Richard Vedder and Jonathan Robe - An Interstate Analysis of Right to Work Laws

CHART 4. GROWTH IN REAL PER CAPITA INCOME, 1977–2012
70%
65%
60%
55%
50%
45%
40%
Non-RTW
United States
RTW States
Source: Bureau of Economic Analysis, authors’ calculations.
percent—indicating that inflation-adjusted total
personal income in those states was about 2.8
times higher in 2012 than in 1977. Conversely,
non-RTW states saw below average growth of
99 percent, meaning that real total personal income
did not quite double in those states during
this same period.
Population growth is part of the driving
force behind total growth in real personal income.
Right to work states have experienced
above-average population growth during
this period, which would explain part of the
above-average growth in real personal incomes
shown in Chart 3. Perhaps a better way to measure
economic growth is to measure the growth
in per capita income, which allows us to examine
how the average individual’s personal
income level changes over time. Chart 4 reports
our results after adjusting for changes in population
size.
Even after controlling for population growth,
growth in real per capita incomes in RTW states
is substantially higher than both the national
average and non-RTW states. The real income
for the average person in a RTW state was 65
percent higher in 2012 than it was in 1977,
while for non-RTW states, it was only 50 percent
higher.
Regression Analysis
Although Chart 4 suggests that there is an
important and positive relationship between
RTW laws and economic growth—that is, states
with RTW laws have experienced above-average
economic growth while states without such
laws have seen below-average growth—it does
not control for other factors that may have affected
economic growth in the various states
14 An Interstate Analysis of Right to Work Laws