On December 11, 2012, Michigan became the 24th state to pass “right-to-work” legislation making it illegal for employers to collect union dues as a condition of employment. In the absence of right-to-work, employees in unionized workplaces a free to eschew union membership but cannot “opt out” of paying union dues. Thus, all employees are covered by their union’s contracts and receive the same benefits regardless of membership status. The same universal coverage applies to employees who choose not to pay dues under right-to-work, making them “free riders” who benefit from the union’s representation without supporting it financially..
Critics of right-to-work laws argue that the free rider problem is not only unfair to those employees who pay for union benefits but also weakens the union’s power relative to management, undermining its ability to negotiate for wages and benefits. Moreover, any drop off in financial support reduces the union’s capacity to fund pro-labor political activities.
Supporters of right-to-work contend that no employee should be forced to contribute a portion of his or her paycheck to an organization if the employee does not value the services it provides or condone its political activities. The most oft-repeated refrain of right-to-work advocates, however, is that limiting the influence of organized labor contributes to job creation by attracting new business to the state. This theory implies that firms give significant weight to union strength in a jurisdiction (in addition to tax structure and regulatory climate) when making location decisions and will choose the most “business friendly” climate (i.e., where unions are weakest, taxes lowest, and regulations least burdensome).
An Unlikely Venue
The passage of right-to-work in Michigan was a stunning development for two reasons. First, it would have been inconceivable only a few months earlier that Michigan—birthplace of the United Automobile Workers and one of the few remaining union strongholds—would be the next victory for the right-to-work movement. Indeed, Michigan has played a prominent role in the history of organized labor in the U.S. The 1936 Flint Sit-Down Strike organized by the UAW galvanized the national union movement and demonstrated labor’s potential to extract concessions from management. In 1950 the UAW once again transformed the labor-management power balance when its president, Walter P. Reuther, negotiated the “Treaty of Detroit” which normalized long-term contracts with generous benefits for Big Three autoworkers. Today, even as union membership continues to decline nationally, polls indicate that nearly 30% of Michigan voters live in union households.
Second, Governor Rick Snyder and the Republican-dominated legislature assured union supporters that RTW was not a priority. Shortly after taking office in 2011, Snyder insisted that RTW was “not on his agenda” and even pleaded with members of his own party not to pursue such a “divisive issue” certain to distract from his focus on jobs and economic growth. For a time it seemed that his fellow Republicans—many representing heavily unionized districts—were heeding his call. In fact, Senate Majority Leader Randy Richardville, a moderate Republican endorsed by Michigan’s carpenters and millwrights union, once promised his union constituents that he would never allow passage of Right to Work on his watch (Kroll, 2014).
Labor Picks a Fight
What transpired in late 2012 amounted to a perfect storm culminating in the passage of Senate Bill 116 and House Bill 4003 in the space of one week (it would have occurred more quickly were it not for a constitutionally-mandated 5-day waiting period between votes on the same legislation). To the horror of union supporters packing the Michigan Capitol, Governor Snyder happily signed the reconciled version hours after it passed both houses on December 11.
Explaining his change of heart, Snyder claimed that his hand was forced by labor’s support for a ballot initiative one month earlier that would have enshrined collective bargaining in Michigan’s constitution for both private and public sector employees. Voters rejected the initiative but the “horses were already out of the gate” as the governor would later put it. Reflecting on the fight in early 2014, he explained his plea to backers of Proposal 2: “If you do this and you don't succeed, you've essentially triggered the right-to-work discussion.” Sensing the inevitability of a showdown between labor groups and RTW backers, Snyder quickly embraced the legislation citing workers’ rights and the potential for new job creation (Woods, 2014). When pitching the latter point the Governor often pointed to Indiana, which had experienced job growth after adopting its own right-to-work law (critics dispute this causal link and reference other states that experienced job loss after passing RTW legislation).
A similar dynamic played out in the Republican-controlled legislature. Although a handful of hardline Conservatives had been pressing right-to-work in Michigan for some time, even moderates—including Senate Majority Leader Richardville—viewed Proposal 2 as an ultimatum thrust upon them by organized labor and its allies on the Left. Moreover, the entire Republican caucus was under enormous pressure to act thanks to a convergence of wealthy Conservative donors (including Michigan’s own ultra-wealthy DeVos family) invigorated by the Prop 2 defeat and ready to expend unlimited resources to curb the influence of unions and the Democratic Party (Kroll, 2014). That pressure, which included a statewide TV and radio advertising blitz, persuaded all but six House Republicans and the entire Senate GOP caucus to vote in favor of the legislation.
One Year Later
When the dust settled after the contentious fight, Michigan was left with a right-to-work law that prohibits most public and private sector employers from collecting union dues as a condition of employment. The sole exemptions are for police and firefighters’ unions (lawmakers supporting RTW attribute this carve-out to a 1969 law that prohibits police officers and firefighters from striking, yet critics denounce this as a simple political calculation because teachers unions, which are not exempt from RTW, are also prohibited by law from striking). The law took effect three and a half months after passage on March 28, 2013. Although it is still too early to make conclusive judgments about long term effects only one year later, we can examine the law’s initial impacts for clues about what lays ahead. We can also gain insight by looking to a neighboring state that adopted right-to-work one year before Michigan.
It is premature to render a verdict on Michigan’s right-to-work law primarily because it has not yet gone into effect for unions still operating under contracts negotiated prior to the law’s effective date. That status applies to a majority of the state’s unions, including the UAW which remains under pre-RTW contracts with the Detroit automakers until summer 2015 (Henkel, 2014). However, we can study the impact of the law on the state’s two largest education unions, the Michigan Education Association and the American Federation of Teachers-Michigan, both of which are operating under contracts governed by right-to-work.
