Right to Work Claims Not Supported by Job Evidence in Warren County
By Jason Bailey
Kentucky Center for Economic Progress
Warren County, Kentucky passed a local right to work ordinance in December 2014. At the time, proponents argued the policy would result in dramatic economic improvements in the local economy. To date, there is not strong evidence that such improvements have occurred.
No Accelerated Drop in Unemployment Rate
The unemployment rate in Warren County was 4.6 percent in September 2014, before the ordinance was passed. In September 2017, the most recent month for which data is available, the unemployment rate had dropped to only 4.0 percent, a 0.6 percentage point decline in 3 years. That is a smaller decrease in unemployment over that 3 year period than Warren County experienced in the 3 years before the local right to work ordinance went into effect. Over that time period...the unemployment rate declined 3.1 percentage points from 7.7 percent to 4.6 percent.[1]
A similar pattern can be seen by looking at the unemployment rate in the Bowling Green Metropolitan Statistical Area...Much of the improvement in the metro unemployment rate happened before the right to work ordinance went into effect. Since then, the metro area unemployment rate has improved only slightly.
Job Announcements Not Driven By New Firms, Fall Short of Claims
Since three years is a limited time frame in which to analyze the effects of a policy in terms of actual jobs created, we can also examine potential impacts by looking at planned job announcements. That data is tracked by the state’s Cabinet for Economic Development. Since December 19, 2014, when the ordinance passed, 34 manufacturing firms have announced expansions or locations in Warren County. But...the overwhelming percentage of those job announcements have been expansions of existing companies, not new locations. Approximately 76 percent of the announcements, 79 percent of the jobs and 92 percent of the new investment come from expansions of existing firms and not new firms choosing to locate in the county.[2]
In April of 2015, Warren County Judge Executive Mike Buchanan stated in an affidavit that “since the passage of the Right to Work ordinance, Warren County has been placed on site selection lists for more than 30 projects, worth more than $300 million in capital investment in our community and more than 3,000 jobs.”[3] But the actual new locations announced over the last three years by the Cabinet total only 8 projects with $148 million in capital investment and 461 to 464 jobs. The latter represent less than one percent of jobs in the county.
Results So Far in Warren County Mirror What Research Suggests
The lack of robust economic results so far in Warren County should be expected given the academic research on the role of right to work laws in job creation.
That research does not find a statistically significant relationship between right to work laws and employment growth. A study of Oklahoma since it became a right to work state in 2001 found no increase in jobs or manufacturing employment from the change after controlling for other factors. Similarly, a 2008 study by the Center for Business and Economic Research at the University of Kentucky did not find a positive relationship between state economic growth and right to work status. Studies have found, however, that right to work is associated with lower wages.[4]
Many factors other than right to work drive economic and job growth in a community, including the state of the macroeconomy, the industry mix within a community, skills of the workforce, quality of the infrastructure, location and quality of life.
[1] Bureau of Labor Statistics, Local Area Unemployment Statistics. September is used because it is the latest month available and county-level unemployment data is not seasonally adjusted, so must be compared year to year using the same month. For the Bowling Green Metropolitan Area, data is available on a seasonally adjusted basis and so can be compared across all months.
[2] Cabinet for Economic Development, Warren County Community Profile, Business and Industry, http://www.thinkkentucky.com/cmnty/BusInd.aspx?cw=067.
[3] Affidavit of Judge Executive Mike Buchanon, United Automobile, Aerospace and Agricultural Implement Workers of America Local 3047, et al., v Hardin County, Kentucky, et al., April 17, 2015.
[4] Research reviewed in Anna Baumann, “What the Research Says About “Right to Work” Laws,” Kentucky Center for Economic Policy, April 15, 2015, https://kypolicy.org/what-the-research-says-about-right-to-work-laws/. Gordon Lafer and Sylvia Allegretto, “Does “Right-to-Work’ Create Jobs? Answers from Oklahoma,” Economic Policy Institute, February 28, 2011, http://www.epi.org/files/page/-/BriefingPaper300.pdf. Christopher Jepsen, Kenneth Sanford and Kenneth Troske, “Economic Growth in Kentucky; Why Does Kentucky Lag Behind the Rest of the South?” Center for Business and Economic Research, Gatton College of Business and Economics, University of Kentucky, January 2008, https://uknowledge.uky.edu/cber_researchreports/14/. Elise Gould and Will Kimball, “’Right-to-Work’ States Still Have Lower Wages,” Economic Policy Institute, April 22, 2015, http://www.epi.org/publication/right-to-work-states-have-lower-wages/.