The pros and cons of right-to-work (RTW) laws have been debated for decades.  Indiana’s recent conversion to RTW has given fresh life to the debate, especially in the Midwest.  Do RTW laws increase job creation?  Do they lower wages?  Are they good for states?  Will other Midwestern states be forced to follow suit to compete for new jobs and investment?

While there is a body of research dedicated to the effect of RTW on economic prosperity (with differing conclusions that extend beyond the scope of this article), very little commentary exists specifically on the role of RTW in a corporate location decision.

What does appear to be indisputable is that many companies refuse to even consider locations that are not in RTW states.  This is especially true for manufacturing operations. 

Dennis Donovan, a location advisor with Wadley Donovan Gutshaw Consulting, estimates that one third of his industrial clients use RTW as a filter. Most, if not all, location selection consultants agree on this point, citing percentages in the same general range.

The economic development community confirms this dynamic.  Economic developers in Indiana say they are now seeing projects they wouldn’t have seen otherwise.  Economic developers in Oklahoma, the second most recent state to adopt right-to-work (2001), also report being given the opportunity to compete for additional projects after their legislation took effect.

There appears to be little opposition to the claim that non-right-to-work states (sometimes referred to as “forced unionism” states) forego the opportunity to compete for a significant volume of potential projects, and thus also of corporate investment and employment.  Whether this fact alone is sufficient cause for adoption of right-to-work legislation is a decision for elected officials and voters.

Yet while states and communities debate the merits and vices of right-to-work legislation, corporate executives have their own decisions to make.  How important is RTW to a location decision?  Should it be a threshold criterion?  In practice, site search teams often mistakenly use RTW to assess the level of union activity in a location, so a more in-depth look at the true implications of RTW may be useful.