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Marquette Economist: Simply No Economic Reason to Argue for Right-to-Work in Wisconsin

jen and joe

GOP Senate Majority Leader Scott Fitzgerald announced today that the state Senate will hold an extraordinary session next week to vote on a right-to-work bill. A spokesman for Gov. Walker says that Walker would sign such a bill into law.

Two recent studies make the case that such a law would actually damage Wisconsin's economy.

One, titled“Right to Work” Is the Wrong Answer for Wisconsin’s Economy, was from the Washington-based Economic Policy Institute. The EPI focuses on the needs of low- and middle-income workers in economic policy discussions.

The other study was funded by the Wisconsin Contractor Coalition, a group which opposes right-to-work, but was conducted independently by Marquette University economist Abdur Chowdhury.  

Chowdhury's study, The Potential Effects Of A Right To Work Law in Wisconsin, looked at how right-to-work would impact employment, income and other areas that affect working families in Wisconsin.

"What we found is that right-to-work, by itself, does not create any economic advantage," Chowdhury says. "What is good for the state is its overall business package. For example, if we have an overall business package that helps to attract business, increase workers wages - that would be good for the state. But just concentrating on a right-to-work law would be a mistake."

"The reason to have a right-to-work law is more political than economic...there simply is no economic reason to argue for a right-to-work law at this point for Wisconsin," he adds.

Common Arguments for Right-to-Work & Chowhury's Response

Right-to-work attracts new businesses.

"What we have found, per se, right-to-work laws do not attract businesses," Chowdhury says. "For example, there's a magazine called Area Development and what they do is on a monthly basis, they list what factors are important for business firms when they decide on a location. If you look at their findings for the last couple of years, right-to-work never appeared in the top ten reasons that were given by business firms."

Other issues are of more concern when deciding where to locate a business, Chowdhury says, such as transportation, infrastructure, ease of permitting, existing workforce and state and local tax policies.

"What we have seen is that when you look at right-to-work laws, there is no economic advantage...however there are some social costs involved," he says. "I would say that the net impact would be negative."

No union dues means employee paychecks would go up.

Department of Labor Statistics from 2013 showed that average wages for all occupations in right-to-work states were about $4 an hour lower compared to non-right-to-work states, Chowdhury says. 

"This has multiple impacts on the state. If wages are low that will lead to lower incomes at the state level, overall. If there is lower income, there will be less spending," he says. "If you look at state and local government, they would also see a decrease in their income revenues."

Right-to-work creates more jobs.

"If wages are lower, we expect to see an outflow of workforce. The skilled workers tend to leave the state and will go to another place where the wages are higher," Chowdhury says. "So, we do see a drop in employment."

There's a positive economic multiplier effect.

Chowdhury's "conservative" calculation for the impact of right-to-work on Wisconsin would be "a net loss of direct and indirect income would be at least $5.8 billion annually."

"If incomes drop by $5.8 billion, that would also mean economic loss - in terms of income tax revenues for state government - would be at least $234 million per year," he says.