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The Right-to-Exploit

by ROBERT HANHAM

No sooner had Michigan’s ‘right-to-work’ (RTW) law passed, than supporters were out in force crowing about their success and the prospect of other states falling victim.

Non-RTW states Alaska, Illinois, Kentucky, Maine, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia and Wisconsin were all mentioned as potential candidates to fall. Most frequently referred to were Missouri, Ohio and Pennsylvania. Twenty-four states are currently RTW, most recently Indiana and Michigan in 2012.

The rationale behind RTW is simple. It allows capital to boost its profit-making (labor exploitation) by using state coercion. In other words, RTW increases capital’s share of produced surplus at the expense of labor. It has nothing to do with the right to work.

RTW achieves this by undermining the power of unions, thereby reducing wages (an average $1500 annually according to the Economic Policy Institute), shifting the burden of paying for benefits and pensions onto workers, creating less healthy work environments and so on.

I decided to research how capital and labor have fared in RTW and non-RTW states in the current economic downturn. Using the most recent data available from the U.S. Bureau of Economic Analysis, I calculated labor’s share of each state’s private sector GDP, a rough measure of its share of the surplus. I then calculated the average labor share for RTW states and the average for non-RTW states.

In 2011, labor’s share averaged 47.5% in RTW states and 50.6% in non-RTW states, a difference of 3.1%. RTW clearly does what it is designed to accomplish, namely increase profit-making and enhance the exploitation of labor.

It is not difficult to see why supporters thought of the states listed above as future candidates for RTW. Twenty-three of the twenty-eight states without RTW in 2011 had labor shares that are higher than the average for all of the RTW states (47.5%), making them particularly ripe for RTW exploitation.

What’s more, the states most often mentioned by supporters as candidates for RTW had some of the highest labor shares, specifically Pennsylvania (55%), Ohio (54%) and Missouri (54%). Pre-RTW Michigan also had one of the largest labor shares (54%).

How much does capital gain financially from RTW?  Since the average gap in labor’s share between RTW states and non-RTW states is 3.1% of state GDP, I assumed that current RTW states would have a 3.1% larger labor share than they do now if they were not RTW.

Summing 3.1% of each RTW state’s GDP provides a measure of the value to capital of enforcing RTW on all those states. The result for 2011, when there were twenty-two RTW states, is $150.9 billion. That’s a huge number, and it’s only for one year.

And how much would capital gain financially from forcing RTW on current non-RTW states? Using the same reasoning as above, but in reverse, the value to capital of converting all twenty-eight states that were not RTW in 2011 to RTW is $253.0 billion. Again, it’s a huge number, and only for one year.

Obviously, it is unrealistic to think this will happen, but it does give a good idea of how much is at stake. More concretely, the value to capital of forcing RTW on Indiana and Michigan in 2012 would alone have been about $18.3 billion in the first year.

The financial gain to capital of RTW is enormous, and that’s the whole point of it. RTW is an instrument of class war. It is misnamed and should be called the right-to-exploit.

ROBERT HANHAM is a retired academic geographer.

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