Manufacturing Went South

By Alex Tabarrok.

"Excellent piece by Gary Winslett in the Washington Post. As I pointed out in my piece on Manufacturing and Trade, the US is a manufacturing powerhouse. So why did the rust belt rust? Because manufacturing went South.

The Rust Belt’s manufacturing decline isn’t primarily about jobs going to Mexico. It’s about jobs going to Alabama, South Carolina, Georgia and Tennessee…In 1970, the Rust Belt was responsible for nearly half of all manufacturing exports while the South produced less than a quarter. Today, the roles are reversed, it is the Rust Belt that hosts less than one-fourth of all manufactured exports and the South that exports twice what the Rust Belt does.

Why the move? Better policies:

Economic research suggests that labor conflict drove much of the decline of the Rust Belt. Right-to-work laws in the South, by contrast, created more operational flexibility and attracted capital. The average unionization rate in the Rust Belt is 13.3 percent; in the South, it’s 4.3 percent. Southern states’ political leaders are quite open about how they see right-to-work as foundational to their competitiveness.

But that’s far from the only factor. The South offers cheaper electricity, a critical input for energy-intensive manufacturing. Ten states in the South have industrial electricity rates under 8 cents per kilowatt-hour; zero states in the Rust Belt do. Ohio has some of the country’s most restrictive wind-energy setback regulations. You know who doesn’t? Texas.

Despite the economic growth, Southern states have built so much housing that they kept costs from becoming unaffordable. Last year, both North Carolina and South Carolina each built more than four times as much new housing per capita as Massachusetts, according to U.S. census data. Florida, Georgia, Texas, Tennessee, South Carolina and North Carolina, all built more housing per capita than all of Illinois, Ohio, Michigan, Pennsylvania, California, New York and Massachusetts. That is not just a 2024 dynamic. That is true for every single year going all the way back to 1993. Comparatively low-cost housing makes it easier to attract and retain workers, which further attracts capital, which adds yet more investment and jobs, and the virtuous cycle spins upward.

…Immigration helps a lot, as well. More immigrants live in the South than any other region of the country. The region with the fewest immigrants? The Midwest. Immigrants promote growth, makes the workforce more robust, and create the goods and services that support manufacturing.

Right-to-work laws, cheap energy, affordable housing, low-cost land, fast permitting, low taxes, immigration. That’s a powerful combination…

Neither party wants to face these realities. The Republicans are mired in victimology and don’t see that the South’s success is built on exporting and immigration, both of which they are cutting. The Democrats don’t want to acknowledge right to work laws, cheap energy and low taxes.

Both parties prefer simple villains, whether it’s China or greedy corporations. But what’s needed isn’t more warm fuzzies about the way things used to be or globalization scapegoating. It is a clear-eyed approach that understands why companies choose Alabama over Ohio and that embraces the choices made by Southern states. That means leaning into globalization, right-to-work, all-of-the-above energy policy, permitting reform, immigration and low taxes. America’s economic future depends on embracing this reality rather than in indulging in turn-back-the-clock fictions."

Welcome to Indiana, a Right-to-Work State

Since the law was enacted in 2012, the state has gained jobs from nearby union-friendly Ohio

By Todd Nesbit and Michael LaFaive. Excerpts:

"We found that states with right-to-work protections have a higher employment share in certain industries, such as manufacturing and construction, as a percentage of total private employment. Notably, states that have enacted these laws since 2000 have a 20.7% higher manufacturing share than they otherwise would without a right-to-work law."

"we thought evidence of the laws’ impact might first turn up in border counties and in more heavily unionized industries"

"Manufacturing jobs seem to be traveling from non-right-to-work states to those that have adopted those worker protections. In cases where manufacturing employment was unchanged in a region containing states with and without right-to-work laws, the share of it in right-to-work states seems to have increased at the expense of adjacent states without right-to-work laws."

"We found that manufacturing employment as a percentage of total private employment was more than 27% higher than it would have been absent the law."

"Construction, utility and information sectors also showed positive gains as a share of total employment in right-to-work states. In construction, gains from right-to-work protections were largest (14.2%) in states that adopted such a law before 2000 rather than afterward, but in either case they were still higher than in non-right-to-work border counties. Among post-2000-adoption states, bordering counties in non-right-to-work states suffered an 8.7% drop in construction employment as a share of total private employment. (We split our analysis into two time periods because there was a pause in right-to-work adoptions before 2000.)

We recognize that these laws aren’t the only variable affecting changes in employment shares across industries. Our study, however, includes a set of controls designed to isolate the laws’ impact.

Our study indicates that right to work has broad benefits, and states are harming themselves by not adopting these laws."

Jobs recovery far more rapid in right-to-work states

By Mark Mix. 

"As the nation strives to get back to normal after the steep COVID-19 recession, it is obvious some states have much further to go than others.

Recently updated data from the Department of Commerce and the Department of Labor show that from 2010 to 2020, "right-to-work" states outpaced forced-unionism states in job growth by nearly 2 to 1 — and they are now poised to get back much sooner to their pre-pandemic job numbers than forced-unionism states. The current trend shows right-to-work states will surge even further ahead over the next decade.

