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Right-to-Work Ought to Trump Union Privilege

04/03/2013 12:08 EDT | Updated 06/03/2013 05:12 EDT

Labourers don't enjoy the competency to act in their self-interest, a report by the Canadian Foundation of Labour Rights tacitly suggests. The authors warn that the enactment of right-to-work legislation will weaken unions and effectively toss Canadian workers under the jackboot of the corporate elite.

"Unions matter and are a critical factor in ensuring the economic and social well-being of all Canadians," read the report by the 'labour rights' organization, many of whose board of directors have fairly close ties with unions. "The biggest blow to Canadian unions may soon be in the offing with American-style 'Right to Work' laws that have been mentioned by conservative leaders in Alberta and Ontario and by the federal conservatives."

Right-to-work laws simply entitle workers with a greater degree of choice, letting them ultimately decide whether they'll join a labour union and pay the compulsory dues. The authors of the report wrote that such laws not only fail to create jobs, but also lower the wages and benefits and pensions of workers. But the fact of the matter is not as clear-cut as the CFLR and its sources of information let on.

The CFLR report's assertions about the effects of Right-to-Work legislation essentially rest on a Canadian Centre for Policy Alternatives paper. Similarly, the CCPA paper contains little to no empirical work and mostly cites the findings of an Economic Policy Institute study to make its case. Nonetheless, after what felt like a wild-goose chase finally came to an end, it became evident that the CFLR report uses especially weak data to back its claims.

The EPI study's approach is self-admittedly limited and quite frankly subpar. The biggest barrier to properly assessing the economic consequences of Right-to-Work legislation is that real world events are terribly complex and can't always be accurately quantified. While the EPI study takes some of the complex factors into account, it fails to account for others that are just as if not more impactful. What's more, the EPI study merely presents a snapshot of comparative wage-rates at a specific time instead of a comprehensive picture over a longer period.

Richard Vedder, emeritus professor of economics at Ohio University, has done work on labour markets and inevitably the Right-To-Work regime. Yet his work, which looks at the effects of such laws within the U.S.A., controls for complex factors and paints a picture the EPI study doesn't.

Vedder's research -- which considers the differences in tax burdens, acquired education levels, land areas, population growth, and other factors -- shows that the American states wherein Right-to-Work laws are effective are economically better off. Indeed, these states generally have lower unemployment rates, greater labour force participation rates, higher average income rates, and greater investment rates over the long run. More importantly, it seems people actually prefer living in Right-To-Work states, as these states also tend to have higher net-migration levels.

To be sure, the same problems that fundamentally plague the EPI study plague Vedder's work, for the statistical tools and knowledge economists so frequently employ aren't without limitations or flaws. But what essentially separates the two pieces of empirical literature -- besides each study's analytical approach -- is that Vedder's findings stand to reason.

To put it simply, that unions raise labour costs above what they'd otherwise be absent of forcefully organized collective bargaining justifies Vedder's conclusions. Higher labour costs incentivize businesses to hire less labour, which lowers economic output. The higher labour costs, which equate to higher wages, incentivize people to try to find work in that field, but the larger demand for jobs is met by a smaller supply of jobs. Altogether, the only result is less economic activity and more unemployment.

That unions remain confident about their apparent utility ought to completely shatter their worries about Right-To-Work laws. Why, if labour cartels are indeed the stewards of the working class, then they needn't fear a regime that simply empowers workers with nothing other than a greater degree of choice.

Still, that they do fear it brings up a rather thought-provoking question -- whose side are they really on?

This article was originally published in the Prince Arthur Herald.

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