Contact
Right to work is right for NM
Eric Fruits
Right-to-work legislation is one of the very few pro-growth policies that is virtually costless to enact. And a large body of research has found that it benefits states economically.
New Mexico, along with much of the country, still struggles to recover from a recession that began more than four years ago. While the state has benefited from the recent energy boom, states like New Mexico have struggled to cope with the employment consequences of the recession. In response, policymakers have tended to focus on fiscal policies such as tax cuts and “stimulus spending” rather than market structural solutions.
Right-to-work laws can be a key component of a pro-investment and pro-employment package for New Mexico that encourages firms to locate and expand in the state. A large body of research has found that, as a group, right-to-work states have enjoyed more rapid employment growth, better job preservation and faster recoveries from recession that states without right-to-work laws in place.
New Mexico has recognized this when the Legislature passed right-to-work legislation twice – in 1979 and 1981 – only to see the legislation vetoed by then-Gov. Bruce King.
Proponents of right-to-work legislation argue that individuals should have the choice of whether or not to join a union and that the choice of whether to join a union should not be a condition of employment. They point to the relatively rapid growth in employment and incomes in right-to-work states relative to non-right-to-work states.
On the other hand, opponents of right-to-work legislation argue that union collective bargaining benefits all employees – without compulsory union membership, employees have incentives to “free ride” on the benefits of collective bargaining without contributing to the costs associated with such bargaining. They suggest that the potential job gains from right-to-work are virtually non-existent.
In fact, right-to-work supporters are correct. The legislation would give New Mexico a permanent structural advantage in attracting employers and employment to the state.
Study breaks new ground
A recently released study from Rio Grande Foundation quantifies the impacts and potential impacts of right-to-work legislation on employment and income growth in New Mexico, using data from each of the 50 states and spanning a time period covering almost 60 years. The study finds that if right-to-work legislation goes into effect next year, then by 2020, New Mexico would have 42,300 more people working than if it maintains the status quo. In addition, the state’s personal income would be nearly $5 billion higher and wage and salary income would be $2.2 billion higher.
The study has broken new ground. It covers a very long time period, every state, and relies on what is believed to be the largest datasets ever employed to study the impacts of right-to-work laws. The results demonstrate more than just a correlation between right-to-work policy and economic growth, but point toward a causal link. In other words, this research demonstrates that the right to work actually contributes to more employment, higher incomes and faster economic growth. It is therefore a policy from which New Mexico will permanently benefit.
Unlike fiscal policies that must weigh spending against taxes or pit one government program against another, enacting right-to-work legislation will not take a single dime out of state coffers. Indeed, right-to-work legislation is one of the very few pro-growth policies that is virtually costless to enact.
Even if this research had not so clearly shown that New Mexico’s economic prospects would improve as a right-to-work state, we would still support a right-to-work policy based on the non-economic benefits that the name itself implies.
It is unconscionable that a job-seeker in can be denied the opportunity to make a living simply because he or she declines to join a union. Thus, even basic principles of liberty and the pursuit of happiness demand that New Mexico assert employees’ and job-seekers’ right to work.
Eric Fruits, Ph.D., is president and chief economist at Economics International Corp., an economics consulting firm, and an adjunct scholar with the Rio Grande Foundation. His economic analysis has been widely cited and has been published in The Economist, the Wall Street Journal and USA Today.
22 comments so far. Scroll down to submit your own comment.
Leave a response
You must be logged in to post a comment.
Some people think that ignorance is something to be cured, not cherished.
Likewise some people feel arrogance and assuming something about a person for which you have very little knowledge is not a sign of true intellect. I have no pretense of my superiority over you MS, your whole basis for debate is that you are smarter and more well informed and therefore right, always right and never wrong. Never wrong
Being “employed” is not equivalent to being paid a “living wage.” Until such time as such is to occur, all anti-union sentiment is merely the public expression of the desires of a capitalistic elitist being verbalized by opportunistic individuals incapable of comprehending the terminology, “slave labor.”
If you wish to believe that 2+2 = 5, that’s certainly your right. Some people think that ignorance is something to be cured, not cherished.
