NCPA - National Center for Policy Analysis

Mandatory Union Membership Slows Employment, Productivity

April 1, 2004

The National Labor Relations Act (NLRA), adopted some 70 years ago, enables unions to require all workers covered by its collective bargaining power to become union members and to pay the corresponding dues. However, 22 states have since passed "right-to-work" laws that enable workers to opt out of such agency-fee clauses.

According to a new report by the Capital Research Center, states that have adopted right-to-work laws have enjoyed superior rates of business productivity, state-level economic growth and job-creation over the past two decades. The reports also showed:

  • Depending on the percent of workers unionized, unionization reduced the value added per hour of labor by as much as 6.5 percent.
  • Between 1981 and 2001, the economy of the average right-to-work state expanded by 236 percent, while that of the average non-right-to-work state grew by 221 percent.
  • Over the last twenty years, the average right-to-work state increased employment by 62 percent, as compared to 42 percent for non-right-to-work states.

Perhaps most importantly, there has been little difference in pay between right-to-work states and their counterparts once one accounts for the cost of living of living. In 2002, per capita disposable income averaged $27,476 for workers in non-right-to-work states, as compared to $24,335 in right-to-work states -- a disparity of about 11.4 percent. However, according to the American Federation of Teachers (AFT), the cost of living in the average right-to-work state is 11 percent lower than in non-right-to-work states.

Source: Paul Kersey, "The Economic Case for Right-to-Work Laws," Capital Research Center, January 2004.


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