The business world is abuzz over the National Labor Relations Board's complaint vs. Boeing's new South Carolina production line. For NLRB critics, the case boils down to one thing: "right-to-work" laws.
Right-to-work states have generally lower unemployment, higher job growth, lower taxes and better business climates. They have growing populations and have been attracting businesses from other states.
In most states, once a workplace is unionized, employees are required to join the union or they can't work there. But 22 states, including South Carolina, have passed laws that give employees the right not to join. Hence the term "right-to-work."
Unions dislike these laws for the obvious reason: It reduces their membership.
Critics like the Chamber of Commerce say a union-friendly NLRB is simply punishing Boeing for choosing a right-to-work state, a charge the agency has rejected.
But if the complaint stands, it could stop firms in heavily unionized states from expanding or moving to right-to-work states.
Why go to these states?
"It gives employers more flexibility and it gives the workers more individual rights," said Chris Edwards, senior fellow at the free-market Cato Institute. "Unionized workforces are more likely to demand unaffordable compensation that puts the businesses at a disadvantage."
Better Job, Wage Gains
It seems to be a good deal for the workers, too. The U.S. unemployment rate is 9.1%. In right-to-work states the average is 7.9% — 8.6% adjusted for population.
Between 1977-08, employment grew 100% in right-to-work states vs. the national average of 71% and 56.5% in non-right-to-work states. That's according to a January study that Ohio University economics professor Richard Vedder did for the Indiana Chamber of Commerce.
In this period, real per capita income in the right-to-work states grew 62.3% vs. the national average of 54.7% and 52.8% for non-right-to-work states.
Vedder has studied right-to-work laws for decades and argues that this success is not a coincidence.
" I've been looking for ways to show that these laws don't really (impact) anything. But I haven't found it yet," Vedder said.
Between 2000-09, about 5 million people moved to right-to-work states from other states. The population of 25- to 34-year-olds in right-to-work states has grown 16%, according to an American Legislative Exchange Council study, indicating that they "attract the most productive members of society."
Critics argue that these are correlations that don't show causation. The 22 right-to-work states are pretty diverse. Nevada has a unionization rate of around 15%. The epicenter for the housing bust has a 12.1% jobless rate.
Also, several non-right-to-work states like New York have strong, resilient economies, notes Univer sity of Oregon economist Gordon Lafer in a March paper for the liberal Economic Policy Institute.
"The simple truth is that if ... both RTW and non-RTW states can foster booming job markets, something in these states' economies, demographics, or policies other than RTW clearly are driving their growth," Lafer wrote.
Right-to-work fans concede that a variety of factors go into the relative success of a state's economy. But the labor laws are a strong indicator, they argue.
"Nobody is saying that right-to-work is the only factor, but if the bottom 14 states for personal income growth (between 1999 and 2009) are all non-right-to- work states, that's a pretty strong negative correlation," said Stan Greer, senior research associate for National Right to Work's National Institute for Labor Relations Research.
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