Poster #104 - Right-to-Work Laws and Worker Compensation

• In Event: Saturday Poster Luncheon

Abstract

Fringe benefits make up about 30 percent of total worker compensation, yet fewer private-sector employers are offering these benefits, even as more states have adopted Right-to-Work laws in the past decade. While previous research has examined how RTW laws affect union membership and wages, little is known about their impact on total worker compensation, including fringe benefits. This paper addresses that gap by estimating the effects of RTW laws on wages, employer-sponsored health insurance, pension plans, unemployment, and union membership.Estimating the effects of RTW laws is challenging because adoption often coincides with changes in economic conditions and union sentiment. To address this, I use variation in the timing of RTW law adoption across states and estimate a difference-in-differences model to identify the causal effects of these policies. The analysis uses data from 1990 to 2019, with plans to extend the sample through 2025.The results show that RTW laws are associated with lower unemployment on average in the private sector and that union membership declines several years after adoption. The findings also reveal important differences across industries and firm sizes. In highly unionized industries, RTW laws reduce both wages and unemployment, with wage declines concentrated in construction, manufacturing, mining, and healthcare. Workers in mid-sized firms with fewer than 500 employees also experience wage declines following RTW adoption. State-level estimates further suggest that wages and unemployment decline in Indiana and Wisconsin after these laws are enacted.These findings contribute to the literature by providing new evidence on how RTW laws affect total worker compensation and by showing that their impacts vary across workers, industries, and states. This broader perspective helps improve understanding of the trade-offs associated with RTW policies.

Note that I plan to update the time period to incorporate data through 2025 and additional variation from Kentucky, which adopted a RTW law in 2017.

Author

• Mary Penn, Independent
  Presenting Author