Virginia isn’t for workers. Old Dominion is currently one of only three states to explicitly bar all public-sector employees from bargaining collectively. It was also one of the first states to enact a “right to work” law — a policy that undermines organized labor by allowing workers who join a unionized shop to enjoy the benefits of a collective-bargaining agreement without paying dues to the union that negotiated it. This encourages other workers to skirt their dues, which can then drain a union of the funds it needs to survive.
Virginia’s labor policy doesn’t just hurt the union movement, or the minority of Virginians who would gain access to collective bargaining under more liberal laws; it also undermines labor standards across the state’s economy. In 2018, the anti-poverty organization Oxfam America set out to identify the best and worst places in the U.S. to work. They judged all 50 states (plus the District of Columbia) on the following criteria:
Wage policies: Has the state raised the minimum wage to help workers earn a living wage? Do localities have capacity to raise the minimum wage to accommodate higher costs of living?
Worker protection policies: Does the state provide protections at work for situations such as paid sick leave, pregnancy, and equal pay?
Right to organize policies: Does the state guarantee that workers have the right to organize and sustain a trade union?
Virginia came in dead last.
In 2019, the Democratic Party won the power to change that. For the first time in a quarter-century, every branch of Virginia’s government is now true blue. And last week, the state’s General Assembly passed a bill establishing a right to collective bargaining for Virginia’s public-sector employees. If signed into law, that legislation should have a significant impact on the state’s unionization rate.
But the right-to-work repeal did not fare so well. After gaining some momentum in recent weeks, the bill ultimately lost support after a fiscal estimate predicted it would cost the state millions of dollars. As the Virginia Mercury reports:
Del. Lee Carter, D-Manassas, had proposed a full-scale repeal of the law, legislation unanimously endorsed by Democrats on the Labor and Commerce Committee. But the bill was sent to appropriations to weigh the potential impact on the state’s budget, which the Virginia Economic Development Partnership estimated at between $9 and $25 million a year as a result of projects lost to other states.
You might be wondering how the VEDP went about calculating those figures. As it happens, the primary basis for its estimate appears to be a poll taken of corporate executives and consultants who — in a shocking turn of events — said that they actually like it when states suppress the bargaining power of their workers:
Area Development annually surveys corporate executives and site consultants on factors that impact location decisions. In their most recent survey published in 2019, more than 70% of corporate executives and more than 78% of site-selection consultants indicated it is “important” or “very important” for a state to have “right to work” for location decisions.
The concern raised by the VEDP is hardly implausible. Capital is highly mobile within the United States and the “race to the bottom” is a real phenomenon. It’s conceivable that repealing right-to-work would cost Virginia some development projects. This said, as a magnet for investment, Virginia has plenty going for it besides subpar labor standards. The state has one of best-educated workforces in the country. Its proximity to the nation’s capital makes it a natural site for military contractors and a wide range of other businesses that benefit from ready access to D.C. Beyond the ethical question of whether the state should acquiesce to the race to the bottom rather than resisting the logic of low-road capitalism, it’s far from clear that modestly increasing Virginia workers’ bargaining power would substantially reduce corporate investment in the state. Further, to the extent that labor reform does produce higher prevailing wages for Virginia workers, this could raise internal consumer demand in the state, and thus, economic growth. In 2018, a team of economists at Princeton University published a study that examined (among other things) the relationship between state-level rates of union density and per capita GDP between 1940 and 2009. They found a small positive correlation between high unionization rates and high rates of economic growth.
Virginia would, perhaps, be an exception to this rule. But if you are going to produce a fiscal estimate of right-to-work repeal that posits a negative relationship between increasing labor rights and economic growth — in defiance of the pattern established by a rigorous analysis of 69 years’ worth of state-level economic data — your study should probably have a stronger empirical basis than “We asked some bosses if they prefer to operate in places where they don’t need to pay workers well and 70 percent said ‘yes.’”