Cronyism

Right-to-Work: A Pro-Growth Reform Opportunity in Missouri

This week, Missourians have a chance to see their business climate greatly improved by becoming the 26th Right-to-Work (RTW). Despite recent attempts to link Right-to-Work laws with racist conspiracies or lower private-sector wages, these laws empower employees to decide freely whether or not they would like to pay union dues, ending compulsory unionization. Furthermore, ensuring that employees have this freedom significantly improves states’ business and economic climates and leads to real gains in economic opportunity for a state’s citizens.

A recent study from the non-partisan Heritage Foundation found that once the cost of living is sufficiently accounted for, there are no differences in private-sector wage levels between Right-to-Work states and forced-union states.

American Legislative Exchange Council research from Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index found that on average from 2003 to 2013, the states with Right-to-Work laws grew gross state product and personal income by 58.8 percent and 57.9 percent respectively. By contrast, the average of the forced-union states in the same time period grew gross state product and personal income by just 44.3 percent and 45.8 percent respectively. The trend of states with Right-to-Work laws outperforming their forced-union counterparts is especially pronounced when measuring non-farm payroll employment growth from 2003 to 2013. The Right-to-Work states experienced non-farm payroll employment growth of 8.6 percent, more than double the 3.7 percent from the forced-union states.

Additionally, employers are currently looking to move to states with right-to-work laws. Leo Troy, an economist at Rutgers University finds that “right-to-work laws are strongly correlated with faster growth in jobs and personal income.” In 2011, Boeing made headlines for expanding operations in South Carolina, employing, directly and indirectly, as many as 8,500 people. Many companies will not even consider locating a plant in a non-right-to-work state, which is why almost all new foreign auto plants owned by Mercedes, Nissan, BMW, and Honda are locating in Southern States.

The most recent edition of Rich States, Poor States ranks Missouri as 27th in the nation for economic outlook. A hypothetical re-ranking, keeping all else equal, in which Missouri adopted a Right-to-Work law, would boost the state’s economic outlook to 24th best in the nation. This one change alone could switch Missouri from being in the bottom half of states to the top half of states in economic outlook.

In just the last five years, there has been a clear trend of heavily unionized states adopting Right-to-Work laws. Indiana, Michigan, and Wisconsin all recognized the economic benefit and the need to protect workers’ freedom. Even southern region director for the United Auto Workers, Gary Casteel, points out, some union organizers prefer right-to-work environments, “So if I go to an organizing drive, I can tell these workers, ‘If you don’t like this arrangement, you don’t have to belong.’ Versus, ‘If we get 50 percent of you, then all of you have to belong, whether you like to or not.’ I don’t even like the way that sounds, because it’s a voluntary system, and if you don’t think the system’s earning its keep, then you don’t have to pay.”

The inflexibility of forced-union employment denies employees the right to decide what is best for them. The simple fact is, employees deserve the right to decide whether or not they wish to join a union. Right-to-Work laws do not outlaw unions nor do they harm private-sector wages. They do, however, give individuals and families more choice and improve states’ business climates in a competitive economy.


In Depth: Cronyism

Cronyism in tax policy stifles innovation, hinders competition and introduces a deep temptation for corruption. The 2014 ALEC Center for State Fiscal Reform study, The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth, found that in the most recent year in which states published their respective tax expenditure …

+ Cronyism In Depth