NERA Economist Comments on the Economic Evidence Supporting Right-to-Work Laws

The Situation

State Right-to-Work (RTW) laws prevent unions from forcing employees that choose not to join the union from paying an “agency fee” in lieu of union dues, a practice that is otherwise permitted under the 1947 federal Taft-Hartley Act. As a direct reaction to Taft-Hartley, 10 states passed RTW laws in the 1940s; since then, 18 more have joined, the most recent being Missouri, which passed its RTW law on 6 February 2017.

There is a large body of rigorous economic research on the effects of RTW laws on economic performance. Overall, that research suggests that RTW laws have a positive impact on economic growth, employment, investment, and innovation, both directly and indirectly. The weight of the evidence indicates that lower union density is associated with higher levels of employment, increased investment, and R&D spending and increased innovation.

NERA's Role

NERA was retained by the US Chamber of Commerce to prepare a study that presents comparative data on economic performance in RTW and non-RTW states. While such comparisons cannot in and of themselves demonstrate a causal relationship between RTW laws and economic performance, the data is consistent with, and thus supportive of, the results of more than four decades of rigorous economic research.

The Result

The report draws several conclusions linking state performance and RTW status. Economists have been studying the economic effects of RTW laws for more than four decades, and while it is inherently difficult to isolate the effects of a single policy on economic performance, the weight of the evidence strongly and increasingly suggests that RTW laws improve economic performance overall. The evidence on recent economic performance in RTW and non-RTW states presented in the study provides further support for this finding. Twenty-eight states have already passed RTW laws, with the two of the most recent, Kentucky and Missouri, citing the desire for increased performance as the impetus for doing so. The evidence reported here suggests that adoption of RTW laws would also enhance economic performance in other states such as Colorado, Maine, and Washington, where such laws have recently been considered.