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Economists wrestle over right-to-work

It would be great if before the Legislature begins considering right-to-work bills some honest broker could demonstrate how New Mexico’s economy will fare if one passes.

Not gonna happen.

Economists have been trying for years to tease out the effect of right-to-work from the countless gears, cogs, levers and switches that make up a state’s economy. Their results are all over the place and depend mainly on the approach they take to research and the data they choose to use, according to the Congressional Research Service. There are simply too many things going on in an economy to separately assess any one policy or event.

A right-to-work law bars requiring payment of union dues as a condition of employment. At the same time, people who don’t pay dues are still entitled to the benefits the union can achieve at the bargaining table. The Congressional Research Service calls states without right-to-work laws union-security states.

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Proponents and opponents compare employment, unionization and wage data between right-to-work and union-security states, but such comparisons don’t mean much, according to the Congressional Research Service, because it is impossible to know whether the differences are due to right-to-work or “labor force characteristics, industry makeup, local taxation policies, and countless other state-specific characteristics.”

The data can take you to a lot of interesting places. Arizona and Alabama are both right-to-work states, but employment grew 19 percent from 2000 through 2009 in Arizona and fell 8 percent in Alabama. Employment grew 9.5 percent in union-security state New Mexico during that decade and only 3 percent in Oklahoma, which had and has a right-to-work law.

According to the Economic Policy Institute, which opposes right-to-work laws, three union-security states (Washington, Alaska and New Mexico) had faster job growth in the 2000-2009 period than 17 right-to-work law states.

That doesn’t mean right-to-work laws depress economic growth. It means economic growth is more complicated than one law.

Right-to-work laws were adopted first in Southern states after they were authorized by the Taft-Hartley Act of 1947. Economic growth took off in the region in the following years. But so did agricultural productivity, which freed up workers for manufacturing jobs. Interstate highways made it possible to move goods from the South to markets. Air conditioning made the region more inviting to businesses seeking to relocate. Right-to-work may well have been a factor, but only that – a factor, one of several that spurred the South’s economy. Or didn’t. It’s hard to say.

The National Right-to-Work Committee cites a 1998 study by University of Minnesota economist Thomas Holmes to support its contention that right-to-work laws attract industry and stimulate economic growth. Holmes compared manufacturing activity in states with right-to-work laws against activity in union-security states by looking at counties in each state that bordered each other. For example, Cochise County in Arizona borders Hidalgo County in New Mexico, so Holmes would compare manufacturing in those two counties.

But Holmes wasn’t studying right-to-work laws. His paper says he was comparing states with pro-business policies against other states and chose right-to-work states to represent all states with pro-business policies. He looked at manufacturing as a proxy for economic vitality in general. Indeed, he found stronger growth in manufacturing employment in right-to-work states, but he warned against reading too much into that finding.

“We would expect to find a positive association between manufacturing growth and right-to-work laws because of underlying differences between right-to-work states” and union-security states, he wrote. Right-to-work states often had other pro-business policies in place and were usually already hostile to labor unions. Many of them were agricultural states; agricultural employment has been declining for years, which made an eager and low-cost workforce available to manufacturers.

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“In sum, broad comparisons of right-to-work states and non-right-to-work states prove nothing about the effects of states’ policies on manufacturing growth rates,” Holmes wrote.

Some proponents, such as Gary Tonjes of Albuquerque Economic Development, aren’t making grandiose claims for right-to-work laws. Tonjes says some number of businesses that might relocate to New Mexico never consider us because we don’t have a right-to-work law. He just wants a chance to make the case for Albuquerque to these companies.

Twenty-first-century companies have become highly mobile. Boeing moved major operations to right-to-work South Carolina and out of Washington. Toyota’s newest American plant is in right-to-work Mississippi. Tonjes and others believe right-to-work gives New Mexico a better chance to attract this sort of investment.

The question is, even if we do make the case will any of these companies come to New Mexico? Or will labor force, transportation, infrastructure, natural resources or a thousand other things that concern a business keep them away?

The economic answer is: We don’t know.

UpFront is a daily front-page news and opinion column. Comment directly to Winthrop Quigley at 823-3896 or wquigley@abqjournal.com. Go to www.abqjournal.com/letters/new to submit a letter to the editor.

 

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