Effects of Right to Work Laws on
Employees, Unions and Businesses
John W. Cooper
Available online as a PDF
Available online as a PDF
Available online at: http://www.johnwcooper.com
© 2004 John W. Cooper
I would like to thank my parents for being there for me while I was writing
this paper. Father, your involvement with
the legal profession sparked my interest in the law. You are an inspiration to me and inspired me
to take on this legal topic. Mother,
thank you for supporting me while I wrote this paper. Without your support and guidance I would not
be where I am today. I would also like
to thank those who have contributed so much to the study of Right to Work laws,
including Baird, Dinlersoz, Ellwood, Fine, Greer,
Should a state adopt a Right to Work law? This question has been and continues to be hotly contested. In brief, Right to Work laws prohibit unions from including certain types of union security clauses in their contracts with companies that effectively force the company to make their employees either join the union or at least pay a proportion of their union dues as a condition of employment. Proponents of Right to Work laws point to research that says Right to Work laws have a positive effect on states that adopt them while opponents of Right to Work laws do just the opposite.
The purpose of this paper is to sift through the great deal of research currently available to decide whether a state should adopt a Right to Work law. To make this decision, this paper primarily focuses on how Right to Work laws affect a state’s people: their wages, their employment levels, their morality, their unions, and their wealth. In examining the moral issues associated with Right to Work laws, this paper looks at both the “forced union dues” problem and the “free rider” problem.
After weighing the pros and cons of Right to Work laws this paper finally concludes that Right to Work laws are a net benefit to a state and should be adopted because the benefits to a state’s people outweigh the costs: Right to Work laws create jobs and spur economic activity.
Employees and Right to Work Laws:
Employment Levels 19
Union Dues 26
Unions and Right to Work Laws:
Union Membership 33
Free Rider Problem 36
Companies and Right to Work Laws:
Stockholder Wealth 40
Works Cited 44
Figures and Case Examples
Figure 1: Right to Work Law Adoption Timeline 6
Figure 2: Right to
Figure 3: Full Text of Actual Right
Many brilliant studies have been done on the topic of Right to Work laws. This paper’s goal is not to provide new groundbreaking research, but to provide someone unfamiliar with the Right to Work issue with all of the most current information in an accessible and easy to read format.
a resident of
In order to make it easier for the reader to understand the important concepts a key points learning box found at the end of each section summarizes the main points of that particular section. Additionally, case examples of Right to Work law implementation are included sporadically throughout to provide real world examples of Right to Work laws in action.
· Congressperson: This paper will provide you with the background necessary to understand Right to Work legislation. It will objectively examine the mounds of evidence provided by both proponents and opponents of Right to Work laws, and will conclude with some recommendations and suggestions for your state’s future.
· Union Member: This paper will inform you of the rights you have in both Right to Work and non-Right to Work states.
· Business Owner: This paper will provide you with all the information you need to better understand how your relationship with a union and the relationship of your employees with a union changes when your business is in a Right to Work state.
Right to Work laws, sometimes referred to as Right to Work for less laws, are a hot topic (Clay and Larson). Congress is even considering a national Right to Work bill. The bill, H.R. 391, has over a hundred co-sponsors as of December 2003 (“The Welch”). Congress considered another national Right to Work law in 1996, which was defeated by a filibuster in the senate (Baird, Right to Work Before). The purpose of this paper is to examine whether a state level Right to Work law, is right for your state: “A Right to Work law guarantees that no person can be compelled, as a condition of employment, to join or… to pay dues to a labor union” (“The Right to Work Principle”).
Proponents of Right to Work laws contend that these laws lead to higher wages, create jobs by attracting businesses, improve union accountability, and are morally right because they stop people from having to support a cause in which they do not believe. Opponents of Right to Work laws contend the laws lead to lower wages, hurt unions, lower people’s standards of living, and are morally wrong, because they allow people to receive union representation without paying for it.
of Right to Work laws quote
Organization of Paper:
· Background Section: To fully understand this issue one needs to understand the historical context in which Right to Work laws originated. This section also shows what they look like and how union’s power for exclusive bargaining relates to these laws.
· Employee Section: This section focuses on how Right to Work laws affect workers. First this section examines the effect that Right to Work laws have on worker’s wages. Then it focuses on whether these laws attract businesses and create jobs. After that it will shift its attention to the issue of union dues being used for political purposes.
· Union Section: Here we will look at how Right to Work laws affect unions. We will scrutinize the free rider problem for unions, and will consequently pay particular attention to any changes in union membership and union representation that these laws cause. We will also look at how these laws affect unions’ bargaining power with employers.
· Stockholder Section: This part will examine how Wall Street reacts to Right to Work legislation, which in turn affects people’s net wealth.
· Conclusion Section: In this section we draw upon the analysis from the previous three sections to make a final recommendation about whether or not a state should adopt a Right to Work law.
