One year later, Right to Work results uncertain

Thousands of protesters converged on the state capitol in December 2012 to oppose passage of right-to-work legislation. Photo credit: Anne Savage of the Michigan Democratic Party.

The predictions were both dire and dramatic.

But one year after Gov. Rick Snyder signed right-to-work legislation, it has yet to prove either the body blow to labor or the boon to business many foretold. That comes as no surprise to experts like Michigan State University economist Charles Ballard.

“This is not a game-changer because the game had already changed,” Ballard said.

Ballard noted that unions were in decline well before Michigan joined 23 other states with right-to-work provisions. The law, signed Dec. 11, 2012, says that public and private workers cannot be compelled to join a union or pay dues as a condition of employment.

By then, union membership in Michigan had fallen from 919,000 in 2003 to 629,000, according to the U.S. Bureau of Labor Statistics. Union members accounted for less than 17 percent of wage and salary workers in 2012. In 1989, they accounted for 26 percent. It was 45 percent in 1964.

“The other forces that have weakened unions for the last 60 years are far more important than this. If you draw a graph, the decline of manufacturing looks a lot like unions as a percentage of the labor force,” Ballard said.

As for business, it is hard to find evidence the measure has sparked new outside investment. Ten days after he signed the law, Snyder said the “phone's already been ringing” at the Michigan Economic Development Corporation office from outside inquiries.

Asked to identify any projects landed because of right-to-work, MEDC spokesperson Emily Palsrok cited none and instead issued a statement that said Michigan's business climate is “significantly improved” because of measures including business tax cuts, deregulation and right to work. Those have led to economic growth and the addition of 200,000 jobs since 2009, she said.

“These results are attributable to the full range of improvements listed and we know of no way to distinguish among them,” Palsrok said.

Michigan’s employment rate, meanwhile, remains relatively unchanged since the law was passed. The rate stood at 8.9 percent last January, and was 9 percent in October – compared with a national unemployment rate of 7.3 percent.

No results yet

Given that the law applies to contracts negotiated on or after last March 28, business relocation experts were not expecting an immediate impact.

“On a lot of these projects, it's not uncommon to have a one-or two-year time frame. It takes a bit of time for these projects to come through,” said Tracey Hyatt Bosman, managing director for Biggins, Lacy Shapiro & Co., a New Jersey-based corporate site selection firm that does work in Michigan.

Bosman said right-to-work status is one of many factors firms weigh in relocation decisions. But she said for some firms, particularly manufacturers, Michigan might get a look it would not otherwise enjoy. “A number of clients will say, 'Don't even look at someplace that's not right to work,'” Bosman said.

Supporters of the measure counsel patience in looking for results.

Earlier this year, Michael LaFaive, director of fiscal policy for the Midland-based Mackinac Center for Public Policy, a conservative think tank, said it takes “10 years before you can reasonably measure” its impact in a state.

In the meantime, the battle continues over its implementation within the public sector.

A group of public school teachers filed an unfair labor practice lawsuit in October, claiming the Michigan Education Association, the state’s largest teachers union, withheld information about how teachers could opt out of the union. They are backed by the legal arm of the Mackinac Center.

The MEA dismisses the claim as groundless. It also maintains that 99 percent of its 150,000 active and retired members are holding firm with the union.

Under MEA bylaws, members can only elect to leave the union during the month of August. The teachers in the suit said they tried to leave in other months and were unaware they could only do so in August.

Doug Pratt, spokesman for the MEA, said the opt-out provision - if not widely known - has been included in membership contracts for 40 years. As to any obligation to publicize that information, Pratt said: “Membership organizations don't work that way. We don't market how to quit.”

Indeed, many MEA local chapters scrambled to extend contracts with school districts, often in exchange for concessions, days before right-to-work took effect. MEA President Steve Cook estimated that as many as 30 percent of the union's teachers are covered by such contracts.

Other unions are battling the law's application to more than 31,000 unionized state workers, claiming it violates their protection under the state Civil Service Commission. The matter is on appeal to the State Supreme Court.

Right to work won't affect United Auto Workers employees in Michigan until after 2015, when the UAW contract with the Big Three automakers expires.

The impact of right-to-work on other unions:

• The Michigan chapter of the American Federation of Teachers, which represents 35,000 members, reported “minimal” effect on its members. It provided no specific numbers.
• SEIU Local 517M – which represents 8,600 school and state and local government workers – said the union has lost “less than 15 percent” of its members.
• The Michigan AFL-CIO – which represents 1 million active and retired members – said it has “not seen a significant effect so far.” It provided no specific numbers.

Karla Swift, president of Michigan AFL-CIO, added: “We are deeply concerned that wages and benefits for all workers, not just union workers, could decline as they have in other RTW states.”

But economist Ballard said it is difficult to isolate the measure among many factors that affect economic development in a state. Those can include the education level of workers, natural resources, tax rates, infrastructure and community quality of life.

Analysis in 2011 by PolitiFact, a fact-checking project of the Tampa Bay Times newspaper, found that the unemployment rate in 22 right-to-work states was 9.17 percent compared with 9.65 percent in 28 non-right-to-work states.

In general, wages in right-to-work states are below those in non-right-to-work states. Ballard's own breakdown of per capita annual income in 2011 found that workers in non-right-to-work states average more than $6,000 more in income, at $44,515, compared with $38,046 in right-to-work states.

“You have to ask yourself, 'What states should we emulate? What are the right-to-work states?' They are disproportionately poor.”

Divide remains

Conclusions about right-to-work’s impact on workers and the economy often follow ideological lines.

The Economic Policy Institute, a Washington D.C. think tank funded in part by labor unions, concludes that right-to-work legislation lowers wages while not contributing to job growth. The Heritage Foundation, a conservative think tank, asserts that it leads to job growth and economic development.

While Ballard said the legislation could have “some effect” in driving down wages in Michigan, he sees deeper political motives behind its passage.

“Supporters of right-to-work felt compelled to represent it as something that was an economic move. You couldn't very well say, 'Why are we doing this? To reward my political friends and punish my political enemies.' That doesn't make a very good press release.”

A survey conducted by MSU earlier this year found state residents evenly divided about right-to-work's impact, with 43 percent convinced it would help the economy and 41 percent believing it would hurt.

At the time the legislation passed, there were considerations in Democratic Party circles to back a ballot initiative in 2014 to overturn the measure. That talk has quieted.

Asked if that was still under discussion, Democratic Party spokesman Josh Pugh said only: “We are focused like a laser on electing Democrats in the 2014 ballot.”