This study examines the effects of worker choice laws in the US?commonly referred to as ?right to work? (RTW) policies?and applies the findings to British Columbia and to Ontario. RTW laws have been enacted by 24 US states; these laws prohibit collective bargaining agreements between employers and unions from forcing workers represented by a union to pay dues for its representation.
The scholarly literature generally finds that RTW laws reduce the percentage of workers covered by union contracts, and increase economic and employment growth. A new econometric analysis reported in this study finds that RTW laws in the US increase economic growth by about 1.8% and employment by about 1% in the states enacting such laws.
The scholarly literature also finds that RTW laws have the effect of increasing manufacturing employment and output. Oklahoma, which became a RTW state in 2001, shares a border with seven states, four of which adopted RTW laws earlier; the others are not RTW states. The data suggest that the faster manufacturing growth observed in Oklahoma after 2001 was due, to some substantial degree, to the adoption of a RTW policy.
A conservative application of the econometric findings reported here suggest that a RTW policy would increase manufacturing output in British Columbia and Ontario by about $200 million (0.2%) and $4.0 billion (0.5%), respectively. A conservative estimate is that a RTW policy would increase total economic output in British Columbia by $3.9 billion (about $844 per capita) and total employment by a bit less than 19,000. The respective figures for Ontario are $11.8 billion (about $874 per capita) and almost 57,000.
These predicted effects are not trivial, and the prospective benefits should engender a debate in Canada and in the provinces about the policy reforms needed to maintain and enhance competitive positions. A RTW law should be prominent among them.