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Wednesday, December 12, 2012

A Historic Day - Will Right-to-Work Help or Hurt Michigan and its Workers?

History was made today in Lansing, as Governor Snyder signed into law several "right-to-work" bills that would make it optional for workers to contribute financially when they work under a union contract. After spending two years denying "right-to-work" was on his agenda, the Governor added it to his agenda and signed it into law in the space of a week during this lame-duck session.

Unions and "right-to-work" both have pros and cons, and there is a lot to discuss and assess on that front. First, however, a thought on the process itself:

  • Lame duck Republicans railroading this highly partisan, highly controversial bill through the Legislature with minimal discussion and no public input is a sham and a disgrace to Michigan; even if "right-to-work" is right for Michigan, such a bill should have gone through the proper channels and processes (I think a referendum would have been best); at best, this is a terrible precedent
  • There may be economic merits to "right-to-work", but the political nature of the timing cannot be denied; Republicans are taking a shot at weakening Labor and Democrats, sensing weakness given the loss of Proposal 2 (I couldn't vote for Proposal 2 to put union rights in the Constitution, but I didn't vote against it for that reason, because I didn't want Republicans to take its defeat as a sign that "right-to-work" had support)
  • The unions may have overreached by pushing Proposal 2, but it was more of a defensive measure than an offensive one in my view; given all of the anti-union legislation in the Midwest, from Wisconsin to Ohio to Indiana, it was only a matter of time before the battle came to Michigan; Governor Snyder could have shown true courage and leadership and taken a post-partisan stand by saying he would veto "right-to-work" legislation, but he never said that, and in the end, his reassurances that it was "not on his agenda" were hollow, as he supported "right-to-work" the second it came up anyways)
  • Like those other states, I fear this act which disturbs the balance of power is just the beginning of a long war; I'm afraid it will create a toxic environment in Lansing (perhaps to rival DC) and cause gridlock and uncertainty at a time when Michigan has many more pressing issues (e.g., Detroit, regional transit, taxes, etc.); as this struggle unfolds, our policies in Michigan may become disjointed and incoherent over the next decade; as a businessman, the Governor should have realized that if there is one thing that delays investments in job-creation and that businesses hate, it is uncertainty...
Okay, aside from the political mess and effects, here are some thoughts on the practical impacts:
  • Nothing will really happen for a few years; legislation will tie it up (even Governor Snyder is expecting some legal challenges)
  • Companies will certainly view Michigan more favorably when undertaking site selection exercises for their business; whether a geography is "right-to-work" is often a consideration for such companies, no doubt about it
  • That being said, Toyota or Volkswagen aren't coming to Michigan anytime soon; there is already too much auto production capacity in North America, their footprints are already elsewhere, so there is no reason for them to come to Michigan; I don't expect any other gigantic factories opening up in Michigan anytime soon either
  • With or without "right-to-work", unions really need to reinvent themselves; unions have a bad reputation in many places, and certainly, the way the system is setup, there are many inefficiencies and much room for improvement; solidarity is great, but for instance, perhaps unions should take another look at better integrating worker-by-worker performance-based incentive systems as part of compensation; also, maybe seniority should not be the only factor when layoffs occur (maybe other options should be considered, like some kind of rotations or an average decrease in hours, rather than layoffs)
  • Sure, unions will still be able to collectively bargain, but "right-to-work" will let workers "freeload" and benefit from the union but not pay the union, weakening them financially
  • If unions disappeared tomorrow, compensation and benefits would also go down tomorrow
  • "Right-to-work" is basically a step on the way down in a race to the bottom; Companies will typically pay workers as little as they can get away with (most think like Wal-Mart, not Costco); Governor Snyder indicated his impetus to support "right-to-work" was Indiana's passage of such a law earlier this year (the UAW rightfully feared his intentions in their misguided support of Proposal 2)...if all states adopt "right-to-work", then all states are just competing to have lower and lower wages; perhaps a national "card-check" law would level the national playing field; either way, we should be figuring out how to compete with Mexico and China (and not by lowering wages to their levels), rather than a zero sum game of shifting jobs between Midwestern states (and often paying hundreds of millions in tax incentives to do so)
  • Perhaps this law will have the perverse effect of making it easier for Unions to organize labor places (after all, if someone doesn't lose any money in dues, and only gains with higher wages, why not vote to unionize?)

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