Ball State University economics professor Michael Hicks' research on Right-to-Work states from 1929 to 2005 found "no statistically significant differences," either posititive or negative, "between RTW states and non-RTW states in either the industrial composition of their economies or their income from manufacturing." In comparing the recession experience of Indiana and Michigan, and looking at Illinois and Ohio as well, he found something far more significant to explain why Indiana fared so much better in the downturn -- our much lower rate of public indebtedness:
When businesses see big long-term unfunded liabilities for bonds and public employee pensions," Hicks said, "they know that one of two things will happen -- public services will be slashed or taxes will rise in the future to pay for those promises."
As to why Michigan's jobless rate has closed the gap with Indiana these past two years, Hicks offered two reasons. One is an improving long-term debt outlook because of changes pushed by Gov. Rick Snyder, including a $5-billion reduction in future retiree health-care liabilities. The other is that Michigan's labor pool has continued to shrink -- declining by 160,000 since 2009 -- while Indiana's has grown by 48,000 in the same period.
RTW is one of those issues that helps fuel the partisan divide because both sides feel so passionate about it. But it's also something for which you can get pretty creative in the use of statistics to prove just about anything you want to. It's reassuring to see some evidence that being prudent and restrained in spending is as important as some of us think it is.
