Issue Brief: Right to Work, Right for Vermont

What is “Right to Work”?

“Right to Work” refers to the principle that every person has the right to work for a living without being compelled to belong to, pay dues to, or pay fees to a union.RTW states 2

A Right-to-Work law does not forbid workers from enlisting in a union, and in fact protect an individual’s right-to-unionize/ But they also secure an individual’s right to disassociate themselves both organizationally and financially from a union.

Presently, 28 states have right-to-work (RTW) laws[1], a number that has been increasing since the 1940’s.

In just the past three years, four states, Wisconsin (2015), West Virginia (2016), Kentucky and Missouri (2017) each passed right-to-work legislation, with many more states considering RTW bills.

Theories: Pro & Con

Proponents of RTW laws see moral, economic, and constitutionalreasons for support. Morally, it is simply wrong to force anybody to join or pay money to any organization of which they do not wish to be associated. Economically, RTW states tend to be more prosperous with more jobs, more business investment, and higher real wages. Constitutionally, forced unionization violates freedom of association and, as dues are used for political purposes, freedom of speech.

Opponents say that without compulsory union dues or “agency fees” workers would have an incentive to “free ride”, benefiting from union activity and negotiating power without having to contribute to it. However, it is worth noting that when given the option of not negotiating on behalf of non-union members, unions demure. Given the choice, they would rather maintain a monopoly on bargaining rights.

Background

Congress passed the National Labor Relations Act (NLRA) in 1935 with the purpose of protecting the right of workers to collectively bargain for better wages, benefits, and working conditions. The NRLA formed “closed shops”, which specify that employers may only hire employees who are already part of the union. This, of course, provided a regular, guaranteed source of income for the union.

However, a decade later, it became clear that the benefits of the policy came with unintended consequences damaging to employees. The NLRA provided an index of possible inequitable policies the employer might foist on the employee, but did little to shield the employer and employees from unscrupulous unions.

The Taft-Hartley Act of 1947 modified the NLRA to include a list of unreasonable labor practices on the part of unions. It banned closed shops and diluted union shops to become “agency shops,” which gives workers the option to remain employed even if they are not union members, so long as they pay an “agency fee” to the union. Workers who choose this option theoretically end up paying for a union’s collective bargaining but not for a union’s political activities.[4]

The Taft-Hartley Act also returned a portion of regulatory power of labor to the states, and gave them the option to pass right-to-work laws, which outlawed involuntary agency shops and agency fees.

What The Studies Show

States that adopt right-to-work laws lead their non-right-to-work peers in three key areas: 1) Business Investment, 2) Jobs and 3) Wages.

INCREASE IN BUSINESS INVESTMENT

According to Stevans and Zarb (2009), right-to-work states are more likely to appeal to new businesses than states that do not have right-to-work laws.[6] Employers value the business-labor relational predictability in right-to-work states, which frequently have better business climates.

A business’s location decision is heavily dependent on a state’s status as right-to-work. According to a site adviser, who has clients like AT&T, Chevron, Dell, Honda, PepsiCo and Verizon Wireless, “manufacturing companies look for reasons to scratch off states when considering where to build major facilities—and no right-to-work law is at the top of the list. I can’t underscore how critical right-to-work status is.”[7] A second site adviser agrees, noting that 50% of manufacturers eliminate non right-to-work states in the first round of cuts.[8]

MORE JOBS

The Federal Reserve Bank of Minneapolis found that right-to-work counties that share a border with a county in a non-right-to-work state have one-third more manufacturing jobs.[9]

From 2004 to 2014, the Congressional Research Service noted that “aggregate employment in RTW states has increased modestly while employment in union security states has declined.”[10]

According to Eren and Ozbeklik (2008), “the examination of Idaho reveals significant effects of the RTW laws on manufacturing employment… the share of the manufacturing employment, on average, appears to be 2.5 percentage points higher, transferring into ten thousand manufacturing jobs saved or added per year.”[11]

Michael LaFaive’s 2013 study compares states using data from the US Census Bureau and Bureau of Economic Analysis data. From 1990-2011, right-work states exhibited a 42.6% gain in total employment compared to 18.8% in non-right-to-work states. Population increased at a 39.8% clip in right-to-work states vs. only 16.7% for non-right-to-work states. Nominal personal income grew by 209% in right-to-work states and by 149% percent in non-right-to-work states from 1990 to 2011.[12]

Vedder and Robe (2014) note that “incomes rise following the passage of RTW laws, even after adjusting for the substantial population growth that those laws also induce…the overall effect of a right-to-work law is to increase economic growth rates by 11.5%”[13]

