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    The Right-To-Work (RTW) law that passed in Michigan last December was a very controversial piece of legislation, especially considering how pro-union Michigan is. It mandates that employers in both the public and private sector must not require employees to join union memberships or pay union dues as a condition of employment (excluding firefighters and police officers). Opponents of this law believe that it will divide workers and lower the collective bargaining power of the unions as a result of a decreased amount of union dues. On the other hand, supporters of the bill, such as Senator Lamar Alexander (R-Tenn) believe that "No one is, in passing a Right-To-Work law, taking away workers' rights. They're actually giving them a new right: the right not to have to pay union dues in order to get or keep a job."[1] Even though the law passed, Michigan has seen picketing and protests nonstop from union affiliates voicing their opinion. Throughout this analysis the controversy of RTW passing in Michigan will be covered, along with issues regarding RTW, general trends of employment and wages in other RTW states, the current state of Michigan's economy, and then finally there will be a conjecture made about the future of Michigan after RTW.

     

    .

    A Political Battle Begins: The Controversy Of Right-To-Work In Michigan

    The RTW law affects nearly every employer and employee who participates in union labor. Naturally, this means that the primary opposition to RTW comes from the unions themselves. Many believe it was enacted in response to Michigan's defeated "Protect Our Jobs" Amendment proposal earlier in 2012, which would have added the right to collective bargaining for public and private sector employees to the state constitution. This would have given unions much more power in the work place because it would be against the law to deny them their right to lobby for employment benefits and higher wages. After initially garnering a great deal of support, the proposal was denied by a 15-point margin. [2] Governor Rick Snyder publicly opposed this proposal in a press release in September of 2012, stating "I am a supporter of collective bargaining, but [Protect Our Jobs] would amend our constitution to change the way bargaining would work in our state. It could lead to unlimited wage increases and early retirements with lavish pensions - all at the taxpayers' expense. It rolls back Michigan labor laws made over the last 30 or 40 years. This proposal should be called "the Back in Time amendment." It would seriously harm Michigan's ability to keep moving forward." [3] This is the main reason that the proposal failed, because many believed it would lead to highly inflated taxes in order to cover the expenses of increased statewide union benefits (e.g. health care, retirement benefits, income protection, etc.).
    Even though the margin was relatively close, conservatives in Michigan saw this failure as an opportunity to push the RTW bill. Governor Snyder played a key role with many debates and speeches preceding the signing of the bill, but it is interesting to note how and why his opinion changed up to that point. Initially he opposed both Protect Our Jobs and RTW, because he believed they would make Michigan too polarized. In March of 2012 he explained his reasoning, stating: "My concern is that could start a whole divisive atmosphere of other people trying to put right-to-work on the ballot, a whole bunch of things like that, and that would distract from the good things we've got going on." [4]

    Many political entrepreneurs understand that in order to stay in power, one must pick a side. Governor Snyder must have realized that in order to keep his approval ratings positive he should change his platform and support RTW, considering that Protect Our Jobs was unfavorable. He flip-flopped from claiming this initiative would just divide Michigan to admiring the positive change it could bring. He asserts two main reasons it would help. "First and foremost, it's about giving hard-working Michigan workers the freedom to choose to have the resources [to] go to a union or not. Secondly, this is about more and better jobs coming to Michigan." [5] This pivotal platform change was important passing this landmark bill, as it won a vote in the House by a margin of 58-51. [6]

    Even though Governor Snyder was on the winning side of RTW, his approval by the public seemed to suffer. From November to December of 2012, his approval rating was down ten points in a potential match-up for 2014. [7] While this may not be directly because of RTW, the widespread and significant public protests make an arguable case for it being so.

     

    The Free-Rider Problem

    There are a number of reasons why antagonists of RTW are outraged that the law passed, but most (if not all) of them stem from the threat of free-riders. A free-rider in a labor union is an employee who pays no union dues or agency shop fees, but benefits from union representation and collective bargaining. Peter Schmidt, an economics professor at Michigan State University, openly expresses his opinion of RTW and the potential free-rider problem in Michigan. He writes: "It means that you don't have to pay for union representation in collective bargaining even when the majority of the workers in their company have democratically voted to be represented by the union. The union still bargains for you. It helps you get a good salary, paid holidays and a health plan. Members of the union sometimes even go out on strike to make sure you get these benefits. But when it's time to pay the piper, the piper pays you. If you have a grievance under a union-negotiated contract, the union has to pursue your grievance." [8]

    It is easy to see what would attract many to become a free-rider, especially if they disagree with some of the actions their union is taking. The reason it is such a fear of unions is because with a lessening of funding to unions there will be a lessening of their political power and lobbying potential. Schmidt gives a good analogy to explain the responsibility of being held accountable to paying union dues. "The classic free-rider problem is littering. Littering is great - for the litterer. It's terrible for everyone who has to look at the litter, smell it or pick it up. Union dues are like taxes. No one likes to pay taxes, but somebody has to. If you can be a free-rider while everybody else pays taxes, that's a great deal for you. It's not such a great deal for everybody else." [8] It is discernible that his discontent, as well as many others', stems from the belief of an inequality and unfairness that may arise now that RTW has passed.

