Study reveals how right-to-work laws impact store openings

June 2, 2011, Columbia Business School

A new study by Columbia Business School Professor Paul Ingram, Kravis Professor Business, Management and senior scholar at the Jerome A. Chazen Institute for International Business at Columbia Business School; Hayagreeva Rao, Atholl McBean Professor of Organizational Behavior and Human Resources, Stanford Graduate School of Business; and Qingyuan (Lori) Yue, Assistant Professor of Management and Organization, USC Marshall School of Business, found evidence of how firms engage in regulatory arbitrage and make decisions based on a state's regulatory policies. The study, which is featured in this month's American Sociological Review, flagship journal of the American Sociological Association (ASA), explored various states' right-to-work (RTW) laws and Walmart store openings between 1998 through 2005, and discovered that Walmart was more likely to propose and open new stores in RTW states located near the borders of non-RTW states, even in the face of protests.

RTW laws prohibit unions and employers from entering agreements that make union membership a condition of employment. Twenty-two of 50 US states have variations of right-to-work laws. Under regulatory arbitrage, if regulatory polices do not suit business firms' interests, they will locate their operations in pro-business states, creating an incentive for other states to become pro-business.

In their study, the researchers aimed to explore if RTW policies can signal a pro-business environment for certain kinds of businesses, such as labor-intensive ones. In this case, from 1998 through 2005, proposed 102 store openings within 25 miles of borders between RTW and non-RTW states. The study followed each proposal to gauge the stores that eventually opened. The company's store proposals are protested often, but despite protests, the researchers found that Walmart was more likely to propose and open new stores in RTW states located near the borders of non-RTW states even in the face of protests.

"This is interesting because Walmart is not unionized," noted Professor Paul Ingram of Columbia . "We take this as an indication that RTW states are perceived to have more business-friendly policies, and Walmart prefers to do business in these states."

The results provide evidence of how firms engage in regulatory arbitrage: Walmart can select stores in states friendlier to business because its stores can draw customers from about 50 miles away. The study has important implications for policymakers, as states and countries have to consider competition from nearby territories when drafting laws. "Neither employees nor companies are hostage to a location — or its regulations — anymore," Professor Ingram elaborated.

Explore further: Study: Walmart Does Not Boost Employment or Retail Sales

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dogbert
2.5 / 5 (10) Jun 02, 2011
It should be obvious that right to work states offer better conditions for business.

There has been a slow but growing movement of industry from northern states with restrictive laws to southern states with right to work laws.
Vendicar_Decarian
2.7 / 5 (7) Jun 03, 2011
It should be obvious that right to work states offer worse conditions for employees.
dogbert
2.4 / 5 (11) Jun 03, 2011
It should be obvious that right to work states offer worse conditions for employees.


No. Right to work states do not require employees to pay a part of their earnings to a union.
Shelgeyr
2.7 / 5 (9) Jun 03, 2011
It should be obvious that right to work states offer worse conditions for employees.


What a hilariously absurd and wrong thing to think! Of course right to work states offer better conditions for employees, starting right at the door with "actually having jobs to offer".
J-n
3 / 5 (6) Jun 03, 2011
Name for me 5 improvements to workers rights, wages, etc that came from anti-union activity.
ryggesogn2
2.4 / 5 (11) Jun 03, 2011
Right to work keeps unions from forcing workers to pay dues to unions that support the socialist party (democrats).
NV is a RTW state and they have a large union the really does very little for their workers except run the health care plan and take their cut.
ryggesogn2
2.1 / 5 (10) Jun 03, 2011
It should be obvious that right to work states offer worse conditions for employees.

If what you say is true forced union states should be booming.
That is not true is it.
kaasinees
1 / 5 (2) Jun 03, 2011
slavery laws.
J-n
3.5 / 5 (8) Jun 03, 2011
If what you say is true forced union states should be booming.
That is not true is it.


"Right to work" states have more jobs only because the majority of companies participate in the race to the bottom.

Companies have only 1 motivation, to make money. So, if one state allows their workers less protection, allows employers to pay them less, offer less benefits, etc.. companies will move there. It is the SAME motivation that pushes companies to move their jobs offshore to nations that allow slaves or slave-like work conditions.

So yes, it's more profitable for a company to abuse their workforce than to pay them a reasonable wage.

