5 reasons why anti-Right-to-Work study is flawed

A few weeks ago, Frank Manzo IV of the Illinois Economic Policy Institute teamed up with Robert Bruno from the University of Illinois Labor Education Program to release yet another demonstration of how sophisticated mathematical analysis can’t fix bad data. Their report, titled “Free Rider States: How Low-Wage Employment in Right to Work States is...

A few weeks ago, Frank Manzo IV of the Illinois Economic Policy Institute teamed up with Robert Bruno from the University of Illinois Labor Education Program to release yet another demonstration of how sophisticated mathematical analysis can’t fix bad data. Their report, titled “Free Rider States: How Low-Wage Employment in Right to Work States is Subsidized by the Economic Benefits of Collective Bargaining,” supposedly uses econometrics to show that allowing workers to decide for themselves to support a union or not is harmful to the economy. In reality, it is chock full of inept analysis.

Here are a few examples:

1. Two years is not enough time to spot a trend

Most of the paper consists of straight-up comparisons between Right-to-Work and non-Right-to-Work states on measurements of wages and poverty. These are fair game but they only tell you so much. You might notice that there are a lot of sick people in the hospital and conclude that hospitals are bad for your health, without realizing that most of the sick people in the hospital were sick before they went there. Something similar applies to Right-to-Work states: they tended to be poor – sometimes desperately so – before they passed the law, and since passing the law they have been catching up.

To get a better fix on what effects right to work has, it helps to look at trends, which Manzo and Bruno do get around to, but they do it badly, limiting themselves to the period from 2011 to 2013. That’s way too short a time to evaluate a policy. Right-to-Work is a long-term strategy, not a statewide get-rich-quick scheme. When one looks at trends over 10 years or more, the advantages of Right-to-Work laws become a lot clearer.

By itself this one error is fatal. All their sophisticated regressions and projections are based on extremely limited data, but this isn’t their only mistake.

2. Authors didn’t make use of best data for analysis

Aside from the very short time period they looked at, Manzo and Bruno made some odd choices in terms of what sources to use and what to look at. For instance, their employment figures came from the U.S. Census Household survey, rather than the payroll jobs figures put out by the Bureau of Labor Statistics. The household figures include the self-employed, while the payroll figures are based on reports from established employers. The debate over Right-to-Work is ultimately about the effect that unions have on the economy, and unionized workers are more likely to be traditional employees than free-lancers, so it would make more sense to focus on payroll jobs.

The authors also don’t bother to break out the most unionized sections of the economy, such as manufacturing or construction; areas in which Illinois has struggled to hold on to jobs. Neither do they deal with the fact that workers have tended to migrate from non-Right-to-Work states such as Illinois to states such as Indiana that have Right-to-Work laws – something that both affects economic performance and suggests what conditions workers find friendlier.

None of these is fatal by itself, but they do indicate a certain amount of sloppiness.

3. Rationalizations for arguments unpersuasive

At one point, the authors notice that health-insurance coverage in Right-to-Work states was growing faster than in non-Right-to-Work states. (This in spite of the extremely limited time frame that, to be honest, may have scrambled any attempt that Manzo and Bruno made to measure trends.) Rather than concede the possibility that Right-to-Work states might have some advantages – or go back and get longer-term data to see if this is just a blip – the authors argued that “[h]igher growth in health insurance coverage from 2011 to 2013 … is likely due to the efforts (sic) of the Patient Protection and Affordable Care Act…” This opportunistic plug for ObamaCare fails, however, because it isn’t clear that ObamaCare has done much to expand health insurance coverage overall.

4. Conclusions don’t factor in cost of living

Manzo and Bruno make a big deal out of their finding that nominal wages are lower in Right-to-Work states. Of course, since they botched their examination of trend lines, they don’t realize that wages are growing faster in states that have Right-to-Work laws – meaning that wages in Right-to-Work states are catching up with and even surpassing those in non-Right-to-Work states. Manzo and Bruno also completely ignore local cost of living and purchasing power. This is a huge oversight – higher wages aren’t worth much if everything you need is more expensive. It is widely understood that a wage dollar goes further in Right-to-Work states; even the pro-union, Washington, D.C.-based Economic Policy Institute will acknowledge that much. The only question is whether or not the cost-of-living difference is great enough to put workers in Right-to-Work states ahead.

5. Authors concede Right to Work creates jobs – halfway through the paper

At the very end of their paper, after running their sophisticated regressions and developing mathematical models, Manzo and Bruno find that Illinois would have 46,000 more jobs if it had passed a Right-to-Work law. Now with all the problems we’ve already identified in their paper, one might be tempted to treat this conclusion with some skepticism, but they’re hardly the only ones to conclude that Right-to-Work states have an edge in job creation over states such as Illinois where workers can be forced to pay dues to a union they don’t believe in. With Illinois still struggling to create jobs even as the national economy recovers, one would think this is an important point that Manzo and Bruno would want to call attention to. Instead they bury it on page 15 of their 28-page paper.

Far from a rigorous and even-handed analysis of the evidence surrounding a contentious political issue, Manzo and Bruno’s analysis in entirely inept – and compound that by ignoring important issues and downplaying their most interesting finding. There are powerful union officials and influential politicians in Illinois who will confuse this poorly conceived, poorly executed report for a sophisticated and insightful economic analysis, the last word on state labor policy. That goes a long way toward explaining what’s wrong with Illinois.

The truth is that Right to Work is better for workers. Right-to-Work states have a clear advantage in job creation, and when cost-of-living and wage growth is factored in states with Right-to-Work laws offer better living standards as well. Unions have a role to play, but they aren’t a substitute for a growing economy with plenty of opportunities, which is what Right-to-Work offers.