TPA Study: Right-to-Work Legislation Would Boost Michigan’s Economy

Full Press Release:

The Taxpayers Protection Alliance today released a study on the positive impact Right-to-Work legislation would have on Michigan’s economy. Right-to-Work laws, which have been enacted in 23 states, would protect workers from compulsory union membership and payment of union dues as a requirement of employment.

“Passing Right-to-Work legislation in Michigan would attract growing businesses to the state and create much needed economic growth,” said David Williams, president of Taxpayers Protection Alliance. “Collective bargaining restricts free labor markets, lowers per capita income and reduces individual freedoms. Especially in a time of economic uncertainty, Michigan’s taxpayers and citizens deserve labor laws that make it easier, not harder, for both America’s small businesses and its middle class to prosper.”

Key findings in the report include:

• Labor productivity tends to grow more in Right-to-Work states, stimulating economic growth and often leading to increased wages and employment. If Michigan had adopted a Right-to-Work law in 1977, per capita income would have been $13,556 higher for a family of four by 2008.

• Between 2000 and 2010, nearly 5 million Americans left non-Right-to-Work states and moved to states that had Right-to-Work legislation. To the extent that unionization increases labor costs, non-Right-to-Work states are a less attractive place to invest new capital.  As a result, capital tends to migrate away from non-Right-to-Work states (like Michigan) where the perceived costs of unionization are relatively high.  And while businesses migrate to Right-to-Work states because of the lower perceived labor costs, workers tend to move to such states because they see greater economic opportunities.

• During that same period (2000 – 2010), Right-to-Work states experienced a 165.3 percent increase (or 2.6 times higher). In the long run, the debilitating impact on capital formation and the forced migration of workers to Right to Work states lead to lower per-capita income growth for union members.  To view the long-term impact on personal income, consider this:  the real total personal income grew by 115 percent nationally from 1977 to 2011, meaning that, after adjusting for inflation, total personal income doubled.

Written by Richard Vedder, a Distinguished Professor of Economics at Ohio University, and Matthew Denhart, from the 4% Growth Project at the George W. Bush Institute, the study will be presented today at the West Michigan Policy Forum in Grand Rapids, Michigan.

To read the full report, click here.