HIGHER REAL WAGES

Right-to-work opponents characterize right-to-work laws as the ‘right-to-work-for-less.’ As Economic Policy Insitute’s Elise Gould puts it, “workers in ‘right-to-work’ states have lower wages.”[14]

While it is true that the dollar-amount wages in right-to-work states tend to be lower, right-to-work states also have emphatically lower costs of living. In the second quarter of 2017, 21 of the 25 states with the lowest cost of living were right-to-work states.[15]

James Sherk, a senior fellow at the Heritage Foundation, found that when cost of living is taken into account, “RTW laws are associated with 0.5 percent higher private-sector wages.”[16] In other words, employees in right-to-work states savor higher purchasing power, or “real” incomes, than their peers in non-right-to-work states. As Robert Reed of the University of Oklahoma put it, “RTW states have average wages that are significantly higher than non-RTW states.”[17]

Against Right-to-Work: Free Riders?

Some consider RTW laws “to enable workers to be freeloaders, to enjoy the benefits of being a union member such as higher wages and job protections, but without paying any of the costs of collective bargaining.”[18]

However, unions are only required to represent all employees, including non-union members, if the union appeals to the federal law allowing them the option of “exclusive bargaining representation.” Should a union invoke this privilege, the union negotiates for all company employees, and is not obligated to ask employees if they agree with this method of negotiation. If the union does decide to use exclusive bargaining, the union cannot discriminate against those outside the union by offering them lower pay.

The National Labor Relations Act does not coerce unions to represent those outside the union. Federal law gives unions the ability to bargain exclusively for dues-paying members. William Gould, former chairman of the National Labor Relations Board calls this process ‘members-only’ bargaining for employees.[19] The Supreme Court has, on two occasions, recognized the right unions have to solely represent paying members if they choose to, first in Consolidated Edison Co. v. NLRB (1938) and then in Retail Clerks v. Lion Dry Goods Inc. (1962).

In theory, if a union forgoes the option of exclusive bargaining, the union would necessarily represent only those employees who had voluntarily agreed to pay dues in a signed contract. In practice, this rarely occurs. Unions are extremely protective of their monopoly right to bargain on behalf of all employees with the employer.

A Heritage Foundation study explains:

“They [unions] prefer exclusive representative status because it enables them to get a better contract for their supporters. Consider seniority systems: They ensure that everyone gets raises and promotions at the same rate, irrespective of individual performance. If a union negotiated a members-only contract with a seniority system, high-performing workers would refuse to join. Those workers would negotiate a separate contract with performance pay. The best workers would get ahead faster, leaving less money and fewer positions available for those on the seniority scale. The union wants everyone in the seniority system—especially those it holds back.”[20]

So unions eagerly claim their privilege to bargain wages for all employees, and then use their decision as the explanation for why employees should be forced to pay union dues in non-right-to-work states.

Against Right-to-Work: Union Busting?

Right-to-work opponents claim that unions can be “crippling for organized labor.”[21]

There is nothing inherently “crippling” about unions being pushed to demonstrate their worth to workers by constructing a completely voluntary relationship between the worker and representative. Knowing that the workers could terminate the relationship at will forces union leaders to respond promptly to those they represent.

Right-to-work laws do not necessitate a decrease in union membership. Case in point: the right-to-work state of Nevada contains the Culinary Union Local 226. Nevada has been a right to work state since 1952, and Culinary Local 226 has still managed to increase its membership from 18,000 in 1987 to 57,000 in 2017.[22]

Union apologist Richard Yeselson writes: “There is an argument sometimes made by union activists that unions Union Membership 2should run persuasion campaigns to collect dues (in a RTW state) because the workers are more invested and supportive of an energized organization than when dues are passively/invisibly collected on a union’s behalf (in a non-RTW state). There is some evidence that this is true.”

While Yeselson bemoans the “free ride” non-union workers get from unions in right-to-work states, he also credits Culinary Local’s “intense advocacy” for its accomplishments in getting nearly 100% of eligible hospitality workers to join the union.[23] Culinary Union leaders have made, by Yeselson’s reckoning, Culinary Local 226 the “most powerful local union in the country.” The leaders are not separated from union members by a coldly impersonal process like the automatic collection of dues. They must regularly request that union members “buy in” to the union, and they have succeeded with flying colors. It is doubtful that Culinary Local 226’s would have been so enthusiastic if it were not beholden to member involvement because of Nevada’s right-to-work law.

