gun restrictions that we mostly used to have already. How about some damn leadership goddammit.

  • Sam Knight on December 17, 2012 12:36 AM:

    Hi low-tech cyclist. After that part, I actually try to explain why I think RTW states' low unemployment rates have nothing to do with labor law.

    But I concede my wording may have been head-slappingly clumsy.

  • Crissa on December 17, 2012 1:42 AM:

    Actually, at per GDP/capita, nearly none of the states that faced a shortfall were as low as California.

    Just to point out, anyhow, all the panicking about California's debt was stupid, when compared to California's vast GDP and population.

  • tec619 on December 17, 2012 8:44 AM:

    So Mississippi and Alabama are again leading in a negative socio-economic cateory. Yet they think their way is right.

  • Helen Bedd on December 17, 2012 9:17 AM:

    "The states with the most enviable employment rates are open shop."

    Yes, but....

    All seven are either farm or energy boom states which explains both the low unemployment and the net government tax transfers..

    Strikes me it would be better to compare both service job and manufacturing wages between those states that have "right to work for less" laws and those that don't

  • paul on December 17, 2012 9:47 AM:

    Some of the states that have low unemployment rates (e.g.) N.D. are ones that have managed to attract particular industries (such as credit card issuers) by having other sweetheart laws in addition to RTW. Like RTW, those laws are not always good for the nation as a whole.

  • Fasaha Traylor on December 17, 2012 10:42 AM:

    "Open Shop" is still misleading. We should start calling them either free-rider shops or freeloader shops.

  • dan on December 17, 2012 1:23 PM:

    Framing is critical here. "Open shop" sounds very nice; "free-rider" sounds biased and may turn off people who are uninformed. I suggest "disaggregated bargaining" or, pithier, "David-Goliath bargaining" - which has the advantages of depicting vividly what's at stake, and invoking a biblical analogy that will resonate with a lot of people who would otherwise think that "openness" is necessarily virtuous.

  • bigtuna on December 17, 2012 1:52 PM:

    Okdem has a lot of it, but the other posts are correct in pointing out that there are MANY other factors regarding which states do well. THere are the statistics of small numbers - Energy is a factor in ND - it doesn't take many jobs to move the needle down in a state with 800 k people. Wyoming - ditto. Most of the low employment states are small.

    Utah - always a special case. There are always a glut of reasonably educated people willing to stay, or move to, utah and work at a 20-30% discount due to the draw of LDS culture and religion, + the minority of us who deal with the repression because we like other aspects of the state. Ditto OK - just not LDS culture.

    Anyway, sorting the free rider states into high, and low, unemployment doesn"t really enlighten the discussion. There are so many factors at work here.