Right to Work Blog

With America in an economic downturn and big labor poised to make substantial electoral gains, it is critical to understand their agenda and the impact it will have on economic growth. National Right to Work President Mark Mix has done just that in the Wall Street Journal.

Revisionist historians like to claim that it was President Roosevelt’s policies that “led us from the great Depression.” But most economists now understand his policies actually prolonged it by over seven years. Part of the Roosevelt plan was enactment of the Wagner Act, a measure that authorized union officials to seek and obtain the power to act as the exclusive (that is, the monopoly) bargaining agent over all the front-line employees, including union nonmembers as well as members, in a unionized workplace.

Mix examines the history:

As Amity Shlaes observed in her recent history of the Great Depression, “The Forgotten Man,” within a few months after the Wagner Act was upheld, industrial production began to plummet and “the jobs started to disappear, with unemployment moving back to 1931 levels,” even as the number of workers under union control was “growing astoundingly.”

Given the reality of unions in the workplace, the law meant that efficiency and profitability were compromised, by forcing employers to equally reward their most productive and least productive employees. Therefore subsequent wage increases for some workers led to widespread job losses.

Pre-Depression-era growth and prosperity did not return to the private sector until the early 1950s, when the spread of state right-to-work laws prohibiting forced union membership and dues greatly reduced the detrimental effects of the Wagner Act.

The U.S. has just experienced another stock market crash, and Barack Obama, the candidate now favored to be the next president, is in favor of what amounts to a new Wagner Act.

If the mislabeled “Employee Free Choice Act,” becomes law, it will likely have a similar effect on the economy as the original Wagner Act, transforming what could have been a recovery into a lengthy, deep recession, or worse.

The bill would greatly facilitate organization in workplaces by effectively eliminating secret ballot elections, allowing unions to become exclusive bargaining agents when a majority of the workers sign a card indicating they want a union — before they’ve heard a word from their employer about the potential downside of unionization.

The cards themselves may be signed under duress. Service Employees International Union (SEIU) czar Andy Stern predicts that its enactment would cause unions to “grow by 1.5 million members a year, not just for five years but for 10 to 15 straight years.”

Sen. Obama voted for one version of the card-check bill in June 2007 and pledged to Big Labor that he will push for enactment as president. With a handful of pickups he will have a filibuster-proof majority in the next Senate, and can make good his pledge.

“I owe those unions,” Mr. Obama explained in his 2006 political memoir, “The Audacity of Hope.” “When their leaders call, I do my best to call them back right away. I don’t consider this corrupting in any way . . .”

John McCain voted against card-check legislation in 2007, and has pledged to veto such legislation as president. He also supports a national right-to-work law that would repeal all current federal labor law provisions authorizing forced union dues and fees. Unfortunately, his campaign has done little to alert the nation to the dangers of the card-check bill.

Before they cast their votes, the American people ought to be aware of Mr. Obama’s commitment to the passage of a new Wagner Act, and of what the economic consequences of such a law are almost certain to be.

History tends to repeat itself. In the question of the upcoming Big Labor power grab, the question is — will you let it?

Auto workers in Alabama have the choice to join a union while workers in Michigan do not. If more politicians in Michigan would be willing to stand up to the labor union bosses, the auto industry would be in much better shape — perhaps doing as well as in Alabama. The Birmingham News takes an insightful look:

If organized labor is looking at a shaky economy as an opportunity to elbow into Alabama’s auto manufacturing industry, union bosses must be reading their own propaganda.

A bad economy would be the worst time for workers at Alabama’s three major auto plants - Mercedes in Vance, Honda in Lincoln and Hyundai in Montgomery - to look for the union label.

These are difficult times for auto manufacturers all over the nation, and Alabama is no different. With car building a relatively new industry in the state, this is the first serious economic challenge. But even with the downturn, Alabama’s manufacturing plants are doing better than many others.

Mercedes has cut production to bring the number of vehicles produced more in line with decreased demand.

Honda also has trimmed production, but is bringing new models to the plant in Lincoln.

Hyundai has not announced any cutbacks, but if demand continues to weaken, production cuts at the assembly plant are a good bet.

Yet, none of the companies has laid off any employees in Alabama.

The argument by organized labor that union membership will assure Alabama auto workers job protection is undercut by the layoffs and closings at auto assembly plants elsewhere, especially in the heavily unionized Midwestern rust belt. Those union jobs are hardly secure.

