State-level Costs of the PRO Act: Update

Executive Summary 

  • The recently reintroduced Protecting the Right to Organize (PRO) Act (H.R. 20) seeks to strengthen labor unions through provisions that include repealing right-to-work laws, reclassifying independent contractors, and broadening the joint-employer standard.  
  • Many of the provisions ignore stated worker preferences and would likely harm the labor market by limiting worker freedom and increasing costs to small businesses, franchisees, and entrepreneurs.  
  • This state-by-state analysis of these provisions, updating previous American Action Forum Research, indicates that the right-to-work states that would be most harmed through increased employment costs and risk of gross domestic product loss by the PRO Act are Alabama, Florida, Georgia, Nebraska, North Carolina, South Carolina, Texas, Virginia, and Wyoming.  


The Protecting the Right to Organize (PRO) Act (H.R. 20) is sweeping legislation that seeks to strengthen labor unions by increasing their collective bargaining power. The PRO Act would, among other things, repeal all right-to-work (RTW) laws, narrow the classification criteria for independent contractors (ICs), and broaden the joint-employer standard. Though intended as pro-worker legislation, many of the bill’s provisions do not align with most workers’ stated preferences, would likely limit worker freedoms, and put upward pressure on costs to employers, freelancers, and entrepreneurs.  

Previous American Action Forum (AAF) research estimated the economic costs of the noted PRO Act provisions to the nation as a whole. As these impacts are unlikely to be evenly distributed across states, however, this analysis attempts to quantify how they would affect each state. This update to previous AAF research finds the right-to-work states that would be most negatively affected by the PRO Act are Alabama, Florida, Georgia, Nebraska, North Carolina, South Carolina, Texas, Virginia, and Wyoming. These states would see the greatest rise in employment costs and risk of reduced gross domestic product.  

Right-to-work and the PRO Act 

RTW laws, found in 26 states nationwide, prevent union membership from being a condition of employment and make compulsory union dues illegal. Research suggests that RTW states generally enjoy higher levels of employment, greater state investment, and enhanced productivity. Repealing every state’s RTW law, as the PRO Act would do, would therefore carry significant economic costs. 

Right-to-work and Employment  

The benefits of RTW laws on employment apply not just to specific industries but state economies broadly. According to a 2018 report from NERA Economic Consulting, states with RTW laws witnessed 27 percent employment growth from 2001–2016 compared to 15 percent growth in non-RTW states. Looking at year-to-year changes in employment, RTW states outpaced non-RTW states in employment growth. From March 2022–2023, for example, RTW states averaged 2.5 percent employment growth, whereas non-RTW states hovered around 2.1 percent growth.  

Unemployment rates are consistently lower in states with RTW laws, too. NERA Economic Consulting also found that the annual unemployment rate in RTW states was 0.4 percentage points lower than in non-RTW states. Currently, the average unemployment rate for RTW states is 3.1 percent, compared to 3.5 percent in non-RTW states.  

Right-to-work and Investment 

RTW states benefit from higher employment relative to non-RTW states in part due to the preference of businesses to invest in and relocate to RTW states. Data suggest that RTW states have preferable business environments. Between 2009–2021, California, closely followed by New York, saw the greatest loss in the number of corporate headquarters. The states that gained the most corporate headquarters over the same period were Arizona, Florida, Massachusetts, and Texas, three of which are RTW states.  

Businesses also openly testify on the importance of RTW status for determining their location. In a 2017 survey of 500 CEOs, over half indicated a preference for locating in states with RTW laws.  

Worker Freedom 

In addition to economic benefits, RTW laws provide workers with greater freedom of choice regarding employment and representation.  

Workers value free choice. A 2018 paper by economist Christos Makridis found, for example, that RTW laws are associated with improvements in employee well-being, workplace conditions, and culture. In addition, survey data find that voters support the protections that RTW legislation provides, with 70 percent reporting concern that the PRO Act would abolish RTW and force workers to pay union dues.  