It makes one wonder if those heads of corporations made a little less money and paid their workers more (allowing them to pay their mortgage) if we would even be in the current economic situation?

Remember it is the GOAL of EVERY company to reduce their labor costs, which means less money in the pocket of workers, who purchase goods.
ryggesogn2
1.4 / 5 (9) Jun 03, 2011
The goal of every company is to make a profit.
They are leaving union states partly because of union rules but primarily due to higher taxes.
Caterpillar is threatening to leave IL due to high taxes.
J-n
3.5 / 5 (8) Jun 03, 2011
They are leaving union states partly because of union rules but primarily due to higher taxes.


Yes, again a race to the bottom. If we had a state where there were no taxes, no minimum wage, and unions were disallowed- ALL of the businesses would move there. Wages would be SIGNIFICANTLY depressed, and the economy of the United States would die.

Lower Wages for workers means less money spent at the grocery store (etc) and that would mean less profit for said store, which would then mean less wages for those who work at the grocery store, and layoffs.. which would decrease the amount of spending again.. ETC..

It is a FACT that the rich spend a SIGNIFICANTLY lower percentage of their income on goods and services than do the workers.

Give the money to the workers, it will be spent. Give the money to the rich, the money will not be spent.

ryggesogn2
1.9 / 5 (9) Jun 03, 2011
"Both small-business owners, and analysts who cover these companies tell me that many American businesses would like to stay here, but they see no letup in sight in the endless stream of taxes and regulations coming from an administration most of them consider anti-business.

Sidoti's actually an example of the problem. With federal, state and city taxes, Sidoti & Co. gets hammered with around a 75 percent tax rate. With his health-care costs rising 10 percent alone this year, he estimates that the first $1 million his company earns goes toward paying those costs.

"That's why I'm looking to open an office in Austin, Texas, where taxes are lower," he tells me.

Read more: http://www.nypost...EABNrsf"
J-n
3.3 / 5 (7) Jun 03, 2011
Companies are not out to help the american economy, just themselves, their bottom line. A race to the bottom only ensures we are ALL at the bottom.
J-n
3.5 / 5 (8) Jun 03, 2011
It should be obvious that right to work states offer worse conditions for employees.

If what you say is true forced union states should be booming.
That is not true is it.


In all actuality what he is saying CAN be true regardless of wether those states are booming or not. Companies do not care about Employee satisfaction, they care about the bottom line. You said so yourself. Which means when you made the above comment you were being disingenuous. At best you made a logical misstep at worse you were lying to suit your argument.

ryggesogn2
2.2 / 5 (10) Jun 03, 2011
Companies care about employees when employee performance and turnover affect the bottom line.
Thrasymachus
3.7 / 5 (6) Jun 03, 2011
It's marjon, best to assume he's lying. Unions are responsible for most of the good things about employment we tend to take for granted. The 8-hour work day, the 2-day weekend, the 40 hour week, child-labor laws and so forth. The unions were also responsible both directly through negotiating good wages for their members and indirectly through market forces, of growing the middle class both in terms of numbers and in terms of economic buying power. Since the decline of unions beginning in the 70's, the relative size of the middle class as well as their economic power (and with it, their political clout) has fallen. It doesn't take a genius to figure out the causality here.
ryggesogn2
1.7 / 5 (11) Jun 03, 2011
Unions are responsible for most of the good things about employment

Henry Ford started the 40 hour, 5 day work week, not unions.
"HENRY FORD: Why I Favor Five Days' Work With Six Days' Pay"
http://www.workle...ford.htm
J-n
5 / 5 (5) Jun 03, 2011
Another attempt at falsehood or deliberate ignorance.

(All from the wiki en(dot)wikipedia(dot)org/wiki/Eight-hour_day#United_States )

In the United States, Philadelphia carpenters went on strike in 1791 for the ten-hour day. By the 1830s, this had become a general demand.


Labor movement publications called for an eight-hour day as early as 1836.


In August 1866 the National Labor Union at Baltimore passed a resolution that said, "The first and great necessity of the present to free labour of this country from capitalist slavery, is the passing of a law by which eight hours shall be the normal working day in all States of the American Union. We are resolved to put forth all our strength until this glorious result is achieved."


By 1905 the eight-hour day was widely installed in the printing trades see International Typographical Union (section) but the vast majority of Americans worked 12-14 hour days.


