The Taft-Hartley Act, passed by the United States Congress in 1947, gave states the power to enact “right-to-work” legislation that prohibits union shop agreements. According to such an agreement, a labor union negotiates wages and working conditions for all workers in a business, and all workers are required to belong to the union.
Since 1947, 20 states have adopted right-to-work laws. Much of the literature concerning right-to-work laws implies that such legislation has not actually had a significant impact. This point of view, however, has not gone uncriticized. Thomas M. Carroll has proposed that the conclusions drawn by previous researchers are attributable to their myopic focus on the premise that, unless right-to-work laws significantly reduce union membership within a state, they have no effect.
Carroll argues that the right-to-work laws “do matter” in that such laws generate differences in real wages across states. Specifically, Carroll indicates that while right-to-work laws may not “destroy” unions by reducing the absolute number of unionized workers, they do impede the spread of unions and thereby reduce wages within right-to-work states.
Because the countervailing power of unions is weakened in right-to-work states, manufacturers and their suppliers can act collusively in competitive labor markets, thus lowering wages in the affected industries.
Such a finding has important implications regarding the demographics of employment and wages in right-to-work states. Specifically, if right-to-work laws lower wages by weakening union power, minority workers can be expected to suffer a relatively greater economic disadvantage in right-to-work states than in union shop states.
This is so because, contrary to what was once thought, unions tend to have a significant positive impact on the economic position of minority workers, especially Black workers, relative to White workers. Most studies concerned with the impact of unionism on the Black worker’s economic position relative to theWhite worker’s have concentrated on the changes in Black wages due to union membership.
That is, they have concentrated on union versus nonunion wage differentials within certain occupational groups. In a pioneering study, however, Ashenfelter finds that these studies overlook an important fact: although craft unionism increases the differential between the wages of White workers and Black workers due to the traditional exclusion of minority workers from unions in the craft sectors of the labor market, strong positive wage gains are made by Black workers within industrial unions.
In fact, Ashenfelter estimates that industrial unionism decreases the differential between the wages of Black workers and White workers by about 3 percent. If state right-to-work laws weaken the economic power of unions to raise wages, Black workers will experience a disproportionate decline in their relative wage positions. Black workers in right-to-work states would therefore experience a decline in their relative economic positions unless there is strong economic growth in right-to-work states, creating labor shortages and thereby driving up wages.