Independent Workers and the PRO Act 

The PRO Act would narrow the definition of ICs in the National Labor Relations Act, resulting in the reclassification of many independent workers as traditional W-2 employees. States with high concentrations of independent contractors would be disproportionately affected.   

The independent workforce has been steadily growing and could include as many as 73.3 million workers (up to 46.2 percent of the labor force) in the United States. Of these workers, only 9 percent report preferring traditional employee status over their IC role. Many ICs cite higher wages and the flexibility that independent work provides as motivation to participate in independent work. Reclassifying ICs as traditional W-2 employees would erase these benefits and put upward cost pressures on employers, particularly in California, Florida, Georgia, Illinois, New York, Pennsylvania, and Texas (see appendix for all states).  

Benefits of Independent Work 

Independent work allows individuals to supplement existing sources of income or accumulate multiple sources of income to cushion against economic instability. 12 percent of the workforce reported turning to some form of independent work during the pandemic, for example. Of those, 75 percent reported doing so for financial stability. What’s more, approximately 44 percent of freelancers say that they make more money from gigs than they would as traditional W-2 employees. This includes full-time independent workers who earn, on average, $69,000 per year from gig work alone.  

Another benefit of independent work is the flexibility it affords workers. When surveyed about the motivation to freelance, approximately 73 percent of independent workers report wanting a flexible schedule as a driving factor for their participation in the gig economy.  

Reclassification Costs 

Beyond impacting workers’ incomes and flexibility, the PRO Act’s reclassification of independent contractors as traditional workers would put upward pressure on employers’ costs. To calculate the costs of reclassification, this study used data from the Chamber of Commerce to estimate the number of independent contractors by state. The original data reports the IC workforce of 2016, which is about 220 percent smaller than the current IC workforce. Ideally, this research would have access to more recent data that breaks down the IC workforce by state. As such data is not available, this research bases all calculations off the 2016 data by assuming that the distribution of independent workers across states is similar to the conditions of 2016 and therefore that the IC population in each state grew by 220 percent between 2016–2023. Table 1 reports the approximate number of independent workers per state proportional to 2016.  

The latest regional Employer Costs for Employee Compensation data for legally required benefits of traditional W-2 employees were used to identify the increase in employer costs due to reclassification (see regional benefit costs in appendix). This analysis does not estimate the effects of alternative cost-saving measures, such as layoffs or increasing consumer prices, that employers could take to counteract cost increases. In addition to the 15–50 percent of ICs likely to be impacted, the reclassification would also interrupt small business operations.[i] This analysis indicates that RTW states facing the greatest costs from reclassification are Florida, Georgia, North Carolina, Texas, and Virginia (see Table 1). Nationally, the total cost amounts to $18 billion at the 15 percent reclassification level and $61 billion at the 50 percent reclassification level. 

Table 1: Estimated State-level Reclassification Costs  

RTW States  Est. Number of Independent Workers  Est. Cost of Reclassification ($) – 15% of workers  Est. Cost of Reclassification ($) – 50% of workers 
Alabama  964,272  600,261,634  2,000,872,114 
Arizona  1,425,683  1,063,459,150  3,544,863,833 
Arkansas  657,952  444,885,035  1,482,950,117 
Florida  5,613,120  4,111,686,738  13,705,622,461 
Georgia  2,715,158  1,988,890,161  6,629,633,870 
Idaho  324,342  241,936,298  806,454,328 
Indiana  1,207,466  946,042,849  3,153,476,164 
Iowa  664,291  472,342,787  1,574,475,957 
Kansas  605,517  430,551,652  1,435,172,173 
Kentucky  789,133  491,237,186  1,637,457,288 
Louisiana  996,410  673,738,963  245,796,542 
Mississippi  598,394  372,501,701  1,241,672,337 
Nebraska  414,579  294,785,569  982,618,563 
Nevada  663,069  494,602,794  1,648,675,980 
North Carolina  2,265,562  1,659,554,977  5,531,849,922 
North Dakota  171,670  122,065,610  406,885,367 
Oklahoma  881,629  596,127,907  1,987,093,024 
South Carolina  1,016,918  744,906,265  2,483,020,884 
South Dakota  201,805  143,493,042  478,310,139 
Tennessee  1,552,022  966,137,420  3,220,458,066 
Texas  8,280,816  5,599,209,544  18,664,031,813 
Utah  547,587  408,461,352  1,361,537,840 
Virginia  1,784,458  1,307,139,754  4,357,132,512 
West Virginia  254,278  186,262,093  620,873,644 
Wisconsin  915,706  717,450,523  2,391,501,743 
Wyoming  130,045  97,004,415  323,348,049 

