Right-to-work Laws and Business Environments: An Analysis of State Labor Policy

摘要

Under federal labor law, states can prohibit compulsory union membership clauses in collective bargaining agreements. The passage of "right-to-work" (RTW) laws may confer a perceived economic advantage on those states having such laws. Because the legislation negatively affects union density, it arguably creates a more favorable business climate and job growth. This article uses a cross-sectional model with data on states to analyze the effects of RTW on unions and business environments. We include the idea of "social capital" as an element of labor-management relations. Our findings indicate a negative correlation between a state's level of social capital and managerial opposition to unions. Variables representing social capital, managerial opposition to unions, political beliefs, and RTW laws account for between two-thirds and three-fourths of the variation in union density. Further, RTW laws have a substantial negative impact on union density net of the social and political controls. On the basis of these findings, we argue that RTW promotes a competitive environment based on lower labor costs. The laws may thus hinder the objectives of our national labor policy and state economic development strategies that could enhance employment conditions for employers and workers.