    It is not just scholars and academics that are speaking out against RTW; the key lobbyists and opponents are the heads of these affected unions. More specifically, Michigan is home to one of the biggest unions in the United States, and it is based out of Detroit. The United Auto Workers Union (UAW) has roughly 390,000 active members in 750 local unions. [9] UAW President, Bob King, has been very involved in the media concerning RTW lately, and he addresses a problem about free-riders not yet discussed. "If a worker decides he or she doesn't want to pay their fair share, their coworkers are going to be pretty unhappy about that." [10] Their concern that opting out of dues will cause of a division of workers is an upsetting theory, but there has been no conclusive evidence of this affecting the workforce in other RTW states.

    Trends In Employment And Wages Of Other Right-To-Work States

    Because RTW only recently went into effect in Michigan (March 28th, 2013), there is not enough data to see its effect on the state. In order to combat this lack of evidence, comparisons will be made through examining statistical trends in some of the other 23 RTW states. Before that is done, it is important to remember that correlation does not imply causation. There are factors other than the RTW law that could be affecting these results. Charles Ballard, an economics professor at Michigan State University, puts it best by saying "its difficult to determine whether right-to-work is the driving force behind those statistics." He says you have to factor in other variables, such as "cost of living, economic history and even the weather." [11] Keeping this in mind, there are some interesting statistical trends on how RTW has affected other states.

    The Congressional Research Service (CRS) is an organization that works exclusively to provide political and legal analysis to the U.S. Congress. They found that from 2001 to 2011, RTW states have increased employment by 3.6%. In the same time frame, union security states have decreased by 2.5%. [12] Their argument for this correlation "is that RTW laws create a favorable business environment in which employers have increased flexibility in hiring, discharge, and wage-setting. Businesses are attracted to this environment and employment in these areas increases." [12] Peter Schmidt included an opinion about this as well, by stating that "Proponents of "right to work" laws like to point out the fact that employment has grown much faster over time in "right to work" states than in union-friendly states. Unfortunately for everyone except employers, they're right. Due to their lower wages, "right to work" states steal manufacturing and distribution jobs away from union-friendly states." [8] He raises an interesting argument about RTW bringing more jobs to Michigan at the expense of other states, but keeping ethics aside raises the question about whether this is what Michigan needs or not.

    While there is a significant statistic on employment rate, it is also important to note how RTW affects wages. As of 2011, RTW states were reported to have an average annual wage of $43,000, while union states are at $50,000. [12] This 14% difference could very well be attributed to other factors, as every state has their own governance and partially separate economies, but the basic argument here based on these correlations is that RTW causes a lowering of wages.
    The rationale behind this theory is that unions push employers to drive up wages, which accounts for an increase in annual income. Through the practice of monopolistic bargaining power unions usually gain a union wage premium, which increases total compensation compared to a nonunionized force. According to the Bureau of Labor Statistics (2012), "In 2011, among full-time wage and salary workers, union members had a median usual weekly earnings of $938, while those who were not union members had median weekly earnings of $729." [13] This statistic doesn't include self-employed earnings, as they could potentially be a confounding variable. These results shed light to the theory that if RTW does indeed lower union involvement, a case could be made that RTW causes a lowering of average annual earnings.

    Now the question arises on how RTW will affect union participation, because union supporters believe this is what will cripple their funding and bargaining power. To examine this point, let's first look at Oklahoma. They passed RTW in 2001, and at the time the percentage of union employees was a little above 8%. As of 2012, it has fallen roughly 1%. [14] This means that the union workforce has decreased by over 12% in a decade, which could imply that RTW has caused a decrease in union participation. On a more general scale, in 2011 RTW states stood at about 6.5% union membership, while states without it were at roughly 10.8%. [13] This is a considerable difference, but it must be understood that in order for a state to pass RTW, they probably don't have high union participation compared to states that have high union involvement (with Michigan being an exception).

    There have been an overwhelming amount of mixed studies regarding wages and employment statistics with RTW states, as there are many factors that affect these two labor indicators. Because wages are typically lower in RTW states, it seems that the primary motivational factors for supporters of RTW would be freedom of employment and a larger job market, despite lacking the job security that unions offer. Nevertheless, we will use these theories and data in conjunction with Michigan's economic climate to draw a conclusion on whether or not RTW will benefit or cause damage to Michigan's workforce.

