Analyst: RTW Opponents Use Flawed Math

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.

Pennsylvania Legislators Introduce Right-to-Work

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.

Favorable Court Decision for Right-to-Work

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.

Despite Obama’s Objections, Job Growth in RTW States Likely Aided His Reelection

It’s no secret the Indiana Chamber supports right-to-work and was a driving force in its passage in Indiana. It’s also no secret that big labor and President Obama are not fans. However, an interesting blog from the National Institute for Labor Relations Research explains how right-to-work states have seen the bulk of job increases, and most likely helped inspire confidence in Obama’s economy during his reelection bid:

Exit polling conducted by the Associated Press indicates one important reason the President was able to win at all was that four in 10 voters believed the national economy was improving, while only three in 10 believed it was getting worse.

To convince voters things were getting better, the Obama campaign pointed to the millions of jobs that have been created since the recession officially ended in June 2009.  Household employment data for the 50 states and Washington, D.C., do show an overall net gain of 2.59 million jobs through this September.

Ironically, the bulk of the increase occurred in the 22 states that have had Right to Work laws on the books since June 2009. Their aggregate household employment grew by 1.86 million, or 3.4%.  (Since Indiana did not adopt its Right to Work law until this February, the 19,000 jobs it added are not included.) Because Right to Work laws protect employees from being fired for refusal to pay union dues or fees, Big Labor bosses hate them. And the union hierarchy’s massive, forced dues-fueled campaign support is the single most important reason the President was reelected.

At the same time, Right to Work states (again excluding Indiana) were responsible for 72% of all net household job growth across the U.S. from June 2009 through September 2012 (see chart above).  If these states’ job increase had been no better than the 0.85% experienced by forced-unionism states as a group, the nationwide job increase would have been less than half as great. And the President wouldn’t have been able even to pretend the economy was in recovery.

During his first term, Barack Obama repeatedly expressed virulent opposition to Right to Work laws and enthusiastically supported “card-check” forced-unionism measures and other legislative and bureaucratic proposals designed to shove millions of additional workers under union control.  Fortunately, Right to Work proponents generally thwarted him.

Now a genuine national recovery depends on the President calling off his administration’s guerrilla attacks on Right to Work states for the next four years. Will Obama, his congressional allies, and his political appointees at last step aside and allow the 23 Right to Work states to serve as the bulwark of U.S. economic recovery? Or will they continue trying to deter employers and employees from setting up shop and expanding in Right to Work states?

Hat tip to our Political Affairs Coordinator Ryan McNicholas and the AEIdeas blog.

Chamber Presents Top Honors With Annual Business Celebration, Awards

The CEO of a marketing software giant, two state legislators who authored the right-to-work legislation and an Indianapolis community which hosted Super Bowl XLVI and is experiencing ongoing infrastructure improvements and economic growth were honored by the Indiana Chamber of Commerce this evening at the organization’s 23rd Annual Awards Dinner.

A crowd of approximately 1,400 business, civic and political leaders attended the event at the Indiana Convention Center in downtown Indianapolis. Famed journalists Bob Woodward and Carl Bernstein delivered the keynote speech. The awards dinner was presented in partnership with Anthem Blue Cross & Blue Shield.

The 2012 Indiana Chamber honorees are: Business Leader of the Year Scott Dorsey, co-founder and CEO of Indianapolis-based ExactTarget; Government Leaders of the Year Rep. Jerry Torr and Sen. Carlin Yoder; and Indianapolis as Community of the Year.

Business Leader of the Year: Scott Dorsey, co-founder and CEO of ExactTarget, Indianapolis — "Scott Dorsey and ExactTarget are a shining example of Indiana’s growing technology community and what this state has to offer," says Indiana Chamber President Kevin Brinegar. "Scott’s humble leadership style and business acumen, along with the desire to foster his employees and the local community, has made the company what it is today."

Though marketing software company ExactTarget is now widely known, it began like any other technology startup – with hard work and support from family and friends – when Dorsey, his brother-in-law Chris Baggott and another partner, Peter McCormick, launched the company in 2000.

"The Internet bubble had burst; money was not flowing into Internet companies," Dorsey contends. "We were three entrepreneurs with no software experience. The capital raising process was really difficult. We went down the friends and family route. It was great, but a little unconventional."

While Dorsey recalls that the early years of the company were "bootstrapped," with the three founders working without salaries for most of the first year in business, ExactTarget has grown to over 1,300 employees in five countries, with just under 1,000 employees in Indiana alone.

"How do you build and manage a global business? That’s a big challenge, especially when you move into markets that are non-English speaking, like we have in Sao Paulo, Brazil. Managing life as a public company is very different too (the company launched an initial public offering in March), but exciting. The expectations and pressures of Wall Street are very different — and very time consuming — to communicate and build relationships with all those key constituents," Dorsey offers.

