2012 Texas Economic
COMPETITIVENESS STUDY
An analysis of issues to advance Texas in a complex global economy
2012 Texas Economic
Competitiveness Study:
An analysis of issues to advance
Texas in a complex global
economy
Acknowledgements
The Michigan Chamber Foundation (MCF) would like to thank Northwood University for
agreeing to conduct the original study and assembling a first class team of researchers to bring
it to fruition. In particular, the MCF like to thank Northwood University President and CEO Dr.
Keith A. Pretty; Study Director, Dr. Timothy G. Nash, Vice President for Strategic and Corporate
Alliances and the David E. Fry Endowed Chair in Free Market Economics for shepherding the
project from inception to completion. The chamber would also like to thank the research team
led by Dr. Nash, which is a diverse and talented group of economists and public policy thinkers
from across Michigan and nationally. Dr. Debasish Chakraborty, Professor of Economics,
Central Michigan University; Dr. Richard Ebeling, Professor of Economics, Northwood
University; Dr. Adam Guerrero, Associate Professor of Economics, Northwood University; Dr.
John Grether, Professor of Economics, Northwood University; Dr. Adam Okulicz-Kozaryn,
Associate Professor of Public Policy, Rutgers University; Northwood University; Adam N.
Matzke, Economics and Finance graduate, Northwood University; Adam Pretty, Law student,
University of Notre Dame; and Charles Ruger, graduate student in Economics, University of
Detroit-Mercy.
Finally, we would like to thank Joseph T. Nash, Rita G. Nash, Jeffrey G. Phillips, Susan
Woodcock, John Young and Rochelle Zimmerman for their assistance with the chart
construction, editing, typing and researching of this project.
Northwood University would like to thank the Michigan Chamber Foundation (MCF) for
allowing the use of its data in the construction of the Texas Competitiveness Study. The
University would also like to recognize Dr. Kevin G. Fegan, President, Northwood University,
Texas Area; Mr. Evgeiny Gentchev, Associate Professor of International Business, Northwood
University and Ms. Sabine Adams, Associate Professor Finance, Northwood University, for their
leadership and contributions to the Texas Study.
About the Michigan Chamber Foundation
The Texas Economic Competitiveness Study is based on a study done for the Michigan Chamber
Foundation and is produced with the permission of the Michigan Chamber Foundation. The
Michigan Chamber Foundation was established as a non-profit supporting organization to the
Michigan Chamber of Commerce in 1985 for the following purposes:



To plan and conduct nonpartisan public education programs regarding free enterprise,
productivity and basic economic issues affecting the state of Michigan;
To establish and operate a leadership institute designed to provide promising future
leaders assessment of Michigan’s assets, challenges and opportunities to give
participants the background and network of contacts necessary to make a positive
impact on Michigan’s future;
To conduct nonpartisan research and distribute policy studies on issues facing Michigan
including, but not limited to taxation, government regulation, government spending,
health care and transportation.
Michigan Chamber Foundation Board of Directors
Chair:
Kelly Rossman-McKinney, Truscott Rossman
Vice Chair:
John Schreuder, First National Bank of Michigan
President:
Rich Studley, Michigan Chamber of Commerce
At-Large:
Gordon Kummer, Lloyd & Mabel Johnson Foundation
Steve Mitchell, Mitchell Research & Communications
Dan Ponder, Franco Public Relations Group
Jon Sorber, TWO MEN AND A TRUCK/INTERNATIONAL, INC.
Bill Woodbury, Auto-Owners Insurance
Executive Director:
Bob Thomas
Introduction
The following research and conclusions emanate from a series of meetings and discussions
between the study authors and members of the Michigan Chamber Foundation board and staff
and have been adapted for analysis of the Texas economy. This study was conceived and is
designed to take a careful and unbiased look at economic competitiveness in general and the
U.S. and Texas economies in detail.
The U.S., and therefore the Texas economy, is part of a highly complex global economy which
faces constant and often radical change. The study briefly outlines the current state of U.S.
competitiveness in the global economy and then focuses on Texas’s economic performance
relative to the other 49 U.S. states. The purpose of the study was to conduct a comprehensive
analysis of the Texas economy and evaluate its rank and performance across a number of
metrics including but not limited to Gross State Product (GSP) growth, tax policy, regulatory
policy, and cost of doing business.
This study also focuses on the issue of Right to Work legislation at both a theoretical and an
empirical level. The results are interesting to say the least. Although the topic is controversial
in some quarters, it deserves serious discussions at all levels of the decision making process.
After comparing Texas to many national norms, the same details were used to compare Texas’s
performance to Right to Work (RTW) states and Non-Right to Work (NRTW) states to see if
there might be significant differences relative to these metrics as well. The results are
interesting and unique and make a compelling case for bi-partisan discussion, action and
objective pro-business reforms in many states with Texas as a model.
The U.S. in a Complex Global Economy
Economists fundamentally agree about the source of economic growth. There are definite
reasons why some nations grow and others don't. Robert Barro (1991) in his seminal paper
“Economic Growth in a Cross Section of Countries” tried to answer that question. He studied
the key economic and political factors that determined 98 countries’ competitiveness that led
to economic growth and improved standards of living. It is clear from his studies and others
that economic growth is helped by investments in human capital, lower tax rate, less regulatory
burden on businesses and emphasis on the overall human development matrix. It is also clear
that the U.S. has been steadily falling behind in these critical investment areas, or at least
unable to keep up with the investments vis-à-vis many of its competitors In addition, the
federal government budget deficit and national debt have grown alarmingly high, and the
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financing of the deficit, along with additional post-recession banking regulation, has been
instrumental in decreasing the cost of capital while making it difficult for private businesses to
invest in critical areas. Many economists argue that these unprecedented increases in
government spending and new regulation have been the main reasons behind the relative
decline in American competitiveness. In the appendix of this paper tables and charts are
provided that highlight this decline in US competitiveness across a variety of factors.
It is important to note that the 20th century was clearly the “American Century.” The 1900s saw
the United States become the world’s largest, most productive and most competitive economy
while also becoming the world leader in invention and innovation. The U.S. was the envy of the
world, producing new technologies and abandoning old ones while successfully
commercializing the best at a rate the rest of the world could only dream of (see Exhibit 1).
While the American competitive free enterprise system produced individual giants like Ford,
GM, Standard Oil and U.S. Steel and billionaires named Rockefeller, Carnegie and Ford, the
educated middle class realized rapid income growth and soaring standards of living that was
the U.S. hallmark during this time (U.S. Department of Commerce, 2012).
U.S. economic performance was nothing short of exceptional during the 20th century driven by
creativity, invention and innovation. The U.S. became the world’s most entrepreneurial, most
educated and most competitive economy and remained that way throughout most of the
century. This creation of millions of jobs and newly founded businesses and industries,
combined with phenomenal economic performance allowed America to comfortably shoulder
the burden of World War I and II and to realize a 213 % increase in real disposable personal
income from $9,240 in 1950 to $28,899 in 2010 (U.S. Bureau of Economic Analysis, 2010).
Toward the end of the 20th century grave concerns were voiced as to whether or not the U.S.
could or would remain in its position of prominence atop the global economy. Income growth
and job growth began to slow toward the end of the 20th century and have continued to slow
into the 21st century (U.S. Department of Commerce, 2012). Simultaneously other countries
began to appear on the global economic stage as viable competitors to the United States. Over
the last decade or more, evidence of a decline in American competitiveness has continued to
mount. As an example, U.S. 15 year olds ranked just 25th in math among the 34 industrialized
countries that make up the Organization for Economic Cooperation and Development (OECD)
countries and scored in the middle in science and reading on the Program for International
Student Assessment (PISA) test given to students in more than 70 countries in 2009 as reported
in December, 2010. The test is given every three years with the Shanghai region of China
finishing number one among the 72 countries taking the exam (see Exhibit 2). In response to
this report, U.S. Secretary of Education Arne Duncan stated that “the brutal fact here is there
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are many countries that are far ahead of the U.S. and improving more rapidly than we are. This
should be a massive wake-up call to the entire country” (Bloomberg, 2010).
In addition, according to the Congressional Budget Office and the Heritage Foundation,
government at all levels in the United States consumed less than 8 % of GDP by expenditures in
1902 and today consumes more than 42 % (see Exhibit 3). We believe that 8 % government
expenditures as a percent of GDP is unrealistically low in today’s complex global economy; yet
we also believe that 42 % is excessively high, creating a crushing burden on business and
economic growth in the United States.
Additionally, The U.S. tax system is becoming more and more burdensome to U.S.
competitiveness relative to the rest of the world. According to the Tax Foundation, the U.S.
now has the highest corporate income tax rate in the industrialized world at 39.2 %, not
because the U.S. has raised taxes but rather because many of its competitors have lowered
their rates over the last decade (see Exhibit 4). The U.S. also has among the highest long-term
and integrated capital gains tax rates in the industrialized world at 19 % and 51 % respectively
(see Exhibit 5).
In reviewing the 16 key indicators (including the number of scientists and engineers, corporate
and government R&D, venture capital, productivity, trade performance and others) contained
in the July 2011 Atlantic Century (Atkinson, 2011) report on competitiveness, the results show
the U.S. ranked number four behind Singapore, Finland and Sweden.
While a fourth place ranking doesn’t appear to be too bad, additional studies and data sources
paint a picture of a less nimble and less competitive U.S. economy and business environment.
The 2012 Heritage Foundation/Wall Street Journal’s Index of Economic Freedom measures
political freedom, prosperity, and economic freedom across 10 metrics to gauge the economic
success of 184 countries around the world. In 1995 the U.S. was ranked 4th in the world on the
index, and in 2012 the U.S. dropped to 10th (see Exhibit 6). Another measure of economic
competitiveness is the highly regarded International Institute for Management Development’s
(IMD) Global Competitiveness Index, which consists of 323 variables and four sub-indices
(Economic Performance, Government Efficiency, Business Efficiency and Infrastructure) and
measures the competitiveness of nations by analyzing how they create a competitive business
environment. The U.S. has dropped from being ranked number one on the 1999-2000 index to
number five on the 2011-12 index behind Switzerland, Singapore, Sweden and Finland (see
Exhibit 7).
U.S. competitiveness is being adversely impacted by a number of factors, including a mounting
national debt which now stands at $16 trillion and is greater than 100% of projected 2012 GDP.
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The national debt of the United States took more than 205 years to reach the one trillion dollar
mark, and in roughly 30 years it increased 15 fold (see Exhibit 8). According to the U.S.
Department of the Treasury and the U.S. Congressional Budget Office (CBO), U.S. gross interest
rate payments on treasury debt securities in 2011 was $454 billion dollars (more than the total
GDP of some of the most advanced economies in the world). It is also important to note that
the debt was serviced at a historically low average interest rate of just 2.62 % (see Exhibit 9).
There is concern with the future burden of gross interest rate payments in the United States if
the economy recovers or if it enters an inflationary spiral; in either case, interest rates will rise
as will the cost of servicing the national debt.
Many believe that the solution to the U.S. deficit problem is simply to raise taxes, especially on
those in the top 1 % on personal income and on corporations. According to the Tax Foundation
in 2009 (the most recent tax data available), the top 1 % of income earners paid 36.7 % of total
U.S. personal income taxes while the top 10 % percent paid 70.5 % (Tax Foundation, 2012).
Additionally, in 2012 the U.S. gained the dubious distinction of having the highest corporate
income tax rate in the industrialized world, making the U.S. and the North American region less
competitive (see Exhibit 10).
Somewhere over the last one hundred years the United States as a country has lost sight of
what made it great. There is less understanding of the contributions of (a) economic and
political freedom and (b) entrepreneurship and investment to (c) business success,
infrastructure development and rising standards of living. Productivity and wealth generated
by a free and dynamic business sector allow for households to prosper and government to exist
and operate and play a vital role in the economy (see Exhibit 11). The mix of resource
allocation among households, businesses, and government needs to be closely reexamined as
government is consuming an ever-increasing share of U.S. GDP thus thwarting U.S.
competitiveness and growth.
Texas in a Changing U.S. Economy
The U.S. economy’s pace for invention, innovation and new business formation was staggering
throughout the 20th century, and Texas was at the epicenter of much of that growth. Texasbased companies like Exxon Mobil, Texas Instruments, Southwest Airlines, Neiman Marcus,
Conoco Phillips, Sysco, Halliburton, and Marathon Oil were complemented and supplemented
by thousands of small and medium-sized entrepreneurial organizations, making Texas a center
for business excellence (U.S. Department of Commerce Report, 2012). Further measure of
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Texas’s success is that 52 of the 2012 Fortune 500 largest companies are headquartered in the
state of Texas.
The following analysis will shed some light on the factors driving economic growth in Texas in
comparing Texas to numerous national averages, Right to Work (RTW) states and U.S. NonRight to Work (NRTW) states.
Population, Employment and GDP Growth in Texas and the United States
Texas’s U.S. population net migration from 2000-2010 was among the best in the United States
with a net gain of 868,292 people. Net migration is defined as the difference in people leaving
a state relative to people migrating to a state over a given period of time. The overall U.S.
population net migration for the same period was just under 1,000,000 people net positive with
RTW states experiencing a positive net migration total of just under 6,000,000 and NRTW states
suffering a net migration loss of just under 5,000,000 (see Exhibits 12 and 13). During the same
period, Texas Non-Farm Employment growth increased 11.2% while the U.S. overall average
grew just 2.0 %. RTW states saw employment growth at just under 4.0 % while NRTW states’
job growth was 0.5 % (see Exhibits 14 and 15).
From 1998-2011 Texas Gross State Product (GSP) exceeded the national average significantly.
While the U.S. economy grew from an overall Gross Domestic Product (GDP) level of more than
$8 trillion in 1998 to just under $15 trillion in 2011 or 71.5 %, the Texas economy grew by
106.2% over the same period. Gross State Product grew at an average rate of 85 % over the
same period in RTW states while realizing a slower growth rate in NRTW states of 64.2 % (see
Exhibits 16-21). As one should expect, strong growth or positive growth in GSP is generally
correlated with higher levels of employment. From 2000-10, the average unemployment rate
in Texas was 4.75% while the average for the United States was 5.49 %. Somewhat surprising is
the fact that average unemployment in RTW states was 5.55 % while NRTW states averaged
5.44 % over the same period (see Exhibits 22 and 23).
Employment growth in the Non-Farm segment of the U.S. economy from 2000-2010 averaged
just 2.0 % as noted earlier. Texas’s job creation was positive, ranked sixth out of the fifty states
for job growth during this period. The average rank for job growth in RTW states over the same
period was 21.3 while the average rate out of 50 states for NRTW states was 28.8 (see Exhibits
24-27). Texas clearly outperformed versus the U.S. and RTW averages in the areas of economic
growth, population, migration, and job creation.
