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Opening Arguments

Numbers game

Is there no effect from right-to-work laws?

A new Ball State University study shows right to work has no meaningful impact on job growth in the manufacturing sector. Economist Mike Hicks says the study examined the manufacturing sector in states where right to work became law.

Hicks says the study finds that manufacturing wages, employment and economic growth remained virtually unchanged in states after right-to-work laws took effect.

If the study is accurate, it undercuts the statistical claims used by each side -- that more jobs are created on the one hand, and that wages are lowered on the other -- to justify its position. That just makes it all the more obvious what has been apparent for some time: It is quite easy to pick and choose the numbers that favor your position and ignore the rest. Lies, damn lies and statistics.

Hicks says Indiana already has "a pretty good business climate" and that adding right-to-work on top of it wouldn't do all that much for the state. That's one way to look at it -- if a law isn't especially needed, don't clutter up the state code with it. But there are also the philosophical underpinnings of each side. Is it fair to make workers pay dues to a union they don't want to join? Is it right to pass a law that clearly weakens unions in their ability to deal with companies?


William Larsen
Mon, 01/16/2012 - 1:06pm

Maybe I am missing something, but after clicking on the link for the Ball State Study on Right To Work, I did not find it. All I have to go on is the word of a person I do not know by the name of Hicks. Maybe I am foolish for not accepting this at face value, but I would like to know what inputs or in this case measurables were used in this study. He is also an economist which does not give him much credibility. Economists are about as good as weathermen.

Maybe I am just out of it today, but I am having a difficult time finding Hicks report. If it is so good and thorough, why is it so difficult? But then my dial modem may not be loading links.

The problem with studies is what data is used, where did it come from and were the right inputs used to analyze the specific output

Harl Delos
Mon, 01/16/2012 - 1:58pm

Gateway 2000 set up shop on a farm near Souix City. Ted Waitt was born and raised near Souix City. Coincidence? I think not. Most businesses are located where the boss wants to live. There are exceptions, of course. I think Lincoln moved to Philly because that's where the wife of the new boss wanted to live.

If you have the pieces available, people start businesses. It's probably easier to start an orthopedic appliance factory in Warsaw because you can find employees who know a lot about that industry. At one point, FW city counsel tried to keep new gas stations from opening, figuring that abandoned gas stations were a blight on the city, but with good locations and ample parking, a former gas station makes a nice place to start many businesses.

Pennsylvania doesn't allow you to deduct business losses from your taxes. That makes it harder to finance a new business with a spouse's paycheck. That probably is more significant in business startups than right-to-work. You don't need a union until you have a large number of employees, but most new jobs are created in companies with fewer than 30 employees.

Christopher Swing
Mon, 01/16/2012 - 2:55pm

Or we can spend 3 seconds in Google and come up with an article that links to the pdf, and is more than a few paragraphs long:


"Supporters of right-to-work, including Republican Gov. Mitch Daniels, don't claim the labor policy will get all Hoosiers working but will simply be another tool to lure companies to Indiana.

Democrats point to other studies showing that when researchers include all workplaces, not just manufacturing as in the Ball State study, a right-to-work law reduces wages and benefits for union and nonunion employees by as much as $1,500 a year.

Hicks said his study shouldn't be interpreted as a call for or against right-to-work in Indiana, but based on the outcome in other states, the legislation "is not likely to have an effect on the manufacturing industry in Indiana."

But hey, remember that link back in "The people have spoken?"

INDIANAPOLIS | If Indiana history is a guide, the Republican legislative leaders pushing for a right-to-work law may not be in their positions of power much longer.

House Speaker Brian Bosma, R-Indianapolis, and Senate President David Long, R-Fort Wayne, have said enacting right-to-work is their top priority when the General Assembly convenes Wednesday. A right-to-work law would allow nonunion employees at a union workplace to receive union services without paying for them.

They claim a right-to-work law will bring more jobs to Indiana. Democrats and union leaders opposed to right-to-work cite studies showing the labor policy lowers wages for all workers and does not reduce unemployment.

The right-to-work fight is nothing new for Indiana, which once had a right-to-work law

William Larsen
Mon, 01/16/2012 - 4:00pm

Harl thanks for correcting the location of Gateway. Swing, thanks for identifying a link to the PDF file. I downloaded it and read it.

At first glance there it is like any other mutli variable problem. Having worked on hundreds of these types of problems makes me suspect there is a high degree of error in the report. What I found most telling is the "escape clause language" at the end of the report:

The summary is most telling. It states the study cannot be interpreted as for/against RTW; the study is incomplete, did not fully evaluated all industries, does not fully identify or weight the factors evaluated and "reasonable interpretation is that other factors matter more than RTW in determining the size of the manufacturing industry in a state." Yet it contradicts itself by stating "we can draw some conclusions from our reading of existing studies and the new analysis presented here: which is conjecture only with no support. My opinion; their statistical analysis of the variables looked at hod no correlation. I guess I was hoping for more of this report.

The variables used "...where the dependent variable Y is the manufacturing share of income in state i, in year t or income in the manufacturing sector. These are estimated as a function of a common and fixed effects intercept alfa + alfa(1), a presence variable for right-to-work legislation (RTW), a first order spatial contiguity element to correct for spatial autocorrelation [WY(j,t)], a first order temporal autoregressive element omega[Y (i,t-1), and a white noise error term, E(i,t)." The analysis did not include taxes, cost of living, unemployment, skills, geography, etc.

"This study has attempted to evaluate SOME of these factors. This study is INCOMPLETE and DOES NOT fully evaluate all industries or ALL ASPECTS of the workplace. As such, this study cannot be interpreted alone as a call for or against passage of a RTW law in Indiana. However, we can draw some conclusions from our reading of existing studies and the new analysis presented here.

Among these findings are: