Right-to-Work study shows Minnesota's economy would benefit by allowing employees freedom to choose
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January 26, 2012 Brian McClung: 612-965-2729
Right-to-Work study shows Minnesota’s economy
would benefit by allowing employees freedom to choose
Legislature considering whether to put Right-to-Work issue on the ballot in 2012
Minneapolis, MN – Minnesota Free Market Institute at Center of the American Experiment today released a new study, “Minnesota Right-to-Work: How the Freedom of Workers in the Workplace Enhances Prosperity,” by Dr. Richard Vedder, Matthew Denhart, and Jonathan Robe.
The study found that a typical Minnesota resident would have a higher income and standard of living if the state had a Right-to-Work provision that allowed workers the freedom to join, or not to join, a labor union. Twenty-two states, including neighbors North and South Dakota and Iowa, currently have similar measures and Minnesota legislators are considering a proposed amendment to the state constitution that would be placed on this November’s general election ballot.
"Minnesotans would have a higher standard of living and greater job opportunities if the state had adopted a right-to-work law 30 years ago," said Dr. Richard Vedder, chief author of the study. "Minnesota's future prosperity would be enhanced if the state allows employees to decide whether or not to join a labor union."
The study estimates that annual personal income per capita, on average, would have been $2,360 to $3,072 higher in 2008 if Minnesota had adopted Right-to-Work in 1977. On a per household basis, income would have been somewhere in the range of $5,960 to $7,740 higher if such a provision had been in place. Instead of being 14th in the nation in per capita income in 2008, the state almost certainly would have been in the top 10.
“This study provides useful information to voters and legislators as they consider this contentious issue,” said Kim Crockett, COO and General Counsel at Center of the American Experiment. “Minnesota should take all possible steps to strengthen our economy. While workplace freedom would be a cultural shift, it would also be a key factor in unleashing Minnesota’s talent and attracting investment to our state.”
This finding adds to economic evidence connecting Right-to-Work laws with economic growth, which suggests that passing Right-to-Work in Minnesota will help the state’s economy grow stronger and more competitive. Importantly, the cost to the state government would be minimal as enacting Right-to-Work requires no expenditure of taxpayer dollars.
“Minnesota’s economy has experienced a slowdown largely attributable to the national and global recession and slow recovery,” said Peter Nelson, Director of Public Policy at the Center of the American Experiment. “We’re interested in solutions to help Minnesota regain economic strength. This study looks into whether providing workers the freedom to join or not join a union would translate into greater prosperity – not just for employers – but for employees, as well. We found that Minnesota has missed growth opportunities that would have benefited both employees and employers. This study clearly demonstrates that Minnesota would benefit from employee workplace freedom.”
While the study does not focus on the state budget, it does not sidestep how Right-to-Work can help improve the state’s balance sheet by containing public employee labor costs. Public unions are especially troubling in states without Right-to-Work, because they represent an agreement between two monopoly providers: state governments have a monopoly over the provision of public goods within a state, and unions (in absence of Right-to-Work) hold a monopoly over employment services. This can lead to above-market compensation levels for employees and sharply higher costs of providing public services.
The report concludes that the United States operates largely under Depression-era labor laws that are increasingly out of touch with the realities of a global labor market. The Taft-Hartley Act of 1947 provided states an opportunity to reduce some of the adverse effects of these laws by passing “Right-to-Work” measures that give workers the right to decide whether they wish to join a union or pay union dues. Minnesota did not take advantage of that opportunity and has paid a high economic price for not doing so.
Right-to-Work has been proven to attract productive resources (both capital and labor) to a state. Following a decade of relatively slower economic growth, it may well be time for Minnesota to become the 23rd state to pass Right-to-Work.
“Minnesota Right-to-Work: How the Freedom of Workers in the Workplace Enhances Prosperity” is available online at www.AmericanExperiment.org