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Wednesday, December 12,2012

Why Right to Work Makes No Sense

by Walt Sorg
(Background music: “The Twilight Zone” theme)

Narrator: Imagine, for a moment, a state law that makes paying taxes voluntary. Why, backers successfully argued, should people be forced to pay for services they don’t need or want? It is, after all, an issue of personal freedom.

You’ve just crossed into the Twilight Zone. (Theme music up and out.)

This never-to-be-produced TV script is an extension of the “script” being followed by Michigan’s right-to-work backers: a belief that unions can continue to negotiate on behalf of workers (it is their right under federal law), but having workers pay for that advocacy should be optional.

Roland Zullo, a researcher at the University of Michigan’s Institute for Labor and Industrial Relations, notes that while “politicians may debate the level of tax, how taxes are collected, or how taxes are spent ... there is no question that it would be a disaster to allow the payment of taxes to be optional. Compulsory taxation is necessary to ensure the adequate financing of public services. With too many “free riders” … the collective becomes resource-starved, causing it to under-perform or fail.”

The same economic principle applies to unions and right to work laws.

THE IMPACT ON WORKERS

Opponents of right-to-work laws derisively label the statutes as “Right to Work for Less.” The facts support their rhetoric.

A February 2011 study by the nonprofit Economic Policy institute concludes:

•  Wages in right-to-work states are 3.2 percent lower than non-right-to-work states, the equivalent of about $1,500 annually (a figure verified by the federal Bureau of Labor Statistics)

•  Workers in right-to-work states are 2.6 percent less likely to have employer-sponsored healthcare insurance

•  Workers in right-to-work states are 4.8 percent less likely to have employer-sponsored pensions

THE IMPACT ON UNIONS

Concerns about “free riders” are very real. Under the 1947 Taft-Hartley Labor Act, “whenever a union has been certified as a bargaining agent for a group of employees, the union has a duty of fair representation for everyone covered by the contract regardless of whether they are a member,” according to Michigan State University Professor John Revitte.

“The union represents everybody, member or non-member. They can’t treat them differently.” The mandate extends even to representation in a grievance proceeding.

The right-to-work battle is increasingly a battle over public employee unions. Since 1964 public sector employees have enjoyed collective bargaining rights, the result of bipartisan legislation approved nearly unanimously by the state Legislature and signed by Republican Gov. George Romney.

Since then, Michigan’s unionized workforce has dropped from nearly 50 percent to 18.3 percent, the bulk of them in the public sector. Nationally, only 7.6 percent of private-sector workers are union members compared to more than 40 percent of government workers, according to the Bureau of Labor Statistics. 

THE ECONOMICS

The rationale for Gov. Rick Snyder’s flip-flop on right to work is Indiana’s new right-to-work law, the first in the Midwest. Crushing unions is the latest tactic in the Hoosier state’s highly unsuccessful economic strategy of cutting costs for businesses, (The strategy has seen Indiana’s per capita income drop from 33rd to 42nd among states over the last decade.)

Backers of right to work in Michigan say Indiana’s law makes it imperative Michigan follow suit, arguing that the change will bring good-paying jobs. Economic development experts are not convinced.

“There’s no evidence that being a right-to-work state encourages great growth of good paying jobs coming into your area, but there is evidence that right to work brings lower wages and lower benefits,” Revitte says.

Michigan State University economist Charles Ballard concurs. 

“If what we want to do is do a little bit better at attracting certain kinds of low-wage jobs, I think this may help,” Ballard said. “But it’s an awful lot of political blood to be spilled for something that will not galvanize Michigan’s economy.”

In an earlier incarnation, Snyder also questioned the correlation between right to work and job growth. He told Crain’s Detroit Business earlier this year that automotive executives at a recent North American International Auto Show expressed regret about locating plants in the the mostly right-to-work southern states "because they weren´t getting the skilled workforce the same way that they would in Michigan."

