Quick Hit Ellyn Fortino Thursday April 23rd, 2015, 3:23pm

'Right-To-Work' Laws Could Pull Down Worker Wages By 3.1 Percent

Statewide "right-to-work" policies drive down worker wages for both union and nonunion members by 3.1 percent, finds a new report by the Economic Policy Institute (EPI), a Washington, D.C. think tank.

That means full-time, year-round workers living in right-to-work states earn, on average, $1,558 less annually than similar workers in states without such regulations, according to the report.

EPI researchers used demographic, cost-of-living and labor market controls in calculating their findings.

"It's abundantly clear that right-to-work laws are negatively correlated with workers' wages," report co-author and EPI senior economist Elise Gould said in a statement. "Our model uses widely-agreed upon variables, and holds up under a series of tests to ensure that the model is sound and not being skewed by the inclusion or exclusion or particular variables or estimate technique."

Twenty-five U.S. states, including Indiana, Wisconsin, Michigan, North Dakota, Texas and others, have passed right-to-work laws. The policies prohibit employers and unions from entering into contracts requiring that workers pay union dues as a condition of employment. This allows workers who do not pay dues to enjoy the benefits of collective bargaining deals.

Critics say right-to-work measures are designed to control and weaken labor unions, which rely on membership dues for activities such as funding lengthy contract negotiations, supporting political candidates and representing workers in unfair termination cases.

Workers in non-right-to-work states are more than twice as likely to be in a union or covered by a collective bargaining agreement than those in right-to-work states, the EPI experts found.

"Policymakers who are concerned by the three-and-a-half decades of wage stagnation that have plagued American workers should be trying to strengthen unions," noted report co-author and EPI research assistant Will Kimball. "Collective bargaining is a clear way to raise wages, and right-to-work laws undercut it."

The new research comes as Illinois Gov. Bruce Rauner, a Republican, continues to push for "employee empowerment zones" in which Illinois communities could individually enact their own right-to-work policies. Rather than pushing for a statewide right-to-work measure, which has little chance of clearing the Democrat-controlled Illinois legislature, Rauner says he wants "local voter control" over the matter.

Illinois Attorney General Lisa Madigan has weighed in on Rauner's proposed right-to-work zones, saying in a recent legal opinion that they would violate federal law. If right-to-work is not adopted statewide, local communities cannot enact such measures, Madigan argues.

Rauner has created controversy by pressing Illinois municipalities to pass resolutions in support of his right-to-work zones and other items on his "turnaround agenda" for the state. The Daily Herald reports that 27 Illinois municipalities have thus far approved non-binding resolutions supporting the governor's turnaround plan. Various other Illinois communities, including Chicago, have come out against adopting such measures.

The Illinois Policy Institute, a libertarian think tank that has received funding from Rauner, endorses right-to-work policies, arguing that U.S. states with such "legislation are seeing their business favorability move in a positive direction." Rauner claims right-to-work zones in Illinois would help boost job creation and the state's economy.

However, a recent report by labor and economic experts at the Illinois Economic Policy Institute and the University of Illinois found that Rauner's proposed right-to-work zones would negatively impact Illinois' economy and workers.

Those same local experts have examined the statewide impacts of right-to-work laws. Their research has showed that while right-to-work policies at the state level "are correlated with a minor 0.4 percentage point increase in the employment rate" they also reduce the labor force participation rate by an average of 0.5 percentage points. Right-to-work, the Illinois-based experts found, is also associated with lower worker earnings and union membership rates as well as declines in state income tax revenues. Additionally, such initiatives reduce the share of employees covered by health insurance and pension plans and increase the poverty rate among workers.

"At their core, (right-to-work) laws seek to hamstring unions' ability to help employees bargain with their employers for better wages, benefits and working conditions," reads the EPI report. "Given that unionization raises wages both for individual union members as well as for nonunion workers in unionized sectors, it is not surprising that research shows that both union and nonunion workers in (right-to-work) states have lower wages and fewer benefits, on average, than comparable workers in other states."


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