Dorsey grew up in Naperville, Illinois, and graduated from Indiana University with a degree in marketing before earning an MBA from Northwestern University’s Kellogg School of Management. He also has worked in various sales positions for Divine, Inc.; Metro; and Steelcase, Inc.

Family ties brought ExactTarget’s headquarters to Indianapolis, but Dorsey admits that the Circle City has proven itself as the right place to be for a growing technology company.

"The support we received from the tech community was extraordinary. As we’ve grown, Indianapolis has become a big competitive advantage for us: the low cost of operation, amazing support from the city and state, great universities we’re able to recruit from and a very loyal employee base with good values and a great work ethic," Dorsey declares.

To give back to the local community, Dorsey and his team created a grassroots organization, ExactImpact (focused on assisting area charities), and the newly-established ExactTarget Foundation.

Dorsey also serves on the board of directors for TechPoint, Indiana Sports Corporation and the Central Indiana Corporate Partnership and is a member of the Dean’s Advisory Council for the School of Informatics at Indiana University. He also served as chair for the marketing and communications division for the Indianapolis Super Bowl Host Committee.

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Chamber Report Ranks State Legislators on Economy, Jobs Issues

Did your legislators support implementing a statewide smoking ban? What about making Indiana a right-to-work state and eliminating the state’s inheritance tax? Find out in the Legislative Vote Analysis report released today by the Indiana Chamber of Commerce; the publication details the pro-economy, pro-jobs voting records for state lawmakers during the 2012 session.

All scores and the full report are available at the Indiana Chamber’s web site at www.indianachamber.com/lva.

"The thing that really stands out is how much the vote scores have gone up in recent years – Democrats and Republicans alike. In fact, this year a total of 15 legislators scored 100%. Overall what this shows is the support for prosperity issues continues to grow, and that reflects where Hoosiers are," states Indiana Chamber President Kevin Brinegar.

"We want employers and citizens to take note of this report because it makes it very clear which legislators were supportive of bettering Indiana’s economic climate and which were not."

Legislators who score 70% or greater for the most recent two-year voting period are eligible for endorsement by the Chamber’s political action committee, Indiana Business for Responsive Government.

Bills used in the report were selected based on their significant impact to the state’s economic climate and workforce. Lawmakers are kept apprised of the Chamber position and reasoning on these bills through various communications during the legislative session — and prior to key votes being taken. Only floor votes for which there is a public record are used in the Legislative Vote Analysis.

The final vote on House Bill 1001 — the right-to-work legislation — was counted twice in the report to reflect the importance placed on that policy.

Copies of the Legislative Vote Analysis report are sent to all legislators and Indiana Chamber board members, and made available online for all businesspersons, community leaders and citizens.

For 28 years, the Chamber has measured the voting performance of all 150 legislators on bills that reflect the organization’s public policy positions.

The Indiana Chamber has been the state’s largest broad-based business advocacy organization for 90 years, with members in every county and legislative district. Today, the Indiana Chamber serves more than 5,000 member companies that employ 800,000 Hoosier workers.

Best and Worst States for Business; Indiana in Top 5

Larry Gigerich, managing director of site selector Ginovus, penned a column for Inside INdiana Business about the best and worst states to do business. Following the right-to-work legislation this fall and many other beneficial moves, Indiana finds its way into the top five.

While labor force, tax structure, regulatory environment, real estate, infrastructure and economic development incentive programs are all important considerations in the process of selecting a community and state, the initial list of geographic areas to be considered for the project may be shaped by the thoughts of the senior leadership of an organization. This is why regions and states must work to tell their story to corporate decision makers.

Chief Executive Magazine surveyed 650 business leaders earlier this year. CEOs were asked to evaluate states based upon factors such as tax, regulatory, workforce quality and quality of life. The survey process identified the best and worst states in the United States. Please find below a summary of the best states in the rankings.

1. Texas: Texas scored very well in tax and regulatory environment, along with workforce quality. This is the 8th year in a row that the state ranked No. 1 in the country.
2. Florida: Governor Rick Scott has enacted tax and regulatory reforms resulting in a drop of over 2 percent in the state’s unemployment rate. Florida moved up from No. 3 on last year’s list.
3. North Carolina: The state scored very well in workforce quality, quality of life and regulatory environment categories. North Carolina has solid economic development incentive programs in place.
4. Tennessee: Governor Bill Haslem has brought a business perspective to state operations and economic development. Tennessee scored very well in quality of life and tax climate.
5. Indiana: Indiana is the economic development leader in the Midwest, but also a stiff competitor nationally. Indiana became the 23rd state in the nation to adopt right-to-work this year.

There are a few other interesting notes to share about states that have shown tremendous improvement in the United States. Louisiana, under the dynamic leadership of Governor Bobby Jindal, jumped 14 spots on the list. In addition, Ohio and West Virginia made significant improvements to their business climates and each jumped eight spots on this year’s list.

