Dear Population Council: There’s a Labor Elephant in the Room

by | Dec 26, 2023 | Opinion

By Michael D. LaFaive

Gov. Gretchen Whitmer’s Growing Michigan Together Council released its final report last week with recommendations purportedly designed to help grow Michigan’s population. One thing the report doesn’t mention is how the governor’s pro-union actions this year make Michigan a less welcoming place for people who might consider moving in, as well as a harder place for people who already live here.

There are some demonstrably bad ideas in the council’s report. They should not be adopted because they may do more harm than good, especially if funded with large tax hikes. What was left unsaid, however, is the damage to Michigan’s population potential that was already done this year by the legislature and governor.

Consider just one bad policy choice ignored by the council in its report. The repeal of Michigan’s 10-year-old right-to-work law. A right-to-work state does not compel workers to pay a union as a condition of employment. From 2010 to 2020, 4.5 million Americans on net moved from states without right-to-work protections to right-to-work states, according to the U.S. Census Bureau. Population grew 11.2% in right-to-work states during that time frame, versus 3.6% in non-right-to-work states.

These are unlikely to be simple coincidences. Scholars have repeatedly found links between the presence of a right-to-work law and inbound interstate migration among other positive consequences. These studies attempt to control for variables that may also explain interstate migration such as climate, tax burdens, economic growth and more.

Economist Richard Vedder’s 2010 Cato Journal article “Right-to-Work Laws: Liberty, Prosperity and Quality of Life” found that “Without exception, in all the estimations, a statistically significant positive relationship…was observed between the presence of right-to-work laws and net migration.” A right-to-work law is not the only factor, but it is a vital one.

The Mackinac Center’s 2013 study of right-to-work spans 64 years of data and likewise controls for variables that might otherwise impact estimates. That study found that over more than six decades the presence of a right-to-work law lifted states’ average annual population growth by 0.5%.

A study published in 2018 by Harvard scholars found that the presence of a right-to-work law also increased population at the county level. The authors report that between 1940 and 2010 right-to-work “caused a 19.1% increase in population of RTW counties relative to their non-RTW neighbors.”

It’s worth noting that lawmakers also reinstituted the state’s demonstrably expensive prevailing wage law and passed other laws to make the state’s labor market less flexible and more expensive. The state effectively mandates union scale wages on government funded projects such as road construction.

This interference in labor markets raises the cost of road construction in Michigan by “between 8.5% and 14.3% in quality-adjusted road miles. In Michigan in 2018 that would translate to between $5,900 and $9,200 in additional costs per mile,” according to a recent study. Lawmakers have also passed and proposed more harmful labor laws in 2023, but those go beyond the scope of this article.

A more flexible and free labor market in general is important to population growth, even when research specifically excludes a right-to-work variable from its equation. The Fraser Institute of Canada annually publishes the Economic Freedom of North America index which uses as a proxy for liberty data in three major categories: taxes, government spending and labor market regulation. The index ranks all 50 states from these results.

Labor market regulation is the Fraser index category that drives the most results. One study that zeroed in on the impact of the labor rankings found that a state’s labor freedom score increase of one percentage point was associated with “a 2.8% increase in the gross in-migration rate.”

If Whitmer and Democratic legislative leaders are concerned with population and economic growth, why did they repeal a law with so much demonstrable evidence in its favor? Why interfere in other ways that have been shown to slow both economic and population growth? Why practically ignore what academics say?

The population council’s report does not mention the power of right-to-work laws (a glaring omission). This should be a red flag to those genuinely interested in making Michigan more attractive to residents and potential newcomers alike.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

NEXT: Wisconsin Ranks 14th in Attempt to Foretell Social Mobility

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