Household Income Growth and Minimum Wage in Texas and the United States
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Personal income per capita growth in Texas grew 34% from 2000-2010 while the U.S. average
income grew at 36.4 % over the same period. Personal income growth over the period grew at
just under 40 % in RTW states and at 34.2 % in NRTW states (see Exhibits 28 and 29).
Household income can be measured by median income (generally the parent or parents in the
household). Texas lags the national average while having roughly the same averages as the
RTW states. NRTW states have higher average incomes, but the margin is narrowing relative to
RTW states due to more rapid income growth and GSP growth in RTW states over the past
decade (see Exhibits 30-31).
Minimum wage rates are often considered to be a barrier to entry for young and/or unskilled
workers who either lack necessary skills or job experience or both. The U.S. federally mandated
minimum wage floor is $7.25, thus no state may set their minimum wage below this rate. The
Texas minimum wage for 2012 is $7.25. Texas is $.22 below the national average and only $.08
below the RTW average. There is a $.26 differential premium between RTW and NRTW states
regarding minimum wage rates (see Exhibits 32 and 33).
Assessing the Cost of Government in Texas and the United States
Tax burdens, especially on business, have a generally negative effect on job creation, job
growth and in attracting new businesses. The average state and local tax burden as a % of
income in Texas in 2010 was 7.9 % with the U.S. average at 9.4 %. The average in RTW states
was 8.8 % while the average in NRTW states was 9.9 %, more than a full point higher (see
Exhibits 34 and 35). The average combined state and local tax rate on corporations in Texas in
2010 was 0 % (see Exhibit 36-41).
Unlike the federal government and many other states, Texas’s state debt as a % of Texas Gross
State Product (GSP) is not a problem at 3.4% and is below the national average of 8.35% of GSP.
This compares to 5.31 % on average in RTW states and 10.39 % in NRTW states (see Exhibits 42
and 43). State debt per capita in Texas is low compared to RTW states at $1,491 per capita,
with the U.S. average at $3,449 and the NRTW state average at $4,539. However, the RTW
average is considerably lower at $2,061 (see Exhibit 44 and 45). In examining state debt as a %
of tax revenue, Texas fared well with the national average at 160.37 % and the Texas average at
106.69 %, while RTW states’ state debt as a share of tax revenue was just over 117.15 % and
NRTW states average 194.32 % (see Exhibits 46 and 47). Texas’s debt service as a share of GSP
tax revenue is also below the national average at 2.97 % and below the RTW average at 5.08 %
(see Exhibits 48 and 49).
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Texas’s state liability ranking is 36 out of 50 with RTW states average rank at 23.6 and NRTW
states at 27 (see Exhibits 50 and 51). The Texas economy has grown and maintained a healthy
number of government employees at all levels over the past decade. As of 2010 Texas has 797
government employees per 10,000 people, ranking it the seventeenth highest in the country
(see Exhibits 52 and 53). Looking at state and local government employees alone, Texas ranks
among the sixteen leanest-government states in the country (see Exhibits 54 and 55).
Government operating efficiencies notwithstanding, Texas received among the lowest levels of
federal bailout funds per capita associated with the financial crisis of 2008-2009 and was one of
the top growth states in the country (see Exhibits 56 and 57).
Cost of Key Goods and Services in Texas and Nationally
The cost of doing business in Texas is low by a number of key metrics. The median price for an
automobile insurance policy in Texas is below the national average, according to a recent study
released by CarInsuranceQuotes.com (Johnson, 2012). The median average in Texas is $1,420
while the national average is just under $1,700. The RTW average is $1,580 while the NRTW
average is just under $1,750. The Texas cost figures out to be 2.51 % of household family
income to purchase insurance. Massachusetts is the best bargain at 1.43 % of household family
income (see Exhibits 58-61).
Texas seems to be very competitive in the area of average cost of natural gas and gasoline
taxes, but not electricity. It was below the national average for natural gas as well as below the
RTW average price for natural gas per unit in 2010. In 2012 Texas’s gasoline tax is below the
national, NTRW, and RTW state averages among the lowest total gasoline tax in the nation.
Moreover, the RTW average for natural gas was below the national, NRTW, but not the Texas
averages in all three natural gas categories studied for 2010 (see Exhibits 62-71).
Finally, the average insurance trust expenditure in Texas was among the lowest in the country
at $681.38 per capita in 2010. The national average was less than $896.79 (see Exhibits 72-75).
Competitiveness Metrics in Texas and the United States
In this section a number of measurement tools related to the business environment and
business competitiveness of a state and the subsequent rankings are compiled. They are
broken-down to compare Texas with RTW and NRTW states.
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A study by hospitality marketing research firm Cvent noted the top 50 cities for meetings and
conventions, and Texas was second with seven cities (see Exhibits 76 and 77). Also, the
Kauffman Foundation ranked new business start-ups per 100,000 people per month per state in
2011 with the national average being 296 and the Texas average at 440. The RTW state
average was 310 and the NRTW state average was 285 (see Exhibits 78 and 79). There is some
interesting data on business births and deaths from 2002-2007. Texas trails the national
average and the RTW average in births. RTW states are producing new organizations at a faster
pace than NRTW states as well (See Exhibits 80-87).
Professors from the University of Warwick in England and Hamilton College in New York have
done some path-breaking work trying to measure happiness and quality of life, having
published it in the journal Science. The survey rankings from 2005-2008 were used to compare
Texas to RTW and NRTW states. Texas ranked 16th or 16th “most happy” overall with RTW
states citizens seeming to be much happier at an average rank of 16.95 while NRTW states had
an average happiness rank of 32.71 (see Exhibits 88 and 89).
The American Legislative Exchange Council annually ranks states on economic performance
considering seven factors ranging from corporate tax rates and GSP growth to non-farm payroll
growth and population growth. The 2011 rankings of the above variables showed that Texas
ranked second in economic performance with the average ranking for RTW states being 18.27
and NRTW states averaging 31.18 (see Exhibits 90 and 91).
The 2011 Forbes Best States for Business Index was analyzed and compared Texas to RTW and
NRTW states. The Forbes Index considers seven variables ranging from business costs and the
regulatory environment to the economic climate and a state’s growth prospects. Texas ranked
6 out of 50 with 1 being the highest and 50 being the lowest. RTW states average 17.64 on the
Forbes Index while NRTW states measured 31.64 (see Exhibits 92 and 93). A similar analysis
was conducted with data from the 2011 CNBC Index of America’s Top States for Business. The
ten general variables used by CNBC range from education and infrastructure to cost of living
and cost of business. Texas fared better here with an overall rank of 2 out of 50 (50 being least
favorable) with RTW states averaging just under 21 and NRTW states averaging 29 (see Exhibits
94 and 95). Texas fared least well on the Beacon Hill Institute’s Competitiveness Index which
includes government and fiscal policy, security, infrastructure, human resources, technology,
business incubation, openness, and environmental policy factors with a ranking of 15 (1 being
most favorable) while RTW states averaged just below than 24 and NRTW states averaged just
under 27 (see Exhibits 96 and 97).
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The Northwood University Competitiveness Index
Texas fared well in most measures of competitiveness on all of the indices and in the studies
mentioned above for happiness, business climate, competitiveness, or economic performance
in general. To define the combined effects of the data, roughly 200 variables were examined in
this study for all 50 states and a factor analysis was conducted to find the five major categories
or aggregate factors.
Unlike many other indices where the data and/or categories are assigned weights by the
researchers, the Northwood Index assigns weights based on factor analysis. The weights are
market sensitive since they change with changes in the economic conditions, and the indices
are therefore subject to change as the values of the data change over time. Thus, the model
delivers an overall ranking for a state, provides evidence of strengths and weaknesses relative
to other states by category, and the weights assigned in each category by the model may be
useful in prioritizing efforts to improve a state’s relative competiveness.
The Factor Categories and the key variables that influenced each factor are:
Factor 1 (General Macroeconomic Environment) - considers general measures of state-wide
economic health such as unemployment rates, labor force participation rates, per-capita
income, and life-satisfaction (another measure of well-being in addition to per-capital income).
Factor 2 (State Debt and Taxation) - considers state debt per capita, cost of living, and tax
burden per capita (tax burden considers state sales taxes, selective taxes, license taxes,
corporate income taxes, and state income taxes).
Factor 3 (Workforce Composition and Cost) – considers % of the working population that is
part of a union, % of the private working population that is a member of a union, the % of the
public working population that is a member of a union, and cash payments to beneficiaries
(including withdrawals of retirement contributions) of employee retirement, unemployment
compensation, workers’ compensation, and disability benefit social insurance programs.
Factor 4 (Labor and Capital Formation) - considers employment growth, population growth,
migration, and organizational birth and death data.
Factor 5 (Regulatory Environment) – represents a composite of other indices that consider the
business friendliness of a state's regulatory framework/environment.
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Based on the most current available data, Texas’s economic performance in the five categories
is:
1.
General Macroeconomic Environment -
24th
2.
Debt and Taxation -
3rd
3.
Workforce Composition and Costs -
17th
4.
Labor and Capital Formation -
4th
5.
Regulatory Environment -
17th
Overall, Texas ranks 3rd out of the 50 states in the Index. Consequently, the state’s relatively
strong performance in terms of Debt and Taxation and Labor and Capital Formation are
complimented by its relatively strong performance in the factor categories of the General
Macroeconomic Environment, Workforce Composition and Costs, and Regulatory Environment.
In addition, RTW states averaged 15 and NRTW states averaged 33.8 (see Exhibits 98 to 109). A
careful analysis of factors 1, 3 and 5 coupled with sound public policies designed to address said
issues will enhance Texas competitiveness in the future which should be demonstrated by an
improvement in Texas’s position within the Index.
Right to Work (RTW) versus Non-Right to Work States (NRTW)
Introduction to the Right to Work Debate
Having come out of the second-worst economic downturn of the past 100 years and faced with
a sluggish recovery, the Right To Work (RTW) concept is among the most controversial issues
facing the nation today. Two recent political battles -- Indiana’s adoption of a RTW law and the
failed attempt by organized labor to engineer the recall of Wisconsin Governor Scott Walker, as
well as the impending placement of the “Protect Our Jobs” Amendment on the November
2012 (see Appendix) Michigan ballot-- are indicative of this.
Both the opponents and the proponents of RTW base their arguments in several different
contextual frames. One approach is the use of rights-based legal theory that shows that RTW
laws are legally neutral insomuch as they give no legal advantage to workers, employers, or
labor organizations and therefore maximize individuals’ freedom of contract and freedom of
association; with which this section begins. However, the pure legal or ethical value placed on
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individuals’ fundamental rights and freedoms alone is not the basis of existing law. Sound
public policy, while rightly determining the extent and boundaries of individual rights, must also
look to maximize economic opportunity in terms of general economic growth, job creation,
investment, and the standards of living afforded to those served by policymakers.
Understanding this, the approach taken here in examining RTW follows the sentiments of
Massachusetts Institute of Technology’s Thomas A. Kochan in his recent piece “Resolving
America's Human Capital Paradox: A Jobs Compact for the Future” (2012), where he states:
The purpose of a 21st century labor law and policy should be twofold: 1) to protect and
support worker rights to choose whether or not to be represented by a union, and 2) to
promote and sustain positive labor management relations—ones that have
demonstrated their value in supporting high-productivity and high-wage practices and
relationships.
This section continues with a general exposition of the primary pro and anti-RTW positions,
followed by the basic economic arguments surrounding RTW and a review of the literature
surrounding the economic effects of RTW laws (See Exhibit 119), which also serves to illustrate
the technical challenges associated with such studies. This is followed with a discussion and
analysis of recent data, finishing with the identification of opportunities for further inquiry.
A Legal History and Analysis of Right to Work
The Right to Organize (or Not)
The legal status conferred to workers’ rights to organize for their mutual benefit can be viewed
to fall on a spectrum or continuum defined by common law concepts of freedom of association
and freedom of contract. At one end of the continuum, organized labor is viewed as a criminal
conspiracy against the employer, and the freedom of association and contract as applied to
workers with other workers is thwarted for the benefit of the employer. At the opposite end of
the continuum, employment can only be legally obtained through membership in a labor
organization, and employers must only hire through the union. Here, under compulsory
unionization, freedom of association and contract between individual workers and employers is
undermined, and the law favors organized labor. The midpoint of this continuum represents
the position where both individual workers are free to associate with other workers, or not, and
labor organizations are free to negotiate with employers as they choose. Employers, likewise,
are free to choose whom they hire, maximizing freedom of association and freedom of contract
for all involved and effectively guaranteeing workers the right to work wherever they can find
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employment. Hunter (1999) considered this midpoint to be the legally-neutral position
insomuch as at that point, the law does not favor one person or group of persons over another.
When viewed from a historical perspective over the last 200 years, the law governing the rights
of workers to act individually or through labor organizations has occupied most points on this
continuum at one time or another.
Early Common Law in the United States
A series of cases in the 19th century shows the gradual change in the common law treatment of
labor organizations and the acceptance of collective bargaining. At the time of the founding,
the legal treatment of trade unions and workers was almost exclusively seated in the common
law of contract and association where trade associations developed for the purposes of mutual
aid, worker training, and improving worker-management relations. However, in
Commonwealth v. Pullis (1806), the Philadelphia Mayor’s Court held that a union of
shoemakers, striking to earn higher wages, were engaging in a conspiracy against their
employer, and each member was fined a week’s wages and the union was required to pay all
court costs. The court’s holding made all labor union activity directed against an employer
illegal in industrial Pennsylvania and potentially served as legal precedent elsewhere.
However, by 1842 in Commonwealth v. Hunt, the Supreme Judicial Court of Massachusetts
found that workers had a right to organize, collectively bargain and strike as long as they did
not use violence or illegal means to accomplish their goals. More than fifty years later, in
Vegelahn v. Gunter (1896) the Massachusetts Court clarified its earlier position by stating that
the right to strike stopped at the point where the strikers interfered with the ongoing
operations of the business, including the employer hiring replacement workers. The
Massachusetts Court cited In re Debs (1894) where the United States Supreme Court
determined that an injunction against a labor strike is allowed when there is evidence of harm
to business or the general public. Thus, by the end of the 19th century, organized labor had
moved from illegality to legally-neutral status, even if that was not yet fully-defined.
Federal Law and Labor Unions
Moving into the 20th century, legal neutrality towards organized labor began to face new
challenges. In 1890, Congress passed the Sherman Antitrust Act which prohibits activities that
reduce market competition. The Act was applied to labor unions in Loewe v. Lawlor (1908)
where the United States Supreme Court found that union strikes, boycotts and secondary
boycotts (of suppliers or customers) were illegal if they interfered with interstate commerce by
limiting competition. The court also found that individual union members could be charged
under the Act if it could be shown they had engaged in conspiracy to cause such interference.
