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Is South Carolina really a right-to-work state? Of course it is, right? Well, hold on. By the common legal definition, yes – South Carolina is a right-to-work state: its residents can’t be forced to join a union. That’s a good thing, too. It means workers enjoy the freedom of joining or not joining unions; it means they can’t be turned down for a job because of membership or non-membership in a union; and it means businesses are more likely to invest and grow in the absence of state-supported coercion. That doesn’t mean South Carolina has no unions. It only means South Carolinians can’t be forced into them.
There is one institution, however, that functions just like a union, and an extremely powerful one – state government. Sure, state policymakers go to great lengths to protect South Carolina’s right-to-work status. But little effort is made to prevent state government from infringing on employee freedom through overregulation and over-licensing. Even with a right-to-work law firmly in place, state government has constructed so many barriers to entry into the workforce that South Carolina’s status as a right-to-work state is debatable.
South Carolina’s poor economy – 48th lowest per capita income in the nation – can’t be attributed to a weak right-to-work law. It’s the product, rather, of bad policy and government interference.
With a top marginal tax rate of 7 percent that kicks in at just over $14,000 of income, South Carolina has the highest marginal tax rate on the lowest level of taxable income in the Southeast (and third in the nation).
Many of the state’s poorest citizens are paying the highest possible tax rate – a major disincentive to the state’s workforce, yet one South Carolina politicians consistently ignore.
Consider the state’s more than 40 licensing boards and more than 160 chapters of state code dealing with regulations and licensing.
Entrenched companies and industries lobby for these strict licensing and regulation laws to make it too expensive for competitors to compete against them.
Many state lawmakers do little but introduce legislation that, when passed, protects them from competition.
Remember, too, that South Carolina was ranked the 10th most extensively and onerously licensed state in the country by the Institute for Justice’s License to Work report. It turns out that most other right-to-work states like South Carolina rank poorly in this measurement in the report – specifically those in the South and West.
The truth here is a sober one. South Carolina has a long way to go if its intent is to maximize citizens’ freedom to enter the workforce. Entrenched industries in right-to-work states don’t need compulsory union membership in order to keep other workers, companies, and/or entrepreneurs from competing with them. Instead, they can use the arm of the state to keep competitors out of the market. How do they do this? By lobbying for stricter licensing requirements and regulations that make it too expensive for others to enter the industry.
For an excellent example of this, watch the responses of an entrenched taxicab industry, politicians, and regulators when ride-sharing companies like Uber and Lyft enter the state. In South Carolina, the taxicab industry doesn’t need to be unionized in order keep Uber and Lyft from competing against them. Both individually and collectively, taxicab companies and drivers have pushed state and local regulators – and even law enforcement agencies – to strictly enforce any current regulations that protect the industry from competition. Their lobbying efforts have already been successful in getting cities like Charleston, Columbia, and Myrtle Beach to start cracking down.
But this is just one of many instances of state government actively infringing on the right to work.
When one combines the heavy-handed regulatory burden of state government with legislative efforts to insulate entrenched interests (including their own) in a variety of industries – the funeral and pharmaceutical industries are excellent examples of this – a clearer picture of South Carolinians’ freedom to work begins to emerge.
How to alleviate the problem? Level the playing field by cutting these outdated licensing laws and regulations so that neither entrenched companies nor newcomers are disadvantaged by them.
Dillon Jones is a policy analyst at the S.C. Policy Council.