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Original article URL: http://bridgemi.com/2012/03/no-easy-answer-on-right-to-work-benefits/

Economy & competitive position

No easy answer on Right to Work benefits

Rep. Mike Shirkey reeled off statistics about the economic growth of Right to Work states faster than the person on the other end of the phone line could jot them all down.

Shirkey, a Jackson-area Republican, also said he spent weeks anonymously calling corporate site selection specialists and asking them if their clients, mainly manufacturers, insisted on Right to Work as a condition for investing in a state.

The answer to that question, he says, was almost always “yes.”

“I’ve been astounded at the responses I’ve gotten,” said Shirkey, a leading proponent of Right to Work in the Legislature. “Michigan has no clue how many opportunities we have missed because were are not a labor-freedom, Right to Work state.”

Right to Work states prohibit union contracts that require workers to join the union and pay dues as a condition of employment. There are 23 RTW states, mostly in the South and Plains region of the country.

Indiana became the first Great Lakes RTW state after Gov. Mitch Daniels signed the measure into law in February.

Supporters of RTW say it creates jobs and promotes economic growth while giving workers the right to decide if they want to belong to a labor union.

Critics say RTW is a union-busting ploy that pushes down wages and shifts income from workers to business owners without benefiting a state’s overall economy. Union officials call the measure “Right to Work for less.”

Economists, and even some RTW supporters say it’s difficult to prove that the measure is the cause of the economic growth.

“We’re careful not to say that there is a direct causation of right to work and economic growth,” Shirkey said. “But there is a strong correlation.”

By the numbers

Tim Bartik, senior economist at the Upjohn Center for Employment Research in Kalamazoo, said it’s impossible to know whether right to work boosts employment or whether it is a “proxy” for a variety of other policies and political leanings.

“For example, if faster-growth southern states tend to adopt Right to Work, then Right to Work may be due to the underlying political culture of states, which happens by chance to be correlated with Right to Work,” he said.

Some say the push for RTW in Michigan is more about annihilating public sector unions than it is about creating more jobs in the private sector.

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Last year, just 410,769 of the state’s 3.1 million private sector workers, or 12.4 percent, were covered by labor contracts, according to data compiled by economists Barry Hirsch of Georgia State University and David Macpherson of Trinity University, located in San Antonio, Texas.

But 291,852 of Michigan’s 517,000 teachers, state workers and other government employees — 55 percent — were covered by labor contracts.

RTW supporters don’t hide their disdain for public sector unions. They see the gains made by teachers and other public employees in collective bargaining as money transferred directly from the pockets of taxpayers to government workers. And they view local school boards and other public bodies as ill-equipped to hold off workers’ economic demands.

“I don’t think there should be public sector unions,” said Charles Owens, state director of the 17,000-member National Federation of Independent Businesses in Michigan.

However, the evidence that RTW leads to a stronger economy is mixed, at best.

A Bridge Magazine analysis of state gross domestic product, personal income and jobs data over the past two decades found that RTW states generally had better numbers than non-RTW states.

But differences in the two groups of state weren’t eye-popping, except for total job growth. And the economic performance of the 22 RTW states examined varied widely. (Indiana was included as a non-RTW state in the analysis because the measure wasn’t in place in the years studied.)

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The nation’s economic output, as measured by GDP, grew by 33 percent between 1997 and 2010, adjusted for inflation, according to federal Bureau of Economic Analysis data.

Economic output in RTW states grew 39 percent in the period, while output in non-RTW states grew by 30 percent.

Output in manufacturing, where supporters say RTW is most beneficial, has barely shifted from non-RTW regions of the country over the past 20 years.

RTW states accounted for 38 percent of the nation’s manufacturing output in 2010, up just 1 percentage point from 1997. Half of the RTW states grew less than the national average of 31 percent in manufacturing output during that period.

The United States has lost 6.2 million manufacturing jobs since 1990. Nearly three-quarters of those jobs were lost in the 28 non-RTW states. RTW states lost 1.7 million manufacturing jobs in the period.

But total employment in RTW states over the past 20 years grew much faster than in non-RTW states as the U.S. population steadily shifted south.