16
In response to the Loewe decision, labor unions successfully lobbied Congress to exempt union
activities from the Sherman Act through passage of the Clayton Act in 1914. While further
defining additional illegal activities in restraint of trade, Section 6 of the Clayton Act allows
labor unions the right to boycott, peacefully strike and picket, and engage in collective
bargaining regardless of any effect on interstate commerce. In subsequent cases the Supreme
Court further clarified the extent to which Section 6 of the Clayton Act protected organized
labor activities.
In 1921, the Supreme Court heard the case of Duplex Printing Press Co. v. Deering. In this case,
the Court found that even under Section 6, secondary boycotts and other activities directed
towards a company with which the union was not directly concerned were in violation of the
Sherman Act. A year later, the Court expanded this ruling to apply to union activities directed
at non-union companies in the same industry in United Mine Workers v. Coronado Coal (1922).
In addition to these adjustments to the legal standing of organized labor, federal rules
surrounding collective bargaining began to take shape. During the First World War, President
Woodrow Wilson created the National War Labor Board to direct various national resources to
the war effort. The general principle followed by the Board was that in exchange for giving up
the right to strike, unions would be guaranteed the right to good-faith collective bargaining
with employers through “arbitration, mediation, and conciliation” providing a mechanism to
mend labor-management disputes that might have otherwise interfered with war production.
After the Sherman and Clayton Acts, their interpretation by the Supreme Court, and moving
towards the Great Depression and the New Deal, the legal status of labor unions remained
largely in the position of legal neutrality. Individuals and unions both had the right to seek work
from employers and employers retained the right to deal with unions or not. Unions were not
only allowed but guaranteed the right to collectively bargain under certain circumstances and
to recruit new members as long as these activities did not interfere with individual choice or
restrain trade.
The only exceptions to unions’ general legal status heading into the New Deal were the railroad
workers’ unions. As early as the Erdman Act of 1898, Congress created the means for the
railroads and the railroad workers’ unions to settle labor disputes without interruption to rail
services, which were seen as vital to the functioning of the economy. The Erdman Act allowed
voluntary but binding arbitration, enforceable in federal court. Moreover, in 1920 Congress
passed the Esch–Cummins Act, (otherwise known as the Railroad Transportation Act),
establishing the Railroad Labor Board which in turn granted railroad unions exclusive
representation in labor disputes and disallowed individuals’ rights to negotiate for themselves.
17
However, in Davis v. Wechsler (1923), the Supreme Court held that it was unconstitutional to
deny individuals the right to negotiate with the railroads independently from the union.
In 1926 in response to the Davis decision, Congress passed the Railway Labor Act. The Act
explicitly granted workers the right to organize and created for the railroad companies a legal
“duty to bargain” with railroad unions. The Act was amended to include airlines in 1936. In
1951, the Act was once again amended to permit compulsory unionization, making it illegal for
a railroad or airline to hire outside the labor unions representing their workers. These
provisions are still in effect today. These amendments notwithstanding, the “new”
requirements under the Railway Labor Act would set the stage for additional federal regulation
regarding the rights of unions moving into the Great Depression.
In 1932, President Herbert Hoover signed the Norris-LaGuardia Act. In general, the Act limited
the legal power of employers over labor unions as opposed to directly empowering unions. It
prohibited the creation of worker agreements to refrain from future union membership (socalled “yellow-dog contracts”) and it disallowed such agreements already in existence from
being entered into the record in a federal case. It also exempted unions from potential
violations of antitrust law under the Sherman Act. The Act furthermore prohibited employers
from filing private damage suits arising from or injunctions against striking labor unions.
A year later, the National Industrial Recovery Act (NIRA) was signed into law by President
Franklin Roosevelt. NIRA was intended as a general plan to promote economic recovery and
only a small part of it, Title I, Section 7(a) applied directly to labor unions. That section gave all
workers statutory rights to organize labor unions and bargain collectively. In Schechter Poultry
Corp. v. United States (1935), the Supreme Court found NIRA unconstitutional on the grounds
that Title I was vague in its construction and delegated overbroad authority to the executive
branch, but the language in Title I, Section 7(a) was never specifically cited in the Court’s
opinion, leaving the labor issue open for further legislation.
The Wagner Act
The basis of all modern federal law regarding the legal status of organized labor in the private
sector is the National Labor Relations Act, often referred to as the NLRA or Wagner Act. The
Act was passed by Congress and signed into law by President Roosevelt in early July 1935,
roughly six weeks after the Court’s decision in Schechter. The NLRA created legal rights and
obligations for both employers and unions. For employers it became an “unfair labor practice”
to fail to “bargain in good faith,” or to interfere with 1) workers organizing into labor unions, 2)
workers engaging in collective bargaining through labor unions, and 3) concerted labor
activities such as striking and picketing.
18
For unions, the NLRA established a process for workers to adopt membership in a particular
union. If a majority of workers voted in favor of union representation, the elected union was
allowed to establish one of three different worker-union relationships. The first, referred to as a
“closed shop,” required workers to be a member of the union prior to employment. Second,
unions could establish a “union shop” by allowing companies to hire non-union members, but
requiring those workers to join the union within some set time following their hiring. Third, the
union could declare itself an “agency shop” where union membership is not required but where
all workers are required to pay dues for all union activities through which they receive benefit.
In addition, a new federal agency, the National Labor Relations Board (NLRB), was created to
oversee the enactment of the NLRA and enforce its various provisions.
As a result (with the single exception of the railroad industry), the common-law based legal
foundation of business-labor relations that had emerged through the common law over one
hundred years was largely discarded. By allowing unions to operate closed shops, union
membership could become compulsory, employees could be denied access to jobs and
employers would have no opportunity to contract with workers of their own choosing.
The Taft-Hartley Act
The NLRA operated as the law of the land from its passage until after World War II. In 1947,
Congress enacted the Labor-Management Relations Act (commonly known as the Taft-Hartley
Act), by overriding President Harry S. Truman’s veto. The goal of the Act was to amend the
NLRA to reduce the degree of power afforded labor unions by re-establishing legal rights of
individual workers and mandating administrative changes within the NLRB. The major
provisions the Taft-Hartley amendments were nearly as broad if not as deep as the NLRA itself.
First, Taft-Hartley recognizes the right of individual workers to refrain from union activities.
Second, the Act adds prohibitions on unfair union labor practices and further defines
requirements for both unions and businesses in collective bargaining. Third, it specifically
prohibits coercive conduct against neutral persons in certain circumstances such as disputes
among two or more unions at a workplace regarding work assignments, and prescribes
standards for injunctive relief in such circumstances. Fourth, the Act allows both labor and
management to file suit for breach of a labor contract. Fifth, it eliminates the closed-shop
option for union organization but still allows for union and agency shop arrangements.
Last, and most importantly, section 14 (b) of the Taft-Hartley Act states that the act “shall not
be construed as authorizing the execution or application of agreements requiring membership
in a labor organization as a condition of employment in any State or Territory in which such
execution or application is prohibited by State or Territorial law.”
19
The language of section 14(b) allows the individual states to “opt out” of the union shop
requirements of the NLRA, effectively making the agency shop structure the only legal method
of union organization within those states. In opting out, and disallowing a union membership
requirement for purposes of employment, several states took the opportunity to re-establish
the legal neutrality and maximum freedom of association and contract that have become
known as the “right to work.”
The Right to Work States
In 1944, three years prior to the passage of the Taft-Hartley Act, Florida and Arkansas
established right to work provisions in their state constitutions, expressly forbidding employers
from hiring workers based on their status as a member or non-member of a labor union, even
though these provisions were contrary to existing federal law under the Wagner Act. In 1946,
three states, Arizona, Nebraska, and South Dakota, adopted similar constitutional provisions.
Both before and after passage of Taft –Hartley in 1947, the legislatures of six additional states-Georgia, Iowa, North Carolina, Texas, Tennessee and Virginia--enacted right to work statutes.
Various organized labor groups in Arizona, Nebraska and North Carolina challenged the state
laws almost immediately upon passage in their respective state courts where they were all
upheld. The state cases from Nebraska and North Carolina reached the United States Supreme
Court on appeal in late 1948 in Lincoln Federal Labor Union v. Northwestern Iron & Metal Co.
where the Court held that state laws can forbid union membership as a requirement for
employment when they create equal rights to employment for both union and non-union
workers.
Since 1947, twelve additional states have enacted right to work laws either through statute,
constitutional amendment in the case of Oklahoma and Kansas, or in the case of Mississippi,
first by statue and later by constitutional amendment. Chronologically, they are: North Dakota
(1948), Nevada (1952), Alabama (1953), South Carolina (1954), Mississippi (1954, 1960), Utah
(1955), Kansas (1958), Wyoming (1963), Louisiana (1976), Idaho (1985), Oklahoma (2001), and
most recently, Indiana (2012). In addition to these states, the Territory of Guam adopted right
to work legislation in 2001.
Indiana is the only state to have had right to work legislation implemented and then repealed.
As summarized by Vedder, et al. (2011), the state originally passed right to work legislation in
1957, but in the time between its enactment and when it was scheduled to go into effect,
several unions negotiated contract extensions that would be honored under the law until they
expired. Union leaders then brought suit against the state, arguing that agency shop contracts
that charged workers dues but that did not require union membership were permitted under
state law. In 1959 the Indiana Court of Appeals ruled in favor of the unions in Meade Electric
20
Co. v. Hagberg. This decision ostensibly resulted in no greater employment opportunity for
individual workers under the law than under a union shop setting, and as a consequence the
law was repealed in 1965.
Review of the Economic Literature on Right to Work
As outlined in the previous section, an underlying and fundamental principle in the American
political and economic system is the idea of freedom of association. Individuals should have the
personal liberty to freely associate with any other members of society for lawful and commonly
shared goals, purposes, and activities. This principle also implies the opposite: that individuals
may not be compelled or coerced into joining or participating in any association without their
voluntary consent. The underlying premise of a free society is the right of individuals to say,
“No,” whether this involves joining a church, entering into a contract, participating in any social
club or group, or membership in a labor union (Baird, 1988).
Broadly, the arguments against an individual employee’s right to work without membership in a
union have been of three general types: First, only unified union membership can protect all
workers against the superior bargaining power of the employer; Second, only compulsory
membership can protect other workers from the “unfair” competition of non-union members
that may result in the wages of all workers in that industry being pushed below their “fair
market value”; and third, only mandatory union membership (and dues paying) prevents nonunion members from a “free ride” at the expense of union workers in a company or industry.
The Superior Bargaining Power of the Employer
The inferior position of the individual worker is claimed to be due to a number of factors. First,
it is argued that the individual worker must accept the wage offered by the employer, since if
she or he does not accept it, there are always many other workers looking for jobs ready to
take that place. This ignores the fact that competition is two-sided in virtually every modern,
developed market, and especially in a country like the United States. Any employer who fails to
offer a wage tending to reflect the anticipated value that the worker contributes to a
company’s profitability runs the risk that the potential employee with useful and productive
skills will search out alternative employment where those skills are more highly valued by
another employer wishing to get ahead of the competition.
The same applies to currently employed workers who, if they believe that they are not receiving
a wage commensurate with their actual market value, will see the advantage of changing
21
employers in the same or a related market. This forces any employer attempting to “low ball”
workers to raise the wage offers, or run the risk of losing a growing number of qualified workers
without whom she or he may not be able to retain the market position relative to his or her
rivals.
Another argument claims that the individual worker has an inferior bargaining position because
the individual worker cannot “wait” to look for a better job. First, if the worker does not earn
wages she or he cannot eat. The employer can wait to find a worker willing to take any salary
she or he wishes to offer because, she or he has “capital” to live off until such a worker comes
along who will accept the lower wage the employer wishes to pay. Second, it is stated that
labor is a perishable “commodity.” It cannot be “stored” to sell on another day. So if the
worker does not take the wage offered that lost day’s labor can never be regained.
However, there are limits to any such claimed “waiting” advantage on the part of the employer.
First, every day of less output produced because needed workers are not yet hired is a day with
lost sales revenues resulting from reduced output that could have been produced and sold on
the market. Thus, waiting to find workers who might be willing to accept wages less than their
real market value imposes a cost on the employer in the form of smaller profits and less market
share that could have been acquired, if a wage more in line with workers’ worth was offered
and accepted.
Second, financial capital may be “stored” rather than invested in hiring workers and producing
output. It can be held as cash or loaned out (short-term) for some interest return. However,
delaying the hiring of workers who would otherwise have gladly worked at reasonable marketvalued wages results in prospective employers earning neither profit nor interest if a part of his
or her financial capital is held as cash. And even if lent out to earn short-term interest, the
potential employer loses every day the difference between the interest s/he may earn and the
greater profits that could have been had by not delaying hiring needed workers for production
that could have been manufactured and sold (Hutt, 1954; 1973, pp. 61-76; Machlup, 1952, pp.
348-352; Chamberlin, 1951, pp. 168-187).
Unions Protect Wages from Unfair Non-Union Competition
It is argued that unions are able to collectively negotiate wages above what individual workers
were individually could negotiate on their own. If non-union workers could compete for union
jobs, those union-secured, higher wages would be competed down. Thus, all workers will be
better off if required to join and jointly negotiate through the representing union. Labor,
however, like every other good or service offered on the market, is subject to the law of supply
22
and demand. If a union successfully negotiates a wage above the one that would have been
competitively established on the market, fewer workers may be employed, since the higher the
wage the less profitable the number of workers potential employers find it attractive to hire (or
retain). In other words, wages that compulsory unions may successfully impose runs the risk of
pricing some workers out of the labor market (Velasco, 1973).
In this instance, the “conflict” is not between “labor” and “management,” but instead between
union workers and non-union workers. The union “locks out” members of the labor force who
would have been willing to work for prospective employers on terms mutually attractive to the
two sides. This forces the locked out and displaced workers to search out alternative gainful
employment in jobs and with employers who may be less well paying and not as attractive. The
union members’ gains are, as a consequence, at the expense of other workers, who must find
employment in other markets. As non-union workers fill these other markets, wages in that
alternative part of the labor market fall below what would have prevailed if the all the jobs had
been available to all the workers.
This process can and often does entail workers having to migrate out of the state where they
had previously found work, or where they would have chosen to reside, if not for compulsory
union membership rules pushing non-union workers out of that part of the labor market, and
that part of the country in which “closed shop” conditions prevail (Hayek, 1960, pp. 267-284;
Knight, 1959, pp. 21-45).
The Need for Union Membership to Avoid Non-Union Free Riders
It has been argued that the higher wages and better working conditions negotiated by a labor
union benefit not only the union members but all other workers in the company or industry
who are covered by the union terms of employment. If non-union members are able to benefit
from the “positive” results of union activities, it is only reasonable that they should be required
to bear a part of the costs of obtaining those favorable work conditions and wages. Thus, nonunion workers should, if not required to join the union, to be at least obligated to pay union
dues to assist in defraying the organizational and related expenses to provide those benefits. At
the same time, the potential for “free riding” reduces the incentive to belong to a union, and
thus may result in fewer union members and weaker unions unable to effectively negotiate on
behalf of workers’ interest (Ickniowski and Zax, 1991).
