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Affluent Investor | June 29, 2017

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What The Right-To-Work Momentum Means

righttowork

For quite a few years, the number of states with Right-to-Work statutes was stuck at 22. Oklahoma adopted RTW in 2001, but then no more did so (despite serious legislative battles) until Indiana in 2012 and Michigan in 2013.

Wisconsin has now become the 25th RTW state.

What is going on? I think the momentum toward RTW – or more accurately, the declining appeal of compulsory unionism – is explained by two things. First, it is becoming clear that RTW status helps attract business, while compulsory unionism repels it.

Second, more and more workers who once regarded labor unions as crucial to their success and happiness are realizing that they aren’t, and in fact just want to grab some of their money.

On the first point, there is a pretty strong correlation between business and economic growth in a state and having a RTW law. In a recent paper, “The Economic Impact of a Right-to-Work Law on Wisconsin,” Richard Vedder, Joseph Hartge, and Christopher Denhart concluded that the Badger state has retarded its economic growth by remaining (until now) a compulsory unionism state. Suppose that Wisconsin had adopted RTW back in 1983 – where would the state have been in 2013? Their answer is that per capital income would have been $1,683 higher than it was.

But why do we see that correlation? Bear in mind that RTW laws do not prevent workers from seeking to unionize. The federal labor statute, the National Labor Relations Act, applies equally in all states and its provisions strongly tilt the playing field in favor of unionization. But because workers who don’t want to pay union dues cannot be fired in RTW states, unions are less interested in trying to win certification there.

Lowering the likelihood of unionization appeals to management since unions are notorious for interfering with efficiency and fomenting a poisonous “us versus them” attitude. That helps to explain why, for example, the foreign car-makers chose to build plants in RTW states rather than in states where unionization was more probable.

Moreover, once a state rejects compulsory unionism, that signals to investors that the redistributionists are no longer in complete control of the state and thus their capital will earn a better return. RTW, after all, usually goes hand-in-hand with other tax and regulatory policies that attract rather than repel business.

And now, counties are starting to take advantage of RTW where state laws give them wide latitude. That is particularly true in Kentucky. Back in December, Warren County exercised its “home rule” power to enact a RTW ordinance; over the next ten weeks, nine more counties did the same. “The local push took off once it became clear Kentucky’s legislature would not make union dues voluntary statewide,” write James Sherk, Mitchell Tu and Alex Belica in this Heritage Foundation piece.

Big Labor is fighting against these local RTW laws, arguing that they aren’t permitted under the NLRA, but that is merely a delaying tactic that will probably crash in the courts. (Union members might wonder why their dues money should be squandered on lawyers to oppose worker freedom in counties where they don’t live.) In Illinois, Governor Bruce Rauner has suggested that counties in his state do the same as in Kentucky and give themselves a bit of an advantage when businesses are looking for good sites.

On my second point, more Americans are concluding that unions are far more interested in lining their own pockets than in doing anything for them. The grasping, unscrupulous nature of organized labor was revealed clearly in last year’s big Supreme Court case, Harris v. Quinn (which I wrote about here). Using its clout with two Illinois governors it had helped elect (Rod Blagojevich and Patrick Quinn), the union movement had home health care workers classified as “state employees” so some of the money they were paid through Medicaid would be diverted into union coffers.

That widely publicized case showed how brazen and greedy the union movement often is.

Big labor is also turning off many former supporters, as we discover in this recent Houston Chronicle piece about a strike called by the United Steelworkers against a Shell Oil facility in the area. One worker, a long-time member of the union, has decided to ignore the strike order and return to work. His chief reason for disaffection is that the union decided to go from a flat annual dues amount to a percentage of earnings system. “We went from paying dues to paying a tax,” complained Hank Wamble.

Furthermore, he and two other workers told the reporter, “The strike has more to do with padding membership numbers than with making plants safer.” These men have realized what many other workers have: union officials have their own agendas which are often at cross-purposes with the best interests of the individuals they purport to represent.

The old, coercive and collectivistic style of unionism enshrined in the 1935 NLRA is way out of touch with modern realities and its appeal is fading fast. Despite desperate union political efforts (exemplified in the blatantly pro-union activism of the NLRB under Obama), union numbers keep falling. More states are apt to enact RTW statutes to avoid losing out on business investment; where state legislatures won’t, some counties will. And in states with ballot initiatives, voters might take that route to eliminating compulsory unionism.

More workers who are currently in unions (seldom, incidentally, due to an election they participated in, since many unions were voted in decades ago) will seek to decertify them. (Apropos of that, here is the notice sent by the National Right to Work Legal Defense Foundation to the USW members in that dispute, explaining how they can exercise their rights.)

Public polling shows that by a 3-1 margin, Americans agree that workers should not have to pay union dues as a condition of keeping their jobs. That gap will continue to widen.

In short, the union movement is in the same condition as Humpty Dumpty after falling off the wall.

 

Article originally published on Forbes.com.

 

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