A historic development happened this week. Michigan, long the most union-heavy state in the country, passed laws commonly referred to as ‘right-to-work,’ meaning that people can no longer be forced to join unions or pay union dues in order to have jobs at certain locations and in some industries.
There is a stunning correlation between which states are right-to-work, and which voted for Mitt Romney in the recent election. Of the 50, all but five – Alaska, Montana, Missouri, Kentucky, and West Virginia – of the states going Republican in November have these laws. Likewise, all of the Barack-Obama-choosing states do not, except Nevada, Iowa, Virginia, Florida, Indiana, and Michigan, the last two of which changed their laws this year. That makes 39 of 50 states aligning their union laws with their overall presidential choice, and 41 as of last January. While correlation does not mean causation, in this case right-to-work laws appear to be a politically-related issue.
Michigan’s shift drew some expected criticism from Democrats, starting with Obama, who called it “the right to work for less money.” Republicans, led by that state’s governor Rick Snyder, cheered the move as being more pro-business and giving workers a choice, which Charles Krauthammer said, in his column today, was appropriate for a free country.
So what is right from a 2012 perspective? It is clear. There should be no laws requiring union membership or payment of union dues. Why?
Unions were critical to offset the abuses of the early Industrial Revolution, when we did not know how many hours people could work and under what conditions, and people were dying as we found out. As Krauthammer pointed out, matching what I wrote in Work’s New Age, unions were valuable during the post-war Winning by Default years, when the United States was the prime source for most industrial products and jobs were plentiful. Since then, as Robert Townsend put it in Further Up the Organization, unions became “part of the problem,” and as Krauthammer similarly wrote, American companies were “saddled with protected, inflated, relatively uncompetitive wages, benefits, and work rules.”
The jobs crisis is happening because America now has excess capacity in workers. It is inevitable that compensation come down, and until it does, there will be even more severe job losses. As Krauthammer said, the positions themselves are most important, and right-to-work states have consistently lower unemployment. Recently, more companies have closed American plants, or, in the case of Hostess, gone out of business entirely, when they could not come to terms with unions who would not accept lower pay.
The problem is the same with minimum wage laws. While higher cash compensation, especially for workers at the bottom, has a considerable stimulus effect, it is inappropriate in a time of decreasing job opportunities to mandate that workers be more expensive. Pay will find its own level – New Jersey’s proposed minimum wage increase from $7.25 to $8.50 would help few in the likes of Princeton or Newark, where their labor commands that much anyway, but would cut jobs in the less developed south. It is true that companies have had record profits recently, but that is a case for higher taxation of them in general, especially for those whose jobs are outside the country, not one for forcing them to pay for unions or to raise their lowest wages.
That is the real choice we have – more jobs, as the market will allow them, or fewer positions at higher pay. Work is already being concentrated into fewer and fewer Americans, and these laws only encourage more of that. The peak times of unions have passed, and neither they nor the vast amount of manufacturing their members did will return. We will not put the country back to work by pricing our workers out of world markets, and unemployed people each earn the same for their labor. With the most unionized state changing its laws, it is possible that the entire country will be right-to-work by decade’s end. That will be a good thing for the United States.