It wasnt until 1914 that Ford made their change.
Skultch
4 / 5 (4) Jun 03, 2011
Anyone else notice how seamlessly Marjon shifted his argument over to small business owners? An appeal to emotion, me thinks.

What percentage of GDP are small businesses responsible for? Same for hedge funds? Large banks? The top 1% income earners?

Where should our focus be? Are the govt regulations that affect small business as significant as the affect the whims of the uber-rich on the rest of us?

These are not rhetorical questions. I can't do the research any time soon, but I would love to know.
J-n
4 / 5 (4) Jun 03, 2011
Interesting how when he was called out for outright lies he shut up pretty quickly.
ryggesogn2
2.6 / 5 (10) Jun 03, 2011
"The resources generated from your coerced membership are crucial to helping elect and keep Democratic politicians in elected office. Dont take my word for it, heres what Gerald W. McEntee, president of the American Federation of State, County and Municipal Employees (AFSCME) admitted said:

I see this as payback for the role we played in the 2010 elections, said Gerald W. McEntee, who said in October that his union was spending more than $90 million on the campaign, largely to help Democrats.

Now theres a bulls-eye on our back, and theyre out to inflict pain, he said."
http://nevadanews...prosper/
I am not surprised that those who support the unions are 'progressives', aka socialists.
ryggesogn2
2.3 / 5 (9) Jun 03, 2011
"In the key metrics of economic growth, right-to-work states have a distinct advantage when it comes to unemployment rates, income growth, population increases and jobs. "
http://www.mackin...?ID=9422
"Taxes do matter. Regulations do matter. People do respond to incentives. "
http://www.vermon...k-f.html
FrankHerbert
1.8 / 5 (5) Jun 04, 2011
Henry Ford started the 40 hour, 5 day work week, not unions.
"HENRY FORD: Why I Favor Five Days' Work With Six Days' Pay"
http://www.workle...ford.htm


Only after Ford tried intimidating his employees by KILLING THEM. It was union organization that forced those changes down Ford's throat, and only after he killed some.

Holy shit man how can you be so damn wrong all the time? At some point wouldn't you just assume that because you are wrong about everything, you are probably wrong about any given point you are trying to argue? Why don't you stop.
ryggesogn2
1.8 / 5 (5) Jun 04, 2011
Labor economist Herbert Northrup said that in the '20s and '30s blacks came closer to job equality at Ford than at any other comparable company. No other car companies hired blacks for anything but the most menial or difficult and dangerous jobs -- jobs unwanted by white workers.
So when the United Auto Workers began to organize, Ford's black employees were caught in the middle. Many were grateful to Ford for the opportunities he provided and were suspicious of the white union organizers.

Blacks had long been involved in trade and craft unionism -- the strike by black porters against the Pullman Company had lasted 12 years -- but Ford had given them good jobs when other plants refused to hire them and many feared the loss of these jobs.

From The Detroit News: http://apps.detne...OKXj2ASx
ryggesogn2
2.1 / 5 (7) Jun 04, 2011
"So when the UAW organizers began showing up at the Ford gates, they met with resistance. Black workers and the American public tended to side with Henry Ford's anti-union position.

Ford felt the unions were communistic {his was correct} and wanted to take his factories away from him. He felt he had been good to his workers and could not understand why they would want to bite the hand that fed them.
"The significant thing," Sheffield wrote, "is that Henry Ford accomplished this measure of fair employment practices in the Rouge plant long before there was any thought of a 'Negro revolution' or any commitment on the part of government to the principle of equality in employment. It was unprecedented, and it was achieved without apparent backlash from the white work force."

"Police had to be called out to control the crowds at the Ford plant when Henry Ford announced the $5 day in 1914."