I don’t care if you consider my knowledge and experience to be worth anything,
The problem is not that personal knowledge and experience is worthless, it’s that personal knowledge and experience often lead to error, and the process of gaining personal and experience experience is so slow that you end up learning a lot less than you’d otherwise learn – and it’s not the sort of thing that’ll persuade anyone else. Personal knowledge and experience are behind such wondrous theories as phlogiston, alchemy, and the belief that if you drop a heavy item and a light item in a vacuum the heavy one will fall faster.
No MS, I don’t care if you consider my knowledge and experience to be worth anything, I’m not trying to change your mind. You know everything about everything and where to look it up. Thats very impressive, you must have a lot of influence.
Learn to tell true from untrue.
My point on here is that often links are thrown about as demonstration of the factuality of something. Yet its often just working from the answer backwards. I’m fine with that, just like I’m fine with an opinion based on my own knowledge and experience. Others not so much.
For example, consider the following two assertions:
1. It’s true because stever (an anonymous person (or dog) on the internet) says it’s true based on his knowledge and experience.
2. It’s true because two people did a study. You can read their report of their study, including how they collected their data, how they analyzed their data, and how they reached their conclusions, at THIS link. You can read about them, their current employment, support, and their education, HERE.
Certainly the existence of a readable study doesn’t prove something is true (1). You have to look at the study, and consider its methods and data. But we’ve got a five hundred year history of developing methods for determining how to make reliable predictions about the consequences of actions. That’s how we’re able to build bridges that don’t fall down, build rockets that reach the moon, and computers that work, etc. You just have to learn those methods.
(1) of course, according to Popper, there’s no way to prove anything is true. The best that you can do is say that we’re accepting this model as true for the moment because we haven’t been able to falsify it yet.
Lafer and Allegretto (2011) point out that agricultural employees and most professional and managerial employees have no right to organize under federal labor law, thus they argue that there is no clear reason why right-to-work statutes would directly impact employment shares in these sectors. This criticism, however, seems to belie a misunderstanding of basic arithmetic—as the employment in one sector of the economy increases relative to other sectors, by definition, the shares of other sectors must decrease.
That’s from the report cited in the original post. I have no idea why pgessing copied most of it without either citation.
I found Allegretto and Lafer (2011). The link to the pdf of the paper is here: http://www.epi.org/publication/bp300/
pgessing and the original study criticize A+L for talking about employment shares, and suggest an arithmetic error.
That’s not what the paper does, as best as I can see. From the paper:
The state’s manufacturing sector grew from 155,000 jobs in 1990 to a peak of nearly 177,000 in 2000 (Figure A). In the decade following adoption of the new law, however, manufacturing employment declined sharply and has never regained its pre-right-to-work level. Oklahoma ended the decade with 123,000 residents employed in manufacturing, nearly 50,000 less than when the law was voted in.36 This does not mean that right-to-work in itself caused a decline in the state’s manufacturing employment. Rather, it suggests that right- to-work had no positive impact on the manufacturing sector and, in the face of broader forces undermining the sector, right-to-work was simply impotent.
Note that those are absolute numbers, not shares. In all I found the A+L paper far more persuasive that the Rio Grande Foundation paper, mostly because it candidly recognizes the complexity of the issues, and tries to deal with all the confounding variables. I find pgessing and the RGF papers criticism of A+L either simply wrong or mystifying.
One point that A+L make is that economic development, and increases in employment, are driven by a lot of factors other than RTW laws. To the extent that the RTW states are the beneficiaries of these other factors more than the non-RTW states are, a simple analysis such as the RGF does will mistakenly attribute the employment increase to RTW when it’s really due to other things.
Regression analysis is one way to try to tease out the various causitive factors. However, it assumes a lot of things that I’m not sure are true in this case. Here’s the list of assumptions from https://en.wikipedia.org/wiki/Regression_analysis
Classical assumptions for regression analysis include:
The sample is representative of the population for the inference prediction.
The error is a random variable with a mean of zero conditional on the explanatory variables.
The independent variables are measured with no error. (Note: If this is not so, modeling may be done instead using errors-in-variables model techniques).
The predictors are linearly independent, i.e. it is not possible to express any predictor as a linear combination of the others. See Multicollinearity.
The errors are uncorrelated, that is, the variance–covariance matrix of the errors is diagonal and each non-zero element is the variance of the error.
The variance of the error is constant across observations (homoscedasticity). (Note: If not, weighted least squares or other methods might instead be used).