    Employment And Unionization In Michigan

    It is not breaking news to understand that unemployment is arguably one of the biggest issues in Michigan. In the 2012 census Statistical Abstract, Michigan was reported with having the highest unemployment rate in the country in 2008, at 8.4%. [15] Such a high unemployment rate causes taxpayers to provide assistance to individuals who are not part of the workforce. This drives funding away from other needed areas, such as education, healthcare and infrastructure. Detroit specifically has suffered because of the lack of jobs, and as a result crime and deterioration has littered the city that was known as the labor capital of America. Recently, Gov. Snyder has even declared that Detroit is in a financial emergency because of this out flux of jobs and capital.
    As far as unionized labor goes, Michigan is one of the most heavily unionized states in America. Of all the 24 RTW states, Michigan has the highest union activity by far. For example, Nevada was previously the most unionized RTW state (14th overall in the U.S.), but Michigan now takes that title at 3rd overall in the United States with 670,000 union workers in 2011. [16] Chart 1 exemplifies this statistic by stacking Michigan's union employment rate compared to the national average. It might be interesting to note the gradual decline in union employment in Michigan over the years, which could be attributed to outsourcing and lay-offs in the Auto industry. While it was once 10% above the national average, now it is only 5% above. This decline in union labor could arguably be one of the causes on how RTW passed and Protect Our Jobs failed.

    Potential Political And Economic Implications Of Right To Work

    Now that pertinent data and political opinions are established, predictions can be made about the effect of RTW for Michigan. Many believe that the real changes will occur when current union contracts expire, and new ones have to be written. That's when the new law's limiting of union rights will have their biggest impact in the work place. There are other implications other than wages and employment that RTW will affect, and those issues include Governor Snyder's reelection and the Democratic Party's political power.

    As previously stated, poll results have shown Snyder's 10-point decline after RTW was initially passed. Fortunately, he still has over a year until the next gubernatorial election. This will give RTW enough time to set in and start making an impact in Michigan, and if it is successful it can only help him out. On the other hand, if it fails, or even if the public still is openly showing their discontent about it, then a Democratic candidate could potentially take office. That would introduce the risk of alterations and modifications of RTW, and promises of that could be a major campaigning platform.

    As far as campaign funding goes, if there is indeed decreased union activity and funding then the Democratic Party will suffer. Unions are major campaign lobbyists for Democratic candidates, because if they are put in office then they are more likely to form policies that are in the union's favor. For example, the Teacher's Union contributed about $5.4 million to federal candidates, parties and committees during the 2008 election cycle. It was reported from the Federal Election Commission that the Teacher's Union contributes about 95 percent of their funds to Democrats, if that gives one any idea how much money unions spend on lobbying. [17] This would not only have an immediate effect on Michigan, but it would affect Democrats on a federal level as well, because Michigan's union strength is so high.

    As far as employment and wages go, it would be a good thing if Michigan followed similar trends to other RTW states. When many picture Michigan they think of the Great Lakes, crime, and unemployment. They don't picture it as a labor central; instead the tight-knit union protected workers steer companies away, because they might be able to find cheaper work somewhere else. This must be reevaluated and reconfigured if Michigan stands a shot at redefining its image. RTW could be the law that does this. If companies see that Michigan has an untapped workforce of individuals who are willing to work outside of unions, then perhaps they will provide more jobs. They might not be at staggeringly high wages, but at least we could potentially stray away from being the state with the highest unemployment rate.

    Final Analysis And Conclusion

    Eric Patashnik extensively examines reform policies in his book "Reforms at Risk", and he provides some useful theories that may be important to keep in mind when discussing RTW. For example, on sustainability he states, "The enactment of a policy reform, then, signals not the end of the political story, only the start of a new chapter." (Patashnik, 161) [18] RTW has only just started; there are plenty of interest groups who are already mobilizing to overturn it. Just because it has passed does not mean that its sustainability is guaranteed.
    On the topic of interest groups, he explains how "Many of the reforms have failed to build clienteles, leaving them vulnerable to erosion and change." (Patashnik, 168) [18] If the Republican Party and Governor Snyder want to secure political power, they should look for support from those who benefit from RTW. This should be primarily from major companies who avoid union labor.

    A third way that Patashnik helps to foresee potential problems with RTW is his offering of one of his general paradoxes of reforms. That being, "Reforms are enacted to solve problems, but what they really do is create new ones." (Patashnik, 175) [18] Obviously, more often than not reforms are intended to fix problems with how the current state is being governed. RTW was just that; a proposal that gave employees the choice to either join a union or distance themselves entirely. What it really did (at least in the opponents eyes) is create the potential problem of free-riders, which could effectively destroy the state of unions in Michigan. This must be addressed if RTW aims to make everyone happy, because creating a political battlefield by not dealing with this issue will only exacerbate polarization in Michigan, when what Michigan really needs is to stick together to deal with other issues. Unfortunately, there is no simple answer to this problem. One thing that lawmakers should look at is branched reform approach, which refers to small additions or limitations to the law, as opposed to reworking it entirely. A solution I would suggest would be to eliminate the problem of free-riding. A way to do this could be by requiring those who opt out of union dues to have either partial or none of the benefits that the collective bargaining has granted that union's members.