Full- and part-time employment grew 30.2 percent in RTW states between 1990 and 2010, compared to just 9.4 percent in non-RTW states.

Real per capita income in RTW states over the past 20 years has grown slightly faster than in non-RTW states — 35 percent to 31 percent.

But per capita income in non-RTW states was still an average $5,221 above incomes in RTW states, according to the Bridge analysis of federal statistics.

Union forces look to the ballot

“So-called Right to Work legislation is nothing more than a power grab by corporate special interests that will give even more profits to greedy CEOs at the expense of our jobs, our retirement security and our kids’ future,” said Todd Cook, state director of We Are the People.

Cook’s group is a backer of a proposed constitutional amendment that would protect collective bargaining rights for government and private sector workers.

Southern RTW states, in particular, have had great success in attracting Asian and European auto plants, including those of Toyota, Honda, Nissan, Hyundai, BMW and Mercedes-Benz.

Those factories have created tens of thousands of direct and spin-off jobs, including those at suppliers and at other businesses such as retail stores and restaurants.

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The Mackinac Center for Public Policy, a free-market think tank which has been pushing for Michigan to become a RTW state for years, says the measure is key to the South’s economic success.

“We’ve shown that over the long haul right to work is associated with faster economic growth, more jobs and faster growing wages,” said Paul Kersey, the center’s director of labor policy. “It isn’t necessarily an overnight transformation that happens, but it’s a steady, constant growth that’s hard to deny.”

But many economists say there are numerous other factors in the economic growth of the RTW-dominated southern and western regions of the country.

Among those are better weather, cheaper energy costs, lower taxes and less government regulation. Southern states also have used billions of dollars in tax incentives to lure foreign auto plants and other manufacturing investment.

Michael Hicks, an economist at Ball State University in Muncie, Ind., also cited the “miraculous invention of air-conditioning” as a major factor in attracting population and business investment to states such as Arizona, Alabama, Mississippi and Texas.

In January, Hicks released a study on Right to Work in which he said he could find no significant impact of the measure on manufacturing wages, jobs and output in RTW states.

However, his study found that seven of 10 states that had RTW in effect for at least 10 years since 1947 showed growth in manufacturing jobs.

“It’s a fairly nuanced story,” said Hicks, who recently spoke in Lansing about the economies of Michigan and Indiana at the invitation of the Mackinac Center. “I don’t have a good answer as to whether Right to Work would help Michigan.”

But RTW supporters say Indiana’s passage of the measure increases pressure on Michigan to do the same.

“That really is a sea change in the debate,” said Rich Studley, president of the Michigan Chamber of Commerce. “By the time this fall rolls around, we could be on receiving end of a pretty aggressive economic development campaign by Indiana.”

In a 1998 study, University of Minnesota economist Thomas Holmes examined the impact on manufacturing jobs in RTW states that bordered non-RTW states.

His study found that counties in RTW states within 25 miles of the border generally had more manufacturing jobs than counties near the border of non-RTW states.

Ron Pollina, a site selection consultant in Chicago, said RTW is “extremely important” to his manufacturing clients. By adopting the measure, he said, Indiana has moved “to the top of the list” of northern states seeking manufacturing investment.

Pollina did a study in 2010 for the Michigan Economic Development Corp. recommending the state establish RTW zones in areas of the state that favored the measure or were threatened by a nearby RTW state.

His proposal hasn’t been pursued by state officials.

“The smart people (in other Midwest states) are concerned about this and they should be,” said Pollina, president of Pollina Corporate Real Estate Inc. “By becoming a Right to Work state, Indiana has positioned itself to be a major force in this region.”

But Gov. Rick Snyder has said RTW is less important in his economic development strategy of growing small businesses and adding “knowledge jobs,” which are far less subject to union representation.

Michigan State University economist Charles Ballard agreed, noting the number of workers represented by unions has declined dramatically in Michigan and the rest of the country over the past five decades.

“In a sense, the anti-union folks have won quite a bit of the battle,” Ballard said. “I think it’s just foolish to think there will be a big transformation of our economy is we make it more difficult for unions to organize,” he said.

Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.

18 comments from Bridge readers.Add mine!