Unions have a better shot at organizing a plant if workers are upset about working conditions, pay or job security. There are no serious complaints about working conditions or pay at the Alabama plants. With the economy limping along, there can be no absolute job guarantees. That would be the situation whether auto manufacturers run union or nonunion shops.

The real risk - to unionizing auto manufacturing plants and many other businesses in Alabama and across the nation - is the misguided and misnamed Employee Free Choice Act being pushed by Democrats in Congress.

Under that bill, which has little chance of passing this year, but will surely be a top priority of the next Congress, workers would be prevented from using a secret-ballot election to certify a union. If a majority of workers sign cards saying they want a union, the union will be certified.

With no secret ballot, union leaders could intimidate workers into signing the card. Just as elsewhere, peer pressure can be powerful in the workplace, too.

Voters shouldn’t have to explain their ballot in the presidential election, a governor’s election or a union election. That’s why in the United States we cherish the secret ballot. People should be allowed to vote their conscience without pressure, as the secret ballot guarantees.

Readers know the difficulty Michigan is having creating jobs and economic prosperity. But defenders of Big Labor like to deny that the regulations and costs the United Auto Workers (UAW) and other big unions have imposed on the state have anything to do with the state’s mired economic conditions. Albeit already difficult, it is getting harder to make such an argument.

Phil Gramm and Mike Solon writing in the Wall Street Journalnote:

The Competitiveness Index created by the American Legislative Exchange Council (ALEC) identifies “16 policy variables that have a proven impact on the migration of capital — both investment capital and human capital — into and out of states.” Its analysis shows that “generally speaking, states that spend less, especially on income transfer programs, and states that tax less, particularly on productive activities such as working or investing, experience higher growth rates than states that tax and spend more.”

Ranking states by domestic migration, per-capita income growth and employment growth, ALEC found that from 1996 through 2006, Texas, Florida and Arizona were the three most successful states. Illinois, Ohio and Michigan were the three least successful.

The rewards for success were huge. Texas gained 1.7 million net new jobs, Florida gained 1.4 million and Arizona gained 600,000. While the U.S. average job growth percentage was 9.9%, Texas, Florida and Arizona had job growth of 18.5%, 21.4% and 28.9%, respectively.

. . .

There also appears to be a clear difference between union interests and the worker interests. Texas, Florida and Arizona are right-to-work states, while Michigan, Ohio and Illinois are not. Michigan, Ohio and Illinois impose significantly higher minimum wages than Texas, Florida and Arizona. Yet with all the proclaimed benefits of unionism and higher minimum wages, Texas, Florida and Arizona workers saw their real income grow more than twice as fast as workers in Michigan, Ohio and Illinois.

Incredibly, the business climate in Michigan is now so unfavorable that it has overwhelmed the considerable comparative advantage in auto production that Michigan spent a century building up. No one should let Michigan politicians blame their problems solely on the decline of the U.S. auto industry. Yes, Michigan lost 83,000 auto manufacturing jobs during the past decade and a half, but more than 91,000 new auto manufacturing jobs sprung up in Alabama, Tennessee, Kentucky, Georgia, North Carolina, South Carolina, Virginia and Texas.

Gramm and Solon ask whether any of these facts play into the presidential debate and the positions the candidates have on issues like Right to Work?

So what do the state laboratories tell us about the potential success of the economic programs presented by Barack Obama and John McCain?

Mr. McCain will lower taxes. Mr. Obama will raise them, especially on small businesses. To understand why, you need to know something about the “infamous” top 1% of income tax filers: In order to avoid high corporate tax rates and the double taxation of dividends, small business owners have increasingly filed as individuals rather than corporations. When Democrats talk about soaking the rich, it isn’t the Rockefellers they’re talking about; it’s the companies where most Americans work. Three out of four individual income tax filers in the top 1% are, in fact, small businesses.

In the name of taxing the rich, Mr. Obama would raise the marginal tax rates to over 50% on millions of small businesses that provide 75% of all new jobs in America. Investors and corporations will also pay higher taxes under the Obama program, but, as the Michigan-Ohio-Illinois experience painfully demonstrates, workers ultimately pay for higher taxes in lower wages and fewer jobs.

Mr. Obama would spend all the savings from walking out of Iraq to expand the government. Mr. McCain would reserve all the savings from our success in Iraq to shrink the deficit, as part of a credible and internally consistent program to balance the budget by the end of his first term. Mr. Obama’s program offers no hope, or even a promise, of ever achieving a balanced budget.

