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Unions worry about Michigan Law’s effect

Tue, Jan 8, 2013

In a legislative process conducted by a lame-duck legislature that refused to consider the bill in committee, provided limited debate, and lasted less than a week, Michigan on December 11 became the 24th state in the United States to pass a right to work (RTW) law. Such legislation allows workers, who are provided with union representation, the options of forgoing union membership and paying union dues even though they receive the same wages, benefits, etc. as union members.

Although RTW legislation’s bastion is the South where every state that joined the Confederacy possesses such a law, the enactment of RTW legislation in a state that has historically been a stronghold of US industrial labor, that not only gave birth to the United Auto Workers but also was the center of the sit-down strike wave from 1936 to 1938 which helped to build the Congress of Industrial Organizations, was a particularly bitter pill for the beleaguered US labor movement to swallow.

Labor’s fear is that Michigan’s implementation of a RTW law will embolden other northern industrial states, such as Ohio, Wisconsin and Pennsylvania, to pass similar laws. Although Ohio and Wisconsin Governors John Kasich and Scott Walker claim that they have no such plans, these sentiments hardly calm labor, given that Michigan Governor Rick Snyder stated the same thing in early December 2012.

Although RTW laws have been in effect since the 1947 Taft-Hartley Act, this legislation remains extremely controversial. RTW law opponents argue that each employee who profits from the union’s activities should be required to pay dues to the labor organization for services received, preventing employees from becoming “free riders.” Supporters of RTW legislation argue that required union membership, and having to financially support a labor organization, can be viewed as illegitimate limitations on employee free choice. Thus, while RTW law opponents contend that free riders ultimately weaken unions, RTW law advocates claim that such legislation results in job growth by making the state more attractive for industrial investment. So how does RTW legislation affect employment growth, labor organizations, unionized workers and nonunion workers alike?

Research indicates that RTW legislation provides the perception of a more favorable business climate although no definitive evidence exists that such laws contribute to job growth. According to a recently-published article by The Economic Policy Institute on Indiana, a RTW state, tax credits and state assistance packages were more critical in contributing to employment growth than the state’s RTW status.

While many reasons exist for the US union density’s drastic decline, research indicates that RTW legislation is one factor that helps to explain this drop. RTW laws have not only reduced unionization levels in RTW states but in non-RTW states as well, due to companies relocating from highly unionized areas to RTW states.

Considerable evidence exists that free riding in RTW states is approximately six to 10 percent higher than in non-RTW states which, of course, results in fewer union members. Moreover, because of reduced union funding due to free riders, unions find it difficult to conduct strikes, which decreases the unions’ bargaining power in RTW states. RTW laws also reduce the number of union organizing campaigns and union victories in certification elections for at least a decade after the law’s implementation.

Although unionized workers receive 10 percent to 40 percent more in wages than nonunion employees depending upon industry and occupation, nonunion workers also benefit when there is a strong regional union presence in non-RTW states. Due to this “threat effect,” nonunion employers increase wages and benefits to discourage their employees from seeking unionization. However, in the absence of a strong union movement when unionization is no longer a threat, nonunion employers are more likely to pay lower wages, to offer fewer benefits and to impose worse working conditions on their employees.

Since union density is far higher in non-RTW states than in RTW states, the threat effect is considerably dampened in the latter states, which might help to explain why average wage and benefit levels are lower in RTW states. According to the Bureau of Labor Statistics in October, private-sector and non-farm workers in RTW states earned an average of $743.67 a week (before taxes) when compared with $804.62 in non-RTW states, an annual difference of $3,169.40. Additionally, in non-RTW states, employers more frequently provide their employees with health insurance plans.

RTW legislation has contributed to declining union density and the weakening of US labor. And if there is further erosion of union power and the threat effect disappears, downward pressure will be exerted on wages, benefits and working conditions for union and nonunion workers alike. Whether other northern industrial states follow Michigan’s lead in adopting RTW legislation remains to be seen. However, such decisions have real consequences for the future of not only the US trade union movement but for all workers in the early 21st century.

Written by Victor Devinatz,
StreetWise Contributor


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