Michigan Republicans are pushing low wages, claiming that “right-to-work” laws will “attract businesses.”
Conservatives argue that strong unions cost jobs and anti-union “right-to-work” laws will bring jobs, because companies will move to places where workers are less able to fight for good pay and benefits…
Right-to-work laws have not succeeded in boosting employment growth in the states that have adopted them
A Feb., 2011, Economic Policy Institute (EPI) study, Does ‘right-to-work’ create jobs? Answers from Oklahoma, found “overwhelming” evidence:
• The case of Oklahoma – closest in time to the conditions facing those states now considering such legislation – is particularly discouraging regarding the law’s ability to spur job growth. Since the law passed in 2001, manufacturing employment and relocations into the state reversed their climb and began to fall, precisely the opposite of what right-to-work advocates promised.
• For those states looking beyond traditional or low wage manufacturing jobs – whether to higher-tech manufacturing, to “knowledge” sector jobs, or to service industries dependent on consumer spending in the local economy – there is reason to believe that right-to-work laws may actually harm a state’s economic prospects.
A Sept., 2011, study, also by EPI, ‘Right to work,’ The wrong answer for Michigan’s economy, found that,
• Right-to-work laws lower wages—for both union and nonunion workers alike—by an average of $1,500 per year, after accounting for the cost of living in each state.
• Right-to-work laws also decrease the likelihood that employees get either health insurance or pensions through their jobs—again, for both union and nonunion workers.
• By cutting wages, right-to-work laws threaten to undermine job growth by reducing the discretionary income people have to spend in the local retail, real estate, construction, and service industries. Every $1 million in wage cuts translates into an additional six jobs lost in the economy. With 85 percent of Michigan’s economy concentrated in health care, retail, education, and other non-manufacturing industries, widespread wage and benefit cuts could translate into significant negative spillover effects for the state’s economy…
What is the effect on the larger economy?
What happens in the states where these businesses – if any – come from? And what happens to the tax base in states that push lower wages?
If these low-wage policies are successful, two things happen. The states that lose the jobs are poorer, and the workers in the low-wage states they came from (if any actually do) are poorer. And these low-wage states put pressure on wages for the jobs that remain, so wages are driven down economy-wide, across the country. This means that overall economic demand decreases so businesses have fewer customers, and tax revenue decreases because of lower wages and lower demand. As tax revenue decreases schools are defunded, infrastructure is not maintained, and economic conditions deteriorate for businesses throughout the economy.
Cutting wages — and offering tax incentives — to “attract businesses” sounds like it makes sense, but really it is penny wise and pound foolish. In the long run everyone is hurt, except the few already-wealthy billionaires pushing these policies.
Adapted choosen excerpts by Job Market Monitor from
via USW Blog » Blog Archive » “Right to Work’s” Dark Side – Low Wages, Economic Decline.
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