Jan 12, 2011

New research debunks myth that anti-union laws foster business growth or help state economies

For a long time now, credible economists have been telling us that contrary to the dominant narrative, anti-union laws (deceptively called "right-to-work" laws by their proponents) really do nothing to stimulate business growth or help state economies.

Yet anti-worker groups have continued to use this falty reasoning as an excuse to push state legislatures all over the country to pass these harmful anti-union laws. The idea that anti-union laws will draw more businesses to a state and therefore help bolster employment and state economies is nothing more than a red herring used to disguise these groups' real goal of killing unions, and killing worker.

Thankfully, our friends at American Rights at Work have complied an easy-to-read summary of all the recent research that disproves the value of so-called "right-to-work" laws once and for all. The research shows what many of us have known for a long time, but thanks to ARAW's great work, we now have all the evidence in one place, in plain English, and with the citations to back it up.

The major findings of the research are that passing anti-union laws in a state
  • has no impact on economic growth;
  • has no influence on employment;
  • has no influence on business capital formation (the ratio of firm ‘births to the number of firms);
  • can cause wages to go down - workers living in "RTW" states earn 6.5% less than comparable workers living in non-"RTW" states;
and that prior research on "RTW" employment growth was inaccurate.

UFCW members around the country are fighting against these harmful laws, and this is a great resource that we can all point to from now on as we fight back against the myth that crushing unions will bolster the economy. To learn more about what you can do to fight for working families and good jobs, check out voteufcw.org.

Extra credit: a recent article by prominent economist Paul Krugman on the huge budget shortfall in Texas. Conventional wisdom long held that Texas's anti-union laws kept it's economy, and state government healthy. One more anti-working family myth debunked!

2 comments:

Greg Richmond said...

You forget that unions ultimately hurt the customer in both price and quality - Unions do less effecient work (raises and hiring not based on performance so there is no incentive to work harder than your peers) and higher costs to pay for the higher wages you mentioned - all get pased on to the customer. This ultamately DOES hurt the state's economy - a fact you won't see in a pro-union study.

Mish said...

Greg,

Workers have sometimes opposed certain forms of merit-based pay when the standards instituted are likely to hurt more than help (eg. the push towards a teach-to-the-test education system). Often, unions are the ones that put pressure on employers to institute performance standards for pay, particularly in the public sector.

Unions do push wages up. This may cut into the dividends enjoyed by investors (though the studies I've seen suggest that unionization often increases productivity, improving the fiscal health of employers), but it also helps to build the middle class that drives our economic growth.