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Would NM’s economy improve if it were a ‘right to work’ state?

By   /   July 17, 2012  /   2 Comments

Could New Mexico get an economic boost if it became a “right to work” state? That is, if it passed a law securing the right of employees to decide for themselves whether or not to join or financially support a union.

A study written by economist Dr. Eric Fruits says if such legislation went into effect next year, New Mexico would have 42,300 more people working by 2020 and that the state’s personal income would be nearly $5 billion higher and wage and salary income would be $2.2 billion higher.

Courtesy: NPR

“The findings indicate unambiguously that New Mexico would enjoy an employment and income windfall,” writes Dr. Fruits in the 19-page study. Fruits is president and chief economist at Economics International Corp., an economics consulting firm, and an adjunct scholar with the Rio Grande Foundation. (Full disclosure: Capitol Report New Mexico is funded by the Rio Grande Foundation.)

Right-to-work laws exist in twenty-three states, mostly in the southern and western US. New Mexico almost became a “right to work” state more than 30 years ago. In 1979 and 1981 the state legislature passed right-to-work legislation but each time, the bills were vetoed by then-Gov. Bruce King.

Fruits says his numbers show that if King had not done that, New Mexico’s employment in 2011 would have been 21 percent higher and personal income for people in the state would be 21 percent higher.

You can read the study by clicking here.

As you’d expect, labor leaders in New Mexico strongly dispute Fruits’ conclusions.

Carter Bundy of New Mexico’s American Federation of State, County and Municipal Employees (AFSCME) union, dismissed the study and said workers are better off in non-right to work states:

The Rio Grande Foundation’s “study” about the impact of so-called “right-to-work” laws is purely speculative and not based on real economics or real world experience. We can all try to manipulate numbers to prove what is or isn’t likely to happen with legislative changes, but one of the many beautiful things about the United States is that we have 50 real-world laboratories to prove what actually does happen when laws like right-to-work (RTW) are implemented.

The truth is that workers in RTW states make far less than workers in workplace fairness states. As of 2010, RTW state workers make an average of $5,538 a year less than workplace fairness states’ workers. Well, maybe it’s a fluke, right? Or maybe workplace fairness states had an historical advantage that is trending in favor of RTW states? Nope. In 2001, the workplace fairness states’ workers made $5,333 more than RTW states’ workers. In other words, the gap in wages has actually increased in favor of workplace fairness states in the last decade. As explained in the comments section, similar data proves that RTW laws are heavily correlated to poverty, low health care, unsafe worksites, and low employment.

Here are two links to Economic Policy Institute papers dismantling similar RTW “data” used in Indiana and New Hampshire. While they haven’t yet examined this Rio Grande Foundation paper, even the most basic statistical analysis above shows the folly of claiming RTW laws reduce wages and employment.

Working hard to make Indiana look bad: The tortured, uphill case for ‘right-to-work’ http://www.epi.org/publication/ib326right-to-work-new-hampshire-update/



Rob formerly served as staff reporter for Watchdog.org.

  • Paul Gessing

    In a study published by the Economic Policy Institute, Belman et al. (2009) present regression results showing that right-to-work states have a higher share of their populations employed. Their regressions show that the employment-to-population ratio of states with right- to-work legislation is 2.8 percentage points higher than non-right-to-work states.

    In a another study published by the Economic Policy Institute, Lafer and Allegretto (2011) attack a study by Kalenkoski and Lacombe (2006) that found that right-to-work laws have a negative impact on the employment shares of the agriculture, forestry, mining, fishing and hunting industries, and some service industries.

    Lafer and Allegretto correctly point out that agricultural employees and most professional and managerial employees have no right to organize under federal labor law. Therefore, Lafer and Allegretto argue, there is no clear reason why right-to-work statutes would directly impact employment shares in these sectors.

    Lafer and Allegretto’s criticism, however, seems to belie a misunderstanding of basic arithmetic—as the employment in one sector of the economy increases relative to other sectors, by definition, the shares of other sectors must decrease. If one slice of the pie gets larger, the others must get smaller.

  • John Ennis

    NM needs to become a ‘Right to work’ State.