Richard Longworth, senior fellow at the Chicago Council on Global Affairs, blogged about the legacy of retiring two-term Indiana Gov. Mitch Daniels, saying Daniels’ race-to-the-bottom policies are impoverishing his state:

“The businesses who are most concerned about saving money on taxes and wages are low-cost, low-wage businesses that care only about costs, not quality,” he writes. “Businesses looking for nothing except low costs have already found them — in Mississippi, Mexico or China.”

BLS statistics suggest that right to work neither strengthens nor weakens a state’s economy:

•  Six of the 10 states with the highest unemployment rates in December 2011 had right-to-work laws, including national unemployment leader Nevada (12.6 percent). 

•  Seven of the 10 states with the lowest unemployment also are right-to-work states.

•  Seven of the 10 states with the highest household incomes do not have right-to-work laws.

•  Three of the 11 states with the largest growth in gross domestic product in 2011 were right-to-work states.

Ballard suggests that other factors, such as education levels, worker skills, climate and utility costs are far more significant in business location decisions. In the past, Snyder has concurred. His economic program targets businesses that have little or no unionization: science, engineering, math, technology and other knowledge-based industries. 

THE IMPACT ON POLITICS

Why pass the bill now? Despite GOP claims to the contrary, it is likely the right-to-work bills are being jammed through the “lame duck” legislative session because the 2013 Legislature probably would not approve the bill. 

It’s political math: Republicans lost five state House seats in November’s election. It takes 56 votes to pass a bill in the state House; right to work received 58 votes last week. With the net loss of five GOP seats it is likely there would only be 53 votes for right to work in the new Legislature — three votes short of passage.

A similar right to work law in Ohio was rejected by voters 61 percent to 39 percent. Michigan won’t have a similar experience. The pending law takes advantage of a state Constitution provision that prevents a voter referendum on the law by including an appropriation. 

Revitte speculates the $1 million appropriation may be more than a just a way to circumvent a referendum. He suspects the money could fund an “education” campaign to tell workers “the union has to negotiate and enforce a contract for you regardless of whether you are a member, so you might as well get out.”

Regardless of the true purpose of the appropriation, Republicans are right to be wary of a public vote. A new EPIC/MRA poll shows that citizens oppose the concept 51 percent to 42 percent once they have heard both sides of the issue.

The same poll shows a political price to be paid by Snyder and legislative Republicans. By a 39 percent to 27 percent margin, voters are less likely to vote for a legislator who supported right to work. For Snyder, 40 percent are “less likely” to support his reelection, just 24 percent “more likely” because of right to work.

Snyder and Republicans can rest easier, however, knowing that right to work will no doubt mean a huge financial hit for public-sector unions. This will cripple a major source of financial support for Democratic candidates and Democrat-backed ballot proposals.

Snyder’s carefully honed image will take a major hit. The soft-spoken, constantly smiling governor has cast himself as the “Mr. Rogers” of Michigan politics, a relentlessly cheery nerd who has (until now) maintained an image of a data-based, nerdy technocrat who eschews hard-core partisan politics.

Those days are over. He has been slammed in newspapers across Michigan that previously had supported him.

The Detroit Free Press said Sunday that the governor has betrayed the trust placed in him by the people of Michigan. 

“Michigan voters who provided Snyder´s margin of victory in 2010 feel betrayed, and they have every justification. If he was ever serious about being the governor who brought Michiganders together, Snyder has just sent himself back to Square One.”

Even the more conservative Lansing State Journal took Snyder to task for the way Republicans pushed the right-to-work measures through the Legislature without a hearing.

Snyder’s weakened political and editorial support may also end any hopes he has of getting legislative Democrats to support any of his legislative initiatives, including the International Bridge, transportation funding and establishing a state insurance exchange.

A BITTER FUTURE

Right-to-work bills (as this is written) are on the verge of going to Snyder’s desk, and will likely be signed into law within days. Language for ballot proposals to overturn the laws is being drafted, and multiple lawsuits challenging the laws will be filed.

The debate, the controversy, the bitterness and the anger will continue and likely escalate. At the end of the battle (probably years from now), Michigan could well be in a position to become the “Mississippi of the Midwest” with declining incomes, deteriorating educational institutions and an eroded quality of life for its citizens: the Snyder legacy.

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