 Joint-employer and the PRO Act 

The PRO Act would also significantly affect how business is conducted by broadening the joint-employer standard. Under the broader definition, a business entity could be classified as a joint employer if it “possesses the authority to control or exercises the power to control particular employees’ essential terms and conditions of employment.” This would be a change from the previous standard specifying that the employer must also exercise that power to fulfill joint-employment status. If classified as a joint employer, an entity may be responsible for participating in union negotiations and responding to unfair labor practice claims. They would likely also be subject to accretion, the addition of employees to existing bargaining unions without an election. (See additional information about the joint-employer rule here.) 

A broadened joint-employer standard would likely disincentivize franchising significantly. Under the current joint employer standard, franchisors are not considered employers of the franchisees, but the broadened definition would likely cause franchisors to be labeled as joint employers because of the brand-specific rules and procedures that they impose on franchises. Though this oversight is often beneficial for the franchisee when starting a business, it will likely be seen as possession of authority to control terms and conditions of employment, therefore subjecting the franchisor to the responsibilities of a joint employer. Such reclassification would significantly disincentivize the franchise business model. Research surrounding the broadened standard finds that it would cost franchises $33.3 billion a year, lead to the loss of over 350,000 jobs, and increase lawsuits by 93 percent. In addition, recent AAF research estimated that if the PRO Act were to pass, between $20–$38.7 billion of U.S. gross domestic product would be at risk.  

The potential change to the joint-employer standard would impact states differently based on the prevalence of franchising across states. RTW states that could experience significant consequences from a broadened standard include Alabama, Georgia, Nebraska, South Carolina, and Wyoming. (See Table 2.) Among all RTW states, franchise employment represents at least 5.4 percent of total employment and nearly 4.5 million workers.   

Table 2: State-level Franchise Employment 

RTW States  Franchise Employment  Percent Franchise Employees 


 140,998    6.6  
Arizona   189,308    6.0  
Arkansas   83,265    6.2  
Florida   624,681    6.4  
Georgia   315,224    6.5  
Idaho   50,401    6.0  
Indiana   188,387    5.8  
Iowa   91,000    5.7  
Kansas   88,029    6.1  
Kentucky   120,695    6.0  
Louisiana   122,960    6.3  
Mississippi   75,802    6.4  
Nebraska   68,164    6.5  
Nevada   89,514    5.8  
North Carolina   298,122    6.1  
North Dakota   24,956    5.7  
Oklahoma   109,863    6.4  
South Carolina   161,135    7.1  
South Dakota   29,133    6.3  
Tennessee   205,457    6.2  
Texas   826,292    6.0  
Utah   95,001    5.6  
Virginia   246,479    6.0  
West Virginia  38,939  5.6  
Wisconsin   161,064    5.4  
Wyoming   20,309  



The PRO Act would increase unions’ collective bargaining negotiation power at the expense of worker freedom and higher costs for small businesses and entrepreneurs. The state-level effects would vary, but the costs of repealing RTW laws, IC reclassification, and broadening the joint-employer standard as estimated in this research indicate those states that will face the greatest challenges under the PRO Act are Alabama, Florida, Georgia, Nebraska, North Carolina, South Carolina, Texas, Virginia, and Wyoming. 


