Assessing the Employee Welfare Impact of Right-to-Work Laws: Insights from State-Level Legislation

We examine the effect of right-to-work (RTW) laws on employee welfare using the stacked difference-in-differences (DiD) methodology. We posit that RTW laws weaken collective bargaining power, increase free riding, and ultimately reduce employee welfare. We document a significant employee welfare decline following RTW adoption, especially among firms in highly unionized industries. The deterioration is driven by reductions in employee involvement, profit sharing, and work–life balance provisions. Results remain robust to alternative specifications, local unobservables, endogeneity concerns, and multiple identification checks. Overall, our findings highlight important implications for policymakers, labor unions, and employers considering the broader consequences of RTW legislation.