Poverty rates are measured by determining the number of people living in households with an income below a defined amount, called the poverty line, which is adjusted for family size. In his earlier study, Bill Wilson found that right-to-work states had historically been burdened by high poverty rates, but also found that they had great success in diminishing poverty. Between 1969 and 2000 poverty rates had dropped by 6.7 percent on average in right-to-work states, compared with a reduction of 2.0 percent in non-right-to-work states.
During the 2001-2005 period, rates of poverty increased somewhat on account of a recession that affected both right-to-work and non-right-to-work states.* Right-to-work states still had higher poverty rates on average than non-right-to-work states, although the gap between the two did close slightly. For right-to-work states, poverty rates increased from an average of 12.9 in 2000 to 14.0 percent in 2006, an increase of 1.1 percentage points. In non-right-to-work states, the average poverty rate moved from 10.9 percent to 12.1 percent, an increase of 1.2 percentage points. While right-to-work states tend to have higher rates of poverty, the gap has been narrowing for 30 years and that narrowing continued over the past five years.†
Michigan, meanwhile, saw its rate of poverty increase sharply, with the number of Michiganians living in poverty jumping from 10.1 percent in 2000 to 13.2 percent in 2005. According to the latest figures, Michigan has a higher poverty rate than nine right-to-work states.
The method for determining poverty has been heavily criticized for being simplistic and arbitrary. Generally there is no adjustment made for local costs of living, which as we showed is generally lower in right-to-work states, a tendency that could inflate poverty rates. Also, the tendency to focus on a single year’s income can result in families with substantial savings from previous years being treated as poor. Even the process of determining an appropriate "poverty line" itself is somewhat subjective. While the relative poverty rates of right-to-work and non-right-to-work states is worth considering, the arbitrariness of this measurement should lead citizens and policymakers to give this one particular statistic less weight than the measurements of economic growth, job creation, unemployment and income.
* 2005 is the last year for which poverty rates are available at the time this is written. Because of the years covered, Oklahoma, which enacted right-to-work in 2001, will be disregarded.
† Mackinac Center calculations based on data from the U.S. Census Bureau, American Community Survey (2006 figures not available at time of publication).