Firms Prefer to Locate on the Right-to-Work Side of a State Border

Moneybox
A blog about business and economics.
Dec. 12 2012 5:23 PM

Firms Prefer to Locate on the Right-to-Work Side of a State Border

The experience of American history since 1947 suggests that a country can in fact endure half "right-to-work" and half "unions can bargain for whatever terms they can get employers to agree to" but there is reason to believe that ultimately one model or the other has to prevail. Matthew Kahn and Erin Mansur, for example, have pretty compelling research showing that when you look at the boundary between two states with different rules in this regard that firms tend to cluster jobs on the union-hostile side of the border.

So the fact that Michigan has gone right-to-work is not moral encouragement to the Wisconsin and Ohio Republican parties to do likewise, it strengthens the case on the merits for anti-union action. If there were no right-to-work states, no state could systematically lose out on job opportunities as a result of having stronger labor unions. The only question would be whether the unions create some kind of systematic labor market rigidity. But in the actual divided United States of America, even if there are no such rigidities the mere fact that capital prefers to flow to jurisdictions with more capital-friendly policies means that such policies tend to take on their own momentum.

Advertisement

The flipside is that with labor unions more and more concentrated in the public sector, I'm not sure this is nearly as big a deal in practice as it might be in theory. Obviously a public school or a fire department or a DMV isn't going to move across state lines to take advantage of the cheap labor.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

Republicans Want the Government to Listen to the American Public on Ebola. That’s a Horrible Idea.

The Most Ingenious Teaching Device Ever Invented

Tom Hanks Has a Short Story in the New Yorker. It’s Not Good.

Brow Beat

Marvel’s Civil War Is a Far-Right Paranoid Fantasy

It’s also a mess. Can the movies do better?

Watching Netflix in Bed. Hanging Bananas. Is There Anything These Hooks Can’t Solve?

The Procedural Rule That Could Prevent Gay Marriage From Reaching SCOTUS Again

  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Future Tense
Oct. 20 2014 4:59 PM Canadian Town Cancels Outdoor Halloween Because Polar Bears
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.