From The Detroit News: http://apps.detne...OKZ50k00
ryggesogn2
2.1 / 5 (7) Jun 04, 2011
As the experience with Ford suggests, unionism was not about workers rights but union power.
Ford and Hershey treated their employees very well, but as we see with RTW states, unions can't compete and therefore need state coercion and propaganda to force compliance.
Steven_Hales
3.2 / 5 (9) Jun 04, 2011
For all the talk about race to the bottom the posters don't understand markets. Capitalism is not a zero sum game or one of where I win and you lose. Given labor mobility, which has increased dramatically during the past 100 years, wages are set by markets not by fiat. Even minimum wage laws tend to set the minimum below most market wages. But contrast market wages with union wages set by contract and you will find that during the past 100 years a rise and fall in union membership quite independent of RTW laws. The subsequent fall in union membership can be traced to the anti-competitive nature of union work rules that constrain flexibility in a rapidly changing economy. Unions have devolved to representing those who are largely unskilled and those in professions where labor productivity does not apply, e.g., the arts and entertainment and away from its traditional base in manufacturing where employment worldwide has fallen and continues to fall.
ryggesogn2
2.7 / 5 (9) Jun 04, 2011
Capitalism is not a zero sum game or one of where I win and you lose.

That is not what the socialists here believe.

Shootist
2.7 / 5 (7) Jun 05, 2011
Name for me 5 improvements to workers rights, wages, etc that came from anti-union activity.


Compare Kroger (Union) to Publix (non-union) in Georgia.

Kroger - dirty nasty stores
Publix - clean stores

Kroger - no customer service
Publix - is customer service

Kroger - management vs. employees
Publix - management and employees work together

Kroger - Publicly owned
Publix - Owned by employees

Kroger - Epic fail to work for
Publix - Top 10 companies to work for, for 40 years.

Kroger - no bag boys (now called baggers in the PC world we find ourselves)
Publix - takes groceries to car and loads them for customer.

No comparison when talking Union vs. Non-Union.

Unions are thuggish, brutish organizations.
Union members are lazy compared to their non-union brothers. Unions encourage mediocrity, much like welfare.
Unions are steeped in the Marxist tradition and are as archaic; they just haven't died of the rampant internal rot, yet.

eachus
not rated yet Jun 05, 2011
Capitalism is not a zero sum game or one of where I win and you lose.

That is not what the socialists here believe.


You are quite right. But the real question is not what liberals or conservatives believe to be true about economics, it is what economists have discovered to be true. Maybe I should go a bit further, and describe it as what economists view as fundamental truth.

To get to that you need to accept that economists talk funny. (I know, I are one. ;-) First, economists don't measure profits as accountants do. To an economist, a profit is what someone gets back that is greater than all of his or her inputs, knowledge, capital, land, and hard work of whatever flavor.

And a rent-seeker is someone who tries to extract money (a rent) from an economic system. If you think of rent-seekers as mosquitoes of various sizes who suck rents from people, companies, states and nations.

To see what is causing an unhealthy economy, you just follow the blood trails.
Vendicar_Decarian
3 / 5 (2) Jun 06, 2011
Unions can suffer from all of the same ills as the corporations they exist in.

However, without unions the working class declines. As it is declining in America.

In most of the world, Unions cooperate with the corporations they exist in. But there is something wrong with the American Brain that seems to make this difficult.

I blame money grubbing and a lack of education.

"Unions are thuggish, brutish organizations.
Union members are lazy compared to their non-union brothers. Unions encourage mediocrity, much like welfare.
Unions are steeped in the Marxist tradition and are as archaic; they just haven't died of the rampant internal rot, yet." - Kookiest of Tard boys
Vendicar_Decarian
1 / 5 (1) Jun 06, 2011
"As the experience with Ford suggests, unionism was not about workers rights but union power." - RyggTard

It wasn't the union that caused Chrysler to produce crap cars.

That was and remains a corporate decision.

The goal of every business is to provide it's customers with the worst possible product at the highest possible price.

When it comes to a labour force, it is the goal of every business to maximize the work preformed at the lowest wage possible.

With unemployment in the U.S. now stuck at 9%, The American Middle Class can expect to see some pretty rapid decline in wages as employers reduce wages to maximize profits.

Vendicar_Decarian
1 / 5 (1) Jun 06, 2011
"Ford and Hershey treated their employees very well" - RyggTard

You mean well compared to other employers of the era.

By modern standards it was still slave labour enforced by murder on occasion.

It is nice to see the true character of Conservatives - claiming that murdering members of your work force is treating your employees "very well".

Vendicar_Decarian
1 / 5 (1) Jun 06, 2011
""Police had to be called out to control the crowds at the Ford plant when Henry Ford announced the $5 day in 1914."" -RyggTard

Which translates to about $120 an day in current dollars, or about %15 per hour.

Wages improved, and the Murder of employees stopped when unions were set in place.

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