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Ken Turchi
IU Maurer School of Law

Last modified: Tuesday, January 31, 2012

Right-to-work law not the best catalyst for economic growth: IU expert

Jan. 31, 2012

BLOOMINGTON, Ind. -- Right-to-work legislation is speeding its way through the Indiana General Assembly, and Gov. Mitch Daniels is expected to sign the law before Super Bowl Sunday. According to an Indiana University Maurer School of Law expert, however, the law is ill-advised and may backfire on the legislature.

"The evidence that right-to-work laws are good for the economy is far from settled," said Kenneth G. Dau-Schmidt. "In fact, the most reliable studies suggest quite the opposite."

Kenneth Dau-Schmidt

Kenneth G. Dau-Schmidt

Print-Quality Photo

Dau-Schmidt cited an Indiana Chamber of Commerce study asserting that economic growth is higher in right-to-work states and that average Hoosier income will increase nearly $12,000 per year if the law is enacted.

"The $12,000 figure is completely implausible and the assertion that economic growth is higher in right-to-work states is misleading because it relies on data from North Dakota, which has experienced unusually fast economic growth due to shale oil," he said. "If that state is removed from the equation, income growth has actually been higher in states without right-to-work laws. In addition, the two states with fastest economic growth -- Massachusetts and Connecticut -- are not right-to-work states. This is what happens when averages are used to prove a point."

Dau-Schmidt referred to studies from Ball State University, the University of Notre Dame and the Economic Policy Institute, all of which showed that right-to-work legislation has no effect on economic growth. "In fact," he said, "according to the Economic Policy Institute study, wages and benefits for both union and non-union workers are lower in right-to-work states than in states without right-to-work laws."

The bill pending before the General Assembly would make union security agreements illegal in Indiana, meaning that unions and employers could no longer agree that all employees either be union members or pay an agency fee to cover the costs of representing them. Under federal law, however, unions would still be required to represent any employee -- union member or not -- in an employment-related dispute.

"The bill essentially gives non-union workers something for nothing: union representation without having to join the union or pay for their representation," Dau-Schmidt explained. "The legislature would never expect a business to supply services without being paid. Why do they think this would work for unions?"

Dau-Schmidt is the Willard and Margaret Carr Professor of Labor and Employment Law at the IU Maurer School of Law. He is available to comment on this and other right-to-work legislation and can be reached at 812-855-0697 or