While there are a number of good stories to share about the 2012 Chief Executive Magazine rankings, there are also some states that rank very poorly in several categories. These states start off in a deep hole due to the negative perception held by site selectors and corporate decision makers and poor business climate conditions. Please find below a list of the five worst states in this year’s rankings.

46. Michigan: Governor Rick Snyder inherited a fiscal mess from his predecessor and is working hard to improve the state’s position. Michigan currently scores very low in tax and regulatory environment.
47. Massachusetts: The state has been known as "Taxachusetts" for a long time. The tax and regulatory climate conditions to be a drag on a state that possesses a well educated workforce.
48. Illinois: Illinois has raised several taxes and created an unfriendly business climate. Neighboring states such as Indiana, Iowa and Wisconsin are recruiting companies to move from Illinois into their states.
49. New York: Governor Andrew Cuomo has taken steps to address tax and regulatory issues that adversely impact businesses. Despite these efforts, the state has work to do to convince CEOs to locate there.
50. California: The recent announcement of a $16 billion state deficit does not help perception. In addition, proposed tax increases and elimination of redevelopment incentives, hurts the California’s competitiveness.

Oregon dropped the furthest on the list by falling nine spots – largely due to tax increases in recent years. In addition, Kentucky, Mississippi and New Hampshire each fell eight spots on the list this year as other states took bold steps to improve their business climates, workforce and quality of life. 

The Ultimate Countdown: 100 Reasons to do Business in Indiana

If you’re an Indiana enthusiast, you’ll enjoy the Indiana Economic Development Corporation’s 100 Reasons to Move Your Business to Indiana. The list is complemented by a colorful, eye-catching web site.

We’re happy to relay the Indiana Chamber suggested some of the items on the list and has contributed mightily over the years to many of the factors that have created an outstanding business climate. Most notably from the 2012 legislative session, we’re enthusiastic about numbers 12 ("Indiana is a right-to-work state") and 14 ("Indiana is eliminating the inheritance tax").

Kudos to the IEDC and all the contributors to this list. We live in a truly great state — and we’re always happy to show it off.

Indiana Business Climate on the Rise Again

Improvement for Indiana in another national economic development ranking is nothing new. The latest: a rise from sixth to fifth in Chief Executive magazine’s "Best and Worst States for Business." (Indiana had moved from 16th in 2010 to sixth a year ago).

Below is the key passage from the article detailing the opinions of CEOs from across the country:

North Carolina, Tennessee, Indiana, Virginia, South Carolina, Georgia and Utah held their positions in the top 10, with Indiana moving up a notch to fifth. CEOs indicate that workforce quality is the state’s single greatest strength, and since it became the 23rd right-to-work state last year {actually this year}, the Hoosier State is likely to punch above its weight competitively in the future. “Indiana is like a breath of fresh air,” volunteered one manufacturing CEO. “I have operated on both coasts, the Southeast and Chicago, and Indiana is where I will keep my manufacturing operations.”

It may be no accident that most of the states in the top 20 are also right-to-work states, as labor force flexibility is highly sought after when a business seeks a location. Several economists, most notably Ohio State’s Richard Vedder and Harvard’s Robert Barro, have found that the economies in R-to-W areas grow faster than other states, have higher employment and attract more inward migration.

By my count, the entire top 10 and 17 of the 20 are RTW states. Texas earns No. 1 for the eighth year in a row with California at the opposite end — also for eight consecutive years. Rounding out the top five: Florida, North Carolina and Tennessee. The bottom five has Michigan at No. 46, followed by Massachusetts, Illinois and New York.

Full story; Indiana breakout; Indiana Economic Development Corporation release.

Editorial: RTW Challenge Falls Short

A union challenge to the state’s right-to-work law was definitely expected. The challenge that has been offered, however, lacks in credibility, according to this excerpted editorial that first appeared in the Lafayette Journal & Courier and has been echoed in other circles.

In a federal lawsuit filed in federal court, attorneys for the International Union of Operating Engineers Local 150 argue that the right-to-work law infringes on the unions’ freedom of speech.

How? The right-to-work law, signed into law this year, allows workers to skip paying union dues even if the union bargains for wages and benefits on their behalf. The lawsuit’s contention is that right-to-work limits a union’s ability to build up coffers needed to negotiate beyond the plant floor — namely in Statehouses and other political lobbying settings.

The brief filed last month, according to an Associated Press account, cites the U.S. Supreme Court’s Citizens United ruling, which made corporate campaign spending free from many reporting restrictions. Nice try.

The unions, which are scheduled to get a hearing in federal court later this month, are already being called on the strategy by legal experts. And rightly so. The Citizens United decision, whether rightly or wrongly sorted out by the U.S. Supreme Court, was about spending money to boost political speech without many of the past reporting restrictions. It was not about how corporations or organizations raised that money.

Unions faced those potential fundraising limitations before right to work, with union members able to opt out of dues that were beyond those needed for negotiations.

If unions are serious about bringing down Indiana’s right-to-work law, we’re guessing they’ll have to try another approach.