Mostly False
Employees in "workplace freedom" states make more money

Ron Maag on Wednesday, May 1st, 2013 in news report

State Rep. Ron Maag says employees earn more money in ‘right-to-work’ states

Only hours after two Statehouse Republicans unveiled legislation to make Ohio a "right-to-work" state, GOP leadership shot it downas a distraction lacking support.

"We have an ambitious agenda focused on job creation and economic recovery," Senate President Keith Faber said in a statement, "and right-to-work legislation is not on that list."

But the legislation's co-sponsors, Rep. Kristina Roegner of Hudson and Rep. Ron Maag of Lebanon, depicted their proposals as a matter of "workplace freedom" that would attract jobs.

And contrary to a frequent argument of opponents, Maag asserted that workersin so-called right-to-work states make more money.

PolitiFact Ohio wondered how that claim is backed up.

Maag's staff pointed us to the Mackinac Center for Public Policy, a "free market" think tank based in Midland, Mich., that strongly supports right-to-work laws.

Its "Michigan Worker Freedom" website says: "Workers in right-to-work states make more. When adjusting for cost of living, workers in right-to-work states have 4.1 percent higher per-capita personal incomes than workers in non-right-to-work states."

The source for that is a posting by James M. Hohman, assistant director of fiscal policy at the Mackinac Center. He writes that he calculated the adjusted per-capita personal income using a state-by-state cost of living index, and converted personal income figures for all 50 states to the value of Michigan dollars.

"Right-to-work states have 4.1 percent higher per-capita personal incomes than non-right-to-work states," Hohman says.

That conclusion is not widely held, however, even though the evidence is at best mixed on the effect that right-to-work laws have on paychecks and local economies.

Noting that it is difficult to isolate the impact of a single policy, two economists for the generally pro-union Economic Policy Institute conducted an analysisof right-to-work laws using a regression model that controlled for more than 40 factors in addition to the cost of living in different states.

Their analysis found that wages in right-to-work states are 3.2 percent lower than those elsewhere -- for everyone, not just union members. They concluded that the average full-time, full-year worker in a right-to-work state makes about $1,500 less per year than a similar worker elsewhere.

In states with a right-to-work law, the Wall Street Journal reportedlast December, "wages tend to be lower, but job growth stronger, than states that don't have the law. But gauging how much of this divergence in paychecks and employment is a result of the laws is difficult to do."

The Journal said that employees in right-to-work states earned 9.8 percent less than workers in states without such laws, according to an analysis of Labor Department data that did not include health-care and other benefits -- "but proving cause and effect on wages is difficult, since many factors influence what workers are paid in a given locale, such as whether the mix of businesses are concentrated in higher-paying industries."

The meticulously nonpartisan Congressional Research Service issued a studylast December examining right-to-work laws.

Using data from the federal Bureau of Labor Statistics, it found that wages in what it called "union security states" were 16.6 percent higher than in right-to-work states.

Among CRS's conclusions: "Wages are lower in right-to-work states than union security states" -- and that "historical research has suggested that right-to-work laws have little influence on these differences."

Where does that leave Maag’s statement?

Some economists who support right-to-work laws say wages are comparable or higher in right-to-work states when cost-of-living differences are taken into account. And Maag correctly cited that research.

But federal data from a nonpartisan government research arm shows that employees in right-to-work states earn less. So does another analysis that tries to hold other things equal.

None of it shows a definitive relationship between right-to-work laws and economic outcomes, even though (as the Wall Street Journal noted) the laws were first adopted in the South as part of a larger drive to lure factory jobs from the heavily unionized and better paying North.

Maag’s statement, like others we have seen surrounding the highly charged right-to-work issue, suggests a cause-and-effect relationship that is not supported by any evidence.

We rate the statement as Mostly False.