Right-to-Work States Have the Edge
For release Aug. 3 and thereafter (680 words)
It doesn’t take an economist to spot the common thread in these recent economic development headlines:
Chattanooga, Tenn.: “Volkswagen hires 2,000th employee.” July 29
Shreveport, La.: “NJ-based bag manufacturer to build Louisiana plant.” July 28
Decatur, Ala.: “Polyplex to build $185 million plant.” July 21
West Point, Ga.” Kia builds vehicle No. 300,000.” July 7
All four stories have southern datelines. All come from states with right-to-work laws, which prohibit labor contracts that require employees to join a union or pay a union representation fee.
This is the issue that prompted the five-week House Democratic walkout during the 2011 Indiana General Assembly. The Democrats — a minority in both House and Senate — had no other leverage. So when a right-to-work bill came up unexpectedly in a session supposed to be about budget, redistricting and education, they bolted. Republicans capitulated and took the legislation off the table.
In 2012, it will return with a vengeance and this time Democrats can’t avoid it. Right-to-work has been promised a full public airing. The Interim Study Committee on Employment Issues, chaired by Sen. Phil Boots, R-Crawfordsville, is taking a first crack this summer and hopes to recommend a bill by November. Gov. Mitch Daniels, who didn’t support the bill last session, has hinted he might this time around.
The debate goes back to 1935 when Congress passed the National Labor Relations Act protecting employees’ rights to form, join and be involved in unions. One section of the law permitted contracts that made union membership a condition of employment. Congress modified that language in 1947 when it said states could prohibit these. In response, 22 states passed right-to-work laws. Indiana is one of 28 that does not currently have such a law.
Predictably, at last week’s study committee hearing, business interests favored right-to-work while union leaders opposed it. The economists were divided. Richard Vedder of Ohio University summarized research showing that right-to-work states have higher rates of employment, productivity and personal income growth. Marty Wolfson of the University of Notre Dame testified that right-to-work laws result in lower wages and benefits.
Their conclusions are not mutually exclusive. If you grant Wolfson’s point, the policy question remains: Which is better? A state with higher wages for some but a weaker economy overall or one with lower wages for some and more vibrant growth, not to mention freedom of choice for the worker?
Companies are voting with their feet. To the extent that manufacturers are expanding in the United States – and few are – they are choosing the South and West where right-to-work is prevalent.
Alabama Gov. Robert Bentley, in announcing the $185 million project by Polyplex, the world’s fourth largest manufacturer of thin polyester film, was blunt: “Alabama is a right-to-work state and we will continue to be one. That’s one of our advantages for companies who are looking to build on new sites.”
Companies won’t readily admit this because what they say can and will be used against them. Currently pending at the National Labor Relations Board is a case against Boeing, which recently opened a second production facility in South Carolina for its 787 Dreamliner airplane.
South Carolina has a right-to-work law. Boeing’s other production site is in Washington state, which does not. The board’s complaint alleges that Boeing chose South Carolina in retaliation for past strikes by Washington workers in violation of the National Labor Relations Act. Its proposed remedy would force Boeing to move its South Carolina operation to Washington. This would be an extraordinary use of federal power to promote the cause of organized labor at one company’s expense.
Right-to-work does not destroy unions. It gives workers the right to decide for themselves whether to join. “This greater accountability results in unions that are more responsive to their members and more reasonable in their wage and work rule demands,” says the Mackinac Center for Public Policy.
It should come as no surprise to Indiana legislators that expanding industries favor that kind of relationship. The legislative choice is between protecting unions as we know them or protecting the long-term interests of Hoosier workers.
Andrea Neal is adjunct scholar with the Indiana Policy Review Foundation. Contact her at firstname.lastname@example.org.