The free rider problem can only arise when the gains from the actions of some cannot be
prevented from benefiting others who have not participated in covering the costs that have
generated those “positive” results. However, excludability is possible in the case of union23
generated wages or work conditions by simply stipulating in the negotiated union contract that
the terms of that contract apply only to union members.
If non-union workers are unable to obtain from the employers wages and work conditions
equal to or better than those arranged by the union, that will act as a positive incentive for nonunion employees to join the union. If, however, non-union employees are able to negotiate for
themselves wages and work conditions not much different from (or even superior to) those
covered by the union contract, it would demonstrate clearly that union membership and dues
are superfluous (Baird, p. 37).
In addition to the economic considerations raised by organized labor, a number of arguments
have been offered in support of RTW Laws, among them: the case for personal freedom; the
gains from competition; the benefits from labor mobility and workplace flexibility; and the
efficient use of scarce resources for improved productivity.
The Case for Personal Freedom
The hallmark of a free society is the extent to which the individual has the liberty to make
decisions guiding his or her own life, including the occupation or profession she or he chooses
to follow to earn a living and that gives meaning and enjoyment to his or her daily activities. By
definition then, union shops exclude workers who would otherwise find gainful employment on
the basis of free and voluntary contract between themselves and willing employers. This is a
restraint not only on trade in general, but a restriction on the personal freedom of workers to
enter into consensual association with others for peaceful and lawful mutual benefit. The same
applies to compulsory payment of union dues as a “tribute” to a union for the right to work for
a particular employer or in a specific industry. Indeed, it can be argued that it is a form of
imposed tax for the privilege of working within the “jurisdiction” over which the union claims
authority (Richberg, 1957, pp. 114- 126).
The Gains from Labor Market Competition
“Closed shops” have historically had one essential goal, anti-competitive and monopoly
restriction on segments of the labor market (Simons, 1944, pp. 121-159). The purpose is to limit
the supply in various occupations, professions, and trades as a means to raise the price of labor
above the levels at which the free interactions of market supply and demand would have set
wages. Companies or cartels that attempt to act monopolistically bear the cost of leaving a
portion of their capital and equipment idle precisely to withhold potential output with the hope
of deriving higher profits by selling less output at a higher price. They must weigh the cost of
underutilized plant and equipment relative to the higher price with the decreased output.
24
Compulsory unions, however, restrict entry into their market to reduce the supply and raise the
price of labor – wages – but bear no such cost. Their responsibility and “costs” extend no
further than a weighing of the advantages and disadvantages to the workers who remain
employed under the union wage and work condition rules negotiated on the basis of collective
bargaining. Those workers priced out of employment in the closed shop are no longer voting or
dues-paying members, and therefore no longer of an element in the union leadership’s
decision-making. The burden of the compulsory union’s actions, therefore, falls on the
shoulders of the excluded workers. They bear a cost they had not bargained for or agreed to.
Thus, the unemployment or less valued employment that these displaced workers now face
exists as a cost that these unions impose on others without their agreement or consent.
RTW Laws therefore may serve to reduce the unions’ anti-competitive and potentially
monopolist practices in the labor market. The number of workers employed in an industry,
occupation and trade reflects the consumer demand for the products workers can produce. As
long as the value of the product is greater than workers’ opportunity costs of being employed in
some other way of earning a living, the supply of workers will increase, the output of the
desired goods and services will expand in supply and the prices at which those goods are
offered to consumers on the market will decline.
The Benefits from Labor Mobility and Workplace Flexibility
Compulsory unionism and the closed shop tend to reduce and limit labor mobility between
industries and regions of the country. Competitive markets normally experience constant
change requiring continual adjustment and adaptation to new circumstances. Consumer
demands change, resource availabilities are modified, and capital investments shift from one
line of production to another and technological innovations transform how and where goods
and services can be profitably supplied and in what amounts. Some union restrictions inhibit
the required adaptations and adjustments that must constantly be undertaken in different
ways and different places if markets are to be continuously moving in the direction of
sustainable balance and stability.
Under RTW Laws, workers and employers have the flexibility and openness to find the “right”
patterns of worker employment, to perform the tasks and types of work in and between
industries that the shifting conditions of market supply and demand suggest are the most
profitable and advantageous for both employees and employers. This also means that more
flexible labor markets, like those where RTW Laws are present, are likely to offer the flexibility
25
and profitableness to attract more industry into regions and states, allowing more adaptive
labor markets to effectively function. At the same time, a more competitive labor market also is
likely to attract qualified and energetic workers from other areas who are looking for more
attractive and gainful employment.
More Efficient and Productive labor
RTW environments enable labor and other resources and capital to be better allocated and
employed where business judgments suggest it should in a world that is always changing and
therefore contains an irreducible amount of uncertainty and risk. This is not to infer that
managers never get it “wrong” or workers never have second thoughts about jobs they’ve
taken. It is rather that given the inescapable fact that some decisions will always turn out to be
wrong, labor markets, as well as all other resource and capital markets, must have the greatest
potential to readjust and transform what, how, and where production is undertaken and which
job opportunities exist.
It has become a cliché to say that America now exists in a far more competitive, global
economy. It is nonetheless very true. Any state that wishes to meet this challenge, not only by
retaining businesses and jobs within this part of the country, but also wants to attract new
investment and an expanding workforce, needs to offer businesspeople and workers the type
of economic environment that makes that state a magnet.
In spite of the impressions sometimes created, RTW Laws are not “anti-labor” or “anti-union.”
The theoretical literature simply suggests that worker opportunities for the greatest number of
people in a place such as Texas and the country as a whole are most likely to be present in an
“open shop” market-setting, rather than in labor markets that are “closed.” The flexibility and
adaptability in labor markets that come with RTW legislation can serve as an important aspect
of a policy focused on job maintenance and job creation, when combined with other policy
reforms in the wider setting of fiscal and regulatory policy…Texas seems to validate this point.
Determining the Cause and Effect of Right to Work Laws
Revisiting the case made by organized labor and applying simple economics (supply and
demand analysis), it is clear that RTW laws make it more expensive for unions to provide its
services to members because of the free-rider problem. In terms of demand and supply of
union services, this reduces the supply of union services, thereby increasing the price of union
services and reducing the quantity of union services. It is also true that very often RTW
legislation passes in states where the support for unions is very thin. So in most RTW states,
public attitudes towards union are likely already very low, and this is reflected by a reduction in
26
the demand for union services. This reduction in the demand for union services also results in
reducing the quantity of union services being offered to the labor market.
Thus the following key question must be answered correctly to ascertain the true effects of the
RTW legislation: Is the level of unionization lower in RTW states because of the passage of the
law or because of the negative attitude citizens of that state have about unions? This is
precisely why it is difficult to assess the economic effects of RTW legislation. Specifically, the
inability to control for many systematic observed and unobserved differences across states
makes it very difficult to assess the economic effects of RTW legislation as compared to other
relevant state characteristics. Since RTW states are often unsupportive of unions and are
considered to be “business friendly,” they have a lower corporate tax rate, lower regulations,
less absenteeism, and sometimes higher subsidies for businesses. Thus the beneficial effects of
RTW on employment and wages could also be the effects of those pro-business policies. In that
case RTW is just symptomatic of the pro-business attributes of the state. In the absence of an
effective control for these across-state differences, any empirical analysis might lead to
spurious and unreliable estimates.
Therefore, determining the effects of the RTW legislation on wages, employment and location
decisions of businesses is crucially dependent on the nature and type of controls that are
applied in different studies. It must be recognized that a whole range of variables may
contribute to differences in employment and wages across states and regions. What specifically
can be attributed solely to RTW depends on how successful the studies are in controlling these
other factors. There is a need to treat descriptive comparisons based on raw numbers with
skepticism because there are many observed and unobserved factors that influence those
numbers.
In all the papers dealing with the effects of RTW legislation, four central questions have
emerged as important:
1.
2.
3.
4.
Does RTW legislation inhibit union growth?
Does RTW legislation inhibit union bargaining strength?
Does RTW legislation drive location decisions of businesses?
Does RTW legislation impact employment, wage and growth in Gross State Product
(GSP)?
Meyers (1959) argued that RTW proposals are of much less importance than either side to the
controversy has been willing to admit. This issue is a symbolic one. He argued that “what is at
stake is the political power and public support of management and unions.” Meyers argued
that RTW itself had very minor effects on union growth or union power. Kuhn (1961) concluded
27
that RTW did inhibit union growth. Barkin (1961) also concluded that RTW provided legal
confirmation to anti- union movement. It contributed to decline in union membership and also
weakened bargaining power of existing unions. Marshall (1963) concluded that the only impact
of RTW was political. It showed the political weakness of the union. Shister (1968), on the
other hand, concluded that RTW did inhibit both union growth and union bargaining power, but
its impact on union growth was substantially higher than its impact on union bargaining power.
A comprehensive model trying to analyze the effects of “Right To Work” Legislation was
developed by Ashenfelter and Pancavel (1969) and Pancavel (1971). They developed a formal
model of Demand and Supply of union services to explain three competing hypotheses about
the effects of RTW legislation on union membership and bargaining rights of unions. Three
competing hypotheses emerged from their analysis about the effects of RTW legislation: All
subsequent analysis of RTW legislation has revolved around these three hypotheses.
1. The Taste Hypothesis: RTW laws exist only in states where anti-union sentiment among
workers, employers and the public is substantial. Based on this hypothesis, RTW does
not have independent effect on the extent of unionism in a state, but it simply reflects
the hostile attitude towards unions. Thus a repeal of section 14b of the Taft Hartley
legislation will have no impact on union membership in RTW states.
2. The Free-Rider Hypothesis: RTW increases the cost of union organizing and union
maintenance. The supply of union services and the equilibrium level of unionism will be
lower in RTW states than in other non-RTW states, so a repeal of section 14b of the Taft
Hartley legislation would have statistically significant positive impact on union
membership in RTW states.
3. The Bargaining Power Hypothesis: This hypothesis argues that the RTW legislation
directly weakens the bargaining position of the unions, since this law prevents unions
from requiring universal membership within the union. Since unions cannot demand
membership, it will diminish the union’s bargaining position and members will perceive
less value in union membership. This will have significant negative impact on the extent
of unionization in a RTW state. The repeal of section 14b of the Taft Hartley legislation
will have significant positive impact on the extent of unionism in RTW states.
Palomba et al. (1971) argued that for RTW to pass it must receive strong support from nonunion members or employers of union labor. The rationale for their support of RTW may be
that with RTW, business environments improve in a state and that attracts industries in their
state. However, Palomba concluded that RTW legislation had no impact on economic
28
development, since their research showed that RTW states ranked lower in economic
development once the impact of RTW is fully taken into consideration.
Moore, Newman and Thomas (1974) contradict the assumption of Palomba, that non-union
members vote for RTW to ensure more investment in their states. Instead, they argue that
RTW laws are passed to weaken the union, slow their growth and to destroy the existing union.
However, they find no evidence to support that RTW does accomplish any of those objectives.
Lunsden and Peterson (1975) showed that the proportion of workers who belonged to unions
in RTW states was not significantly different in 1953 compared to 1939. They argued that the
lower proportions of workers belonging to unions in RTW states can be attributed to their
tastes and preferences rather than the impact of the law itself. Moore and Newman (1975)
argue that RTW laws did not have a statistically significant impact on the proportions of
workers who belong to unions.
Carroll (1983) argued that “Right To Work” legislation did matter. He argued that RTW
legislation did not destroy unions but significantly slowed down the rate of growth of union
activities. The paper concluded that:
1. A significantly larger proportion of workers in union shop states belonged to a union
than RTW states between 1964 and 1978. Carroll however contends that it is
impossible to conclude that this lower union membership in RTW states is caused by
prohibition of union shop contracts.
2. RTW laws are associated with lower union membership than would be otherwise. He
arrived at this conclusion of relative union membership by using the following
rationale: proportion of workers belonging to unions divided by the predicted
proportion of workers in unions based on the state’s industrial composition. While
union shop states consistently met or exceeded their expected union membership, a
RTW state was consistently below 100 %, implying that RTW laws reduce union
membership more than would otherwise be the case in their state.
3. Wage rates in RTW states were significantly lower than wage rates in non RTW
states.
4. Manufacturing jobs paid consistently lower in RTW states than in non RTW states.
5. Except in the South, the value added per production hour was higher in RTW states
than in non RTW states.
6. Manufacturing employment grew more rapidly in the right to work states than in
non RTW states.
7. RTW states demonstrated significantly lower unemployment rates compared to non
RTW states.
29
Newman (1983) used changes in corporate taxes, unionization and a RTW variable as his
explanatory variable, and in his analysis he was able to control for other factors by including
them as explanatory variables that influence manufacturing employment, so that the net
impact of RTW can be estimated. He concluded that RTW had a significant positive effect on
employment in 11 out of the 13 industries he analyzed. The impact was more substantial in
industries that used more labor compared to capital. However, the effects of RTW laws lose
their impact over time.
Schmenner et al. (1987) investigated the effects of RTW legislation on location decisions of
firms by using Fortune 500 survey data, and state and plant level data. The paper used those
dates to estimate location decisions as a two stage process. In the first stage states were being
seriously considered, whereas in the second stage the final decisions about plant location were
made. The paper concluded that although RTW laws were significant in the first stage, it was
not significant in the final choice.
Ellwood and Fine (1987) studied the effects of RTW legislation on the flow of unionism rather
than the stock of unionism. The paper concluded that RTW legislation has significant effect on
the flow to unions, but the impact is lost over time.
Holmes (2000, 1998) controlled for all other cultural, geographical, climatic and industry mix by
comparing the effects of RTW on the border regions between a right to work and a non-right to
work state. He did this to isolate the effects of RTW legislation, because the counties bordering
two states share most of the same geographical, climatic, cultural traits. He found a significant
difference in the growth of manufacturing employment from 1947 to 1992 for the RTW states
of 88.5 % compared to 62.6 % for the Non-RTW states, a difference of 26 %, for the RTW states.
