Wednesday, December 12, 2012

“Right to Work versus Requirement to Join”

Sydney M. Williams

Thought of the Day
“Right to Work versus Requirement to Join”
December 12, 2012

There are times when a single event appears to overwhelm a secular trend. The event was the re-election of President Obama; the trend toward fiscal responsibility is both gradual and erratic, and is manifested in Michigan’s decision yesterday to become a right-to-work state.

I write “gradual,” because the trend toward responsibility has begun at the local and state levels, and I note “erratic” because states periodically take two or three steps backward, as California did on November 6, when it voted for Proposition 30, a $6 billion tax hike. With a top income tax rate of 13.3% and a 7.5% sales tax, California ranks among the most taxed states in the union, giving credibility to the notion that the state’s greatest export is its population.

Nevertheless, with states like Indiana, Virginia, Wisconsin, North Carolina and now Michigan imposing limits on profligate unions, there is a growing understanding that reining in public sector union power is necessary for fiscal salvation. Michigan’s adaptation of right-to-work laws has been the 24th state to do so. The significance of the Michigan decision is that it becomes the first state among the top five, in terms of union employees as a percent of their workforce, to adopt such rules. The decision and the signature by Governor Rick Snyder should not have been a surprise, despite the thousands of people bussed in to picket the Legislature. Polls going back more than two years support the notion of right-to-work. A Labor Day poll, conducted by the Grand Rapids Press in 2010, showed 51% supporting such rules with 27% opposed.

Indiana became the 23rd state last February, the first in over ten years to adopt what seem to be commonsensical rules. It was notable, as it was the first state in the industrial Midwest to adopt right-to-work rules. Under right-to-work rules, union membership is not required for most state jobs – police and firemen are often exceptions – and current members can turn in their union cards with no adverse consequences. Dues are no longer deducted from state checks, depriving unions of what had been an unfair advantage. Rights to collectively bargain and to organize are not affected by these rules; though the ability to do so may be impeded; for the dollar amount of dues collected will likely decline, as workers decide to opt out of unions. President Obama said on Monday that the issues have nothing to “with economics. They have everything to do with politics.” He’s wrong and he is right. Public sector unions have been more responsible than any other entity for the fiscal mess in which our states and communities now find themselves. The vote in Michigan is the first toward restoring fiscal sanity. On the other hand, the vote is very political, as unions provided the President with his single largest means of financial support.

When President Obama visited Michigan to defend the unions that helped elect him, he posited his remarks on a false assumption: “What we shouldn’t be doing is try to take away your rights to bargain for better wages or better working conditions.” The right to collectively bargain persists, but what states and cities must do is rein in the ruinous entitlement spending that risks bankrupting the nation. Typical of the attitude of too many, Detroit City Council member JoAnn Watson, last week deplored the attitude of the people, the legislature and the governor of her state when she resurrected the image of Mayor Coleman Young going off to Washington in 1977. He went to the city and “came home with some bacon. That’s what you do.” There was no sense of President Kennedy’s imploring the people to ask “…not what your country can do for you, but what you can do for your country?” In the past decade, Detroit lost 25% of its population, which should be no surprise given stewards such as Ms. Watson watching the purse strings. Instead of bacon, the Detroit City Council should be feeding on humble pie.

In September 2011, Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, in response to a question, explained that debt was the largest national security issue we faced and that we have “every responsibility to reduce that threat.” What was true in 2011 is truer today. Yet our representatives in Washington fiddle while the country burns. While union demands do not account for all of the mismanagement of the people’s money, they certainly comprise a significant part. It may not be possible to assign cause and effect, but empirical evidence provided by the Bureau of Labor Statistics (BLS) shows that employment in the 22 states with right-to-work laws, over the past decade, grew 8.2%, while employment in those states where workers are forced to join unions declined 0.5%. According to “State Budget Solutions,” the level of per-capita state debt, in 2011, in right-to-work states was about half that of the per-capita debt in the other twenty-eight states – $9,456 versus $16,486.

The evidence is overwhelming that it is spending, not revenues, that is the principal culprit behind both federal and state deficits. I say “principal” because revenues are lower than they should be, but that has less to do with tax rates than deductions, credits and expenditures, all of which effectively lower tax receipts, and are a special benefit to the wealthiest among us. Tax reform needs to be addressed, but the most important issue is for states (and the federal government) to address the addiction to spending. Michigan, at least, is moving in the right direction, but it will need to do a great deal more. States with the heaviest unionized workforces – New York (24%), Alaska (22%), Hawaii (21.5%), Washington (18.9%), Michigan (17.5%), Rhode Island (17.4%), California (17.1%), Oregon (17.1%), Connecticut (16.8%) and Illinois (16.2%) – are among those with the worst financials. In fact, Huffington Post, in October 2011, ranked five of those states – Connecticut, Hawaii, California, Rhode Island and Oregon – as among those having the dubious honor of being in the top ten in terms of state debt per-capita.

The sad thing is that this condemnation of unions belies the greater good they did earlier in the past century. Unions reduced workweeks to manageable hours; they were responsible for child labor laws, and they allowed employees to enter the middleclass. But, they overstepped their bounds and leaders became greedy. They helped precipitate bankruptcies in the private sector. But it has been their role in the public sector that risks the greatest damage . In fact, the cause of the damage they have wrecked can be traced back to Executive Order 10988 signed by President Kennedy in 1962 (and, notably, endorsed by politicians from both parties), which allowed public sector unions to bargain collectively. That was the catalyst that allowed government workers’ unions to blossom. Today their membership exceeds that of their private sector compatriots.

A city or a state that is reduced to surviving on handouts from the federal government has assumed the status of a Third World nation. Reining in overly aggressive unions is but one step toward fiscal responsibility. Allowing a worker the choice to join, or not join, a union seems like it should be part of the American experience. And such actions slow the momentum toward possible state default. It’s a positive step toward fiscal responsibility.

[1] See Thought’s of the Day, “Unions – For Better, For Worse,” dated November 27, 2012, and “Chicago Teacher’s Strike – Emanuel’s Waterloo.

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