INDIANAPOLIS | A study paid for by the Indiana Chamber of Commerce detailing the positive economic effects of a right-to-work law mistakenly credits those effects to right-to-work, a University of Oregon political scientist says.
The chamber study by Richard Vedder, an Ohio University economist, finds right-to-work states had higher average personal income and employment growth between 1977 and 2008 compared to states without a right-to-work law.
Vedder projects Indiana's annual per capita income would be $2,925 higher today if Indiana had experienced the same growth as right-to-work states over that period. He says passage of a right-to-work law now would boost per capita income by nearly $1,000 over the next decade.
House Speaker Brian Bosma, R-Indianapolis, and Senate President David Long, R-Fort Wayne, repeatedly have cited Vedder's estimates since declaring their top legislative priority is passing a right-to-work law. The law would exempt nonunion members at a union workplace from paying their share of the cost of collective bargaining and other union services.
But a report by Oregon's Gordon Lafer says just because Vedder found positive economic outcomes in states with right-to-work laws, that doesn't mean right-to-work is responsible for those results.
Lafer does not dispute Vedder's finding that right-to-work states had higher average income and employment growth but points out not all right-to-work states grew at the same rate. Between 1977 and 2008, per capita income grew 82 percent in right-to-work North Dakota, but only 32.5 percent in right-to-work Nevada.
Indiana's per capita income grew 37.2 percent over the same period, and Massachusetts, which like Indiana lacks a right-to-work law, had the highest per capita income growth in the nation at 88.9 percent.
"The immediate fact that jumps out from this data is that there is no clear relationship between income growth and right-to-work laws," Lafer writes.
Looking at state-by-state employment, Indiana grew 42.8 percent between 1977 and 2008, while Iowa, the most similar right-to-work state, grew only 34.4 percent in that time.
"Iowa can increase its job growth by repealing right-to-work and making itself more like Indiana," Lafer suggests.
He says when factors such as a state's educational attainment level, infrastructure quality, types of industries and even its weather are factored into the economic equation, right-to-work has no effect.
Debate over right-to-work will be the dominant issue when the Republican-controlled General Assembly begins its 2012 session on Jan. 4.
Most Republicans say right-to-work will attract new businesses to the state. Democrats believe Indiana could create more jobs by providing state tax credits to small businesses that hire new workers.