Is Right to Work Working?

By State Sen. Jim Banks (R-Columbia City)

This past legislative session, the Indiana General Assembly debated House Enrolled Act 1001, often referred to as “ensuring workplace freedom” or, more informally, the “Right to Work” bill. While some lawmakers said this measure would create jobs in Indiana, I was hesitant. The government doesn’t create jobs; the private sector does.

For me, Right to Work was never about job creation anyway. It was about freedom of association. Even though I grew up in a staunch union-supporting family, I recognized that Hoosiers deserved the liberty to choose whether a union was right for them.

So as the debate continued on the Senate floor, I was skeptical as to whether Right to Work would actually create jobs as some legislators promised.

Boy, was I wrong!

With our low tax rates and AAA credit rating, Indiana already stood out for its fiscal responsibility. In 2011, we were recognized as Best in the Midwest in Area Development magazine’s “Top States for Doing Business.”

When the General Assembly made Indiana the 23rd “Right to Work” state, they went one step further in encouraging job growth and economic investment. Although this measure was met with clashing viewpoints, evidence shows Right to Work is already benefitting the Hoosier state.

A Right to Work law prevents any worker from being required to join or financially support a union in order to get or keep a job. This does not restrict any worker’s freedom to join a union if he or she would like, but it gives workers a true choice in the matter by ending mandatory union participation.

Many employers ignore states without Right to Work status when they look for new areas to expand their businesses. In fact, since the passage of Indiana’s Right to Work law, 83 companies have already told the Indiana Economic Development Corporation that our move to become a Right to Work state will factor into their location decision for a current project. Of these, 66 companies have projects in the pipeline stage with the potential to create more than 8,200 jobs and invest approximately $1.8 billion in the coming years. Twenty-six companies have already selected Indiana for their developments, accounting for more than 3,100 estimated new jobs and more than $414 million in investment in our state.

Additionally, in the first four months following Right to Work’s passage, Indiana added 24,600 jobs – the third best in the nation, according to the Bureau of Labor Statistics. In that same four-month span in 2011, Indiana only added 3,000 jobs.

Other Right to Work states have seen similar results. The American Legislative Exchange Council reported Right to Work states experienced a job growth rate of 2.8 percent from 2001 to 2010. Non-Right to Work states had a negative growth rate: -1.29 percent. Furthermore, Right to Work states also had a stronger personal income growth rate: 50 percent, compared to 38.8 percent for non-Right to Work states.

While it will be some time before we see the long-term effects of Right to Work, in the short-run, Indiana has benefitted greatly from this measure. In the upcoming legislative session, the General Assembly will consider a variety of proposals to keep Indiana moving forward economically. It is my goal to continue promoting new laws that support economic development without burdening Indiana taxpayers.

This letter was written on October 3, 2012.