  1. Big D

    “So-called Right to Work legislation is nothing more than a power grab by corporate special interests that will give even more profits to greedy CEOs at the expense of our jobs, our retirement security and our kids’ future” Sounds like a social progressive trying to justify bigger government while ignoring catastrophic fiscal consequences. Its BS.

    How about “So-called Right to Work legislation is nothing more than an affirmation of individual choice which is a hallmark of the left only when it suits their objectives.”

    In that Rick isn’t pushing RTW, he is a disappointment.

  2. Kevin S

    Seriously? “Shirkey, a Jackson-area Republican, also said he spent weeks anonymously calling corporate site selection specialists and asking them if their clients, mainly manufacturers, insisted on Right to Work as a condition for investing in a state.” Who did he tell them he was? Andrew Breitbart or James “O’Keefe? The fact is Right to Work For Less laws have no impact on the performance of state economies and RTWFL laws lower wages for union and non-union workers by an average of $1,500 a year and decrease the likelihood employees will get health insurance or pensions through their jobs.

    Like Tim Bartik, senior economist at the Upjohn Center for Employment Research in Kalamazoo, said it’s impossible to know whether right to work boosts employment or whether it is a “proxy” for a variety of other policies and political leanings.” What we do know, is it lowers wages and kills unions, and that’s why the GOP is pushing it so hard.

  3. BarelyVisual

    Interesting information, but totally irrelevant. We live in a FREE country, and are FREE people, who should be able to FREELY work for whomever we want and FREELY choose to join a union, or not. Period.

    1. Eric

      Exactly. The article should be about whether forcing people to join unions helps or hurts a state’s economy. By allowing union membership to be elective, unions must prove to their members that their existence is in the worker’s best interests.

  4. Paul

    Right To Work For Less will permanently reduce the middle class’s economic and social power. That is what corporate AmeriKa and their thugs the Repuglican Party want. They want to return to their halcyon days of little or no worker rights and benefits. When workers were thrown onto the litter pile of society if they could not work. When debtor’s prisons and work houses existed. When large segments of the population were relegated to begging for their daily bread. When some people earned their way by picking up the corpses of the street people and tossing them into communal graves, before dawn could expose the injustices. Remember, the Repugs want to privatize prisons and other public institutions. Why? To profit from the fallout of their economic policies.

  5. David Waymire

    Don’t be misled by percentage figures…In a state where the per cap income is $20,000, a 10 percent growth in income nets you $2,000. In a state where the per cap income is $40,000, a 7 percent growth in income nets you … $2,800. The RTW folks would have you believe the worker in the state where income increased 10 percent did better. But if you ask that worker, I would bet he or she knows the difference.

    Look at the $ growth in per cap income…and the facts are clear. The states with the smallest income growth are RTW states. People there are getting poorer compared to the top income states in real dollar measures.

  6. Thomas Ford

    When I first began reading information from the Center for Michigan, I thought it might actually be a counter balance to that Right Wing misinformation machine, the MCPP. I knew Mr. Power from his days at the Press Argus when I was running in the primary for the State Senate as a Democrat. The paper was fair, honest and balanced in their reporting of my campaign.

    Although I was guardedly optimistic during the Center’s early days of publishing, it wasn’t long before the website showed its Republican bias and my informational skepticism settled in.

    Once again the Center for Michigan shows its economic and social bias by referring to The Mackinac Center for Public Policy as a free-market think tank. If someone at the Center for Michigan actually scratched the surface and took a critical look at MCPP and its social as well as economic policies they would find a Tea Party Agenda with all the baggage and narrow mindedness the term implies.

    How about balancing your reporting by using facts and figures from an actual progressive policy think tank every time you drag out some of the MCPP polluted pronouncements.

  7. Allan Blackburn

    Years ago, when auto workers were making such good wages, had health care benefits, and a guaranteed pension; they had a home down-state and a little cabin up north. They supported their families, put their kids through college, supported two or more town’s economies and lived a good life. Usually a man was able to go to work and support his entire family and the woman stayed home and raised children. Now, with both parents working, usually part-time, more than one job, no benefits, and no pension, towns are drying up because people can barely afford anything anymore. What’s the difference here? A strong Middle Class. I get tired of the partisan gamesmanship and arguing. If you cannot see what is happening when kids are going to college, only to come home to live afterwards, with a huge pile of debt and no opportunities, something is dreadfully wrong. I am in the upper percentile with my income, I have no pension but, I save over 20K per year, and I am in a higher education bracket. My wife and I are going to survive. I look around me and wonder how most people are going to make it anymore. Many people will now work until they are dead. What are we doing to our great country? What are we allowing others to do to our great country?

