Saturday, August 19th, 2017

Jobs, Jobs, Jobs: It's All About Jobs

Posted: Wednesday, November 17, 2010

By E. Roy Budd, Executive Director, Energize-ECI

Back in 1970, Hoosiers took in 2.4% of U.S. personal, current-dollar income. By 1980, Indiana’s share of American personal income had fallen to 2.2%. Since then, it has continued falling, to 2.0% in 1990 and 1.9% in 2008. Indiana has also suffered a substantial decline in its share of America’s young employees and entrepreneurs. In 1970, 2.5% of Americans aged 25-44 lived in Indiana. By 1985, Indiana’s allotment of this contingent had sunk to 2.3% and in 2008, the latest year for which such data are available; it stood at just 2.1%.

Next year, 2011, the Indiana Legislative will be considering what steps they can take to reverse these disturbing trends. Fortunately, a simple policy reform that has the proven potential to accelerate income growth and expand job opportunities is to make Indiana the nation’s 23rd Right to Work State. For many Right to Work supporters in Indiana and elsewhere, moral principle alone provides sufficient reason to prohibit all forms of forced union membership. The moral case for Right to Work is easy to state: A worker’s freedom not to affiliate with a labor union is no less deserving of protection than his or her freedom to affiliate with a union. This is why the proposed “card check” legislation proposed by the Obama Administration makes no rational sense.

But the economic record of the 22 states that already have Right to Work laws indicates that a similar law for Indiana would be good for Hoosiers’ pocketbooks. For example, between 1994 and 2008, real personal income in Right to Work states increased 37%, compared to increases of just 22% in Indiana and 27% in non-Right to Work states (Bureau of Labor Statistics). But these figures greatly understate the Right to Work advantage. The reason is that they fail to account for the net migration of millions of employees and their family members from non-Right to Work states to Right to Work states that took place over the past decade.

Between 1998 and 2008, the number of Right to Work state residents in the 25-34 age bracket increased by 2%, from 15.0 million to 15.4 million. Meanwhile, the population ages 25-34 in non-Right to Work states fell by 7%, from 25.7 million to 24.0 million. Indiana alone lost a net of 6%, or 52,000, of its residents in this age group. The overall decline in 25-34 year olds is a result of the “baby bust” that began in the last sixties. But there is no disparate trend in birth rates in Right to Work states and non-Right to Work states between the late 1950’s and the late 1970’s to account for the substantially different trends in the two groups of states. Moreover, young people immigrating from abroad disproportionately first settle in non-Right to Work states, so the data cited above actually understate the extent to which native-born Americans are resettling in Right to Work states. And the evidence indicates young people aren’t fleeing states like Indiana because they don’t like cold winters, either. Chilly Right to Work Idaho enjoyed a sizzling 24% increase in its population aged 25-34. But sunny non-Right to Work California endured a 6% decline, despite a heavy influx of young adults from abroad. Like most other non-Right to Work states, Indiana simply isn’t creating enough good jobs, either to keep its young adults from leaving or to lure in young adults from other states.

Today there are a number of surveys rating states and/or metropolitan areas for business climate, and every credible one show jurisdictions where employees’ Right to Work is legally protected clustered in the highest ranks. One especially thorough annual study is conducted by Forbes, America’s leading business magazine, with the help of Economy.com, a well-known research firm based in Westchester, PA., and Bert Sperling, a consultant in Portland, Ore. Forbes ranks large and smaller metro areas based on a variety of factors, including tax, energy and office space expenses, living costs, job and income growth, and quality of life issues. In the 2005 survey, eight of the nine top-ranking large metro areas and six of the nine top-ranking smaller metro areas included in the study are located in Right to Work states. The top four large metro areas “for business and careers”: Boise, Idaho; Raleigh-Durham, N.C.; Austin, Texas; and the Virginia suburbs of Washington, D.C., are all located in Right to Work states. Today the Forbes index shows that Right to Work status alone is an excellent predictor of overall business climate favorability. This is even more apparent when one focuses one’s attention on the nation’s biggest cities. The three largest-population Right to Work metro areas – the Virginia suburbs of Washington, D.C., Houston, and Atlanta – rank, respectively, fourth, 13th, and ninth, while the three largest-population metro areas in non-Right to Work states – Los Angeles, New York City, and Chicago – respectively rank 106th, 120th, and 87th.

The fact that businesses and their employees in Right to Work states generally benefit from less burdensome taxes and bureaucratic red tape is no coincidence. In non-Right to Work states, union officials wield the government-granted power to get workers fired for refusal to pay union dues or “fees.” Union campaign operatives use a large chunk of the forced dues collected under this system to elect politicians who are beholden to Big Labor’s agenda. And this is an agenda of higher taxes, more government spending, and straitjacket regulation of business. Big Labor’s motive in favoring Bigger Government isn’t hard to understand. Although private-sector, non-farm employment across the U.S. grew by 31.4 million, or 44%, between 1983 and 2003, the number of private-sector union members (overwhelmingly forced-dues payers) fell by 3.5 million, or 29%. Meanwhile, government union membership soared by 1.6 million, or 28%, slightly faster than overall government employment. Union officials, therefore, know that the expansion of government and higher taxes are by far the surest ways for them to collect more union dues and acquire more political clout. And in states where they retain the legal privilege to compel workers to pay union dues as a job condition, union officials most often get what they want.

Everyone will benefit with a Right to Work law for Indiana. Of course, whenever a state like Indiana discusses passing a Right to Work law, Big Labor gets very agitated and begins sounding the alarm that enactment of a ban on forced union dues will cause the sky to fall. One has to remember that Businesses create jobs – Not unions. A Right to Work law would create more businesses and more businesses mean more jobs. It’s all about job creation! Therefore, when (and it will) Indiana enacts a Right to Work law, it will be adopting an economic-development strategy that has already been tested time and again, under the most varied of condition, and consistently proven successful.