State  RTW  Number of Independent Workers  Cost of Reclassification ($) – 50% of Workers  Franchise Employment 
Alabama  x  964,272  2,000,872,114  140,998 
Alaska    140,330  463,134,831  13,120 
Arizona  x  1,425,683  3,544,864,330  189,308 
Arkansas  x  657,952  1,482,950,117  83,265 
California    9,733,850  32,124,974,253  886,057 
Colorado    1,448,064  3,600,512,668  186,356 
Connecticut    756,608  2,266,979,154  76,016 
DC    203,325  496,460,604  26,336 
Delaware    178,829  436,648,427  11,787 
Florida  x  5,613,120  13,705,622,461  624,681 
Georgia  x  2,715,158  6,629,634,847  315,224 
Hawaii    317,498  1,047,848,759  32,341 
Idaho  x  324,342  806,455,322  50,401 
Illinois    2,786,893  7,278,383,007  352,174 
Indiana  x  1,207,466  3,153,475,119  188,387 
Iowa  x  664,291  1,574,476,431  91,000 
Kansas  x  605,517  1,435,171,699  88,029 
Kentucky  x  789,133  1,637,456,873  120,695 
Louisiana  x  996,410  2,245,795,641  122,960 
Maine    276,374  828,084,032  24,500 
Maryland    1,471,645  3,593,332,768  152,122 
Massachusetts    1,567,200  4,695,707,328  116,706 
Michigan    1,976,118  5,160,925,667  247,936 
Minnesota    1,666,326  3,949,460,180  151,641 
Mississippi  x  598,394  1,241,671,507  75,802 
Missouri    1,150,330  2,726,465,205  165,659 
Montana    228,893  569,126,382  32,739 
Nebraska  x  414,579  982,619,037  68,164 
Nevada  x  663,069  1,648,675,483  89,514 
New Hampshire    273,674  819,991,787  32,188 
New Jersey    1,690,726  5,353,137,350  203,438 
New Mexico    397,350  987,984,750  51,923 
New York    3,881,357  12,289,058,748  291,390 
North Carolina  x  2,265,562  5,531,848,945  298,122 
North Dakota  x  171,670  406,886,315  24,956 
Ohio    2,413,091  6,302,144,806  314,787 
Oklahoma  x  881,629  1,987,092,573  109,863 
Oregon    815,085  2,690,053,708  104,487 
Pennsylvania    2,507,565  7,939,391,488  289,858 
Rhode Island    218,656  655,145,853  21,925 
South Carolina  x  1,016,918  2,483,021,860  161,135 
South Dakota  x  201,805  478,309,665  29,133 
Tennessee  x  1,552,022  3,220,458,896  205,457 
Texas  x  8,280,816  18,664,031,813  826,292 
Utah  x  547,587  1,361,538,337  95,001 
Vermont    141,946  425,303,085  11,040 
Virginia  x  1,784,458  4,357,131,535  246,479 
Washington    1,286,362  4,245,425,497  179,011 
West Virginia  x  254,278  620,874,621  38,939 
Wisconsin  x  915,706  2,391,500,699  161,064 
Wyoming  x  130,045  323,347,552  20,309 


Cost of Legally Required Benefits by Region  

Region  States  Cost of Legally Required Benefits ($/hour) 
Northeast  New England  Connecticut 



New Hampshire 

Rhode Island 


Middle Atlantic  New Jersey 

New York 


South  South Atlantic  Delaware  




North Carolina 

South Carolina 


West Virginia 

East South Central  Alabama  




West South Central  Arkansas 




Midwest  East North Central  Illinois 





West North Central  Iowa 





North Dakota 

South Dakota 

West  Mountain   Arizona  





New Mexico 



Pacific  Alaska  






[i] The reclassification estimate is the same as that used in previous AAF research.