Mishel (2001) of the Economic Policy Institute studied the effects of RTW on (1) union wage
premium and (2) on wages. The paper basically uses three models each differing from others in
terms of the control variables. In model 1 he controlled for personal and geographic
characteristics like race, ethnicity, age, marital status, industry and occupation. In model 1 he
compared workers with similar demographics and occupation within an industry between RTW
and Non-RTW states. He concluded that workers in RTW states earn 6.5 % less than comparable
workers in non-RTW states. In model # 2 he controlled for state of residences, which according
to him should control all the characteristics of a state other than RTW. He concluded that
workers living in RTW states earned, on the average, 7.8 % less than a comparable worker in
non-RTW states. This difference in earnings, according to Mishel, captures the price difference
between the states. In model #3, he compared workers with similar demographic
characteristics, industry and occupation and also controlled for cost of living using an index of
30
the fair market rent. He concluded that on the average, a worker, living in a RTW state, earned
3.8 % less than a worker living in a non-RTW state.
William Wilson (2002) of the Mackinac Center for Public Policy concluded that RTW states did
better compared to non RTW states in many of the economic variables that are supposed to be
impacted by RTW legislation. Specifically, he found that Gross State Product has grown by 0.5
% more per year in RTW states between 1977 and 1999. He also found that overall employment
increased by 0.9 % more per year in RTW states and manufacturing employment increased
more by 1.7 % per year in RTW states.
Kalenkoski and Lacombe (2006) employing the 2000 census data found that RTW has a
significant positive impact on the manufacturing share of private sector employment of 2.1 %.
Kersey (2007) using data from 2001 to 2006 showed that the general trends in Wilson’s paper
remained the same and the differentials between RTW and Non-RTW states, and in some cases
even had widened. Both Wilson and Kersey attributed the positive effects of RTW legislation
due to its ability to reduce rigid labor laws and address the issue of lower labor productivity.
Stevens (2009) examined the average differences in business conditions, employment, personal
income, wages and salaries, and proprietors’ income between states with RTW legislation and
states without RTW legislation. The paper concluded that the numbers of self-employed were
higher and business bankruptcies were lower in RTW states. However, there were no significant
differences in capital formation, employment rates and personal income between RTW and non
RTW states. In addition, the paper concluded that while wages were lower in RTW states,
proprietors' income was higher.
Garrett and Rhine (2010) evaluated the impact of economic freedom on employment in
different states. To define economic freedom they included size of government (smaller
government and lower taxation are associated with higher economic freedom) and more labor
market freedom. Their study concluded that states with higher economic freedom have
experienced higher economic growth. Their paper controlled for other factors such as human
capital, population density, and industry mix. It is important to note that RTW legislation is one
factor included in the economic freedom index. So the favorable effects of economic freedom
are due to the overall business environment, and RTW is only a part of that overall
environment.
Richard Vedder (2010) of the Cato Institute, a respected conservative think tank, using data
from 1970 to 2008, concluded that RTW states generated a cumulative economic growth of
61.5 % over the thirty years which was about 23 % higher compared to the growth experienced
by non-right to work states. In addition, the research showed that right-to-work states have
31
almost doubled their population, whereas the population in non-right-to-work state has
increased by a modest 26 %.
General Conclusions Regarding the Effects of RTW Laws
By examining the body of literature on the economic effects of RTW, a few key conclusions can
be drawn. First, the effects of RTW laws on union membership are highly sensitive to the
choice of estimation techniques. Second, if RTW variables are treated as exogenous (that is
they are assumed to be independent of a pro or anti-union bias), then RTW laws have a
significant impact on the extent of unionism; however results are mixed if RTW and the extent
of unionism were both treated as exogenous. Third, there is an identification problem
regarding what a significant RTW coefficient indicates. It can indicate one of the following. A)
There is already a bias against unions and RTW coefficient reflects that sentiment and not the
effect of anti-union activities as reflected in the RTW laws. B) It could reflect the effects of the
elimination free rider phenomenon where the cost of organizing becomes tougher and has a
negative consequence on the extent of unionism. C) It could reflect the effects of the
diminished bargaining power of the union and its consequent effects on the level of unionism.
Thus it is very important to attempt to isolate these independent effects and actually assess the
effects of RTW legislation on the extent of unionism. The fourth conclusion is that there seems
to be evidence of a strong and significant slowing down of union organizing with the passage of
RTW laws.
The effects of RTW on wages are also mixed. It is clear that states with RTW laws have a lower
average wage than states without RTW legislation. Yet RTW states have experienced
significantly greater wage rate growth in the last decade (2000-10). However, while the
causality for either is not well-established, there is evidence to suggest that union wage
premiums are significantly higher in RTW states than in non-RTW states.
The effect of RTW legislation on choice of location by industry is functionally dependent upon
the employers’ perception whether the effect of RTW legislation on the extent of unionism is
real or symbolic. If it is real then the decision to relocate is a result of a cost benefit analysis of
the benefits of reduced union activities compared to the cost of relocation. If on the other hand
the benefits of RTW legislation are merely symbolic, then the movement of industries to states
with RTW legislation would be severely restricted.
It is clear that RTW states have a negative impact on the extent of unionism. It is also clear that
the extent of unionization has a significant impact on the existence of RTW legislation. Some
economists have tried to estimate simultaneous equation models to determine jointly
32
unionization level and the presence / absence of RTW laws, but determining cause and effect is
difficult.
Cobb-Douglas Analysis
The difficulty of assessing whether RTW laws are a cause or effect requires the use of a
different approach towards identifying whether RTW matters with regard to a state’s economic
performance. In this study, regression analysis was used to estimate a standard Cobb-Douglas
production function. The Cobb-Douglas production function is a tool used by economists to
examine the dependency between economic output and inputs such as capital, labor, and
technology.
The percentage changes in state gross domestic product, employment, and organizational
births were used to measure output, labor, and capital formation in the Cobb-Douglas function.
It was from this equation a measure for technological formation was derived, a proxy for
business competitiveness. A series of regression models were then estimated to examine the
relationship between business competitiveness and whether a state had in place RTW
legislation, controlling for factors including, but not limited to, state-by-state union
participation rates, government expenditures, and tax policy. In all of the models estimated,
empirical support was provided for the notion that Right-To-Work states are more economically
competitive. All of the results were statistically significant at 99 % level of confidence. (See
Exhibit 110-116)
Conclusion
The Texas economy still is very large and important within the U.S. and global economy.
Texas’s GSP is roughly equivalent to the GDP of the country of Australia which would make
Texas one of the 13 largest economies in the world if it were a country. This study paints a rosy
picture of Texas’s competitive position relative to most other U.S. states. Texas’s ranking on The
Northwood University Competitiveness Index of 3 indicates Texas is one of the most productive
states in America. The study’s regression analysis indicates that RTW states have a strong and
statistically significant relationship on productivity growth. However, effects of RTW legislation
are often hard to isolate since most RTW states are business friendly. Since RTW states are
generally business friendly, capital formation is higher resulting in higher productivity growth.
The study indicates further consideration is needed to better determine the causal relationship
between RTW legislation and competitiveness. Texas is clearly an example of a highly
productive and business-friendly RTW state.
33
There are also recent historical examples of policy changes leading to economic recovery and
accelerated growth. In a recent Cato Institute policy report, entitled “We can cut government,
Canada did,” the authors outlined Canada’s economic reforms since the 1980s which have been
comprehensive and effective.
The examples and processes used in the following reforms implemented in Canada might be
considered by policymakers at the federal level in the United States or at the state level in
Texas. Canada has reformed its trade policy, engaged in privatization of many government
programs and services, cut spending, maintained a sound monetary policy, cut corporate tax
rates, reformed the personal income tax code, balanced its federal budget, and reduced the
size of its central government. In fact, Canadian federal spending was cut from 23.3 % of GDP
in 1993 to 16.5 % by 2000. Canadian spending cuts of the 1990s were coincident with the
beginning of a 15 year economic boom. (Edwards, 2012).
A similar story can be told regarding the economy of New Zealand. John McMillan, in an article
entitled, “Managing Economic Change: Lessons from New Zealand,” points out that New
Zealand saw vast economic improvement from the early 1980s to the late 1990s by
transforming New Zealand from one of the most regulated of the developed world economies
to one of the least regulated (McMillan, 1998).
The research contained in this study should serve as a guidepost and tool for benchmarking by
Texas public policy leaders. For many years, Texas has been an economic catalyst for much of
the U.S. economy, and continues to be a benchmark for many other states. Texas must
continue to set its sights high and encourage business activity and incent business growth. The
‘Lone Star’ state is certainly one of the economic stars in the United States economy. We
predict it will continue to shine brightly for years to come as long as it adheres to restrained
government and pro-business public policies.
34
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Exhibit 1: Economic Cycle of Human Progress
Sources: Myths of Rich and Poor (1999) and When We Are Free (2005)
Exhibit 2: World Education Rankings
South Korea
Finland
Canada
Japan
Netherlands
Switzerland
United States
Germany
France
United Kingdom
Reading
1
2
3
5
7
11
14
16
18
20
Math
1
2
5
4
6
3
25
10
16
22
Science
3
1
5
2
8
10
17
9
21
11
Sources: The Programme for International Student Assessment (PISA) and the Organization for Economic Cooperation and Development (OECD, 2010)
Exhibit 3: Government Expenditures as a
Percentage of GDP
28%
26%
24%
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
25.6%
18.7%
16.6%
9.4%
5.0%
2.6%
Federal
State/Local
1902
Federal
State/Local
1998
Federal
State/Local
2011
(estimate)
Sources: Computed with data from the Joint Economic Committee Report (1999), U.S. Statistical Abstract and the Bureau of Economic Analysis (2012) and Heritage Foundation (2012)
Exhibit 4: 2012 Corporate Tax Rates (2010)
United States
United Kingdom
Turkey
Switzerland
Sweden
Spain
Slovenia
Slovak Republic
Russia
Portugal
Poland
Norway
New Zealand
Netherlands
Mexico
Luxembourg
Korea
Japan
Italy
Isreal
Ireland
India
Iceland
Hungary
Greece
Germany
France
Finland
Estonia
Denmark
Czech Rebuplic
China
Chile
Canada
Belgium
Austria
Australia
0%
5%
10%
15%
20%
2012
25%
2002
30%
35%
40%
45%
Sources: The Tax Foundation (2012) and KPMG (2012)
Exhibit 5: 2011 Capital Gains Rate By Country
Australia
Austria
Belgium
Canada
Chile
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Isreal
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
Top Long-Term Capital Gains Tax Rate
Integrated Capital Gains Tax Rate
23%
0%
0%
23%
20%
0%
42%
0%
28%
31%
25%
0%
16%
0%
25%
20%
45%
10%
0%
0%
0%
0%
0%
28%
19%
0%
19%
0%
21%
30%
0%
0%
28%
19%
46%
25%
34%
44%
34%
19%
57%
38%
47%
55%
48%
20%
32%
36%
34%
39%
