Tag Archives: “Right to Work

Show Me the Money…

Wasn’t “show me the money” a repeated demand in that Tom Cruise movie, Jerry MacGuire?

The phrase seems appropriate in light of recent news from Indiana’s budget mavens; according to several media reports, state lawmakers will have about $213 million less to spend during the next two years than they thought they would.

And why might that be? After all, we’ve been assured by our elected officials that Right to Work and similar measures would grow Indiana’s economy and fill our coffers, that the ability to hire workers for low wages (because we all know that’s what Right to Work was all about–low wages) would bring “job creators” in droves to our state.

It didn’t seem to occur to our economics-challenged lawmakers that people who work for less have less to spend and less to tax.

The General Assembly’s logic reminds me of the old joke about the business owner who bragged that he was selling more widgets than his competitors, because he had priced his below cost. When he was asked how he expected to make any money, he said he’d make it up on volume.

Low wage workers don’t pay a lot of taxes, and widespread reductions in disposable income translate into less business for retailers and other business establishments, so the amount of tax paid by those businesses is also less than it would otherwise be.  

Nor has Indiana seen the promised influx of new enterprises. Businesses tend to gravitate to places that can offer a high quality of life, and low-tax states like ours can’t compete with places that can spend more money on schools, transportation, parks, public art…. When you don’t have any natural amenities–seashores, mountains, great weather–the absence of those niceties is really noticeable.

You’d think our lawmakers would notice that constantly chasing the lowest common denominator hasn’t worked, but they’re doubling down. This session, it was repeal of the Common Construction Wage.

We’re circling the drain, while our “frugal” lawmakers wonder why they can’t show us the money.


The Brits are Right About Right to Work

I love the Guardian; as real newspapers have gotten rarer and actual reporting even rarer, it  reminds me what journalism used to be.

Recently, the paper reported on an upcoming Supreme Court case, Friedrichs v California Teachers Association. That case, said the Guardian

will decide if right-to-work laws (designed to bankrupt unions by encouraging employees who benefit from collective bargaining agreements to not pay for them) will extend to all public employees nationwide – an outcome Justice Samuel Alito has all but promised to deliver.

The article proceeded to provide the context of the ongoing battles over Right to Work–a context rarely provided by today’s “McPapers”:

Economic arguments for right-to-work are, however, always highly speculative, proposing that the low-wage jobs that might be created by companies attracted by such laws would offset the very real, calculable income losses that inevitably accompany deunionization.

So if these laws don’t boost the economy, what else don’t they do?

Despite what their proponents say, right-to-work laws don’t put an end to “compulsory union membership.” There is no such thing, not since 1947, when closed shops – arrangements where union membership was a condition of employment – were banned under the Taft-Hartley Act. No one in the US can legally be fired for refusing to join a union, whether they are in a right-to-work state or not. Nor do such laws “protect” workers from having their dues diverted to political campaigns they do not support; workers already have that protection.

What right-to work laws do is ban a particular type of employment contract, voted on by employees, that requires all employees – union or not – to pay fair share provisions, a fraction of the dues that union members pay to cover the costs of negotiating and enforcing their contract.

The article points out in some detail the “great irony” of small-government libertarians who are more than willing to use the coercive power of the state to ban private contracts in the name of workers’ freedom. As it concludes

Once you strip away the baseless economic and philosophical arguments, you’re left with the politics: politicians who want to help employers maintain the power they have over employees, by gutting any institution that might help employees tilt the balance in their direction.

Interestingly, larger employers are beginning to recognize that this war on workers’ wages ultimately hurts business–that paying better wages is good for the bottom line. Last month, Aetna and Ford announced that their workers would get substantial raises, joining enterprises like Costco, Trader Joe’s and several others who do better by paying better. Even Walmart--granddaddy of companies paying slave wages–has moved to increase wages.

At some point, evidence will outweigh ideology. When it does, the Guardian, at least, will report it.

Does “Right to Work” Work?

Recently, the Washington Examiner interviewed Indiana Governor Mike Pence. It ran the subsequent story under a banner headline:  “Indiana’s Right to Work law has sparked economic rebirth for the Midwest.”

I’d never heard of the newspaper, so I consulted Dr. Google, and discovered (surprise!) that it is owned by Denver billionaire Philip Anschutz[4] who also owns the influential conservative opinion magazine The Weekly StandardIn other words, the paper has a very definite point of view.

But…”economic rebirth”? Sparked by Right to Work?

It is almost impossible to find credible research on the effect of Right to Work laws. Most researchers–even those who are not ideological–have difficulty controlling for the multiple factors that affect a state’s economy. The little sound academic research that does exist suggests the real impact of the laws–for good or ill– is not nearly as dramatic as the heated debate might suggest.

For example, Michigan State University researchers Dale Belman, Richard Block and Karen Roberts examined state economies from 1998 through 2000 and concluded in 2009 that right-to-work laws “seem to have no effect on economic activity.”

In fact, they found that unions in general “have little impact, despite conventional wisdom.”

The Economic Policy Institute is a left-leaning, but generally credible and unbiased research resource. In a 2011 study, the Institute compared Right to Work states to those without that law.

