Is "Right-to-Work" Relevant When Considering Relocation and Expansion Projects?
Declining levels of unionization may have been responsible for the right-to work factor receiving a middling ranking from the respondents to Area Development's 2007 Corporate Survey.
Dave Claborn , Director of Development and Community Relations, Ohio State University, Marion (Jun/Jul 08)
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RTW's Effect on Wages
is disagreement over the effect on wages in RTW states versus non-RTW
states. In an article for the labor-backed Economic Policy Institute,
Lawrence Mishel argues that there is an average wage reduction of 6.5
percent for employees in RTW states versus those in non-RTW states. But
others see both an increase in unionization in RTW states and a trend
toward higher wages in those states as well. Why? As more advanced
technology industries have moved to Southern right-to-work states in
particular, more training and higher skill sets have been required.
This has put pressure on the pool of qualified workers, which, in turn,
puts pressure on wage scales in order to attract and keep those
Some non-RTW states (Ohio and Kentucky
among them) have argued that RTW status may trigger the unintended
consequence of more companies being organized. They reason that an
employee may be more likely to vote for union representation, knowing
that he or she won't be required to actually join the union or pay
dues, but might still benefit from the union's bargaining on wages and
other issues. Actual evidence for or against this hypothesis is scant.
examination of the State Union Density Database, compiled by Barry
Hirsch of Georgia State University and David Macpherson of Florida
State University from the U.S. Census Bureau's Current Population
Survey, reveals that non-RTW states, on average, had about twice the
level of union membership as RTW states in 2007 (16 percent vs. 8.1
percent). But there are some notable exceptions. For example, Nevada, a
RTW state, has a 17.7 percent union density, which is higher than all
but seven of the non-RTW states. Iowa at 13.2 percent and Alabama at
10.7 percent also have relatively high union densities among the RTW
|Corporate Survey 2007
Combined Ratings* of 2007 F
|Site Selection Factors 2007
|*All figures are percentages and are the total of "very important" and "important" ratings of the Area Development Corporate Survey and are rounded to the nearest tenth of a percent.
density for all states has been declining steadily for at least the
last three to four decades. In 1977, the average for all states was
26.9 percent union density. Last year (2007), it had been cut in half
to 13.4 percent. Which begs the question, does right-to-work matter
anymore? Glenn MacDonald, the John M. Olin Distinguished Professor of
Economics and Strategy at Washington University in St. Louis, thinks
RTW status is of diminishing importance. "It was more important when
unions were more important. Now they're practically gone, so I think
it's doesn't have nearly the influence it used to have."
at the map of RTW and non-RTW states finds non-RTW states clustered in
the Northeast, Upper Midwest, and West Coast regions. RTW states are in
the South and West. Professor MacDonald and the site consultants say
that geographic arrangement is no accident. In the more heavily
industrialized states of the Northeast and Midwest, says Professor
MacDonald, unions have a longer history and have supported political
candidates backing their agendas over the years. John Warden with The
Walker Companies notes the South was slow to industrialize, and thus to
unionize. It was the South's long rural tradition, he surmises, that
produced an independent, self-sufficient work force "living by their
own wits and just not interested in having a third party introduced"
into the relationship between workers and employers, he explains.
efforts continue in a number of states that have not yet adopted the
concept; among them are Michigan, Ohio, Kentucky, and Missouri.
However, if the present trend of declining unionization continues, the
debate over right-to-work will likely become less relevant to companies
examining sites for relocation and expansion projects. More relevant,
perhaps, will be whether workers are well-educated, trained,
affordable, and available.
Claborn was recently named vice president of marketing and
communications for The Missouri Partnership, a new statewide-Missouri
economic development organization based in St. Louis. Prior to that, he
was president of Marion CAN DO, the economic development agency for the
city and county of Marion, Ohio. He spent three years with the Ohio
Department of Development following a 20-year career in radio news,
primarily with WTVN Radio, Columbus, where he was news director. He can
be reached at 314-954-0560.