Last fall, the Commerce Department released for the first time annual employment numbers for 2020 in the 50 states, as well as revised data for earlier years. The updated data show that, from 2010 to 2020, the 22 states that had right-to-work laws banning forced union dues and fees as a job condition on the books for the entire decade saw an 18% increase in their aggregate private-sector employment. Meanwhile, private-sector employment in the 23 states that have forced unionism grew by barely more than half as much.

The six top-ranking states over the decade, enjoying employment gains of between 20.8% and 31.3%, are all right-to-work.

Jobs in right-to-work states are typically high-quality. National Institute for Labor Relations Research analyses of Commerce Department data show real per-employee compensation in right-to-work states is consistently higher than in forced-unionism states.

After adjusting for regional cost-of-living differences with indices calculated by the Missouri Economic Research and Information Center, a state government agency, in 2020, private-sector employees earned over $800 more compensation per person in right-to-work states than in forced-unionism states.

And the right-to-work employment advantage has been especially wide since COVID-19 emerged, as the Labor Department’s household survey data clearly show. The most recent available monthly household survey data, going up through December 2021, indicate that total employment in forced-unionism states was 3.6% below its pre-COVID-19 level in February 2020. The distance the 27 current right-to-work states had to go to get back to their pre-COVID-19 level was less than one-quarter as great. Obviously, their complete jobs recovery will come far sooner than in forced-unionism states as a group.

The latest government data simply confirm what right-to-work supporters have been saying for many years: In states where workers are forced to pay tribute to union bosses as a condition of employment, Big Labor’s inordinate economic power results in slower job growth when times are good and greater job destruction when recession strikes.

The detrimental impact of forced unionism is clear. The wasteful work rules, job featherbedding, and union-label “hate-the-boss” propaganda foisted on employees without right-to-work protections are a recipe for long-term economic disaster.

America's workers are the most productive in the world, and there is no doubt our country will come roaring back from the COVID-19 recession. Unfortunately, in forced-unionism states, the “roar” may be more of a whisper.

Today, America’s front-line private-sector employees in 23 states are potentially at risk of being fired for refusal to bankroll a union they don’t want and never asked for. Unless right-to-work protections are extended to these employees, they will continue to be left behind as their counterparts in the now 27 right-to-work states enjoy the full benefits of a strong and recovering economy.

This is just one of several reasons why workers in every state should enjoy the freedom and opportunity of right-to-work protections.

Fortunately, because federal labor law is the source of private-sector forced union dues and fees, Congress has the authority and the responsibility to fix the problem. To ensure post-COVID-19 recovery for employees, Congress should pass the National Right to Work Act.

This landmark legislation would protect private-sector employees in all 50 states from being compelled to bankroll a union or be fired simply by repealing all the current provisions in federal labor law that authorize forced union dues and fees.

Mark Mix is the president of the National Right to Work Committee."

States with right-to-work laws and no income taxes grew fastest in the Obama years

By Michael Barone.

"One highlight of the Christmas holiday season for me is the Census Bureau‘s release of its estimated population figures, as of July 1, for the 50 states and the District of Columbia.

It’s always interesting to see which states have grown the most in the past year: for 2015-16 the fastest growers were Nevada and Utah at 2 percent and Florida, Idaho and Washington at 1.8 percent. It’s also interesting that an unusually large number — eight — of the states are estimated to have lost population in 2015-16: Connecticut, Illinois, Mississippi, New York, Pennsylvania, Vermont and Wyoming. In percentage terms, the biggest loser was Illinois, the home state of the outgoing president. Sounds like there’s some column material there.

Public policies can make a difference in whether states grow — or, like Illinois, decline. You can see how by aggregating the population data for states according to whether they have state income taxes and whether they have right-to-work laws. The following tables show the populations of such states in the 2010 Census and the 2016 Census estimates, together with the population increases in numbers and percentage.


Clearly states without an income tax and states with a right-to-work law have been growing more rapidly than those with income taxes and without right-to-work laws. Fully 40 percent of the nation’s population growth occurred in the nine states with no income taxes and 64 percent of the nation’s population growth occurred in the 26 states with right-to-work laws.

The growth in no-income-tax and right-to-work states was fueled largely by net domestic migration rather than international migration, according to the 2016 Census estimates. The following tables show the numbers for the 2010-16 period.


More than 2 million people moved within the country to no-income-tax and right-to-work states from other states. States with no income taxes attracted significantly more Americans than immigrants; states with right-to-work laws attracted almost exactly the same number of natives and immigrants.
Immigrants were less likely to go to such states: 75 percent went to states with income taxes and 60 percent to states without right-to-work laws. This makes a certain sense: immigrants are less likely than natives to pay income taxes (because those with low incomes usually pay little or none), and immigrants are less likely to be subject to paying union dues (since most union members are public employees and immigrants tend not to be eligible for or to seek public sector jobs).

The bottom line: State income taxes tend to hurt growth and right-to-work laws tend to promote it."