Does Requiring Union Dues Raise Worker Well Being?

Does Requiring Union Dues Raise Worker Well Being?

The United States Supreme court is poised to decide in Janus v. AFSCME on the constitutionality of requiring “agency fees” be paid to public-sector unions by nonunion members.

Unions argue that collective bargaining efforts benefit all workers, so requiring all workers to pay fees solves the canonical “free rider problem.” On the other hand, opponents claim that requiring these dues is a form of forced political speech. Many do not actually believe in the activities unions engage in, at least when it comes to politics. As Mark Janus succinctly put it in the Chicago Tribune: “The union voice is not my voice … The union’s fight is not my fight. But a piece of my paycheck every week still goes to the union.”

Many commentators overlook the fact that over half the states have already passed “right-to-work” laws, which give individuals the right to choose whether to pay union dues. These states provide a natural laboratory to estimate quantitatively the effects of right-to-work laws on worker well-being. In a paper, I use Gallup’s U.S. Daily Poll — which tracks responses among 1,000 individuals per day on a range of issues since 2008, including well-being and economic sentiment — to compare individual well-being and economic sentiment before and after the adoption of right-to-work laws.

I found that adoption of adoption of right to work laws is associated with increases in both life satisfaction and economic sentiment. In fact, the increase in life satisfaction is 14.2 percent of that experienced with the attainment of a college degree — remarkable given that college attainment is associated with a wide array of other benefits, like higher earnings potential.

Of course, there are several potential statistical concerns, which I explore in the full paper. For example, if states that adopt right-to-work laws are on an upward trajectory, life satisfaction and economic sentiment would increase regardless of whether these laws were adopted. But, I found that the effects of right to work laws are concentrated among union workers. If states adopting these laws were simply on an upward trajectory, then non-union workers should also report increased life satisfaction and economic sentiment, which is not the case.

Another possible explanation for my results is that the composition of individuals in the states that adopt right-to-work laws is changing and even driving the adoption of the laws. For example, workers new to the state might have different political preferences. The effects are present, however, even when comparing individuals on opposite sides of the same state border (e.g., in neighboring counties). If the composition were changing overall within a state, these counties along the border would be the least likely to change since they are closest together.

Why does the adoption of right to work laws have an effect opposite to the one unions predict? Using additional data from Gallup on self-reported measures of workplace practices, I found that that the adoption of RTW laws is associated with a nearly 4 percent increase in the probability that employees report that their boss is treating them well and creating an open and trusting work environment. These results suggest that firms respond to the adoption of right-to-work laws by altering the way they interact with their employees. If unions foster an adversarial relationship between employees and employers, then removing these laws creates the conditions for more collaborative workplace cultures.

While in earlier decades unions might have had a genuine purpose and contribution to make, these results suggest that most individuals today do not value the potential services that unions provide through collective bargaining. That’s not to say unions don’t have a role to play in the future, but it does suggest that they need to be transformed in order to truly help workers in a fast-paced, 21st-century economy.

Christos Makridis is finishing his Ph.D. in management science & engineering and Ph.D. (minor) in economics at Stanford University. He also serves as a Digital Fellow at the MIT Sloan Initiative on the Digital Economy and as a non-resident fellow at the Harvard Kennedy School of Government Cyber Security Initiative.

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