Have unions outlived their usefulness; are they passé?
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On July 1st of this year, the State of West Virginia became the 26th state to adopt “Right to Work” (RTW) legislation. RTW simply means a union cannot get a worker fired for not paying union dues. It also means joining a union is voluntary, not compulsory as you will find in a “closed shop.” Such laws started in the south and west, but are now moving north with Wisconsin becoming the 25th (2015), Michigan (24th) and Indiana (23rd) in 2012.
RTW laws weaken the strength of unions. To illustrate, Boeing’s North Charleston plant employs about 7,500 workers to build fuselages for 747s and 787s. In 2015, the International Association of Machinists and Aerospace Workers tried to build support to unionize 3,175 production and maintenance workers. The effort was called off as workers wouldn’t embrace the union. Boeing constructed the plant in South Carolina after several battles with unions at its Washington plant.
According to a February 2011 study by the Economic Policy Institute, the drawbacks to RTW include:
* Wages in right-to-work states are 3.2% lower than those in non-RTW states.
* The rate of employer-sponsored health insurance is 2.6 percentage points lower in RTW states.
* The rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states.
In contrast, an article in the “Wall Street Journal” (“An Inspiration and a Warning From Michigan”; Dec 14, 2012) claims that “between 1980 and 2011, total employment in right-to-work states grew by 71%, while employment in non-right-to-work states grew 32%. Sadly, employment in Michigan increased just 14% during that time. Since 2001, right-to-work states added 3.5% more jobs, while other states decreased by 2.6%. Similarly, inflation-adjusted compensation grew 12% in right-to-work states, but just 3% in the others.”
Aside from this, RTW is an important indicator of a state’s prosperity. To illustrate, according to a recent report from the Mercatus Center at George Mason University, it appears financial success in state governments is not by accident, and Republicans appear to do a better job than their Democratic counterparts. The Mercatus report, examined the financial stability of the fifty states, plus Puerto Rico. The report considered debt and financial obligations, as well as state pension programs and health care benefits. Perhaps the most noteworthy observation made was that all of the Top 10 states are Republican controlled, meaning both the Governor and the legislatures are in GOP hands. Further, with the exception of Kentucky, all of the bottom 10 states, plus Puerto Rico, are controlled by the Democrats. Interestingly, all of the Top 10 are RTW states, and none of the Bottom 10 have a RTW program.
In another recent article, I discovered the states reporting the highest levels of worker “engagement,” meaning the employees are motivated and self-starting, were primarily in the South, and the lowest were in the Northeast and Midwest. Again, in this instance, the South includes RTW states, and the Northeast and Midwest are under union control.
Time and again, RTW is somehow related to prosperity. Coincidence? I do not believe so. Bottom-line, it comes down to whether or not you believe trade unions serve the best interests of their constituents. With the passing of West Virginia’s RTW legislation, there are now more states who are more interested in providing work for their people as opposed to trusting the unions.
As an aside, the territory of Guam has RTW laws, as does the Federal Government. Participation in unions is strictly voluntary.
In the upcoming presidential election, you will not hear either candidate openly support RTW legislation as they need union votes to get elected. However, the day is not far away when living in a non-RTW state will be considered a political liability as opposed to an asset.
Keep the Faith!
