The Uncertain Effects of Right-to-Work
By Melissa Maynard, Staff Writer
Last year, the 250 members of Sheet Metal Workers Local 20 in South Bend, Indiana, fought proposed “right-to-work” legislation as if they were fighting for their lives. They feared for their future after the measure became law in February.
Right-to-work laws, now in place in 24 states after Michigan passed one in December, make it illegal to require workers to pay fees to unions as a condition of their employment. The laws can cripple union finances, infrastructure and bargaining clout with employers if too many of the people represented by the bargaining unit decide to stop paying dues and become what the unions call “free riders.” Under federal law, unions are required to provide many of the same services to people who choose not to pay as they do to dues-paying members. They are required to represent them in employment disputes.
But almost a year later, the members of Sheet Metal Workers Local 20 haven’t found their “new normal” to be as bad as they’d worried it might be. So far it actually looks a lot like their old normal, with increased solidarity for future legislative battles. “The experience brought us closer together,” says Brad Chamness, the union’s business manager. “We haven’t had a single person leave. We didn’t expect an overwhelming wave, but you’re always fearful that one leads to two, and then two leads to ten.”
Indiana and Michigan, the first states in the industrial Midwest to approve right-to-work laws, did so only after bruising political battles. But passage of the laws in those manufacturing states could spur other states to follow suit. Michigan Governor Rick Snyder, a Republican, cited Indiana’s success in attracting business development under the law when he decided to push for it in his state after previously dissuading supporters from pursuing the topic. Snyder and other supporters believe the new right-to-work rules will make Michigan more attractive to businesses looking to relocate or expand.
Still, remarkably little is known about how these laws will impact both unions and the economy over the long haul, and it will be years before their full effects are felt. The laws will be phased in gradually as current contracts between employers and unions expire. The South Bend Sheet Metal Workers union is one of just a few to have gone through the process; others won’t do so until as late as 2017.
Mixed Results on Membership
So far, there are varying accounts on how the new law has affected union membership across Indiana. State Chamber of Commerce President Kevin Brinegar says unions that have renegotiated their contracts as the law phases in are losing 20 to 30 percent of their members. But Nancy Guyott, president of the Indiana AFL-CIO and a former state labor commissioner, says the unions have been losing, at most, a handful of members. "The membership was deeply engaged in right-to-work,” she says. “We think they understand that this is just another attack on working people. We're confident that that understanding will lead to them making the right choices when their contracts come up." There has been no comprehensive accounting of union membership in the wake of the law, so it is impossible to verify either claim.
In anticipation of contract negotiations, some unions are taking extra steps to demonstrate their value to members. The Sheet Metal Workers began using dues to offer a health savings program. Robert Ludolph, an employment attorney at Pepper Hamilton in Detroit, says Indiana unions have become more aggressive in pursuing grievances in order to prove that union membership is desirable. “There has been a lot more contentiousness in terms of grievances and the like,” says Ludolph, who represents corporate clients in labor disputes in both Indiana and Michigan. “You’re going to see that because unions have to show what kind of value they are providing to members who pay dues if they’re not required to do so.”
Michigan State Representative Mike Shirkey, chief sponsor of the legislation, emphasized throughout the debate that its intent was not to bring about the demise of unions. “I believe it is one of the things that helped us win hearts,” he says. “We made our slogan ‘Unions are free to make their case, and workers are free to make their choice.’” Now that right-to-work has passed, Shirkey says, unions should focus their energy on adapting to the new system rather than on lawsuits and recall campaigns. “If they choose to spend their time and energy reengineering their business model, I believe unions have an important role to play in Michigan's future.”
Right-to-work supporters in Indiana say the legislation has given an immediate and significant boost to economic development. “It has exceeded our expectations,” says Brinegar of the Chamber of Commerce. “We heard over and over again that if you're not a right-to-work state, then you're missing out. You don't get a chance to step into the batter’s box and take a swing at the opportunity when businesses are deciding where to locate.”
According to the Indiana Economic Development Corporation, 91 companies have indicated that the enactment of right-to-work “will factor into their decision-making process of where to locate current projects.” Indiana is actively competing with other states and countries for 25 of these projects, the corporation claims, and it says 39 of the companies in question have already finalized tax incentive deals and agreed to locate their projects in Indiana. The Indiana Economic Development Corporation projects that these 39 projects will eventually bring 4,550 new jobs and $1.6 billion in investment to the state.
Critics say these numbers are misleading because it is difficult to determine whether the projects would have come to Indiana anyway, and because many of the companies included in the count are already based in the state and were given lucrative tax incentives to expand. The Economic Policy Institute, a liberal-leaning think tank based in Washington, released a policy brief in December arguing there is no reason to believe that right-to-work laws have significantly impacted job growth or been the determinative factor in a single company’s location decision.
“It's kind of strange that Governor [Mitch] Daniels and the Indiana Economic Development Corporation would claim immediately upon passage that they've received all sorts of indications from companies that they're going to locate in Indiana because of right to work,” says Marty Wolfson, director of the Higgins Labor Studies Program at the University of Notre Dame and a co-author of the brief. “Companies don't make those sorts of decisions so quickly.”
Site selection experts emphasize that a right-to-work law is only one of a number of considerations that corporations take into account when making location and expansion decisions. Tax structure, tax incentives, infrastructure assets, and quality-of-life considerations are also critical, says Timothy Monger, senior vice president of Cassidy Turley’s Location Advisory and Incentives Services division, which is headquartered in Indianapolis.
Still, Monger expects the new right-to-work laws in Indiana and Michigan to make the difference in a number of cases. A former head of Indiana’s economic development agency, Monger now advises major corporations around the country in location strategy and brokers incentive deals with state and local agencies. “It really is significant,” he says. “A company may need a northern location and the fact that Michigan is now right-to-work puts it in play.”