How Right-to-Work Laws Lead to More Jobs: Echoes

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By Amity Shlaes and Ilan Kolet

Earlier this week, we argued that right-to-work laws keep unemployment lower. This chart bears out that assertion: right-to-work states have for many years performed better on this measure than non-right-to-work states. That's because although less regulation makes it easier for employers to fire their workers, it also makes it easier for them to hire.

A right-to-work law suggests to business owners that a state's legislature, and the local culture, will back them up in labor disputes. It also makes employers more willing to hire workers if they know they can adjust quickly to changed economic circumstances, without worrying about overbearing regulation or heavy-handed union intrusions when they need to cut back. In the end, that will make businesses more flexible, productive and profitable. And nothing encourages hiring like profitability.

A test of Amity's proposition is hereby offered: Come back in 18 months, and let's see if states with less labor regulation have created more jobs.

(Amity Shlaes, a Bloomberg View columnist and a senior fellow in economic history at the Council on Foreign Relations, oversees the Echoes blog. The opinions expressed are her own. Ilan Kolet, who created this graphic, is a data editor at Bloomberg News.)

-0- Sep/02/2011 17:46 GMT