Mr. Obama would stimulate the economy by increasing federal spending. Mr. McCain would stimulate the economy by cutting the corporate tax rate. Mr. Obama would expand unionism by denying workers the right to a secret ballot on the decision to form a union, and would dramatically increase the minimum wage. Mr. Obama would also expand the role of government in the economy, and stop reforms in areas like tort abuse.

The states have already tested the McCain and Obama programs, and the results are clear. We now face a national choice to determine if everything that has failed the families of Michigan, Ohio and Illinois will be imposed on a grander scale across the nation. In an appropriate twist of fate, Michigan and Ohio, the two states that have suffered the most from the policies that Mr. Obama proposes, have it within their power not only to reverse their own misfortunes but to spare the nation from a similar fate.

Mark Wylie does an admirable job responding to Florida International University’s Bruce Nissen, an advocate of eliminating the secret ballot election for workers to pad the union rolls for union bosses:

There is a great reason why the economy in the right-to-work states of the South has been so robust and the Rust Belt states, like Michigan, have experienced unemployment rates in double digits. It is because of the secret ballot, the exchange of ideas and workers freely choosing to be paid competitively based on merit.

Forming a union should be a basic freedom in the workplace. On that, I agree with Nissen.

Here is where we part company: That decision should also be personal and private — a decision not made under false pretenses, coercion and threats by either side.

Bernie Marcus is a successful entrepreneur who took a small hardware chain and turned it into Home Depot. He knows a thing or two about labor law and its impact on job creation.

That’s why Marcus is so concerned about the Card Check Scam Bill.

In the Wall Street Journal, Marcus writes:

I recently said that America “would become France” if a certain bill now in Congress — which would virtually guarantee that every company becomes unionized — ever became law. Deceptively named the Employee Free Choice Act, this bill would in most cases take away an employee’s right to a secret ballot in a union election and give unions the option to have federal arbitrators set the wages, benefits, hours and all other terms and conditions of employment. . . .

My advice today about the Employee Free Choice Act is the same as I gave in England: You better fight to stop this undemocratic bill. I’m not the only one who thinks the proposed law violates long-established principles of democracy. In these pages, George McGovern, a former Democratic senator and a champion of organized labor, called this bill what it really is — “a disturbing and undemocratic overreach not in the interest of either management or labor.”

To my astonishment, most CEOs in America are unaware of this planned hostile takeover of their human resources. I am retired, so this is not business for me. It’s strictly personal. I care deeply about the competitiveness of American companies and our system of free enterprise.

I know that labor-union contributions are the lifeblood of many in the House and Senate. But I just cannot understand how so many in Congress are willing to sell out America for political dollars. When the bill came up for a key vote in 2007, all Senate Democrats voted yes and only two Democrats in the House had the courage to vote no. While the bill passed the House, it failed in the Senate because the Democrats were unable to get the required 60 votes to stop a Republican filibuster.

If the Democrats have a good November, the measure could become law early next year. Bill co-sponsor Barack Obama has said: “We will pass the Employee Free Choice Act. It’s not a matter of if, it’s a matter of when. We may have to wait for the next president to sign it, but we will get this thing done.”

Those who support the bill claim that it will “protect workers.” This doesn’t pass the straight-face test. Mr. McGovern saw through the false rhetoric of the bill’s sponsors, saying that the measure “runs counter to ideals that were once at the core of the labor movement. Instead of providing a voice for the unheard, [it] risks silencing those who would speak.”

It’s time to stand up and fight. America’s competitiveness, jobs and right to a secret ballot are at stake. CEOs, employees who want to keep their jobs in America — and those retirees like me who would not be where we are today but for our system of free enterprise — must stop this anti-democratic legislation.

The Associated Builders and Contractors (ABC) points out that Massachusetts’ infamous Central Artery Tunnel union-only project, known as the “Big Dig”, is threatening the solvency of the state of Massachusetts.

The ABC notes:

Despite receiving federal funding, the Big Dig was subject to a union-only project labor agreement (PLA) that required project contractors and subcontractors agree to recognize unions as the representatives of their employees on the job, use the union hiring hall to obtain workers, pay union wages and benefits, and obey the union’s work rules, job classifications and arbitration procedures. . . .

This union-only funding orgy was estimated to cost $2.8 billion dollars, but costs have exploded to over $22 billion.

Union-only jobs cost taxpayers millions of dollars every year — but as in the case of the “Big Dig” — millions easily add up to billions.