Oklahoma became a right-to-work state in 2001. Eleven years later, the President of the AFL-CIO Jimmy Curry remarked, “Somebody asked me how many workers got out because of right-to-work and I said, well, we don’t track that number…It’s like any other workforce, where 10% cause you 90% of your problems. Those are the ones that bailed out of paying dues.” Curry’s indifference toward right-to-work suggests that unions don’t have anything to worry about so long as they maintain good relations with workers. After Oklahoma became right-to-work, Curry ascertained that “our labor-management relationship was terrible.” Since RTW was passed, that relationship improved.[24]

The truth is, unions are losing members across the US at a rapid rate, regardless of whether or not a RTW law is in place. In fact, non-RTW states are losing members at a faster rate, a decrease of 9% from 1983 to 2014, versus a decrease of only 5% for RTW states.[25]

Conclusion

Since Taft-Hartley was passed 70 years ago, more and more states are finding that it is in their interest to adopt right-to-work laws. Right-to-work laws assist states in attracting businesses, generating jobs, and giving workers the ability to earn higher wages. Above all, right-to-work laws empowers individuals to decide for themselves if union representation is right for them. Vermont should set an example to the rest of New England and become the first state in the region to become right-to-work.

 


 

Works Cited/Helpful Links

National Conference of State Legislatures. http://www.ncsl.org/research/labor-and-employment/right-to-work-laws-and-bills.aspx

http://www.encyclopedia.com/social-sciences-and-law/law/law/closed-shop

UC San Diego. https://blink.ucsd.edu/HR/labor/unions/fees/FAQ.html#What-is-an-“agency-fee?”

https://www.workplacefairness.org/unions-right-to-work

“Agenda for Reform: The Future of Employment Relationships and the Law,” William Gould IV, p. 165, 1996, at http://books.google.com/books?id=zaZJTCOL2zw

C&pg=PA80&dq=agenda+for+reform:+the+future+of+employment+relations

hip+and+the+law&hl=en&sa=X&ei=3cUET7KRBKbw0gGmnenCAg&ved=0CDAQ6AEwAA#v=onepage&q=permits%20members-only&f=false.

“Right to Work Increases Jobs and Choices,” James Sherk, The Heritage Foundation, November 9, 2011, at www.heritage.org/research/reports/2011/11/right-to-workincreases-jobs-and-choices.

“How Right-To-Work Laws Hurt Unions” By Dave Jamieson http://www.huffingtonpost.com/2015/02/23/right-to-work-laws_n_6737130.html

http://www.culinaryunion226.org/union/history

http://prospect.org/article/not-wisconsin-its-worse

“Right-To-Work Laws Make Unions Accountable, Not DOA,” Investors Business Daily,April 17, 2012, http://www.investors.com/news/right-to-work-laws-make-unions-accountable/

Right-to-Work Laws: The Economic Evidence, Jeffrey Eisenach, Ph.D, 2015. http://www.nera.com/content/dam/nera/publications/2015/PUB_Right_to_Work_Laws_0615.pdf

“The Effect of Endogenous Right-to-Work Laws on Business and Economic Conditions in the United States: A Multivariate Approach,” Lonnie K. Stevans, Frank G. Zarb http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1027987.

“Tesla update on earnings, gigafactory expected Thurs,” Albuquerque Journal, July 29, 2014, at www.abqjournal.com/437398/biz/tesla-update-on-earnings-gigafactoryexpected-thurs.html.

“A year later, right-to-work effects tough to measure,” The Toledo Blade, December 15, 2013, at www.toledoblade.com/Economy/2013/12/15/A-year-later-right-to-work-effectstough-to-measure.html.

“The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders,” Thomas Holmes, Federal Reserve Bank of Minneapolis and University of Minnesota, Journal of Political Economy, September 1996, at www.minneapolisfed.org/research/sr/sr205.pdf.

Right to Work Laws: Legislative Background and Empirical Research. Benjamin Collins. 2014, https://fas.org/sgp/crs/misc/R42575.pdf

http://web.unlv.edu/projects/RePEc/pdf/1101.pdf

“Economic Growth and Right-to-Work Laws,” Michael Hicks, Ph.D., Ball State University, and Michael LaFaive, Mackinac Center for Public Policy, 2013, at www.mackinac.org/archives/2013/s2013-05.pdf

“The High Cost of Big Labor: An Interstate Analysis of Right to Work Laws,” Richard K. Vedder, Ohio University Department of Economics, and Jonathan Robe, Competitive Enterprise Institute, July 2014, at, http://cei.org/sites/default/files/Richard%20Vedder%20and%20Jonathan%20Robe%20-%20An%20Interstate%20Analysis%20of%20Right%20to%20Work%20Laws.pdf

https://www.nytimes.com/roomfordebate/2015/03/12/scott-walker-right-to-work-and-labors-waning-power/wages-are-lower-in-states-with-these-laws?mcubz=0

https://www.missourieconomy.org/indicators/cost_of_living/index.stm

“Right-to-Work Laws Don’t Lower Private-Sector Pay.” James Sherk, 2015, http://thf_media.s3.amazonaws.com/2015/pdf/IB4457.pdf

“How Right-To-Work Laws Affect Wages,” W. Robert Reed, Journal of Labor Research, October 2003, at http://link.springer.com/article/10.1007%2Fs12122-003-1022-1#page-1.


