The Taft-Hartley Act, passed by the United States Congress in 1947, gave states the power to enact “right-to-work” legislation that prohibits union shop agreements. According to such an agreement, a labor union negotiates wages and working conditions for all workers in a business, and all workers are required to belong to the their suppliers can act collusively in competitive labor markets, thus lowering wages in the affected industries.
Such a finding has important implications regarding the demographics of employment and wages in right-to-work states. Specifically, if right-to-work laws lower wages by weakening union power, minority workers can be expected to suffer a relatively greater economic disadvantage in right-to-work states than in union shop states. This is so because, contrary to there is strong economic growth in right-to-work states, creating labor shortages and thereby driving up wages.
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