Andre Lacy, the Chairman of the Indiana Chamber of Commerce, weighs in on the need for Indiana to enact a Right to Work law:

Increasing Hoosier incomes is among our state’s greatest challenges. Indiana must compete globally for jobs and investment, building economic opportunity for our citizens. Key to achieving this goal and winning the competition for new jobs is the removal of self-imposed impediments. Adopting a right-to-work law will increase investment, incomes and economic opportunity for Hoosiers.

Lacy notes the overwhelming evidence that Right to Work is a benefit to workers and taxpayers:

. . . The effect on economic development and personal income is dramatic, well documented, and it contrasts sharply with those states – such as Indiana – that lack right-to-work laws.

The evidence is overwhelming.

In 2005, Colgate-Palmolive Co. decided to shutter its toothpaste factory in Clarksville and moved to a right-to-work state. In this instance, Indiana’s lack of a right-to-work law cost 475 Hoosiers their jobs and livelihoods.

Numerous studies show that personal income in right-to-work states grew almost twice as fast as that in non-RTW states between 2001 and 2006. During this same time, manufacturing in RTW states grew almost three times as fast as in non-RTW states. Growth in construction employment was also greater in those states with right-to-work laws.

In a 2002 study entitled “The Effect of Right-to-Work Laws on Economic Development,” economist William T. Wilson of the Mackinac Center for Public Policy compared Michigan’s economic performance to right-to-work states. Wilson found that during the 30 years between 1970 and 2000, RTW states created jobs nearly twice as fast as did Michigan. While poverty rates dropped dramatically during these 30 years, Michigan was one of seven states (all lacking right-to-work laws) that witnessed an increase in the percentage of residents living in poverty. Finally, the study showed that right-to-work states created 1.43 million manufacturing jobs, while non-right-to-work states lost 2.18 million manufacturing jobs during the same three decades.

Another 2002 study conducted for and published by the Federal Reserve Bank of St. Louis focused on the experience of Idaho (whose RTW law took effect in 1986) from 1987 through 2000. It concluded that Idaho experienced significant growth in investment and manufacturing employment after adopting right to work. Specifically, Idaho’s annual manufacturing “employment growth rate was about 3.7 percent post-law, compared with an almost zero annual average growth rate pre-law.”
Furthermore, the “growth rate in the number of establishments was about seven times larger compared with that in the pre-law period. Idaho did much better after the RTW law was passed, compared with most other states in the region, both in employment and in the number of establishments. . . . ”

Lacy’s conclusion is both obvious and correct:

. . . Adopting right-to-work will benefit two very broad groups of Hoosiers – workers and taxpayers. This reform will not be easy or without organized opposition. Doing so, however, will send a strong signal that Indiana is open for business and serious about increasing job opportunities for all Hoosiers.

If you are still scratching your head trying to figure out why companies like VW would pass over Michigan when deciding where to put a new billion dollar production facility, look no further than W.I. Meyers Nursery in downtown Detroit.

The Detroit News reports that:

A plan to turn over an abandoned City of Detroit nursery to a nonprofit group that would use it to grow trees for neighborhoods and parks has been blocked by union objections.

The Greening of Detroit, under an agreement approved by Mayor Kwame Kilpatrick and the City Council, would manage the W.I. Meyers Nursery, a 125-acre plot in Rouge Park that has been closed for more than three years.

Using privately raised funds and volunteers, the group would restore the nursery and use it to provide mature trees to neighborhoods. Greening already plants 2,000 trees a year throughout the city.

But the American Federation of State, County and Municipal Employees [AFSCME] obtained an injunction from Wayne County Circuit Court against the deal, saying it violates the collective bargaining agreement. The union says the bargaining agreement applies to any deals to turn over control of city operations to a third party — meaning city workers must staff the nursery.

Someone should tell AFSCME that the “Greening of Detroit” shouldn’t mean the greening of AFSCME’s pockets.

Montana Democrats endorsed a party platform this week that specifically rejects workers’ choice and the Right to Work. Montana’s neighbors: Idaho, North Dakota and Wyoming, have all benefited from the enactment of a Right to Work law. Surrounded by a sea of worker choice states, the Democratic Party of Montana just hung up a sign on the state that says “closed for business.”

This is not a theoretical debate. Just ask the working folks of Kentucky who lost a billion-dollar investment by VW to neighboring Tennessee — a Right to Work state.

Sen. Lamar Alexander
(R-TN), July 22, 2008
At the Dedication of Nissan’s $100 Million
Headquarters in Franklin, Tennessee

I thank the legislatures that worked with all of us in such a bipartisan way to maintain Tennessee’s other competitive advantages: the right to work law, one of the nation’s best 4-lane highway systems and a fair workman’s compensation system.