Home / News / University /
Study: States with right-to-work laws experience better economic growth
By Jackson Seedott on September 24, 2012 8:49 am / 5 comments
A team of economists from Central Michigan University and Northwood University released a study Thursday that suggests Michigan’s economy could benefit from right-to-work laws.
Timothy Nash, vice president of strategic and corporate alliances at Northwood University, led the team in comparing existing metrics such as personal income growth, job growth and corporate tax rates against the national average and states with and without right-to-work laws.
“One of the main focuses of the study was to determine to what extent do RTW laws help the economies of different states, and how much of a state’s economic success is simply due to how business friendly it is,” Nash said.
Debasish Chakraborty, professor of economics and director of the MBA program at CMU, was a major contributor to the study and was responsible for developing strategies to compare competitiveness among different states.
“Right-to-work laws simply mean that you don’t need to be a member of a union in order to get a job. If a company has an existing union for its employees, RTW laws would protect that workers’ right to not join the union,” Chakraborty said.
Labor unions around the country oppose right-to-work laws because workers under a union-negotiated contract can enjoy the benefits that contract brings without paying their dues to the union.
However, the study suggests that states with right-to-work laws put in place had a better overall economy than states that don’t have such laws, including Michigan.
The study looked at eight different aspects of Michigan’s economy and compared them to the economies of other RTW states. Economic categories included growth in personal income, real gross state product growth, net population migration, state job growth, total government employees per 10,000 people, monthly new businesses started per 100,000 people, industrial cost of natural gas and the cost of automobile insurance.
Personal income per capita growth in Michigan grew only 20.3 percent from 2000-10, while the U.S. average income grew 36.4 percent over the same period. Personal income growth over the period grew at just under 40 percent in states that had RTW laws.
While the U.S. economy grew from an overall Gross Domestic Product level of more than $8 trillion in 1998 to just under $15 trillion in 2011 — a 71 percent increase — Michigan’s economy grew by only 26.5 percent over the same period. Gross state product grew at an average rate of 85 percent over the same period in states that had RTW laws.
Michigan’s total population migration from 2000-10 was among the worst in the United States with a loss of 554,374 people. RTW states experienced a net positive migration of just under six million people combined for the 23 states that do have these laws.
In addition, Michigan’s job growth declined 16.9 percent, while the national average grew at a two-percent rate. The average job growth for RTW states was 3.9 percent.
While Michigan was close to the national averages for total government employees per 10,000 people, monthly new businesses started per 100,000 people and the average industrial cost of natural gas, the average price for annual automobile insurance in Michigan was $4,490, while the average for RTW states was only $1,580.55.
“Michigan is headed in the right direction, and we’ve definitely made some meaningful progress over the past year,” Nash said. “Michigan received the second largest amount of bailout dollars, and now that those funds are gone, the challenge is going to be seeing if Michigan can sustain the progress it experienced without help from the federal government.”
While these results might seem as if RTW laws are a quick fix for Michigan’s economy, the results are a little misleading, Chakraborty said, since it is difficult to isolate the precise effects of RTW laws from other economic forces.
“Right-to-work laws could definitely have a positive impact on Michigan’s economy and make it more ‘business friendly,’ however, it is not by any means a quick or ‘ultimate’ fix for our economy,” he said.
Like us on Facebook
Recent Comments
- john wood: I have a 99 kawasaki zrx1100 and I need a engine case for it…
- Marty: Hi I am searching for a Honda rear wheel hub,shaft drive (d…
- Karen Ohneck: Scott you are awesome I have known you for8 yrs. These kids …
- Samantha: Go Kirsten!!!! U are my mentor and I hope u will come back t…
- Hannah McCalister: I disagree with your statement. This was a great article and…
AD LINKS
• Is your baby graduating CMU? Place a personal greeting and photo in CM Life's Baby Graduates special pages. Download the form here
• Contact local movers in Mount Pleasant to help with all of your moving needs.
• Download Campus Cash Coupons!
• Search for local apartments
• Add your link here
5 Comments
100 percent correct! Professor Chakraborty, how did you ever get hired at the union-loving CMU? You are a tremendous professor. Your study is exactly what I’ve been saying for years—Michigan should dump the unions and become a Right-to-Work state. Those right-to-work states around the country are stealing the jobs!
It’s impossible to fire a bad worker in a union. That’s why companies don’t want to do business here. Imagine an athletic team with a bad head coach or manager and you couldn’t get rid of that person. Companies won’t come to Michigan because of the unions. Let me add, unions aren’t good for the employees either. What incentive is there for the employee to do a good job? There is none. For example, if a CMU professor won a Nobel Peace Prize, that wouldn’t mean anything since they’d still be paid to union scale. Dumping unions in Michigan would allow employees to work harder and make more money. It would create competition. Products and services would get better.
Professor, they almost had to call 911 to revive me because I couldn’t believe there is a college professor in Michigan who will admit what you and Professor Nash wrote.
Mr. Nash, let me add that the bailout money from the Federal Government was BORROWED MONEY! The young people at Northwood and CMU will have to pay that back some day. Because of the unions and the disastrous eight years of Jennifer Granholm, Michigan was put out of business. Thanks to Obama, we are now 16 trillion dollars in debt. It hurts the poor and the middle-class and the small businesspeople.
Jackson, you did a great job writing the article. You didn’t editorialize for the unions.
Both Northwood and CMU should be proud to have both of you teaching at your respective universities.
I’m sure the local socialists, Marxists, Democrats, Liberals, Union-Lovers (they’re all the same) will submit false claims and numbers.
You two gentlemen couldn’t have said it better. The Michigan economy would definitely benefit from R-T-W. It would create more jobs!
OK lets ask a question, where did these RTW states start? The answer, at or near the bottom of all the categories listed. In fact most of the RTW states saw a net increase from the raising of the federal minimum wage.
We also need to look at the total numbers. The average annual personal income in RTW states, while it is growing faster than other states is still BELOW the annual average personal income in non-RTW states. So if you want to live in a poor state that will continue to be poor and has no where to go but up by all means move to a RTW state, but if you want to make a decent wage you might be better off finding a state that has not gutted worker protection and see the worker as nothing more than indentured servants who, in the words of their presidential candidate “…are dependent upon government, who believe that they are victims…”
Right you are MICHMEDIAPERSON… non-union, non-dues paying people should be able to get all the same benefits as those who do pay dues… Just like I should be able to attend CMU classes without paying even though you are paying for them!
What a concept! Let’s expand this to your store… I’ll take my ice cream for free and you can pay for yours! Wow, what a utopian world you stand for…
Now WAKE UP! This study is a sham, “right to work for less” States have lower wage rates and less benefits for workers in the same professions. They only have more growth in the sense that corporations are always trying to take advantage of workers and that’s why they move there! When we stop chasing other states in the race to the bottom and organize for fair wages for everybody, we will have a much better society.
Now you won’t post opposing comments!? Wow, freedom of selection not freedom of press!
Clearly this paper wasn’t read by many. The paper states that it can not establish causality between the two. CM-Life clearly didn’t read the paper and has now sparked nonsense.