    On a more general note, I believe that RTW passing in Michigan is a landmark policy that will change union strength and activity in America forever. The reasoning behind this is because none of the other RTW states have even close to the union involvement that Michigan has. Other states will look at this, and if Michigan shows positive trends from RTW being put into effect they might follow suit. If this indeed lowers union participation, then the Democratic Party will receive a lessening of campaign contributions, which could in turn hurt their political prowess. This is speculation of course, but if the trends prove true then it could very well be a reality. All of this aside, it is safe to say that the decision to pass RTW has and will affect Governor Snyder's political career, the State of Michigan's economy, and most directly the collective bargaining power of union labor.


    References
    [1] Chattanoogan. "Alexander: The President's Time Fighting The Right-to-Work Law In Michigan "Would Have Been Better Spent Working On The Fiscal Cliff"." Rev. of Lamar Anderson. Web log post. Www.chattanoogan.com. N.p., 12 Dec. 2012. Web. 14 Apr. 2013.

    [2] United States. Michigan. Department Of State. General Election Results. Ed. Ruth Johnson. N.p., Jan.-Feb. 2013. Web. 14 Apr. 2013.

    [3] Snyder, Rick. "Michigan's 2012 Ballot Initiatives." Michigan.gov. N.p., n.d. Web. 14 Apr. 2013. .

    [4] Egan, Paul. "Gov. Snyder to Unions: Back off Petition Drive against Right-to-work."Detroit Free Press. N.p., 19 Mar. 2012. Web. 14 Apr. 2013.

    [5] "Michigan Gov. Rick Snyder on 'right-to-work'" Interview by Jeremy Hobson.Marketplace Morning Report. 13 Dec. 2013. Radio. Transcript.

    [6] Strauss, Daniel. "Mich. Governor Signs Right-to-work Bills." The Hill (n.d.): n. pag. 11 Dec. 2012. Web. 14 Apr. 2013.

    [7] Jensen, Tom. Gov Snyder and Michigan GOP in Trouble after Right to Work. Publication. Public Policy Polling, 18 Dec. 2012. Web. 14 Apr. 2013.

    [8] Schmidt, Peter. "New" Right to Work" Laws Could Hobble Faculty Unions."Chronicle of Higher Education (2013).

    [9] UAW. "Who We Are." Uaw.org. N.p., 2012. Web. 23 Mar. 2013.
    [10] "'Right-to-work' Arrives for Michigan's Unions." Interview by David Weinberg.Marketplace Morning Report. 28 Mar. 2013. Radio. Transcript.

    [11] "Michigan Governor Signs Right-to-work Legislation." Interview by Krissy Clark.Marketplace Morning Report. 11 Dec. 2012. Radio. Transcript.

    [12] CRS. Right to Work Laws: Legislative Background and Empirical Research. By Benjamin Collins. U.S. Congress, Nov.-Dec. 2012. Web. 23 Mar. 2013.

    [13] U.S. Bureau Of Labor Statistics. Union Membership (Annual) News Release.Www.bls.gov. Department Of Labor, 27 Jan. 2012. Web. 14 Apr. 2013.

    [14] U.S. Bureau of Labor Statistics. "Union Employment in Oklahoma, 1989-2012." N.p., n.d. Web.

    [15] Census. "State Rankings." Unemployment Rate. U.S. Government, 2012. Web. 14 Apr. 2013

    [16] Hersh, Barry T. "Union Membership & Earnings Data Book: Compilations from the Current Population Survey." Georgia State University, 2012. Web. 14 Apr. 2013

    [17] Federal Election Commission. Teachers Unions. Center For Responsive Politics, 25 Mar. 2013. Web. 14 Apr. 2013.

    [18] Patashnik, Eric M. . Reforms at Risk. Princeton, NJ: Princeton UP, 2008. Print.

     


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    The Michigan Policy Network is a student-led public education and research program to report and organize news and information about the political process surrounding Michigan state policy issues. It is run out of the Department of Political Science at Michigan State University, with participation by students from the College of Social Science, the College of Communication, and James Madison College. 

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    Meet your Policy Fellow: Alyssa Firth

    Alyssa Firth is Employment Policy Fellow and correspondent for the Michigan Policy Network. Alyssa is a Journalism student at Michigan State University.