Michigan to join 'right to work' states. A blow to unions?

Michigan is set to become the 24th state with a 'right to work' law prohibiting unions from collecting fees from nonunion workers. Data on such laws' economic impact are mixed.

Michigan is on track to become the second rust belt state to adopt a “right to work” law, raising further questions about the weakening of American labor unions.

Both Republican-dominated houses of the Michigan Legislature this week passed a bill that prohibits unions from collecting fees from nonunion workers, and Gov. Rick Snyder (R) says he’ll fast-track it into law.

Unlike Wisconsin Gov. Scott Walker (R), who picked a fight with public-employee unions over collective bargaining (and had to fight off a recall effort because of it), Governor Snyder had not had major run-ins with union power.

But in the end, he saw the law as a matter of “workplace fairness and equity” – a phrase he prefers to "right to work." More importantly, he emphasized in a YouTube video he posted Friday, “we’re losing a major competitive edge” – especially to neighboring Indiana, where Gov. Mitch Daniels (R) signed that state’s right-to-work law in February, making it the first Rust Belt state in the Midwest or the East to do so.

“Indiana has become a right-to-work state, and I’ve looked at their pipeline,” said Snyder. “They significantly increased the number of businesses looking to come to Indiana and grow in Indiana due to this legislation.”

Michigan has added 140,000 new jobs in the past two years, and the state is projected to add another 110,000 new jobs in the next two years. But that’s far from enough to make up for the 750,000 jobs lost between 2000 and 2010.

“When I looked at Indiana,” Snyder said, “I said, 'Here’s an opportunity to see that pace increase.' ”

It’s too soon to know whether Indiana’s new law in fact has accelerated job growth there. Indiana’s unemployment rate fell 0.2 percent in October, but at 8 percent, it was above the national average.

Still, Indiana officials point to what they see as a positive trend.

“Over the past year Indiana has experienced one of the strongest periods of job growth in over a decade,” said Scott Sanders, commissioner of the Department of Workforce Development. “Since last October we have added nearly 67,000 private sector jobs and continue to significantly outpace the national rate of growth.” 

Maps show the regions where right-to-work laws are most prevalent: the interior West from Idaho to Arizona; the nation’s midsection from North Dakota south to Texas; and the southeast quadrant from Arkansas east to Virginia and south to Florida. Michigan is set to become the 24th such state.

Michigan is the fifth most-unionized state, with 18.3 percent of its workforce in a union, according to the Bureau of Labor Statistics (BLS). It trails New York (26.1 percent), Alaska (23.7), Hawaii (22.5), and Washington State (20.4).

The economic costs and benefits of right-to-work laws have been debated for decades – back to when such laws first were passed in the 1940s.

“Right-to-work states are much more attractive for businesses investment. Unionized firms earn lower profits, invest less, and create fewer jobs than comparable nonunion firms,” asserts the conservative Heritage Foundation. “Boeing’s decision to build a new plant in South Carolina – a right-to-work state – illustrates a larger trend. Businesses consider the presence (or absence) of a right-to-work law a major factor when deciding where to locate. It was no accident that foreign automobile brands located their U.S. plants primarily in right-to-work states like Alabama, Mississippi, and Tennessee.”

Other studies show the difficulty of clearly proving any positive economic impact of right-to-work laws due to unrelated state policies, demographic trends, and climate.

The left-leaning Economic Policy Institute contends that right-to-work laws “lower wages for union and non-union workers by an average of $1,500 a year and decrease the likelihood employees will get health insurance or pensions through their jobs.”

Institute researchers also note that “seven of the 10 highest-unemployment states are states with right-to-work laws, including Nevada and Florida, which have unemployment rates higher than Michigan’s unemployment rate of 10.5 percent, and South Carolina, which also has an unemployment rate of 10.5 percent. Factors other than right-to-work laws, such as major industries and climate, shape states’ economies.”

Drawing on figures from the BLS, the US Bureau of Economic Analysis, and the Census Bureau, the Detroit Free Press reports:

• One of the 10 states with the highest per-capita income in 2010 was a right-to-work state.
• Of the 10 states with the lowest per-capita income, seven have right-to-work laws.
• Among the 10 fastest-growing states, three are right-to-work states.
• Among the 10 states with the most residents without health insurance in 2011, six were right-to-work states.

Aside from what he predicts will be a positive economic impact, Snyder stresses the freedom the law will give workers.

“Today in Michigan, workers who choose not to pay union dues can lose their jobs under some union contracts,” he said in a statement accompanying his YouTube message. “In other words, if they want to work, they have to join a union and pay dues, which can amount to 1 to 2 percent of their wages.”

“Under freedom to work, Michiganders will have the freedom to choose whether or not to join a union,” he said. “They won't be forced to pay union dues if they don't want to, and they won't lose their jobs because of it. And if they want to pay dues voluntarily, they have the freedom to do that, too.”