The Right to Work, Power Resources, and Economic Inequality

Tom VanHeuvelen, University of Illinois at Chicago

How do Right to Work laws affect the distribution of economic resources? While sociological theories would predict inequality to increase following the passage of Right to Work laws, previous research has found these laws to be largely inconsequential for economic inequality. Drawing on Power Resources Theory, I reassess the consequences of Right to Work laws and allow their impact to depend upon local union membership. To do so, I construct unique datasets at the state and commuting zone levels of income and wage inequality, merging data from the Internal Revenue Service, the US census, the American Community Survey, the US Union Sourcebook, the Current Population Survey, and the National Labor Relations Board for years 1939 to 2016. After using two-way fixed effects regression models to replicate inconsistent results of previous studies, I show that these mask substantial and robust heterogeneity across local areas. Simply put, Right to Work laws are highly consequential when passed in times and places where labor has something to lose. Right to Work laws remove the negative association between labor union membership and inequality, while the consequences of Right to Work passage are greatest outside the US South and in highly unionized areas. Supplemental analyses of firm behavior support the theoretical explanations of main findings. In total, results suggest that Right to Work laws work as intended, increasing economic inequality indirectly by lowering labor power resources. Theoretical and policy implications are discussed.

No extended abstract or paper available

 Presented in Session 171. Labor and the Law