In particular, I’m not sure how one can come up with a list of linearly independent variables affecting employment in the various states.
In a study published by the Economic Policy Institute, Belman et al. (2009) present regression results showing that right-to-work states have a higher share of their populations employed. Their regressions show that the employment-to-population ratio of states with right- to-work legislation is 2.8 percentage points higher than non-right-to-work states.In a another study published by the Economic Policy Institute, Lafer and Allegretto (2011) attack a study by Kalenkoski and Lacombe (2006) that found that right-to-work laws have a negative impact on the employment shares of the agriculture, forestry, mining, fishing and hunting industries, and some service industries.Lafer and Allegretto correctly point out that agricultural employees and most professional and managerial employees have no right to organize under federal labor law. Therefore, Lafer and Allegretto argue, there is no clear reason why right-to-work statutes would directly impact employment shares in these sectors.Lafer and Allegretto’s criticism, however, seems to belie a misunderstanding of basic arithmetic—as the employment in one sector of the economy increases relative to other sectors, by definition, the shares of other sectors must decrease. If one slice of the pie gets larger, the others must get smaller.
JCH
My point on here is that often links are thrown about as demonstration of the factuality of something. Yet its often just working from the answer backwards. I’m fine with that, just like I’m fine with an opinion based on my own knowledge and experience. Others not so much.
stever:
That’s the whole point; Mr. Field’s methodology demonstrates that he did his entire study with a specific conclusion in mind and conveniently reached that conclusion after either ignoring or discarding data points that might point his work in a different direction. As for following the money, the same could be said of the Rio Grande Foundation. Of course, the Economic Policy Institute is perfectly willing to list their donors, whereas when asked about who the RGF’s donors are, Mr. Gessing changes his answer based on who is asking; despite being a 501(c)3 subject to public scrutiny, the RGF has been known to refuse to release their list of donors to people they simply don’t like (i.e. Jim Baca). So much for transparency.
However, the most recent available donors list of the Rio Grande Foundation does includes other think-tanks that willingly describe themselves as “conservative” and, on occasion, outright “Republican” (so much for non-partisan); an organization known as the Donors Capital Fund that donates huge amounts of money to organizations like the RGF, but which conversely refuses to say where that money is coming from and appears to be among the largest sources of anonymous donations in the country (which, were this being done in the financial sector rather than politics, would be known as “money laundering”); the Atlas Foundation, which recently published a report tying the success of the free market to fervent religious expression (because faith should apparently be a business), and Wal-Mart… in Arizona (so much for “individual” freedom). Interestingly, the most recent report I could find of the Rio Grande Foundation’s funding was over two years old, omitted the sources of over 20% of their overall funding, and demonstrated that less than 10% of their known funds came from New Mexicans (so much for “New Mexico’s citizens.”).
So how about it, Mr. Gessing? Who is funding your organization now, and how can you demonstrate to us that your organization’s goals are really to the benefit of ordinary working New Mexicans, rather than pushing ideas that are demonstrably mathematically-insoluble and historically disastrous? What gives an organization with a demonstrated history of inaccurate claims consisting of a dozen individuals the right to “experiment” with the lives of two million people?
Right, EW-aif. Then there’s this from April 2010:
West Virginia Governor Joe Manchin said that rescuers found four additional dead miners at the Massey Energy Co. mine that was rocked by an explosion, raising the death toll from the accident to 29 and making it the worst U.S. coal mining disaster since 1970. http://online.wsj.com/article/SB10001424052702304222504575174763756117950.html
and, of course:
Buried deep in most stories about the West Virginia coal mine disaster at Massey Energy Company’s Upper Big Branch mine, if mentioned at all, is one clue to why at least 25 lives were lost: The mine was non-union. … But an examination of the incidence of coal mine fatalities since 1995 shows that in every year but one fatal accidents occurred in non-union mines at a rate disproportionate–usually much more disproportionate–to the non-union share of the workforce. In other words, unionized mines were much safer. http://www.inthesetimes.com/working/entry/5813/fatalities_higher_at_non-union_mineslike_masseys_upper_big_branch/
For higher profits and more money going to those who are already rich, and more dead and maimed workers, support “Right to bust unions” laws. Let’s make workers in NM poorer, sicker, and more often crippled. But since the rich will get richer, it’ll improve average income in NM!
