More than twice as many union members now work for the U.S. Postal Service than in the domestic auto industry. Given that and other facts of declining union membership, the Heritage Foundation notes that labor laws need to be updated. Indiana Congressman Todd Rokita's efforts are mentioned.
Unions Resist Recognizing Achievement
Such sharp drops in union membership indicate that U.S. labor laws are out of step with the modern economy. Traditional unions no longer appeal to workers the way they did two generations ago. Outdated restrictions in labor laws are now seen as holding back both employers and employees.
For example, union wage rates are legally both minimum and maximum wages: A unionized employer may not pay employees more than the union rate without the union’s permission. While unions happily accept group raises, they often resist individual performance pay. They typically insist that employers base promotions and raises on seniority instead of individual recognition.
In 2011, Giant Eagle gave individual raises to two dozen employees at its Edinboro, Pennsylvania, grocery store. These raises were in addition to the union wages. United Food and Commercial Workers Local 23 nonetheless argued that the pay increases violated their collective bargaining agreement. They objected to the fact that some entry-level employees made more than senior union members. The union filed charges. Last November, the Federal District Court for Western Pennsylvania ordered Giant Eagle to rescind the pay increases. Nationwide, union members are less than half as likely to receive performance pay as non-union employees.
This holds back union members. A one-size-fits-all approach was workable when all employees brought essentially the same skills to the bargaining table. But the nature of work is changing. Employers have automated many rote repetitive tasks. At the same time, employers are also flattening the job hierarchy. The line between management and workers is blurring. Employers increasingly expect workers to exercise independent judgment and take initiative on the job. Employers want to reward—and employees want to be rewarded for—individual contributions that no collective contract can reflect.
Citing research by James M. Hohman of the Mackinac Center, Michigan Capitol Confidential takes issue with the claim that right-to-work states feature lower wages. Hohman's conclusion is that, after all the facts are in, right-to-work states actually have the higher per-capita incomes.
Scores of right-to-work critics ranging from politicians to economists have cited lower per-capita incomes in right-to-work states as why the new law is not good for Michigan.
However, not factoring in cost-of-living exposes a flaw in that analysis, said Mackinac Center for Public Policy Fiscal Analyst James Hohman. Once that is considered, Hohman said the per-capita income is higher in right-to-work states than non-right-to-work states.
For example, Texas per-capita income was $37,098 but would have a purchasing power of $49,700 in the state of New York in 2007, according to Hohman’s analysis. New York’s per-capita income was $47,852.
Hohman found that in terms of Michigan dollars in 2000, right-to-work states had 4.1 percent higher per-capita personal incomes than non-right-to-work states when factoring in cost of living. Michigan was considered a non-right-to-work state because the law was passed in late December 2012. Hohman said the right-work-states didn’t surpass non-right-to-work states until 2003.
“One of the most basic arguments repeated time and time again by right-to-work opposition is that Michigan is going to lose income by passing this law,” Hohman said. “That just isn’t the case. When you adjust for what a dollar can get you, the difference reverses itself."
Hohman used the cost of living index done by political scientists William Berry, Richard Fording and Russell Hanson. They adjusted for cost-of-living in every state from 1960 to 2007.
The Washington Free Beacon reports that legislators in the Pennsylvania legislature want to bring right-to-work to their state, citing its passage in Indiana and Michigan and the need for job growth and desire to attract businesses.
Six GOP lawmakers on (Jan. 22) introduced a proposal to make Pennsylvania, the “Keystone State,” the nation’s 25th right-to-work state.
The legislation, which would end the longstanding practice of forcing employees to join unions as a condition of work, has stalled several times over the past decade. The bill’s sponsors say new laws in Michigan and Indiana forced the state’s hand.
“The needs of our economy dictate that it must be adopted at some point in time,” said state Rep. Daryl Metcalfe. “The victory of right-to-work in Michigan and Indiana certainly thrust the spotlight on it and made the General Assembly look it more seriously than the past.”
Pennsylvania is one of the most heavily unionized states in the country with more than 700,000 workers belonging to organized labor groups. That is nearly 100,000 more union members than in Michigan.
The advent of right-to-work in the traditionally labor-friendly Midwest and Rust Belt has left policymakers scrambling to catch up, said Nate Benefield, director of policy analysis at the free-market Commonwealth Foundation.
“Indiana and Michigan are states that we directly compete with,” he said. “We’re going to have to evolve to remain competitive and it’s also a great opportunity for us to outcompete the northeast.”
If Pennsylvania passes right-to-work, it will be the first state to do so in the northeast. That could give it an economic advantage over neighboring New York and New Jersey, which lead the nation in union membership as a percentage of the workforce, advocates of right to work legislation said.
“We’re playing catch-up to Indiana and Michigan, but our immediate neighbors, New York, New Jersey, and Maryland are even less competitive than Pennsylvania is,” Benefield said. “I think right-to-work is a big part to improving our business climate.”
Restricting the use of compulsory union dues also could deal a blow to union influence.
The United States District Court of the Northern District of Indiana upheld Indiana’s right-to-work law by issuing a decision on Sweeney v. Daniels on January 17. The Court dismissed all counts for plaintiffs (the operating engineers Local 150) for their failure to state a claim upon which relief could be granted.
Chief Judge Philip P. Simon said, “For better or worse, the political branches of government make policy judgments. The electorate can ultimately decide whether those judgments are sound, wise and constitute good governance, and then can express their opinions at the polls and by other means.”
In his written opinion, Simon makes clear that the building trades unions are not carved out of the right-to-work legislation, as has been suggested. Further, he dismissed the notion that permitting so called “free riders” violate unions’ protected political speech rights.
It is not known yet whether the operating engineers will appeal the decision. Moreover, there is a second legal challenge ongoing in a Lake County court.
The Indiana Chamber led the charge for Indiana to become the 23rd right-to-work state in 2012, positioning our state for national leadership in economic development and worker freedom. Opponents have promised continuing action to repeal or strike down right-to-work in the courts and in the Statehouse, in an attempt to resume the practice of imposing union membership and financial support as a condition of employment. The Indiana Chamber will support and defend the continuation of the right-to-work statute in Indiana.
The Indiana Chamber’s right-to-work study has gained attention in neighboring states, including Ohio.
The Columbus Dispatch repeats key findings and says that some Ohio lawmakers would prefer their state, not Indiana, become the 23rd to join the RTW fold. Sure, the article (as it should) presents both sides. Only the arguments against, as usual, are more rhetoric than facts.
There have also been rumors of RTW talk in Kentucky, Wisconsin and Minnesota, among others. As one Ohio legislator reaffirmed, the first Midwestern state to pass RTW will become a "jobs oasis."