This week the House considered “right to work” legislation, which would ban contracts that require Missourians to join a union as a condition of employment. I voted for RTW for three reasons: freedom of association, anti-trust balance, and economic growth.
Freedom of Association
As your state representative, my focus is protecting individual rights and empowering you to make your own choices – so long as those choices don’t intrude on the rights of others. I am naturally suspicious of the “big” – whether it’s big government, big business, or big labor. And I generally oppose any regime that compels people to act when they’d rather not.
Opponents often confuse or mischaracterize the concept of individualism. It is not a rejection of community. No man is an island, and community institutions are vital, not just to an individual’s sense of identity, but also to a free society: churches, labor unions, business groups – heck, even bowling leagues create a layer of society for accomplishing tasks that government cannot and should not try to accomplish.
A flourishing civil society distinguishes free from unfree societies. Consider: there were no business associations or labor unions in the Soviet Union or its satellites. In Poland, the labor movement helped overthrow communism. But the key is freedom of association, not compelled association. RTW empowers the worker to freely associate for the obvious reason that it ensures no Missourian can be forced to join an organization as a condition of employment.
In the late 1800s, Congress passed anti-trust legislation to protect consumers and entrepreneurs by making unreasonable restraints on trade illegal. The theory behind anti-trust is that big organizations shouldn’t be able to conspire to eliminate competition in the marketplace.
At the same time, the American labor movement was in its infancy, and workers lacked basic rights, including the right to freely associate.
In 1908, the United States Supreme Court held in Loewe v. Lawlor that federal anti-trust laws applied to the actions of labor unions. In a legal environment with no workplace safety standards, no minimum wage, and no child labor laws, anti-trust legislation made labor’s early difficulties even worse. In 1914, Congress acted accordingly and specifically exempted labor union activities from anti-trust laws.
By World War II, the pendulum had swung in the opposite direction. Despite the greatest battle for freedom in world history, which required huge increases in manufacturing, according to labor historian Jeremy Brecher, “During the 44 months between Pearl Harbor and V-J Day, there were 14,471 strikes involving 6,774,000 strikers: more than during any period of comparable length in United States history.” Strikes increased dramatically with war demobilization. They doubled in the first month after V-J Day, and then doubled again the next month.
In 1947, Congress passed the Taft-Hartley Act over the veto of President Truman to outlaw certain labor practices, empower the executive branch to stop strikes through injunctions, and allow states to pass RTW laws, outlawing closed-shop agreements. Despite his veto, Truman invoked Taft-Hartley 12 times to stop strikes.
Fortunately, the USA of 2014 is much better than that of 1914. Many of the contractual rights unions fought to win from employers are now codified in federal and state law, including but certainly not limited to minimum wages, safe workplace requirements, workers’ compensation, child labor prohibitions, anti-discrimination protections, and prevailing wage. Moreover, while it was nearly impossible, if not illegal, to organize in 1914, the right to organize today is clear. Federal law prohibits employer interference with unionization drives.
Since Taft-Hartley passed, 24 states have passed RTW. The first wave of laws happened nearly immediately after passage. In recent years, RTW laws have passed in Michigan, Oklahoma, Indiana, and Idaho. By passing RTW, these states have essentially applied anti-trust principles to protect individual workers in the same way that consumers and entrepreneurs are protected.
Mark Twain famously said there are “lies, damn lies, and statistics.” I feel the same way about most of the economic “research” on RTW. Union-sponsored studies “prove” it’s Hades. Business-sponsored studies “prove” its Paradise. In these situations, I try to find research that is not tainted by the source of the funding.
Each side has its own irrefutable fact that it loves to cite as proof. Businesses cite the fact that RTW states have grown at significantly higher rates than non-RTW states. Unions counter that non-RTW states have lower average wages than RTW states. Both sides argue that their chosen result is caused by RTW status. However convenient, correlation shouldn’t be confused for causation.
Does RTW lead to higher rates of economic growth? Very likely yes. Though some studies have come to the opposite conclusion, according to a senior economist at the Boston Fed, a veto-proof majority of serious studies “find that the existence of a RTW law exerts a positive, statistically significant impact on economic activity.”
The most interesting study on the topic was done in 1997 by Thomas Holmes of the Minneapolis Fed. Because of difficulty isolating the RTW variable to compare states with different policies, transportation systems, geographies, climates, histories, and cultures, Holmes examined RTW by comparing manufacturing in every county in the United States next to a border of a state with an opposing RTW policy. From 1947 to 1992, Holmes found that, in counties within 25 miles of a RTW border, manufacturing jobs increased one-third faster in RTW states than in non-RTW states.
Does RTW lead to lower wages? Very likely no. Even though states with RTW laws have indisputably lower wages than non-RTW states, it does not automatically follow that those lower wages are caused by the RTW law. One review of prior studies found that “RTW laws have no impact on union wages, nonunion wages, or average wages in either the public or the private sector.” William J. Moore, “The Determinants and Effects of RTW Laws: A Review of Recent Literature,” Journal of Labor Economics, Summer 1998.
Instead of RTW, there may be other factors causing the wage differential. For example, much depends on the starting point. Most RTW states had agricultural economies and were generally poorer than non-RTW states before adopting RTW. These RTW states started the relevant test period with significantly lower wages than the non-RTW states. As explained by Robert Reed, an economist at the University of Oklahoma, “the economic past still casts a long shadow on the economic present.” Reed conducted a study which attempted to account for these historical differences and found that, controlling for a state’s economic conditions at the time of adoption, average wages in RTW states were 8 percent higher as compared to wages in non-RTW states.
RTW’s Likely Impact
In reality, both sides likely overstate their case. RTW is not the most important economic development bill being considered in our state capitol. Tax cuts, education reform, and Medicaid are all more important. But the economic research cited above suggests it will certainly help.
Nor is RTW a death knell for organized labor. Unions will still exist and will continue to work on behalf of its members. The jobs of union leaders will of course become more difficult because they will have to persuade members to join and stay. Without compulsory membership, union leaders will have to adjust to the reality faced by leaders of every other organization in a free society: they will have to convince their members that membership is an actual benefit worthy of their continued investment.
Good unions will survive. Great ones will thrive. In Missouri, we already have RTW for public sector employees. Yet, these public sector unions still attract robust union rolls full of dues-paying members. These unions don’t require compulsion to keep their members. Instead, they rely on promotion and persuasion based on effective leadership and representation.
And the end the individual will have the freedom to choose which organizations they join – a fundamental American value worthy of government protection.