Unions Hinder Economic Growth and the Free Market

Right-to-work laws strengthen states' economies and promote growth

By Arthur Brooks

, President of the American Enterprise Institute

December 13, 2012

About Arthur Brooks:

Arthur Brooks is the president of the American Enterprise Institute.

Union shop laws, which right-to-work laws repeal, are a means of circumventing a competitive labor market. They treat workers as interchangeable parts rather than individuals, force them to join organizations with strong political preferences that they may not share, and have historically been a means of privileging certain groups at the expense of others. They may be effective at shifting economic resources, but they are a hindrance to growing the economy and creating new opportunity.

So it is right that states should seek to pass right-to-work laws as part of reforms to strengthen their economies and enhance economic growth. This is not about ideological opposition to unions; it's about increasing the economic freedom of Americans in an increasingly globalized, competitive economy.

[See a collection of political cartoons on the economy.]

But labor unions are far from the only threat to free markets and a competitive economy that state lawmakers should address. In the name of being "pro-business," states hand out over $80 billion a year in business incentives, according to a recent analysis by the New York Times. The vast majority of these do little or nothing to promote economic growth; they are merely giveaways to the well-connected. This doesn't begin to count nonfinancial regulatory preferences that benefit some firms over others, the abuse of eminent domain policies for private gain, or the almost $100 billion in federal business incentives.

Indeed, in all too many instances, state and local governments seem to do more to promote entrenched interests than promote a true culture of competition. Lawmakers should be thinking about how to remove barriers to entry rather than which firms they should subsidize; they should be simplifying tax codes and regulatory burdens rather than carving out loopholes and making it harder for entrepreneurs to start or expand businesses.

Legal preferences—whether they are for unions, specific firms, politically-connected operators, or whole economic sectors—are anticompetitive, and state lawmakers should be rooting them out.