Juan Carlos Holmes: A study does not equal data. You know that. Unless you agree with the conclusion than its fact.
pgessing surely knows, but does not want to mention, the 1991 accident in the Imperial foods processing plant in the “right-to-work” state of North Carolina.
The Hamlet chicken processing plant fire was an industrial fire in Hamlet, North Carolina at the Imperial Foods chicken processing plant on September 3, 1991, due to a failure in a hydraulic line. Twenty-five were killed and 54 injured in the fire, trapped behind locked fire doors. In 11 years of operation, the plant had never received a safety inspection. Investigators believe a safety inspection might have prevented the disaster.
And the reason the plant had not been inspected is because Reagan cut the OSHA budget.
For more, read my article, written in 2005: ”A Very Brief History of Labor in America,” http://wedum59.com/linkedpages/article-labor.html (It is actually 2,000 words long, but still it only skims the surface.)
It is really sad that the same workers who need union protection so often fall for the lies of the Republican party and vote for their own destruction.
Dr. Fields, this is how I think you reached your conclusions, let me know if anything is incorrect:
Your study analyzed at least four different variables (employment growth, manufacturing employment growth, personal income growth, wage and salary income growth) across the 50 states and D.C. Regression analysis was done 10 times (5 times with ordinary least squares, 5 times with instrumental variable) and thus a lowest and highest significant response from the ‘right-to-work’ coefficient was created. One of these responses (“OLS estimators from second OLS model”) was used to back-predict what New Mexico’s employment would have looked like with right-to-work, and forward-predict what New Mexico’s employment will look like with right-to-work.
This, for instance, leads to the conclusion that “New Mexico’s employment in 2011 would have been approximately 21 percent higher (169,400 higher employment) if the state had enacted right-to-work legislation in 1980.” It’s basically an estimation giving the ‘average’ amount of extra employment that would have existed, based on how the states that have had it have had ‘extra’ employment.
It’s a cool analysis. It’s limited by certain questions that the analysis can’t answer (What are the effects of these extra jobs in New Mexico on our neighbors? Would Texas and Arizona, our right-to-work neighbors, have had less jobs? Wouldn’t that then draw down the seeming benefits of right-to-work?) but at least it’s testable.
Airbus will be moving some of their operation to Alabama. I wonder if right to work rules have anything to do with it.
Innumerate and ahistorical, eh, pgessing?
an incident that happened 50 years before these laws even existed
That’s 23 years, not 50 years, and you’re apparently deliberately choosing to miss the point. The NLRB was created in 1934. Before that, unions had no rights to organize, nor rights to a closed shop. Your so-called “right to work” laws, which are really “right to bust the union” laws, would take us back to that unhappy time. If you repeal the cure for (some) abusive labor practices, you’re a fool if you thing those abuses wont return.
In terms of experimenting on the issue, New Mexico has not been Right to Work for 100 years. Maybe it is time to set up a real world experiment where New Mexico adopts it
Gotta love that reasoning. If you like that logic, you’re compelled to also believe that we should try allowing slavery again – after all, it hasn’t been tried here for at least 100 years, and it might well reduce unemployment. Experiments are all very well, but sometimes they’re not needed. I don’t need to try an experiment to know that dropping a cinderblock on my toes is a bad idea, and we don’t need an experiment to tell us that giving employers more power to abuse workers is not a good idea.
On the topic of the joys of modern labor and the benificence of employers, see:
http://www.motherjones.com/politics/2012/02/mac-mcclelland-free-online-shipping-warehouses-labor?page=1
http://www.motherjones.com/rights-stuff/2011/07/ohio-warehouse-temps-unemployment
Ohio isn’t even a right to bust unions state. I’m sure those peoples’ working conditions would be so much better if only the NLRB wasn’t there ignore their right to organize.
unions should not have special privileges
Corporations have special privileges – limited liability, for one – so why not unions? Are you familiar wih Anatole France’s famous remark about bridges? You seem to be echoing it unironically.
Right to work and a true free choice of who represents you or not is true freedom and democracy, forced union thuggery and collectivist thinking is enslavement.