First, it seems that unions’ concerns about a drop off in dues payments were indeed valid. Unable to automatically collect dues from all employees at a workplace (typically through paycheck deduction), unions are now forced to collect from individual active members. For active members who fall significantly behind on payment, dues are treated like any other category of outstanding debt and are eventually turned over to a collection agency. The problem has been compounded for teachers’ unions thanks to a law passed earlier in 2012 that prohibits school districts from collecting any dues via paycheck deduction, even for teachers who wish to pay (teachers’ unions must now collect dues via alternative forms of payment like credit cards and bank accounts) (Henkel, 2014).
For the MEA, these changes have contributed to a loss of 1% or 1,500 of its paying members during the first year of right-to-work. The AFT-Michigan has experienced a similar financial loss but has not released precise figures (Henkel, 2014). In fact, labor experts predict that all public sector unions will have the most difficulty collecting dues because of the additional legal restrictions placed on them by right-to-work and other complimentary laws (lawmakers favoring such restrictions typically reserve the harshest sentiment for unions representing government employees) (Haglund, 2012).
The UAW, which represents thousands of Michigan state workers in addition to auto workers, filed a lawsuit in January 2013 challenging the applicability of the law to public sector jobs governed by the Civil Service Commission. The challenge was struck down on appeal in August 2013 and has now been taken up by the Michigan Supreme Court (Gray, 2013). Another lawsuit challenging the constitutionality of the law in its entirety is still pending in U.S. District Court (Baldas, 2014).
Because Michigan’s right-to-work law is still in its infancy we are unable to measure its effects on gross state product or job creation. However, we can study the experiences of a neighboring state that enacted its own right-to-work law one year before Michigan. As noted above, Governor Snyder often referenced Indiana—the only other Midwestern right-to-work state—when extolling the virtues of right-to-work. During Michigan’s right-to-work debate, Snyder credited Indiana’s law with influencing several corporations to locate in the Hoosier State instead of surrounding states. If Michigan adopted right-to-work, the Governor said, our state would no longer be “screened out” (Woods, 2014).
Indeed, the Indiana Chamber of Commerce touts right-to-work as a windfall for the state, influencing over 100 companies to locate there. However, Indiana labor organizations dispute the Chamber’s claims about this success story. The skepticism has grown as several companies who moved to Indiana after passage of right-to-work deny having been swayed by the law or even considered it in their calculations. One firm, Android Industries, initially said that right-to-work was a factor in its decision but later backtracked when records revealed it had finalized location plans in 2011, long before the law’s passage was secured. Two other large manufacturing firms that moved to Indiana after right-to-work took effect refuted claims made by the Indiana Economic Development Agency that the law was central to their business decisions. Indeed, both firms had to remind the IEDC that they are non-union shops and would see little if any effect (Roelofs, 2013).
While the employment effects of Michigan’s right-to-work law remain ambiguous, it is clear that union membership will suffer, at least in the public sector. This fallout comes as no surprise to labor experts as right-to-work “makes things more bureaucratic, more demanding for unions and more problematic for the role unions have traditionally played” (Henkel, 2014). However, right-to-work supporters argue that such laws make unions “more accountable” by forcing them to represent a broader spectrum of interests.
The accuracy of the Governor’s pro-worker, pro-jobs justification for changing his stance on right-to-work will be tested in the next several years. In the meantime, the appeal of union membership in the 21st century workforce will be tested next summer when the UAW enters contract negotiations with GM, Ford, and Chrysler.
Baldas, Tresa. 2014. "Federal judge allows part of right-to-work lawsuit against State of Michigan to proceed." Detroit Free Press, March 31. http://www.freep.com/article/20140331/NEWS06/303310139/Michigan-right-to-work-lawsuit (accessed May 29, 2014).
Gray, Kathleen. 2013. "Court: Michigan right-to-work law must cover unionized state employees." Detroit Free Press, August 15. www.freep.com/article/20130815/NEWS06/308150140/michigan-right-to-work-civil-service-employees (accessed May 29, 2014).
Haglund, Rick. 2012. "Why Michigan police, firefighters were exempted from new right-to-work legislation." mlive.com, December 20. http://blog.mlive.com/elections_impact/print.html?entry=/2012/12/policy_reasons_for_exempting_p.html (accessed May 30, 2014).
Henkel, Karl. 2014. "Right to work hits teacher unions 1st." Detroit News, March 27. www.detroitnews.com/article/20140327/BIZ/.../metro0 (accessed May 28, 2014).
Kroll, Andy. 2014. "Meet the New Kochs: The DeVos Clan's Plan to Defund the Left." Mother Jones, January/February. http://www.motherjones.com/politics/2014/01/devos-michigan-labor-politics-gop (accessed May 26, 2014).
Montopoli, Brian. 2012. "The big union fight in Michigan explained." CBSNews, December 11. http://www.cbsnews.com/news/the-big-union-fight-in-michigan-explained/ (accessed June 3, 2014).
Roelofs, Ted. 2013. "Indiana reaction belies pro-Right to Work claims by Gov. Rick Snyder." Bridge Magazine, January 8. http://bridgemi.com/2013/01/indiana-reaction-belies-pro-right-to-work-claims/ (accessed May 29, 2014).
Woods, Ashley. 2014. "Rick Snyder Claims Michigan Is 'Absolutely' Better With Right-To-Work." The Huffington Post, February 8. http://www.huffingtonpost.com/2014/02/08/rick-snyder-right-to-work_n_4751896.html (accessed May 30, 2014).