60%
46%
24%
29%
30%
25%
26%
48%
34%
27%
34%
20%
45%
48%
21%
20%
47%
51%
Source: Tax Foundation (2012)
Exhibit 6:
:1995 Heritage/WSJ Economic Freedom Index
Hong Kong
Singapore
United Kingdom
United States
Bahrain
Japan
Taiwan
Australia
South Korea
Malaysia
76.7
0
10
20
30
40
50
60
70
80
90
2000 Heritage/WSJ Economic Freedom Index
Hong Kong
Singapore
New Zealand
United Kingdom
Australia
Switzerland
United States
Luxembourg
El Salvador
Ireland
76.4
0
10
20
30
40
50
60
70
80
90
2012 Heritage/WSJ Economic Freedom Index
Hong Kong
Singapore
Australia
New Zealand
Switzerland
Canada
Chile
Mauritius
Ireland
United States
76.3
0
10
20
30
40
50
60
70
80
90
Sources: The Heritage Foundation and the Wall Street Journal (2012)
Exhibit 7: World Economic Forum's Global Competitiveness Report
1999-2000
2011-2012
1
United States
Switzerland
2
Finland
Singapore
3
Netherlands
Sweden
4
Sweden
Finland
5
Switzerland
United States
6
Germany
Germany
7
Denmark
Netherlands
8
Canada
Denmark
9
France
Japan
10
United Kingdom
United Kingdom
Source: IMD (2012)
$16,000
$16,000
$14,000
Private Debt:
$4.96 trillion
$12,000
$10,000
Public Debt:
$11.04 trillion
$8,000
$6,000
$4,000
$2,000
$1776
1781
1786
1791
1796
1801
1806
1811
1816
1821
1826
1831
1836
1841
1845
1850
1855
1860
1865
1870
1875
1880
1885
1890
1895
1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Billions
Exhibit 8: History of the U.S. Nominal National Debt Outstanding
Source: U.S. Department of the Treasury (2012)
Exhibit 9: Financing The U.S. National Debt: 2011 Data
Debt
Debt Held by the Public As a Percentage of GDP
Actual 2010
Projected for 2015
Projected for 2020
Interest-Bearing Debt Held By Public Investors (As of December 2011)
Falling Due Within 1 Year
Falling Due Within 5 Years
Falling Due Within 10 Years
Holders of the Public Debt (At End of 2011 Fiscal Year)
Domestic Investors
Foreign Investors
Interest
Average Interest Rates (As of July 31, 2011)
Marketable
Non-marketable
Total
Gross Interest Payments on Treasury Debt Securities (in billions)
Fiscal Year 2012 To Date
Actual 2011
Projected Net Interest Outlays (in billions)
Actual 2011
From 2013-2017
From 2013-2022
Net Interest as a Percent of GDP
Actual in 2011
Projected for 2015
Projected for 2020
67.73%
73.77%
61.42%
32.19%
71.82%
90.16%
54.0%
46.0%
2.13%
3.64%
2.62%
323
454
227
1,503
4,247
1.50%
1.60%
2.5%
Sources: Compiled from Congressional Budget Office and U.S. Department of the Treasury (2012)
Exhibit 10: 2012 Average Corporate Tax Rates
Global
24.47%
Non-US G-7
31.80%
OECD
25.73%
EU
22.75%
Latin America
28.30%
Europe
20.60%
Asia
23.12%
North America
33.00%
Africa
29.22%
United States
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Source: KPMG (2012)
Exhibit 11: The Circular Flow Model
Source: IRS.GOV (2012)
Exhibit 12: U.S. Population Net Migration by State (2001-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
88,477
-6,221
702,883
77,407
-1,505,126
208,990
-97,731
45,827
1,164,630
552,246
29,883
109,961
-627,662
-23,820
-49,494
67,438
84,631
306,662
28,188
-95,645
-277,309
-554,374
-49,989
-37,045
41,252
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
40,163
39,152
358,407
31,706
-406,261
28,518
-1,673,059
671,984
-17,300
-370,708
44,022
178,802
-26,994
-46,343
310,871
7,828
263,372
868,292
53,813
-1,637
170,135
242,663
19,208
-14,788
22,709
Source: Computed with data from Bureau of Labor Statistics (2000 – 2010)
Exhibit 13: U.S. Population Net Migration by
State (2001-2010)
8,000,000
5,776,450
6,000,000
4,000,000
2,000,000
868,292
978,614
Texas
United States
0
RTW States
Non-RTW States
-2,000,000
-4,000,000
-4,797,836
-6,000,000
Source: Computed with data from Bureau of Labor Statistics (2000 – 2010)
Exhibit 14: U.S. Employment Growth by State (2000-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
-3.2%
16.9%
7.1%
1.1%
-2.5%
1.9%
-4.0%
-1.2%
2.9%
-2.3%
8.7%
9.5%
-6.6%
-7.1%
-0.5%
-1.4%
-2.4%
-1.3%
-1.0%
3.6%
-3.1%
-16.9%
-0.6%
-5.4%
-3.7%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
9.8%
3.6%
9.9%
1.5%
-3.0%
8.2%
0.0%
-0.9%
16.8%
-10.4%
3.5%
0.0%
-0.4%
-3.2%
-2.6%
6.9%
-3.8%
11.2%
11.3%
0.3%
4.5%
31.1%
2.2%
-3.0%
19.1%
Source: Computed with data from Bureau of Labor Statistics (2000 – 2010)
Exhibit 15: U.S. Employment Growth by State
(2001-2010)
12.0%
11.2%
10.0%
8.0%
6.0%
3.9%
4.0%
2.0%
2.0%
0.5%
0.0%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Labor Statistics (2000 – 2010)
Exhibit 16: Real U.S. Gross State Product Growth (1998-2011)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
62.6%
120.4%
85.6%
71.0%
75.8%
86.0%
60.1%
83.9%
79.3%
64.1%
76.2%
95.6%
56.6%
54.5%
77.8%
69.1%
52.6%
105.4%
60.7%
86.1%
66.1%
26.5%
71.5%
61.1%
51.5%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
89.9%
81.3%
103.4%
64.3%
56.1%
70.9%
70.1%
81.1%
136.2%
38.2%
92.0%
92.5%
59.0%
70.1%
60.5%
100.6%
64.0%
106.2%
103.4%
61.9%
90.2%
77.8%
71.0%
58.9%
156.1%
Source: Computed with data from Bureau of Economic Analysis (1998 – 2010)
Exhibit 17: Real Gross State Product Growth
(1998-2011)
120.0%
106.2%
100.0%
85.0%
80.0%
71.5%
64.2%
60.0%
40.0%
20.0%
0.0%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (1998 – 2010)
Exhibit 18: Real 1998 Gross State Product (millions of dollars)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$ 106,449.00
$
23,306.00
$ 139,726.00
$
61,888.00
$ 1,114,035.00
$ 142,086.00
$ 143,725.00
$
35,750.00
$ 420,569.00
$ 254,346.00
$
38,019.00
$
29,618.00
$ 428,314.00
$ 180,015.00
$
83,813.00
$
77,441.00
$ 108,002.00
$ 120,625.00
$
32,104.00
$ 161,779.00
$ 235,793.00
$ 304,472.00
$ 164,256.00
$
60,725.00
$ 164,716.00
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
20,009.00
51,931.00
64,009.00
38,691.00
311,981.00
46,479.00
687,860.00
242,799.00
17,072.00
350,293.00
80,711.00
101,164.00
364,050.00
29,446.00
103,274.00
21,000.00
162,521.00
634,286.00
61,217.00
16,002.00
225,493.00
199,706.00
39,080.00
160,324.00
14,689.00
Source: Bureau of Economic Analysis (1998)
Exhibit 19: Real 1998 Average Gross State
Product (millions of dollars)
$700,000
$634,286.00
$600,000
$500,000
$400,000
$300,000
$200,000
$201,195.11
$173,484.22
$138,215.82
$100,000
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (1998)
Exhibit 20: Real 2011 Gross State Product (millions of dollars)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$ 173,122.00
$
51,376.00
$ 258,447.00
$ 105,846.00
$ 1,958,904.00
$ 264,308.00
$ 230,090.00
$
65,755.00
$ 754,255.00
$ 418,943.00
$
66,991.00
$
57,927.00
$ 670,727.00
$ 278,128.00
$ 148,986.00
$ 130,923.00
$ 164,799.00
$ 247,720.00
$
51,585.00
$ 301,100.00
$ 391,771.00
$ 385,242.00
$ 281,712.00
$
97,810.00
$ 249,525.00
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
37,990.00
$
94,160.00
$ 130,666.00
$
63,556.00
$ 486,989.00
$
79,414.00
$ 1,157,969.00
$ 439,826.00
$
40,323.00
$ 483,962.00
$ 154,966.00
$ 194,742.00
$ 578,839.00
$
50,091.00
$ 165,785.00
$
40,117.00
$ 266,527.00
$ 1,308,132.00
$ 124,483.00
$
25,905.00
$ 428,909.00
$ 355,083.00
$
66,821.00
$ 254,818.00
$
37,619.00
Source: Bureau of Economic Analysis (2011)
Exhibit 21: Real 2011 Average Gross State
Product (millions of dollars)
$1,400,000
$1,308,132.00
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$297,473.68
$330,292.57
$255,704.18
$200,000
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2011)
Exhibit 22: Average Unemployment Rate (2000-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
6.93%
6.96%
5.35%
5.20%
4.60%
4.11%
6.52%
5.84%
6.51%
5.18%
4.71%
5.33%
7.68%
4.96%
5.85%
4.53%
4.16%
5.65%
5.37%
5.85%
6.35%
7.23%
5.59%
6.37%
4.28%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
6.53%
5.63%
5.45%
5.43%
5.85%
5.65%
5.75%
5.69%
5.03%
4.30%
5.15%
5.54%
7.12%
3.65%
6.44%
6.41%
3.36%
4.75%
6.96%
3.56%
6.15%
5.80%
4.83%
4.08%
4.22%
Source: Computed with data from Bureau of Economic Analysis (2000 - 2010)
Exhibit 23: Average Unemployment Rate (20002010)
5.80%
5.60%
5.49%
5.55%
5.44%
5.40%
5.20%
5.00%
4.80%
4.75%
4.60%
4.40%
4.20%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2000 - 2010)
Exhibit 24: Non-farm Payroll Employment Growth Rank (2001-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
42
3
12
22
36
20
45
31
18
34
10
9
47
48
27
33
35
32
30
15
40
50
28
46
43
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
8
16
7
21
38
11
25
29
4
49
17
24
26
41
37
13
44
6
5
23
14
1
19
39
2
Source: Computed with data from Bureau of Economic Analysis (2001 - 2010)
Exhibit 25: Non-farm Payroll Employment
Growth Rank (2001-2010)
50.0
45.0
40.0
35.0
28.8
30.0
25.5
25.0
21.3
20.0
15.0
10.0
6.0
5.0
0.0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2001 - 2010)
Exhibit 26: Non-farm Payroll Employment Growth (2001-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
-3.2%
16.9%
7.1%
1.1%
-2.5%
1.9%
-4.0%
-1.2%
2.9%
-2.3%
8.7%
9.5%
-6.6%
-7.1%
-0.5%
-1.4%
-2.4%
-1.3%
-1.0%
3.6%
-3.1%
-16.9%
-0.6%
-5.4%
-3.7%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
9.8%
3.6%
9.9%
1.5%
-3.0%
8.2%
0.0%
-0.9%
16.8%
-10.4%
3.5%
0.0%
-0.4%
-3.2%
-2.6%
6.9%
-3.8%
11.2%
11.3%
0.3%
4.5%
31.1%
2.2%
-3.0%
19.1%
Source: Computed with data from Bureau of Economic Analysis (2001 - 2010)
Exhibit 27: Non-farm Payroll Employment
Growth (2001-2010)
12.0%
11.2%
10.0%
8.0%
6.0%
3.9%
4.0%
2.0%
2.0%
0.5%
0.0%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2000 - 2010)
Exhibit 28: U.S. Personal Income Per Capita Growth (2000-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
39.6%
45.3%
31.9%
45.3%
28.7%
24.8%
30.3%
28.3%
31.6%
23.0%
43.3%
30.5%
29.6%
25.7%
41.3%
38.9%
30.8%
58.0%
36.6%
40.8%
33.5%
20.3%
32.5%
45.1%
33.1%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
48.5%
40.8%
20.2%
26.6%
29.6%
46.0%
38.0%
25.7%
72.0%
27.6%
44.4%
28.2%
35.0%
42.5%
30.0%
52.7%
32.2%
34.0%
33.2%
41.5%
39.4%
33.3%
44.1%
32.1%
53.1%
Source: Computed with data from Bureau of Economic Analysis (2000 - 2010)
Exhibit 29: Average Personal Income Per Capita
Growth (2000-2010)
40.0%
39.2%
39.0%
38.0%
37.0%
36.4%
36.0%
35.0%
34.0%
34.2%
34.0%
33.0%
32.0%
31.0%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2000 - 2010)
Exhibit 30: U.S. Median Household Income (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
40,976.00
58,198.00
47,279.00
38,571.00
54,459.00
60,442.00
66,454.00
55,269.00
44,243.00
44,108.00
58,507.00
47,014.00
50,761.00
46,322.00
49,177.00
46,229.00
41,236.00
39,443.00
48,133.00
69,025.00
61,333.00
46,441.00
52,554.00
37,985.00
46,184.00
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
41,467.00
52,728.00
51,525.00
66,707.00
63,540.00
45,098.00
49,826.00
43,753.00
51,380.00
46,093.00
43,400.00
50,526.00
48,460.00
51,914.00
41,709.00
45,669.00
38,686.00
47,464.00
56,787.00
55,942.00
60,363.00
56,253.00
42,839.00
50,522.00
52,359.00
Source: Computed with data from Bureau of Economic Analysis (2010)
Exhibit 31: U.S. Median Household Income (2010)
$60,000
$53,018
$50,000
$50,107
$47,464
$46,402
$40,000
$30,000
$20,000
$10,000
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2010)
Exhibit 32: State Minimum Wage (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7.25
7.75
7.65
7.25
8.00
7.64
8.25
7.25
7.67
7.25
7.25
7.25
8.25
7.25
7.25
7.25
7.25
7.25
7.50
7.25
8.00
7.40
7.25
7.25
7.25
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7.65
7.25
8.25
7.25
7.25
7.50
7.25
7.25
7.25
7.70
7.25
8.80
7.25
7.40
7.25
7.25
7.25
7.25
7.25
7.25
7.25
9.04
7.25
7.25
7.25
Source: Bureau of Labor Statistics (2012)
Exhibit 33: State Minimum Wage (2012)
$8.00
$7.25
$7.47
$7.33
United States
RTW States
$7.59
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$Texas
Non-RTW States
Source: Computed with data from Bureau of Labor Statistics (2012)
Exhibit 34: Average State and Local Tax Burden as a % of Income (FY 2009-10)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
8.5%
6.3%
8.7%
9.9%
10.6%
8.6%
12.0%
9.6%
9.2%
9.1%
9.6%
9.4%
10.0%
9.5%
9.5%
9.7%
9.3%
8.2%
10.1%
10.0%
10.0%
9.7%
11.0%
8.7%
9.0%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
8.7%
9.8%
7.5%
8.0%
12.2%
8.4%
12.1%
9.8%
9.5%
9.7%
8.7%
9.8%
10.1%
10.7%
8.1%
8.1%
7.6%
7.9%
9.7%
10.2%
9.1%
10.3%
9.4%
11.0%
7.8%
Source: Computed with data from Bureau of Economic Analysis and ALEC’s Rich States, Poor States (2012)
Exhibit 35: Average State and Local Tax Burden
as a % of Income (FY 2009-10)
12.0%
10.0%
9.9%
9.4%
8.8%
8.0%
7.9%
6.0%
4.0%
2.0%
0.0%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis and ALEC’s Rich States, Poor States (2012)
Exhibit 36: Average State and Local Corporate Tax Rate (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
6.50%
9.40%
7.00%
6.50%
8.80%
4.60%
7.50%
8.70%
5.50%
6.00%
6.40%
7.60%
7.30%
8.50%
12.00%
7.10%
6.00%
8.00%
8.90%
8.30%
9.50%
5.00%
9.80%
5.00%
6.30%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
6.80%
7.80%
0.00%
8.50%
9.00%
7.60%
7.10%
6.90%
6.50%
0.30%
6.00%
7.90%
10.00%
9.00%
5.00%
0.00%
6.50%
0.00%
5.00%
8.50%
6.00%
0.00%
8.50%
7.90%
0.00%
Source: Tax Foundation (2010)
Exhibit 37: Average State and Local Corporate
Tax Rate (2010)
8.00%
7.36%
7.00%
6.54%
6.00%
5.50%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
0.00%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Tax Foundation (2010)
Exhibit 38: Average State Sales Tax Rate (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
