The Irrelevance of "Right-to-Work" Laws

The battle over labor laws makes for great theater, but for the most part, theater is all it is.

Some people love right-to-work laws, and some people really hate them. The reaction in Michigan when Republican Gov. Rick Snyder signed one has been not only spirited but downright violent at times. The public was so fierce and divided that I was afraid the state might split into two separate parts. Oh, wait…

These laws have a mythic importance with advocates on the left and the right. One group sees them as a shimmering beacon of freedom against union bullying. In this view, they spur job creation, generate investment and free workers to choose whether to support unions.

Organized labor, on the other hand, sees them as a vicious union-busting ploy by corporate reactionaries. It contends that right-to-work laws ratchet down wages, weaken unions and promote mooching by workers who get the rewards of union representation while shirking the costs.

Both have a point about such measures. Compulsory union dues force unwilling employees to pay for something they may not want. Allowing workers to opt out, though, allows some to ride free at someone else's expense. Deciding which evil is worse is not a simple task.

But both sides of the debate are alike in one thing: blowing the issue out of proportion. For a long time, we've had a bloc of states with right-to-work laws and a bloc of states without. In both places, with few exceptions, the decline of unions has been steady. Regardless of whether policies like these get enacted or repealed, it's only going to continue.

It's not even clear that right-to-work laws by themselves make a meaningful difference in anything. Iowa is a right-to-work state, but its unionization rate is higher than that next door in Missouri, which is not. Kansas has a bigger union presence with right-to-work than adjacent Colorado has without.

One big study cited by supporters found that when Oklahoma passed one of these measures, it reduced union membership but had no effect on manufacturing employment or earnings. Idaho saw an increase in manufacturing jobs but none in per capita income. All this brings to mind what screenwriter William Goldman said is the crucial fact about the movie business: "Nobody knows anything."

Right-to-work laws are not the reason unionization has shrunk so dramatically. In 1980, 20 percent of private sector employees were union members. By 2011, the figure was less than 7 percent. Organized labor has done better among government workers, but even there, its share of the workforce has been flat.

Broad, powerful changes are behind all this. Industries where unions once reigned supreme have been battered by imports, domestic competition and deregulation—and as the industries have gotten weaker, so have the unions.

Back in the days when the Big Three owned the auto market, they could agree to generous terms with the United Auto Workers, knowing they could pass the extra costs on to consumers. That's no longer the case.

Big airlines used to enjoy protection from new competitors. Once commercial air travel was open to all, bankruptcies ensued, allowing high-cost carriers to scrap their labor contracts. More intense competition in the economy has deprived companies of leverage over prices—and unions of leverage over wages.

Public sector unions have long been shielded from such pressures. Governments as a rule don't go bankrupt, and taxpayers can always be compelled to pay any costs.

That was the theory, anyway. Today, as states and municipalities find revenues insufficient to cover the pay and pension promises made to government employees, these unions face a much tougher bargaining environment. Politicians in most places have no choice but to look for ways to cut personnel costs.

Even in the past, the theory didn't quite match up with actual events. States like Wisconsin, Ohio and Indiana have recently curbed public workers' collective bargaining rights, which conservatives blame for bloated benefits. The assumption is that states with strong public employee unions would provide more lavish pay to government workers.

But economist Sylvester Schieber, author of the book "The Predictable Surprise: The Unraveling of the U.S. Retirement System," has studied the issue at length and told me, "My results suggest that the extent of unionization of the public workforce has no significant effect on the generosity of public pensions at the state and local level." He was surprised.

Right-to-work laws or not, mandatory collective bargaining or not, inexorable forces have weakened unions and eroded their presence. The battle over labor laws makes for great theater, but for the most part, theater is all it is.