In its November issue, Site Selection magazine awarded Indiana sixth place out of all states in its Top State Business Climate Rankings. But state Republican leaders say that Indiana will miss out on new jobs unless it adopts right-to-work legislation. Some Democrats have called that claim questionable.
Lawmakers have stated their intent to work together to find common ground, but with their opposing interpretations of what right-to-work laws do, they will likely spend a lot of time debating that point in 2012.
What it means
The National Labor Relations Act says that in a workplace where an employer and union have agreed upon a collective bargaining agreement, all employees – regardless of union membership – are covered by that labor agreement.
Only when an employer and union agree to a “union-security agreement” can an employer require all employees to be dues-paying members of the union. Even so, employees who don’t want to join the union may elect be “objectors,” paying only a portion of dues to cover union representation costs, like contract administration.
Right-to-work states have banned union-security agreements, meaning that objectors do not have to pay any portion of dues to the union but still benefit from its collective bargaining agreement.
What they’re saying
Democrats say right-to-work states erode unions by allowing workers to opt out of paying dues while enjoying the benefits, wages and other perks secured by union efforts. Republicans say right-to-work laws extend to Americans the freedom of choice they deserve.
Sen. Vi Simpson, D-Bloomington, said she thinks a lot of misinformation exists about right-to-work laws.
Simpson said the argument in favor of right-to-work is that it creates favorable environments for business owners, who then bring jobs to right-to-work states. But she said that’s a claim that has not been proven. “In Oklahoma, for example, their unemployment actually went up after they passed right-to-work legislation,” Simpson said.
The Bureau of Labor Statistics shows that when Oklahoma passed right-to-work legislation in 2001, its unemployment rate was around 3 percent. Since then, its unemployment rate has risen along with, but not exceeding, the national unemployment rate. However, since 2002, the BLS reports Oklahoma’s union membership has declined by 39.6 percent, while nationwide, union membership decreased by 11.9 percent.
Labor attorney William Groth said he’s concerned about the intent of right-to-work laws.
“This isn’t about right to work – that’s a misnomer. Anybody and everybody has the right to work. What this effort is really about is a political attack against unions to weaken them politically by depriving them of revenue that they would be able to generate under security provisions.”
On Nov. 21, following a joint press conference, Rep. Brian Bosma, R-Indianapolis, and Sen. David Long, R-Fort Wayne, issued a statement about their commitment to right-to-work laws.
“Right-to-work isn’t about unions – it is about freedom and economic opportunity,” Bosma said in the statement.
At the July 26 meeting of the Interim Study Committee on Employment Issues, then-Indiana Commerce Secretary Mitch Roob said that companies pass over Indiana because of its lack of right-to-work laws. As an example, he cited Boeing’s decision to build a new plant in South Carolina, saying Boeing never considered Indiana as a location. But he stopped short of saying that he knew the reason Boeing never considered Indiana.
Roob also said Volkswagen would not open a plant in Indiana because it is not a right-to-work state. Addressing his remarks, Sen. Karen Tallian, D-Portage, reminded Roob that the Austrian company Fronius had opened a plant in her hometown a month earlier expressing no concerns about Indiana’s lack of right-to-work laws.
“And by the way, Volkswagen Europe is also totally unionized. Did they tell you that they weren’t coming to Indiana because we have unions and we didn’t have right-to-work?” Tallian asked.
Roob said he could not say on the record why Volkswagen did not build a new plant in Indiana.
In the committee meeting, Rep. Kreg Battles, D-Vincennes, said that right-to-work is just one factor companies might consider when choosing where to do business. Texas – which is a right-to-work state – has experienced rapid job growth in recent years. But, Battles said, like most other right-to-work states, it is in the southern half of the country where weather-related shipping and transportation delays are negligible. Texas also has no state income tax.
Economics and liberties
The Nov. 22 statement issued by Long and Bosma said that many businesses, when choosing where to locate do not consider states without right-to-work laws. As support, the statement cites testimony during the July 26 study committee on employment issues, but does not attribute the testimony to anyone. It cites other sources, too, but none provide names of companies that have allegedly skipped over Indiana as a place to do business.
Bosma told Indiana Lawyer that while Indiana has one of the highest nationally ranked business climates in the country, he thinks the time to move forward with right-to-work legislation is now.
“If things were great here in Indiana and our economy was ticking along in great strides, it probably wouldn’t be the program to look at,” he said. “But despite all of our positive efforts and strict fiscal efforts as a state, we still have 9 percent unemployment here.”
Simpson said she worries that right-to-work laws will reduce wages. But it’s not clear how laws forbidding union-security agreements would lower workers’ pay if non-union members are still covered by collective bargaining agreements.
The BLS shows that in 2010, the median weekly wage of full-time workers who were members of unions was significantly higher than that of non-union workers. For example, male (age 16 and older) union members earned a median of $967 per week, while their non-union peers earned $789 per week.
Groth said that non-union members do have a say in how compulsory dues are applied.
“If I don’t like the union’s political stand or political contributions, I can tell my union that I want my dues reduced by the amount that is contributed to those activities,” he said.
Groth said right-to-work laws impede on the ability of businesses to make decisions.
“But this is exactly what right-to-work is all about – it’s the government telling businesses that they cannot include these security provisions in their agreements, he said”•