    1. Dave

      It is encouraging to see someone like yourself who is genuinely concerned for the people of this country. I believe you are asking exactly the right questions.

  8. T. Scott Galloway

    Political decisions to regulate capitalism and empower and protect working people during the Depression and after WWII created the greatest economy, the broadest prosperity and the least financial inequality the world had ever seen. Today Republic Party members are working tirelessly to roll back the reforms that made America the greatest country in the history of the world. So-called “RTW” legislation is but one example of their plans.

    One can only guess at their motives, but it seems beyond doubt that enriching the few at the expense of the many is behind their schemes. Governor Snyder claims to oppose RTW legislation, but almost certainly is too cowardly to stand up to the radicals of the Republic Party to veto any aspect of their anti-worker agenda.

  9. Robert

    Jobs have been leaving this state for decades due to unions, generally moving south where unions are not as strong and thus the pay is less. All well before RTW laws were enacted in the south. So RTW laws really are not the reason these states are seeing job growth, they have been for some time due to their general anti union sentiment and lower wages. So unions are right, these are really right to work for less laws. So the question really is, do we want the right to work for less or not work at all, because those jobs are not coming back.

    1. Dave

      I didn’t realize China was in the south.

  10. Garth

    It’s an issue of freedom to choose vs. human nature. Many (most?) of us favor short-term pleasures over long-term benefits. Just take a look at national savings levels and credit card debt.

    Whether you love unions or hate ‘em, they have historically been a force behind higher wage and benefit levels across the board. That’s the long-term view. But in the short term, they might not raise MY wages at MY job site this year, so why should I pay dues if I don’t have to? A couple of years of that and the union’s gone.

    Really, the issue here isn’t freedom. It’s whether unions serve a valuable societal role today, a role worth preserving. RTW says no.

  11. Charles F. Morton

    If unions are so beneficial, why do they need government FORCE to attract and keep their members? If the members feel they are getting more benefit than they are paying in dues, they will not need to be FORCED to join! Are there any other organizations that Americans are forced to join? I can think of none! Why should unions play by a different set of rules?

  12. steveshevick

    We seem to forget that the unions brought us the five day work week,40 hour work week and many other labor rules that we take for granted. The businesses that want to have the unions weakened are the samer ones that would take your insurance and pay you less while filling up their coffers for another shot at taking over the government. These wealthy individuals such as the Kock brothers must be shown that their money can’t buy votes. If this bill gets signed everyone of the people who voted for this should be recalled. With all the problems in this state we don’t need our middle class under fire anymore. RECALL THE BASTARDS.

  13. Rich

    Forty years ago, there was very little competition to domestic industries. Today, the Japanese and some European auto companies have settled in the south where wages have been historically lower. The people there are quite happy to get the lower wage, as it is higher than what they had before. Unionization efforts at those plants have proven futile. The American public has voted with it’s wallet that they want lower priced autos. The market share of the American owned companies has dropped considerably, from 75% in the 1970′s to barely 45% today. The market is the true master of determination. It has said that it has no feelings toward unions, right to work, or any other factor. In fact, the majority of people in this country have no pension, no medical plan in retirement, and no desire to support these things for someone else. The dwindling number of union households is evidence that there is no support for unions anymore.

    1. Dave

      It only makes sense that most people are happier with a lower wage. Don’t forget to ask for your pay cut tomorrow.

  14. DNH

    My grandfather was in a union as was his wife and they both knew this was coming before they passed away a couple years ago. They admitted unions have become too greedy and eventually there would be a reckoning. My father was not required to join the union and he never regretted it. He always said work hard and earn respect and you will never have to worry. We never did. There was always food on the table, a warm house to live in, and plenty to keep us entertained. Did we have the best? Nope. But we never looked at the rich and said “if only we had a union so we could have as much as they do.”

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