New Hampshire House Passes Right-to-Work

The Union Leader, New Hampshire’s largest newspaper, is reporting that the New Hampshire House of Representatives has just passed a right-to-work bill 221 to 131.  Currently, 22 states have right-to-work laws and none in New England so this is huge.

Richard Vedder, the Edwin and Ruth Kennedy Distinguished Professor of Economics at Ohio University, has an excellent article in the CATO Journal which describes the national movement of people and economic growth toward right-to-work states (pdf).  He concludes:

“The proportion of Americans living in right-to-work states has risen noticeably over the years, and only a small part of that is driven by new states adopting such laws.  People move in extraordinary numbers to right-to-work states from states where union pressure has prevented the adoption of such laws.  Moreover, the greater flexibility for workers and employers offered where right-to-work exists has contributed to higher rates of economic growth rates in the right-to-work environment.  Although the United States seems to have been in roughly a stable political equilibrium regarding these laws in recent decades, if the past trends toward the right-to-work population growing in a relative sense persists while union membership continues to fall as a proportion of the labor force, a threshold point should be passed where the political equilibrium should tip toward making right-to-work laws universal for the entire American population.”

Additionally, my own research on migration patterns in other states has shown this very pattern of people moving from non-right-to-work states to right-to-work states.  I have done studies in four states that are all non-right-to-work and have very high union membership rates (averaged between 1995 and 2007):  Illinois (7th), Minnesota (8th), Rhode Island (9th) and Connecticut (13th).

  1. In the Illinois migration study (pdf), folks moved to where union membership averaged 42.74 percent lower than in Illinois–to 10.3 percent of the labor force from 18 percent.
  2. In the Minnesota migration study (pdf), folks moved to where union membership averaged 49.99 percent lower than in Minnesota–to 9 percent of the labor force from 18 percent.
  3. In the Rhode Island migration study (pdf), folks moved to where union membership averaged 56.73 percent lower than in Rhode Island–to 7.5 percent of the labor force from 17.3 percent.
  4. In the Connecticut migration study, folks moved to where union membership averaged 50.63 percent lower than in Connecticut–to 8.2 percent of the labor force from 16.6 percent.

I’ve also done one study on the reverse in Oklahoma which recently became a right-to-work state in 2001.  In the Oklahoma migration study, folks moved from states to Oklahoma where union membership was 83.9 percent higher than in Oklahoma–to 7.8 percent from 14.3 percent.

While New Hampshire has been a net in-migrate state for many years, the evidence is clear that New Hampshire would be an even greater destination state if it were a right-to-work state.  Unfortunately, Gov. Lynch (D) has vowed to veto any right-to-work legislation.  While Republicans hold a supermajority in the both the House and Senate, the Union Leader article stated that “a few Republicans joined Democrats in opposing the bill . . .” which means over-riding a veto will be a tough challenge.  Stay tuned for more on this important economic debate.

The State of America’s Private Sector V

There is a lot of chatter on the internet about Amity’s article revolving around how comparing Maine and New Hampshire is bogus.  Well, after considering these arguments, I wonder how critics would respond to this comparison–New Hampshire versus Rhode Island.

It would seem based on all the arguments I’ve read that Rhode Island should, without a doubt, be the winner in the race for economic prosperity.  First, consider how they are equal:

  1. Their largest city (Manchester, NH versus Providence, RI) are nearly equidistant from Boston.
  2. As such, both equally benefit from the so-called “Boston Commuter” effect from a geographical perspective.
  3. Both have an Ivy League University (Dartmouth in NH and Brown in RI).
  4. Both are NOT right-to-work states.

Yet, on other points, Rhode Island is superior to New Hampshire according to the critics.

  1. Rhode Island is a small state (the smallest in the country) so transportation costs are minimized.
  2. Rhode Island’s coastline far exceeds New Hampshire’s (which has the smallest coastline of any state with oceanfront).
  3. Rhode Island is bordered on all sides by a wealthy state (MA is the 3rd highest and Connecticut is the highest).

The chart below shows the results of this horse-race.  Prior to RI’s enactment of the sales and corporate income tax in 1947, both RI’s private sector and per capita personal income were higher than NH’s by a comfortable margin.  After 1947, NH’s private sector decisively pulls away and the gap in per capita personal income beings to narrow.

Then the final nail in the coffin was driven in 1971 when Rhode Island enacted its individual income tax.  The gap between the two states private sector continued to widen, but, more importantly, per capita personal income in NH exceeds RI for the first time in 1978.  The gap has widened ever since with NH having, in 2009, the 8th highest per capita income while RI has the 16th.

So what advantage am I missing, other than a larger private sector, does NH hold over RI that explains this difference in economic performance?

New Hampshire versus Rhode Island Private Sector and Per Capita Personal Income