 

Footnotes

[1] National Conference of State Legislatures. http://www.ncsl.org/research/labor-and-employment/right-to-work-laws-and-bills.aspx

[4] UC San Diego. https://blink.ucsd.edu/HR/labor/unions/fees/FAQ.html#What-is-an-“agency-fee?”

[6] “The Effect of Endogenous Right-to-Work Laws on Business and Economic Conditions

in the United States: A Multivariate Approach,” Lonnie K. Stevans, Frank G. Zarb

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1027987.

[7] “Tesla update on earnings, gigafactory expected Thurs,” Albuquerque Journal, July

29, 2014, at www.abqjournal.com/437398/biz/tesla-update-on-earnings-gigafactoryexpected-thurs.html.

[8] “A year later, right-to-work effects tough to measure,” The Toledo Blade, December 15,

2013, at www.toledoblade.com/Economy/2013/12/15/A-year-later-right-to-work-effectstough-to-measure.html.

[9] “The Effect of State Policies on the Location of Manufacturing: Evidence from State

Borders,” Thomas Holmes, Federal Reserve Bank of Minneapolis and University of

Minnesota, Journal of Political Economy, September 1996, at www.minneapolisfed.org/

research/sr/sr205.pdf.

[10] Right to Work Laws: Legislative Background and Empirical Research. Benjamin Collins. 2014, https://fas.org/sgp/crs/misc/R42575.pdf

[11] http://web.unlv.edu/projects/RePEc/pdf/1101.pdf

[12] “Economic Growth and Right-to-Work Laws,” Michael Hicks, Ph.D., Ball State

University, and Michael LaFaive, Mackinac Center for Public Policy, 2013, at www.

mackinac.org/archives/2013/s2013-05.pdf

[13] “The High Cost of Big Labor: An Interstate Analysis of Right to Work Laws,” Richard

  1. Vedder, Ohio University Department of Economics, and Jonathan Robe, Competitive

Enterprise Institute, July 2014, at, http://cei.org/sites/default/files/Richard%20

Vedder%20and%20Jonathan%20Robe%20-%20An%20Interstate%20Analysis%20of%20

Right%20to%20Work%20Laws.pdf

[14] https://www.nytimes.com/roomfordebate/2015/03/12/scott-walker-right-to-work-and-labors-waning-power/wages-are-lower-in-states-with-these-laws?mcubz=0

[15] https://www.missourieconomy.org/indicators/cost_of_living/index.stm

[16] “Right-to-Work Laws Don’t Lower Private-Sector Pay.” James Sherk, 2015, http://thf_media.s3.amazonaws.com/2015/pdf/IB4457.pdf

[17] “How Right-To-Work Laws Affect Wages,” W. Robert Reed, Journal of Labor Research,

October 2003, at http://link.springer.com/article/10.1007%2Fs12122-003-1022-1#page-1.

[18] https://www.workplacefairness.org/unions-right-to-work

[19] “Agenda for Reform: The Future of Employment Relationships and the Law,” William

  1. Gould IV, p. 165, 1996, at http://books.google.com/books?id=zaZJTCOL2zw

C&pg=PA80&dq=agenda+for+reform:+the+future+of+employment+relations

hip+and+the+law&hl=en&sa=X&ei=3cUET7KRBKbw0gGmnenCAg&ved=0CDAQ6AEwAA#v=onepage&q=permits%20members-only&f=false.

[20] “Right to Work Increases Jobs and Choices,” James Sherk, The Heritage Foundation,

November 9, 2011, at www.heritage.org/research/reports/2011/11/right-to-workincreases-jobs-and-choices.

[21] How Right-To-Work Laws Hurt Unions By Dave Jamieson

http://www.huffingtonpost.com/2015/02/23/right-to-work-laws_n_6737130.html

[22] http://www.culinaryunion226.org/union/history

[23] http://prospect.org/article/not-wisconsin-its-worse

[24] “Right-To-Work Laws Make Unions Accountable, Not DOA,” Investors Business Daily,

April 17, 2012, at http://www.investors.com/news/right-to-work-laws-make-unions-accountable/

[25] Right-to-Work Laws: The Economic Evidence, Jeffrey Eisenach, Ph.D, 2015. http://www.nera.com/content/dam/nera/publications/2015/PUB_Right_to_Work_Laws_0615.pdf

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