  • In 2009, the unemployment rate was 1.0 percentage points lower in RTW states than states without the legislation. In RTW states, it was 8.6%, In other states it was 9.6%.[16]
  • Wages in right-to-work states are 3.2% lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic variables as well as state macroeconomic indicators. Using the average wage in non-RTW states as the base ($22.11), the average full-time, full-year worker in an RTW state makes about $1,500 less annually than a similar worker in a non-RTW state. The study goes on to say “How much of this difference can be attributed to RTW status itself? There is an inherent “endogeneity” problem in any attempt to answer that question, namely that RTW and non-RTW states differ on a wide variety of measures that are also related to compensation, making it difficult to isolate the impact of RTW status.”[16]
  • The rate of employer-sponsored health insurance (ESI) is 2.6 percentage points lower in RTW states compared with non-RTW states, after controlling for individual, job, and state-level characteristics. If workers in non-RTW states were to receive ESI at this lower rate, 2 million fewer workers nationally would be covered.
  • The rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states, using the full complement of control variables in [the study’s] regression model. If workers in non-RTW states were to receive pensions at this lower rate, 3.8 million fewer workers nationally would have pensions.

You’d never guess any of that from the glowing report in the Washington Examiner.

In our current media environment, however, data and verification–let alone nuance and complexity–are less important than creating a reality that will appeal to the audience being targeted.

Remember the old song lyric, “a good man is hard to find”? Try looking for a good newspaper these days.

Pollyanna versus Gloomy Gus

Since I so often fill this space with depressing observations, I’m going to begin this week by indulging my inner Pollyanna.

My (non-scientific) theory is that the rash of efforts we are seeing around the country to break the backs of unions, ensconce anti-gay laws in state constitutions, and weaken government oversight of everything from financial institutions (the “banksters”) to the environment are motivated by a recognition on the part of the proponents of these measures that their window of opportunity to get the job done is fast closing.

It remains important to explain what is wrong and troubling about all of these assaults. (There is a very  good, very clear analysis of RTW here, for example.) But those of us who are astonished by the vitriol with which many of these measures are being pursued need to recognize that the sense of urgency being displayed by their proponents reflects a genuine reality: the culture is changing and they know it.

Bashing gays and union members, dismissing environmental concerns as evidence of “tree-hugging,” and characterizing all government action as “socialism” won’t have much traction in the America that is emerging.

I just wish it would emerge a bit faster.



The Power of Framing

During one hour of television tonight, I heard four repetitions of an ad in which Mitch Daniels explains that “this one simple law”–the deceptively named Right to Work law–will bring jobs to Indiana, and keep people from being forced to pay union dues. It was extremely well done.  Once during that hour,  I saw a much less persuasive ad calling Right to Work an “attack on working people.” Daniels had specific points to make; the opposing ad simply claimed the bill would be bad for workers. Advantage: Daniels.

Unfortunately for the policy process, Daniels’ specific points were simply untrue. The union ad would have been considerably more effective had it pointed that out.

Let’s begin with the way the administration is framing this issue. People shouldn’t be “forced” to pay “dues or fees” as a condition of employment. Put that way, it seems like a very reasonable position. But let’s ask a slightly different–and arguably more accurate–question: should some people be forced to provide services to their co-workers for free?

Let’s try an analogy: Let’s say you are a dues-paying member of a social club, and a guy you know says he want to come to the parties and enjoy the refreshments, but he doesn’t want to join the club. Fine, you say, just pay for your food and drink. But the visitor doesn’t even want to do that–indeed, he is highly offended by the suggestion.

That’s what Right to Work is really about–letting some folks “mooch” off the efforts of others.

Under current labor laws, no one has to join a union. But if you go to work in a union shop, you are required to pay your fair share of the costs of negotiation–your share of the amount paid to the people who represent you in dealings with management. You are required to pay for a benefit you receive. That’s it.

A lot of claims are being made by those who want to see this law passed, and most of them are either blatantly untrue or incredibly misleading. For example, the National Right to Work Committee has issued a “Fact Sheet” claiming–among other things–that job growth in Indiana was slower than the average job growth of Midwest states with Right to Work laws. Daniels echoes that assertion in his TV ad– but the claim is “true” only because one of those states is North Dakota, where oil fields were recently discovered, leading to a huge boom. If you exclude North Dakota, the remaining Right to Work States averaged a net job loss. Similarly, the Committee lauds Texas, a Right to Work state, for its job creation during the past decade–without bothering to mention that Texas’ job growth was all in the public sector, and entirely due to the growth of government–Texas private sector actually lost jobs during the past decade.

Other claims were similarly misleading. Independent research–as I noted in a previous post--finds absolutely no relationship between job creation and Right to Work laws, either positive or negative. The only documented effect of such laws is to weaken unions and reduce wages for both union and non-union workers.

So–one might ask–why is the Governor so determined to enact this legislation that he is willing to spend a fortune airing highly misleading TV ads? Why is he so intent upon ramming this through that he was willing to impose “safety” regulations that would keep union members from filling the Statehouse, until the public outcry made him rethink that tactic? The only reason I can think of is because such laws hurt unions, and unions generally support Democrats. It’s purely political.

But you’ve got to give Daniels and the Republicans credit: they are one hell of a lot better at framing this issue than the Democrats are in explaining it.