Right to Work States Forge Ahead

This shouldn't come as a surprise to anyone - when pushed to the edge of collapse, industry and the free market will find a way to get the job done. Unfortunately it has come on the backs of current workers in that they are now doing more for the same pay. Or put differently, the worker is forced to be more productive or get laid off.

Industry is finding out that they can do more with the same people that they have rather than hire to increase production. As demand increases, manufactures will find new ways to meet the demand with the same work force.

This new found productivity does not bode well for the unemployed. To increase hiring, industries must develop new products and then hire new people to produce this product. If new hiring does occur for increased demand, it will be only what is needed in the short run, that is, temporary workers to avoid federal and state hiring regulation demands. When demand is down, the temp is gone.


Right to Work Is Working in Oklahoma
Source: J. Scott Moody and Wendy P. Warcholik, "Oklahoma's Improved Economic Performance Suggests Right to Work Is Working," Oklahoma Council of Public Affairs, October 4, 2011.

Contrary to reports from detractors, the implementation of right to work (RTW) laws in Oklahoma (first approved by the state's voters in 2001) has brought about significant gains for the manufacturing industry in that state, say J. Scott Moody and Wendy P. Warcholik, research fellows with the Oklahoma Council of Public Affairs.

Between 2003 and 2010, Oklahoma's manufacturing gross domestic product (GDP) has grown 45 percent, outstripping that of the average manufacturing growth in RTW states (31 percent) and in non-RTW states (22 percent).

Simultaneously, Oklahoma witnessed a productivity growth rate of 67 percent (measured by manufacturing GDP per worker), outgrowing non-RTW states (55 percent) and RTW states (62 percent).

In those same years, 13,215 households, 40,693 people and $99 million in income have migrated to Oklahoma, with most of these gains coming from non-RTW states.

Critics of the RTW laws have cited a decline in the number of manufacturing jobs as evidence that the legislation has crippled the manufacturing industry of the state, but this conclusion is based on myopic analysis. It is confounded by simultaneous increases in technology that have replaced traditional manufacturing positions, thereby reducing the manufacturing workforce across the country regardless of RTW laws.

Rather, the true gain from RTW policies is seen in the increasing productivity of workers who have remained in the industry. Furthermore, by increasing productivity within the field, RTW laws have created several beneficial economic effects within the state.

First, higher productivity yields higher wages and larger corporate profits, and the increased spending associated with these gains can be expected to spill over into other areas of the economy.

Second, increasing efficiency of labor frees up workers from positions for which they are ill-suited, allowing them to seek more gainful employment elsewhere. The ultimate benefit in this regard is that several sectors will benefit from optimized allocations of labor, thereby seeing gains for the entire state brought about by right to work laws.