4.00%
0.00%
5.60%
6.00%
8.30%
2.90%
6.00%
2.10%
6.00%
4.00%
4.00%
6.00%
6.30%
7.00%
6.00%
5.30%
6.00%
4.00%
5.00%
6.00%
6.30%
6.00%
6.90%
7.00%
4.20%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
0.00%
5.50%
6.90%
0.00%
7.00%
5.40%
4.00%
4.50%
5.00%
5.50%
4.50%
0.00%
6.00%
7.00%
6.00%
4.00%
7.00%
6.30%
6.00%
6.00%
5.00%
6.50%
6.00%
5.00%
4.00%
Source: Tax Foundation (2010)
Exhibit 39: State Sales Tax Rate (2010)
7.00%
6.30%
6.00%
5.39%
5.08%
4.84%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Tax Foundation (2010)
Exhibit 40: Property Tax Collections Per Capita Ranking (2009)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
50
10
32
49
15
24
2
43
13
34
35
40
9
31
22
19
46
45
11
27
8
16
20
41
37
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
23
17
21
3
1
47
5
38
29
30
48
28
25
7
36
33
42
14
39
6
18
26
44
12
4
Source: United States Census Bureau (2009)
Exhibit 41: Property Tax Collections Per Capita
Ranking (2009)
50.0
45.0
40.0
35.0
31.1
30.0
25.5
25.0
21.1
20.0
15.0
14.0
10.0
5.0
0.0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Census Bureau (2009)
Exhibit 42: State Debt As A Percent of GDP (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
5.11%
12.68%
5.47%
4.16%
7.70%
6.37%
12.81%
8.79%
5.38%
3.41%
11.63%
6.84%
9.46%
8.62%
3.61%
5.09%
8.91%
8.00%
11.76%
8.28%
19.36%
8.35%
4.30%
6.65%
8.42%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
12.31%
2.62%
3.56%
13.70%
12.45%
10.75%
11.21%
4.44%
6.30%
6.55%
6.69%
7.26%
7.91%
19.33%
9.73%
8.60%
2.28%
3.40%
5.65%
13.52%
5.88%
8.03%
11.43%
9.03%
3.94%
Source: Computed with data from United States Census Bureau (2009)
Exhibit 43: State Debt As A Percent of GPD
(2010)
12.00%
10.39%
10.00%
8.15%
8.00%
6.00%
4.00%
5.31%
3.40%
2.00%
0.00%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Census Bureau (2009)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Exhibit 44: State Debt Per Capita (2010)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,644
8,002
1,949
1,306
3,572
2,965
7,569
5,490
1,921
1,272
5,059
2,208
4,283
3,261
1,509
2,029
2,965
3,437
4,072
3,789
10,102
2,915
1,970
1,950
3,051
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,953
1,140
1,469
5,677
6,204
3,789
5,981
1,766
2,918
2,420
2,373
3,152
3,151
8,082
3,046
3,820
822
1,491
2,090
4,998
2,787
3,650
3,451
3,512
2,402
Source: Computed with data from United States Census Bureau (2009)
Exhibit 45: State Debt Per Capita (2010)
$5,000
$4,539
$4,500
$4,000
$3,449
$3,500
$3,000
$2,500
$2,061
$2,000
$1,500
$1,491
$1,000
$500
$0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Census Bureau (2009)
Exhibit 46: State Debt as a Share of Tax Revenue (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
107.33%
141.23%
136.84%
58.53%
142.05%
194.60%
245.93%
199.12%
128.27%
93.28%
159.17%
131.19%
223.22%
171.31%
75.49%
99.77%
151.01%
199.18%
172.90%
160.76%
368.77%
144.77%
67.89%
103.17%
210.34%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
204.12%
61.17%
76.01%
392.81%
235.11%
198.00%
203.89%
87.62%
83.09%
132.20%
140.73%
185.34%
148.29%
369.74%
215.67%
267.01%
55.50%
106.69%
127.21%
139.08%
152.13%
170.61%
153.48%
155.33%
71.53%
Source: Computed with data from United States Census Bureau (2009)
Exhibit 47: State Debt as a Share of Tax Revenue
(2010)
250%
194.32%
200%
160.37%
150%
117.15%
106.69%
100%
50%
0%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Census Bureau (2009)
Exhibit 48: Debt Service as a Share of Tax Revenue (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
4.55%
6.69%
5.86%
2.04%
6.40%
9.77%
11.87%
10.41%
4.31%
4.73%
6.38%
5.88%
11.33%
7.25%
3.68%
5.25%
6.28%
12.08%
7.31%
6.78%
17.48%
5.37%
3.21%
3.75%
8.45%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
7.95%
2.56%
3.48%
18.98%
8.34%
7.69%
8.39%
2.80%
4.33%
6.46%
7.25%
6.11%
5.76%
16.72%
9.65%
9.68%
2.31%
2.97%
5.01%
6.14%
6.52%
7.25%
5.74%
6.79%
2.99%
Source: Computed with data from United States Census Bureau (2009)
Exhibit 49: Debt Service as a Share of Tax
Revenue (2010)
9.00%
8.48%
8.00%
6.98%
7.00%
6.00%
5.08%
5.00%
4.00%
3.00%
2.97%
2.00%
1.00%
0.00%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Census Bureau (2010)
Exhibit 50: State Liability System Ranking (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
47
33
13
44
46
8
24
1
42
27
35
18
45
4
5
14
40
49
12
20
9
30
11
48
37
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
43
3
28
16
32
41
23
17
2
29
31
21
34
38
39
10
19
36
7
25
6
26
50
22
15
Source: Computed with data from United States Chamber of Commerce (2010)
Exhibit 51: State Liability System Ranking (2010)
40.0
36.0
35.0
30.0
27.0
25.5
25.0
23.6
20.0
15.0
10.0
5.0
0.0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Chamber of Commerce (2010)
Exhibit 52: Total Government Employees per 10,000 People (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
865
1515
700
813
720
900
742
805
640
816
1328
812
707
705
875
1059
885
901
835
977
692
657
789
954
819
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
981
967
632
731
735
1052
783
902
1256
723
1010
780
649
694
859
1048
720
797
842
917
1095
937
873
766
1326
Source: Computed with data from Bureau of Economic Analysis (2010)
Exhibit 53: Total Government Employees per
10,000 People (2010)
1000
904
872
800
846
797
600
400
200
0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2010)
Exhibit 54: State and Local Government Employee per 10,000 people (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
674
890
552
672
588
681
645
640
512
599
659
662
598
606
770
829
653
736
660
600
583
578
684
757
650
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
749
799
500
634
638
806
683
675
932
619
770
668
534
524
668
794
600
641
644
739
667
704
687
681
1071
Source: Computed with data from Bureau of Economic Analysis (2010)
Exhibit 55: State and Local Government
Employee per 10,000 people (2010)
800
700
706
678
656
641
600
500
400
300
200
100
0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Exhibit 56: Bailout Funds Per Capita (2010)
61.95
4.47
7.67
9.30
11.17
8.74
134.00
2063.83
4.32
23.53
33.24
7.79
6.94
5.73
158.48
2.93
8.57
6.22
8.82
3.96
27.64
418.12
65.10
11.35
9.19
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
0.91
2.79
25.13
5.16
19.71
5.07
219.20
135.42
31.81
31.11
7.79
18.04
23.13
34.97
9.75
24.84
8.84
5.99
202.37
1.74
285.49
7.73
15.58
18.44
6.26
Source: Propublica (2010)
Exhibit 57: Bailout Funds Per Capita (2010)
140
120
114.65
100
85.01
80
60
47.27
40
20
5.99
0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Propublica (2010)
Exhibit 58: Median Price of Annual Car Insurance Policy (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,476.00
1,244.00
1,724.00
1,722.00
1,304.00
1,562.00
1,984.00
2,456.00
1,784.00
1,636.00
1,244.00
1,290.00
1,716.00
1,268.00
1,202.00
1,480.00
2,292.00
2,912.00
1,160.00
2,030.00
1,228.00
4,490.00
1,924.00
1,840.00
1,550.00
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,354.00
1,348.00
2,070.00
1,484.00
2,556.00
1,306.00
2,334.00
860.00
1,384.00
1,128.00
1,610.00
1,108.00
1,828.00
2,132.00
1,682.00
1,772.00
1,452.00
1,420.00
1,270.00
1,380.00
1,444.00
1,458.00
2,074.00
1,400.00
1,394.00
Source: Computed with data from Bureau of Economic Analysis (2012)
Exhibit 59: Median Price of Annual Car Insurance
Policy (2012)
$2,000.00
$1,800.00
$1,749.79
$1,675.32
$1,580.55
$1,600.00
$1,420.00
$1,400.00
$1,200.00
$1,000.00
$800.00
$600.00
$400.00
$200.00
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2012)
Exhibit 60: % of Family Household Income to Purchase Car Insurance (2012 & 2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
2.927%
1.634%
3.115%
3.660%
1.991%
2.304%
2.442%
3.573%
3.360%
2.956%
1.634%
2.465%
2.623%
2.290%
1.973%
2.426%
4.548%
5.551%
1.993%
2.442%
1.434%
8.003%
2.763%
4.045%
2.757%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
2.484%
2.217%
3.439%
1.988%
3.101%
2.560%
3.542%
1.625%
2.122%
1.996%
3.099%
1.955%
2.954%
3.144%
3.253%
2.954%
2.842%
2.510%
2.061%
2.205%
1.992%
2.166%
4.239%
2.255%
2.177%
Source: Computed with data from Bureau of Economic Analysis (2010) and CarInsuranceQuotes.com (2012)
Exhibit 61: % of Family Household Income to
Purchase Car Insurance (2012 & 2010)
3.0%
2.5%
2.8%
2.9%
United States
RTW States
2.8%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Texas
Non-RTW States
Source: Computed with data from Bureau of Economic Analysis (2010) and CarInsuranceQuotes.com (2012)
Exhibit 62: Average Retail Price For Electricity (cents/kWh)(2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
7.57
13.28
8.54
6.96
12.8
7.76
16.45
11.35
10.33
7.86
21.29
5.07
8.46
6.5
6.83
6.84
5.84
8.39
14.59
11.5
15.16
8.53
7.44
8.03
6.56
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
7.13
6.28
9.99
13.98
13.01
7.44
15.22
7.83
6.42
7.91
7.29
7.02
9.08
13.12
7.18
6.89
7.07
10.11
6.41
13.04
7.12
6.37
5.34
8.48
5.29
Source: USA Today (2010)
Exhibit 63: Average Retail Price For Electricity
(cents/kWh)(2010)
$12
$10.52
$10.11
$10
$9.18
$8
$7.47
$6
$4
$2
$0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from USA Today (2010)
Exhibit 64: 2011 Total Gasoline Taxes (per gallon)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
0.39
0.26
0.37
0.40
0.67
0.40
0.67
0.41
0.53
0.48
0.66
0.43
0.57
0.57
0.40
0.43
0.46
0.38
0.50
0.42
0.42
0.58
0.46
0.37
0.36
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
0.46
0.46
0.52
0.38
0.33
0.37
0.67
0.58
0.41
0.46
0.35
0.49
0.51
0.51
0.35
0.42
0.40
0.38
0.43
0.45
0.38
0.56
0.52
0.51
0.32
Source: Bankrate.com (2010)
Exhibit 65: Total Gasoline Taxes (per gallon)
$0.60
$0.49
$0.50
$0.46
$0.42
$0.40
$0.38
$0.30
$0.20
$0.10
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Bankrate.com (2010)
Exhibit 66: Residential Natural Gas Prices (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
8.89
9.92
8.13
14.93
15.12
12.44
9.39
8.62
10.02
14.14
12.44
14.53
11.32
8.76
11.66
8.64
15.07
12.84
9.63
14.04
12.49
12.90
16.48
13.03
16.14
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
12.24
11.39
10.34
15.81
15.87
11.53
17.89
15.17
8.95
9.57
10.54
11.73
10.19
8.95
12.25
12.50
8.08
11.13
11.13
8.77
10.46
10.81
8.22
12.73
8.58
Source: U.S. Energy Information Administration (2010)
Exhibit 67: Residential Natural Gas Prices (2010)
$14.00
$12.00
$11.73
$11.13
$12.11
$11.24
$10.00
$8.00
$6.00
$4.00
$2.00
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from U.S. Energy Information Administration (2010)
Exhibit 68: Commercial Natural Gas Prices (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
8.78
8.30
7.58
9.55
13.26
9.87
8.76
7.54
8.61
11.71
9.87
12.20
8.95
7.60
10.28
8.54
12.23
10.11
7.47
10.88
10.10
10.47
14.46
10.34
11.82
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
10.49
10.27
8.53
13.36
10.72
8.89
10.60
10.95
8.21
7.81
9.61
9.87
8.75
7.07
9.77
10.18
7.03
9.25
9.78
7.13
9.39
7.90
6.83
9.55
7.13
Source: U.S. Energy Information Administration (2010)
Exhibit 69: Commercial Natural Gas Prices (2010)
$12.00
$10.00
$9.25
$9.57
$9.45
$9.66
United States
RTW States
Non-RTW States
$8.00
$6.00
$4.00
$2.00
$Texas
Source: Computed with data from U.S. Energy Information Administration (2010)
Exhibit 70: Industrial Natural Gas Prices (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4.23
7.02
5.84
9.60
10.18
9.05
7.13
5.65
5.57
11.23
9.05
11.54
9.25
5.58
8.70
8.07
11.59
9.63
6.17
8.55
7.05
8.23
12.13
6.11
6.57
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
9.37
5.40
7.56
6.67
7.54
7.28
8.33
6.25
6.39
6.10
5.50
4.67
6.19
5.85
10.53
8.24
5.22
7.40
8.39
5.92
6.64
4.61
5.57
6.68
4.91
Source: U.S. Energy Information Administration (2010)
Exhibit 71: Industrial Natural Gas Prices (2010)
$8.00
$7.40
$7.42
$7.41
$7.43
Texas
United States
RTW States
Non-RTW States
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$Source: Computed with data from U.S. Energy Information Administration (2010)
Exhibit 72: Insurance Trust Expenditures Per Capita (2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,450.52
1,032.41
1,031.92
1,330.42
780.73
960.90
1,117.40
685.99
1,000.09
736.09
700.70
1,322.58
1,067.51
1,042.66
743.45
877.70
624.08
1,626.23
906.97
1,136.26
1,466.32
1,440.86
1,155.27
1,446.54
685.85
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,224.94
727.14
1,086.60
644.12
698.46
675.70
620.37
712.65
743.20
779.73
754.44
797.83
698.16
376.25
1,116.31
854.52
591.63
681.38
806.82
483.60
471.79
611.16
614.90
541.18
1,156.94
Source: United States Census Bureau
Exhibit 73: Insurance Trust Expenditure Per
Capita (2010)
$1,200.00
$966.77
$1,000.00
$896.79
$841.80
$800.00
$681.38
$600.00
$400.00
$200.00
$Texas
United States
RTW States
Non-RTW States
Source: United States Census Bureau (2010)
Exhibit 74: Average Insurance Trust Expenditures Per Capita (2000-2010)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,291.94
757.27
649.50
791.11
502.30
679.46
631.64
339.91
622.29
500.06
469.84
707.96
594.43
694.40
460.94
593.50
340.87
971.18
586.59
757.42
1,027.31
1,018.18
681.31
907.12
371.56
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
823.04
645.28
729.84
433.95
420.15
399.55
370.73
407.13
469.76
480.71
434.16
598.38
485.16
218.30
516.85
484.22
469.26
489.34
539.26
349.34
278.25
424.15
398.47
339.05
754.36
