Sometimes the Economic Equations Are Simple: Declining Union Membership = Lower Wages = Higher Corporate Profits = Higher CEO Pay: Part 2

Workers’ Pay Is Still Higher in Pro-Labor States

Weekly Earnings by Industry

“Under federal law, no one can be forced to join a union as a condition of employment, and the Supreme Court has made clear that workers cannot be forced to pay dues used for political purposes. So-called right-to-work (RTW) legislation goes one step further and entitles employees to the benefits of a union contract—including the right to have the union take up their grievance if their employer abuses them—without paying any of the cost.

“This means that if an employer mistreats a worker who does not pay a union representation fee, the union must prosecute that worker’s grievance just as it would a dues-paying member’s, even if it costs tens of thousands of dollars. Non-dues-paying workers would also receive the higher wages and benefits their dues-paying coworkers enjoy. RTW laws have nothing to do with whether people can be forced to join a union or contribute to a political cause they do not support; that is already illegal. Nor do RTW laws have anything to do with the right to have a job or be provided employment.

At their core, RTW laws seek to hamstring unions’ ability to help employees bargain with their employers for better wages, benefits, and working conditions. 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 RTW states have lower wages and fewer benefits, on average, than comparable workers in other states.

“Indeed, in a 2011 EPI paper, Elise Gould and Heidi Shierholz estimate that wages in RTW states are 3.2 percent lower on average than wages in non-RTW states, even after controlling for a full set of worker characteristics and state labor market conditions. Gould and Shierholz (2011) also find that workers in RTW states are less likely to have employer-sponsored health insurance and pension coverage.

“In this paper, we update that research and subject the results to a series of robustness tests. We utilize more recent data from the Current Population Survey, and employ a cost-of-living indicator from the Bureau of Economic Analysis that was only made available in the years following the release of Gould and Shierholz (2011). Last, we subject our results to various robustness tests as suggested by Sherk (2015) regarding choice of specific explanatory variables. We find that the main results hold under any reasonable alternative specifications. Only extensive data-mining and non-standard specifications of wage equations can move the estimated RTW penalty to statistical insignificance. Our central findings are:

“–Wages in RTW states are 3.1 percent lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic factors as well as state macroeconomic indicators. This translates into RTW being associated with $1,558 lower annual wages for a typical full-time, full-year worker.

“–The relationship between RTW status and wages remains economically and statistically significant under alternative specifications of our econometric model.”

Taken from Elise Gould and Will Kimball’s “’Right to Work’ States Still Have Lower Wages,” Summary of a Report from the Economic Policy Institute, Raising America’s Pay:


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