In U.S. states with openly hostile labour policies, workers are far more likely to turn to self-employment. Research shows that employees in these environments are up to 53 per cent more likely to start their own businesses, with blue-collar workers particularly prone to doing so out of necessity rather than opportunity. Rather than reflecting a boom in entrepreneurial ambition, this trend stems from declining job security and the erosion of collective protections that once made wage employment more stable.
These findings come from a study published in the Strategic Entrepreneurship Journal, which examines how state labour environments shape workers’ employment decisions. The researchers compared states that have enacted right-to-work laws with neighbouring states where unions retain stronger bargaining power. By focusing on these contrasts, the study isolates the role of institutional labour conditions rather than attributing the rise in self-employment to individual preference or broader economic cycles.
According to coauthor Namil Kim of the Graduate School of Information at Yonsei University, stringent anti-union laws reduce employees’ incentives to remain in traditional jobs while making self-employment relatively more attractive. As union protections weaken, the balance shifts: paid work offers less security, fewer benefits, and diminished bargaining power, prompting some workers to view going it alone as the least risky option available.
Right-to-work laws are central to this shift. These laws prohibit union security agreements, allowing employees to opt out of union membership or dues even when a union represents their workplace. Historically, such legislation has reduced union membership and weakened unions’ ability to negotiate wages, benefits, and job security. While supporters argue that right-to-work laws promote flexibility and a business-friendly climate, the study highlights their less visible effect on workers’ sense of stability.
Empirically, the researchers compared labour outcomes in Michigan and Indiana, both of which adopted right-to-work laws, with neighbouring Ohio and Kentucky, which did not. They tracked workers aged 20 to 34 who moved into self-employment, defined as dedicating at least 15 hours per week to a new business, while controlling for demographics, job tenure, occupation, industry, and state-level economic factors.
The results indicate that anti-union environments do more than alter pay and benefits. After right-to-work laws were enacted, workers in affected states were about 50 per cent more likely to become self-employed, typically by opening small, unincorporated businesses. This pattern was powerful among blue-collar and low-wage workers, many of whom reported feeling pushed into self-employment because their regular jobs had become less secure, not because they had identified a promising opportunity.
Additional evidence supports this interpretation. Right-to-work adoption was associated with a roughly two percentage-point decline in union membership, a modest increase in weekly working hours, and no significant rise in wages. For many blue-collar workers, weakened unions translated into more extended hours, fewer benefits, and greater insecurity, making necessity-driven self-employment a means of protecting or replacing income rather than a path to upward mobility.
More information: Daehyun Kim et al, Anti-labor environments and employee entrepreneurship: Evidence from right-to-work laws, Strategic Entrepreneurship Journal. DOI: 10.1002/sej.70006
Journal information: Strategic Entrepreneurship Journal Provided by Strategic Management Society