“Only a fool would try to deprive working men and working women of their right to join the union of their choice.” ~Dwight D. Eisenhower
Unions are a democratic, small “d”, institution. In this democracy of labor the majority decide to organize the workers. In our democracy, you don’t get to opt out of war when the majority goes to war, you don’t get to opt out of taxes because you don’t believe in taxes, you don’t get to opt out of following the law out of your own whim. Capital leverages its power by organizing into corporations. Labor has the right to leverage it’s power by forming unions. A shareholder in a corporation doesn’t get to decide not to follow the will of the majority of shareholders. A house divided can not stand. A worker does not have the right to opt out of the majority’s will. “Right to work” is a dastardly subversion of the rights of workers put forth by slave masters. It is more properly known as “The right to work for less.”
“RGF supports the right to join labor unions…”
What they don’t support is the rights of unions to actually do anything for working Americans.
It is also worth noting that Mr. Gessing completely ignores Hemingway’s data that shows right-to-work laws don’t work in favor of Dr. Fruits data which bases a lot of its conclusions on assumptions in place of raw numbers and accounts for neither income disparity nor population growth. Why would you suggest an “experiment” to which we already know the results? Only the Rio Grande Foundation would propose “experimenting” with people’s livelihoods for a decade-and-a-half; A lot of damage can be done in that time, but it’s nice to know that you consider average New Mexicans to be equivalent to lab rats.
Economic Policy Institute.. follow the money
Ha, very funny, blaming Right to Work for an incident that happened 50 years before these laws even existed. RGF supports the right to join labor unions or any other voluntary organization, but unions should not have special privileges. Right to Work simply restores the balance.
In terms of experimenting on the issue, New Mexico has not been Right to Work for 100 years. Maybe it is time to set up a real world experiment where New Mexico adopts it. If it doesn’t work in 10-15 years or so, go ahead and repeal it.
Triangle Shirtwaist Factory. If you don’t recognize that name, shame on you for being ignorant of a major moment in US labor history.
It was March 25, 1911, and “Right to Work” was the dominant political and economic theory. There was no NLRB, there was no government protection for labor’s right to organize, it was a free market unfettered by excessive intrusive federal regulation.
People seeking work had the right to walk into the hiring office of an employer and freely bargain over wages, working conditions, and everything else. Being a free market, this bargaining always produced the best possible outcome for everyone involved – it produced more jobs for everyone, and more products which people could buy more cheaply.
146 dead girls on the sidewalks of NY City was the other thing famously produced by this ‘right to work’. Because the workers – mostly young women who worked sewing clothes – didn’t actually have bargaining power equal to the factory owners, they were unable to bargain for safe working conditions. So when the building caught fire, “Because the managers had locked the doors to the stairwells and exits – a common practice at the time to prevent pilferage and unauthorized breaks[5] – many of the workers who could not escape the burning building jumped from the eighth, ninth, and tenth floors to the streets below.” (1)
That’s why this statement is a lie: Indeed, right-to-work legislation is one of the very few pro-growth policies that is virtually costless to enact.
There’s a very high cost to right to work laws, but the cost is borne not by taxpayers but by workers. Workers pay in black lung disease, in death and maiming in industrial accidents, and in lower wages and longer hours. Lots of things would make it cheaper to higher people, and thus increase jobs: slavery, eliminating the minimum wage, eliminating job safety regulations, etc. – but history has shown that all these things make the country as a whole poorer and unhappier while making the rich richer.
We tried ‘right to work’, and it was a disaster. If you don’t know the history of employment in those halcyon days before the federal government intervened to deprive workers of the right to take unnecessarily dangerous jobs for unfairly low wages in order to make the rich richer, see: http://www.lawyersgunsmoneyblog.com/2012/07/this-day-in-labor-history-july-11-1892
And click on the link at the bottom of that post and read the other 33 stories. Learn how bad life was before there was legal protection for workers, including protections for the right to organize.
(1) https://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire
The Economic Policy Institute investigated employment growth in states with and without “right-to-work” laws and reported that “the evidence is overwhelming” that “right-to-work laws have not succeeded in boosting employment growth in the states that have adopted them.”
“T]he history of right-to-work studies has a clear trajectory. The more scholars are able to hold “all other things” equal, the more it becomes clear that these laws have little or no positive impact on a state’s job growth. The most recent and most methodologically rigorous studies conclude that the policy has no statistically significant impact whatsoever. [Economic Policy Institute, 3/16/11]
http://www.epi.org/issues/right-to-work/