Tuesday, December 11, 2012

Right-To-Work Boondoggle

At the heart of the debate about right-to-work legislation in Michigan is migration, brain drain. Both camps point to Michigration as a justification for their position. Arguing for right-to-work:

Of the nine states that saw the greatest population growth in that decade, six have a right-to-work law and a seventh — Colorado — enjoyed a quasi-RTW status thanks to its "labor peace act," which makes it difficult for unions to extract fee payments from non-members in a workplace. (Right-to-work laws do not affect collective bargaining, other than to prohibit labor contracts that make union dues or fees a condition of employment.)

To be sure, many factors go into individual migration decisions (high growth states also have more days of sunshine than Michigan, for example), but scholarly studies of the issue using sophisticated statistical techniques to isolate the different factors nevertheless suggest that having right-to-work protections for employees has a positive impact on a state’s in-bound migration.

For example, a 2010 study by Mackinac Center for Public Policy adjunct scholar Richard Vedder examined other possible explanations including climate, taxes, population and the “occupational composition of the workforce,” and still concluded, “Without exception, in all the estimations, a statistically significant positive relationship … was observed between the presence of right-to-work laws and net migration.” Mackinac Center analyses of Michigan migration also discovered a “revealed preference” for right-to-work states.

There you have it. Right-to-work laws are positively correlated with net migration. I'll let that stand on its own for now. The case against right-to-work:

Of the top ten states in private-sector personal incomes (that aren’t oil and gas rich like Wyoming), none are right to work states. But they are the best educated, including: Massachusetts (39.5% of adults have a bachelor’s degree or higher), Colorado (36.4%), New York (32.5%), Minnesota (31.8%) and Illinois (30.7%). Compare that to Michigan’s 24.6% bachelor’s attainment rate.

Are our kids fleeing Michigan for Indiana because it is now “right-to-work”? No, they are going to Chicago, New York, Minneapolis, and Denver because they have a better chance to take their talents (and too often their Michigan education) and either create, or take a job for themselves.

While we are signaling in Michigan that we don’t value our workers and our teachers, and competing with right-to-work states like Alabama and Mississippi to be the “low-cost” producer, other states are eating our lunch by building a knowledge economy, and employing Michigan’s talent to do so.

There you have it. Right-to-work laws are negatively correlated with higher personal incomes and educational attainment rates. Michigan is in a race to the bottom, fueling more brain drain. Soon, the entire state will be residing in Chicago.

Concerning migration, I doubt right-to-work laws have any impact. Both sides are using brain drain hysteria to garner support. The Mackinac Center's analysis is bogus. John Austin fails to demonstrate how right-to-work will undermine the state's Talent Economy. Feathers are ruffled. That's about the extent of the damage.

The battle over right-to-work is ideological. If Michigan wanted to positively impact talent migration, then politicians and policy wonks should take a look at noncompete agreements. Following California's lead, Michigan would stand out from the Rust Belt pack. Right-to-migrate is a powerful economic stimulus. Or, take a closer look at right-to-work Indiana. That state is still fretting about brain drain. Much ado about nothing.

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