Source: Computed with data from United States Census Bureau (2010)
Exhibit 75: Average Insurance Trust Expenditure
Per Capita (2000-2010)
$700.00
$623.33
$578.14
$600.00
$542.62
$500.00
$489.34
$400.00
$300.00
$200.00
$100.00
$Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Census Bureau (2010)
Exhibit 76: Number of Cities in the Top 50 Destinations
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
0
0
2
0
8
1
0
0
9
1
1
0
3
1
0
0
0
1
0
1
1
0
1
0
2
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
0
0
2
0
0
0
1
1
0
1
0
1
1
0
0
0
1
7
0
0
2
1
0
0
0
Source: CNBC (2012)
Exhibit 77: Number of Cities in the Top 50 Destinations
25
23
20
15
10
9
8
7
5
3
0
0
Florida
California
Texas
Illinois
Michigan
All Others
Source: Computed with data from CNBC (2012)
Exhibit 78: The Kauffman Foundation’s Number of Business Start Ups (2011)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
260
410
520
340
440
420
340
270
380
350
180
380
200
200
240
270
370
340
360
290
260
220
230
260
400
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
330
280
390
270
270
250
370
280
280
270
210
250
160
220
290
320
290
440
280
390
200
230
150
230
220
Source: The Kauffman Foundation (2011)
Exhibit 79: The Kauffman Foundation ’s Number
of Business Start Ups (2011)
500
450
440
400
350
310
296
300
285
250
200
150
100
50
0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from The Kauffman Foundation (2011)
Exhibit 80: Business Births per 10,000 People (2007)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
25.87
32.81
31.71
26.13
30.06
41.38
25.91
33.11
39.04
31.61
26.10
41.94
27.28
25.02
25.50
28.57
22.95
29.65
33.71
27.27
26.86
24.19
29.98
25.00
29.20
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
45.69
28.26
35.92
31.08
31.13
27.07
29.39
29.33
31.53
23.56
27.88
35.84
23.38
29.18
28.16
33.77
25.44
26.51
38.20
35.58
29.36
34.83
22.14
25.10
44.85
Source: United States Small Business Administration (2007)
Exhibit 81: Business Births per 10,000 People
(2007)
32.00
31.10
31.00
30.28
30.00
29.64
29.00
28.00
27.00
26.51
26.00
25.00
24.00
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Small Business Administration (2007)
Exhibit 82: Business Deaths per 10,000 People (2007)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
19.82
27.18
22.87
21.48
24.92
32.79
23.81
29.38
32.90
23.81
22.48
28.20
23.16
21.39
22.41
24.33
19.81
19.48
28.68
23.77
24.31
23.64
27.27
18.86
26.10
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
32.89
24.15
26.52
28.48
28.89
20.88
26.18
22.39
25.38
21.98
22.16
27.29
21.55
27.70
21.62
26.51
20.30
20.52
24.73
31.99
23.77
26.84
20.10
22.72
32.43
Source: United States Small Business Administration (2007)
Exhibit 83: Business Deaths per 10,000 People
(2007)
30.00
24.82
25.00
25.58
23.85
20.52
20.00
15.00
10.00
5.00
0.00
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Small Business Administration (2007)
Exhibit 84: Growth in Establishment Births (2002-2007)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
17.50%
8.27%
30.92%
7.19%
14.19%
20.43%
8.00%
6.70%
26.44%
21.66%
12.88%
41.58%
14.34%
9.48%
9.10%
5.53%
8.28%
27.55%
10.49%
8.84%
1.98%
2.31%
10.50%
14.60%
5.95%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
32.48%
7.66%
29.22%
10.03%
10.28%
13.64%
8.48%
23.63%
20.78%
8.50%
12.99%
22.94%
7.87%
10.67%
20.09%
11.25%
15.96%
16.57%
35.16%
17.03%
17.90%
23.57%
8.37%
8.57%
17.82%
Source: Computed with data from United States Small Business Administration (2002 – 2007)
Exhibit 85: Growth in Establishment Births
(2002-2007)
25.00%
19.60%
20.00%
16.57%
15.12%
15.00%
11.61%
10.00%
5.00%
0.00%
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from United States Small Business Administration (2002 – 2007)
Exhibit 86: Growth in Establishment Deaths (2002-2007)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
-6.87%
-0.26%
7.92%
-1.97%
3.07%
1.95%
-4.85%
5.55%
21.47%
1.11%
2.75%
7.19%
-4.17%
-1.59%
-5.84%
-7.91%
-0.69%
-9.21%
-3.01%
8.21%
-20.37%
-5.28%
4.46%
-7.97%
4.17%
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
0.46%
-1.12%
17.67%
3.19%
3.88%
-8.31%
-1.14%
-0.41%
-0.70%
-1.55%
-4.12%
-4.34%
0.41%
8.68%
-1.56%
2.03%
-8.27%
-1.46%
4.44%
-3.61%
8.85%
-3.37%
-5.67%
0.58%
0.77%
Source: Computed with data from United States Small Business Administration (2002 – 2007)
Exhibit 87: Growth in Establishment Deaths
(2002-2007)
1.00%
0.64%
0.50%
0.00%
Texas
United States
-0.14%
RTW States
Non-RTW States
-0.50%
-0.74%
-1.00%
-1.50%
-1.46%
-2.00%
Source: Computed with data from United States Small Business Administration (2002 – 2007)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Exhibit 88: Happiness (2005 - 2008)
9
11
5
17
46
21
50
22
3
19
2
14
45
47
31
32
35
1
10
40
43
48
26
6
38
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
7
33
39
27
49
24
51
12
25
44
20
30
41
42
8
15
4
16
23
18
28
36
34
29
13
Source: Journal of Science (12-17-09)
Exhibit 89: Happiness (2005 - 2008)
50
45
40
35
32.71
30
25.78
25
20
16.95
16.00
15
10
5
0
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Journal of Science (12-17-09)
Exhibit 90: ALEC-Laffer State Economic Performance Rankings, 2000-2010
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
22
5
11
10
47
24
44
35
13
33
15
17
48
46
28
39
32
25
23
21
43
50
41
36
38
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
3
20
18
34
45
6
40
27
4
49
9
26
30
37
29
7
31
2
12
19
8
14
16
42
1
Source: ALEC’s Rich States, Poor States (2012)
Exhibit 91: ALEC-Laffer State Economic
Performance Rankings, 2000-2010
50.00
45.00
40.00
35.00
30.00
28.11
25.50
25.00
22.18
20.00
15.00
10.00
5.00
2.00
0.00
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from ALEC’s Rich States, Poor States (2012)
Exhibit 92: Forbes Best States for Business Rank (2011)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
37
41
20
29
39
5
35
33
24
11
49
16
41
34
10
12
25
30
50
19
18
47
15
46
31
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
23
8
36
27
44
32
22
3
4
38
13
9
26
48
28
17
21
6
1
45
2
7
43
40
14
Source: Forbes (2011)
Exhibit 93: Forbes' Best States for Business
Ranking (2011)
35.00
31.64
30.00
25.48
25.00
20.00
17.64
15.00
10.00
6.00
5.00
0.00
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from Forbes (2011)
Exhibit 94: CNBC's America's Top States for Business (2011)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
41
49
24
32
32
5
39
36
18
4
48
31
22
15
9
11
35
42
40
29
6
34
7
47
16
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
38
10
45
17
30
43
26
3
13
23
28
27
12
50
37
13
18
2
8
44
1
20
46
25
21
Source: CNBC (2011)
Exhibit 95: CNBC's America's Top States for
Business (2011)
50.00
45.00
40.00
35.00
29.07
30.00
25.44
25.00
20.82
20.00
15.00
10.00
5.00
2.00
0.00
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from CNBC (2011)
Exhibit 96: Beacon Hill Institute’s Competitiveness Rankings (2011)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
49
36
32
34
31
3
26
24
18
30
20
16
44
43
8
12
46
40
28
23
1
25
4
50
33
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
27
6
37
11
48
41
29
21
2
45
35
17
39
19
47
13
38
15
5
14
7
9
42
22
10
Source: The Beacon Hill Institute (2011)
Exhibit 97: Beacon Hill Institute’s
Competitiveness Rankings (2011)
50.00
45.00
40.00
35.00
30.00
26.79
25.50
23.86
25.00
20.00
15.00
15.00
10.00
5.00
0.00
Texas
United States
RTW States
Non-RTW States
Source: Computed with data from The Beacon Hill Institute (2011)
Exhibit 98: Northwood's State Competitiveness Index
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
30
42
14
9
49
19
41
29
22
13
31
12
46
32
15
10
38
20
36
11
48
47
26
37
28
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
18
2
17
27
43
16
39
24
1
45
7
44
25
50
34
4
21
3
4
33
6
35
23
40
8
Exhibit 99: Northwood's State Competitiveness
Index
40.0
34.3
35.0
30.0
25.5
25.0
20.0
14.3
15.0
10.0
5.0
3.0
0.0
Texas
United States
RTW States
Non-RTW States
Exhibit 100: NU Index - Workforce Composition and Costs Rank (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
24
48
13
6
40
14
38
18
3
9
50
16
42
27
29
12
25
8
19
35
30
45
36
10
28
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
33
20
47
11
44
23
49
1
26
41
15
37
43
32
4
7
2
17
22
21
5
46
39
34
31
Exhibit 101: NU Index – Workforce Composition
and Costs Rank (2012)
40.0
33.9
35.0
30.0
25.5
25.0
20.0
17.0
14.9
15.0
10.0
5.0
0.0
Texas
United States
RTW States
Non-RTW States
Exhibit 102: NU Index – Regulatory Environment Rank (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
45
50
28
32
42
8
7
15
39
19
37
26
25
5
13
9
31
48
40
6
14
24
23
49
16
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
38
1
3
2
20
44
21
35
11
33
22
36
18
47
46
4
34
17
12
43
10
29
27
30
41
Exhibit 103: NU Index – Regulatory Environment
Rank (2012)
30.0
25.5
25.0
26.1
24.7
20.0
17.0
15.0
10.0
5.0
0.0
Texas
United States
RTW States
Non-RTW States
Exhibit 104: NU Index – State Debt and Taxation Rank (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
9
45
23
2
33
42
47
46
32
15
29
24
35
25
12
14
19
36
41
31
50
10
13
11
16
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
37
5
1
49
43
30
38
26
21
7
20
28
17
48
40
39
6
3
22
44
34
18
8
27
4
Exhibit 105: NU Index – State Debt and Taxation
Rank (2012)
35.0
31.3
30.0
25.5
25.0
20.0
18.1
15.0
10.0
5.0
3.0
0.0
Texas
United States
RTW States
Non-RTW States
Exhibit 106: NU Index – Labor and Capital Formation Rank (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
27
5
2
35
39
17
29
28
9
13
7
10
44
48
43
41
46
22
37
12
40
45
30
50
47
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
8
33
1
26
23
15
21
24
11
49
25
19
32
38
14
20
34
4
3
31
18
16
36
42
6
Exhibit 107: NU Index - Labor and Capital
Formation Rank (2012)
35.0
29.6
30.0
25.5
25.0
20.2
20.0
15.0
10.0
5.0
4.0
0.0
Texas
United States
RTW States
Non-RTW States
Exhibit 108: NU Index - General Macroeconomic Environment Rank (2012)
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
33
1
42
12
43
41
26
23
46
44
14
31
38
37
9
16
34
11
18
15
25
48
22
17
29
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
10
3
50
30
32
5
21
45
2
36
13
49
19
40
47
6
39
24
28
7
20
35
8
27
4
Exhibit 109: NU Index - General Macroeconomic
Environment Rank (2012)
50.0
45.0
40.0
35.0
30.0
25.0
24.0
25.5
24.6
United States
RTW States
26.2
20.0
15.0
10.0
5.0
0.0
Texas
Non-RTW States
Exhibit 110: Cobb-Douglas Production Function
In order to examine the association between whether right to work enhances
business competitiveness, we started with the cobb-douglas production
function as follows:
𝑌 = 𝐾 ∝1 𝐿∝2 𝑇 ∝3
Next, take log as follows:
𝑙𝑛𝑌 =∝1 𝑙𝑛𝐾+∝2 𝑙𝑛𝐿+∝3 𝑇
Exhibit 111: Cobb-Douglas Production Function (Cont.)
This equation can be re-specified as follows:
𝑌′
𝐾′
𝐿′
𝑇′
=∝1
+∝2
+∝3
𝑌
𝐾
𝐿
𝑇
We have used as proxies for K'/K and L'/L growth in births and employment and
estimated the following equation with growth in technology embedded in the
error term:
Model1: 𝑌 = 𝛼1 𝐾𝑖 + 𝛼2 𝐿𝑖 + 𝜀𝑖
Y hat is the percentage change in state gross domestic product, K is
the percentage change in organizational births (capital formation) and
L is the percentage change in employment (labor formation).
Exhibit 112: State-by-State Business Competitiveness
We then regressed predicted residuals of the above equation against
whether a state is right to work as follows:
Model 2: 𝜀𝑖 = 𝛽1 ∗ 𝑅𝑇𝑊𝑖 + 𝜔𝑖
Exhibit 113: State-by-State Business Competitiveness
(Cont.)
This model was then elaborated upon to consider state-wide unionization
and overall tax burden as follows:
Model 3: 𝜀𝑖 = 𝛽1 ∗ 𝑅𝑇𝑊𝑖 + 𝛽2 ∗ 𝑢𝑛𝑖𝑜𝑛 + 𝛽3 ∗ 𝑡𝑎𝑥 𝑏𝑢𝑟𝑑𝑒𝑛 + 𝜔𝑖
Exhibit 114: State-by-State Business Competitiveness
(Cont.)
To examine whether union-type, corporate tax policy, and government
spending makes a difference, this model was further elaborated upon to
consider public, private, and private-manufacturing union participation rates,
corporate tax rates, and state-wide government expenditures per capita as
follows:
Model 4: 𝜀𝑖 = 𝛽1 ∗ 𝑅𝑇𝑊𝑖 + 𝛽2 ∗ 𝑢𝑛𝑖𝑜𝑛𝑖 + 𝛽3 ∗ 𝑡𝑎𝑥 𝑏𝑢𝑟𝑑𝑒𝑛𝑖 +𝛽4 ∗ 𝑝𝑢𝑏𝑙𝑖𝑐𝑖
+𝛽5 ∗ 𝑝𝑟𝑖𝑣𝑎𝑡𝑒𝑖 +𝛽6 ∗ 𝑝𝑟𝑖𝑣𝑎𝑡𝑒 𝑚𝑎𝑛𝑖 + 𝛽7 ∗ 𝑐𝑜𝑟𝑝𝑖 +𝛽7 ∗ 𝑔𝑜𝑣𝑖 +𝜔𝑖
Exhibits 115: Results - Model 1
Model 1
Employment Growth
1.096***
(0.186)
Organizational Births
0.377***
(0.122)
N
50
r2
0.918
aic
318.209
bic
322.033
Standard errors in parentheses
* p<0.10 ** p<0.05 *** p<0.01
Exhibit 116: Results - Models 2, 3, and 4
Right-to-Work
Model 2
20.863***
(2.740)
Model 3
12.797***
(2.800)
0.310
(0.340)
0.003
(0.002)
50
0.542
398.249
400.161
50
0.788
363.742
369.478
Union Membership
Tax Burden
Membership Private
Membership Public
Membership Private Manu
Corporate Tax
Government Expenditures
N
r2
aic
bic
Standard errors in parentheses
* p<0.10 ** p<0.05 *** p<0.01
Model 4
14.232***
(2.968)
1.189
(1.652)
0.005
(0.004)
0.033
(1.627)
-0.128
(0.243)
-0.554*
(0.309)
-0.274
(0.504)
-0.001
(0.002)
50
0.813
367.355
382.652
Northwood University is accredited by the Higher Learning Commission and is a member of the North Central Association (800-621-7440; higherlearningcommission.org).
Northwood University is committed to a policy of nondiscrimination and equal opportunity for all persons regardless of race, gender, color, religion, creed, national origin
or ancestry, age, marital status, disability or veteran status. The University also is committed to compliance with all applicable laws regarding nondiscrimination.