Academic journal article The American Journal of Economics and Sociology

Union Influence and Right-to-Work Law Passage: Evidence from Hazard Model Estimates

Academic journal article The American Journal of Economics and Sociology

Union Influence and Right-to-Work Law Passage: Evidence from Hazard Model Estimates

Article excerpt

I

Introduction

A PRIMARY, AND OFTEN HOTLY DEBATED TOPIC in both labor economics and urban economics has been state labor laws--specifically, the so-called "right-to-work laws." In states without right-to-work laws, unions can negotiate bargains and settlements that require new hires and previous hires to join the union as dues-paying members. Right-to-work laws prohibit such requirements.

From an urban economics perspective, Cebula (1982) provides a simple statistical model based on the theory that, ceteris paribus, right-to-work laws would lead to a decline in union membership. This, in turn, would lead to lower wages which would eventually lower production costs for consumer durables, non-durables, and services. Here, a decline in prices naturally evolves from lower costs in a price theory framework, such that one (as Cebula does) expects lower cost-of-living figures in states with right-to-work laws. Cebula (1982, 195) finds significant regressors in a simple model which point out that right-to-work laws lower (on average) the cost-of-living by $1,300 per annum. Cebula builds these results into a more comprehensive model, and the robustness of the estimates is once again confirmed (Cebula, 1983). However, his model is questioned by Ostrosky (1986) and Reynolds and Edwards (1986), to which Cebula (1986) answers with a resilient model more fully specified.

From a labor economics perspective, these urban models leave many lacunae. For instance, do right-to-work laws lower unionization activity? Does lower unionization activity allow for the passage of right-to-work laws? The labor economics literature has provided much thought and writing in this area. To examine the first question, Ichniowski and Zax (1991) provided a theoretical discussion of the free rider effect, where the necessity of union membership declines with the passage of right-to-work laws. They examine the unionization of local governments and point out the decline in unions due to right-to-work laws. Because of this legislation, employees are no longer obligated to union membership, and forgo paying union dues. They point out that right-to-work laws lower the probability that both bargaining unions, and to a lesser degree, nonbargaining unions will form (due to the free rider effect). Free-riding on the power of unions becomes impossible as unionization declines.

Canak and Miller (1990), using data from the state of Louisiana, provided a historical background of state passage of right-to-work laws in the 1940s, as well as described the events in the 1950s and 1960s which led many states to repeal these laws. They suggest that community involvement in Louisiana (among workers and management) during the campaign period, as well as inter-union conflicts (along with declining unionism), allowed for the passage of the right-to-work laws.

With this evidence, the research is inconclusive on the roles of unions in economic modeling. Does union "decline" allow for the passage of right-to-work laws? Alternatively, do right-to-work laws initiate a decline in union membership? The possibility of both events simultaneously occurring also exists. Innovative techniques in statistical analysis such as simultaneous modeling allow for an answer. Glenn and Ellwood (1987) develop a theoretical framework that allows for tests of simultaneity. They examine "union organizing" (as opposed to "union stocks") as a dependent variable, which allows for both cross-sectional and cohort analysis. These researchers find that right-to-work laws have a sizable (and significant) effect on the decline of union organizing, and furthermore that this effect decays over time. Their results are robust, even when subjected to fixed-effects testing. Moore and Newman (1985), in a summary of the literature, point out there has been a considerable difference in the findings among these studies, depending on whether the study treats the presence/absence of right-to-work laws as exogenous or jointly endogenous with the extent of unionism in a state. …

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