Most of the 22 states that have Right to Work laws adopted them in the 1940’s and 1950’s after the passage of the Taft-Hartley Act of 1947. The Taft-Hartley Act, which allows states to make Right to Work laws, was enacted in response to the belief that the pro-union Wagner Act of 1935 gave unions too much power (“Taft-Hartley Act”). The Wagner Act gave and still gives unions the power of exclusive representation, which allows them to act as the voice of all of a company’s employees if the union can get more than fifty percent of the employees to vote for a union: “Thus, if 100 employees are in the collective bargaining unit and only ten decide to vote, then the union only needs to get six votes in order to represent all 100 employees” (Court and Hunter). After a union gains the power of exclusive representation they will often persuade employers to include union security clauses in their collective bargaining agreements. Prior to the Taft-Hartley Act union security clauses could come in three different forms. Each form would make the employer one of the following types of shops (Court and Hunter):
· Agency Shop: The union’s contract does not mandate that all employees join the union, but it does mandate that the employees pay union dues.
· Union Shop: The union’s contract requires that all employees join the union within a specified amount of time of becoming employed.
· Closed Shop: The union’s contract mandates that the employer only hire union members.
The Taft-Hartley Act of 1947 outlawed the closed shop arrangement. Moreover, section 14(b) of this Act made Right to Work laws legal and gave states the power to pass laws to outlaw both agency and union shops: “Nothing in this Act shall be construed as authorizing the execution… of agreements requiring membership in a labor organization as a condition of employment in any State…in which such execution or application is prohibited by State or Territorial law” (Court and Hunter).
If one lives in a state without Right to Work laws and one’s employer is unionized as an agency or union shop, one would be required to join the union or at least pay union dues. The employee would also be represented by the union, and bound by the union’s contract. On the other hand, if one lives in a Right to Work state, and one’s workplace is unionized, one would generally still be represented by the union and bound by the union contract, but would not be required to join the union or pay union dues.
Key Points – Introduction
Figure 1: Right to Work Law Adoption
Note: Delaware (1947), New Hampshire (1949), and Indiana (1965) all enacted Right to Work laws in the years within the parentheses, but are not listed above, because they have since repealed these laws.
Figure 2: Right to
Employees and Right to Work Laws: Wages
Theoretical Effect on Wages:
The effect of
Right to Work laws on wage levels is ambiguous from an economic point of view (
Unions have an effect on the wages paid to both the union employees and the non-union employees in an economy, but their net effect is unclear, because while they increase the wages of the union workers, they decrease the wages of the non-union workers, because it is not known which effect dominates: “In the usual equilibrium models of the supply and demand for union services, increases in the union wage reduce employment in the union sector causing spillover increases in employment and decreases in wages in the nonunion sector” (Moore).
Nominal Wages evidence:
Opponents of Right to Work like to point out that the average wage in Right to Work states is lower than the average wage in non-RTW states. For example, on the issue section of AFL-CIO’s website, they cite the Bureau of Labor Statistics, 2001: “The average worker in a ‘right to work’ state earns about $5,333 less a year than workers in other states” (“RTW States Are”). Proponents of Right to Work do not dispute the above statistic, but suggest that the statistic is overly simplistic, manipulative and misleading.
On a nominal basis, wages are lower in Right to Work states, but proponents argue, and this paper confirms, that once the above statistic is adjusted for cost of living, real spending power is at least the same and perhaps higher in Right to Work states. For example, when the National Institute for Labor Relations Research used The Economist Magazine’s data to adjust the poverty rate in 2001 for cost of living they found that this adjusted rate was 10.8% in states with Right to Work laws as compared to 12.9% for non-RTW states (“Independent Study”). Now we will turn out attention to other studies of the 1970’s, 1980’s and 1990’s which look at the wage issue and adjust for differences in cost of living.
REVIEW OF PAST STUDIES:
Jefferson Moore, chaired economics professor from
He does critique the methodology of Carroll and Malhotra studies, which used simultaneous equation models, as being extremely complicated models which make it “impossible to compare their results with the other studies” and he particularly critiqued Wessel’s study as being very “sensitive to model specification” (Moore).
exhaustive review of Right to Work literature (his paper cites over 90 sources)
he concludes: “The empirical evidence accumulated in the 1970s and 1980s
indicates that Right to Work laws do not have strong lasting effects on wages.
Most researchers find that Right to Work laws have no impact on union wages,
nonunion wages, or average wages” (
Review of Recent Studies:
Most Recent Study Unfavorable to Right to Work Laws: Mishel 2001
Lawrence Mishel, president of the Economic Policy Institute, completed a study in 2001 which found that the mean nominal “effect of working in a right-to-work state results in a 6% to 8% reduction in wages” with the average reduction being 6.5%, and that even after controlling for cost of living differences, there is still a 3.8% wage penalty for living in a Right to Work state (Mishel). (Note: The Economic Policy Institute receives their funding from unions, mainly the AFL-CIO.)
Mishel’s study was based on a sample of approximately 150,000 salaried workers between the ages of 18-64, with average hourly wages of $15.54 and median hourly wages of $12.25 (Mishel). What made this analysis unique is that it used a regression model to pair and then compare the wages earned by similarly situated workers in Right to Work and non-RTW states. The study used the workers’ industry, occupation, and demographic information to group workers into comparable groups.
Problems with Mishel’s Study:
Firstly, the author of the study conceded that his adjustments for cost of living were at best questionable: “Estimates from this… regression model [controlling for cost of living] are suspect given the lack of an established series for controlling for regional, interstate, or intra-state costs of living” (Mishel). If the adjustments for cost of living were biased one way or another, it could drastically skew the results of his study.
Additionally, trying to match workers based on their professions may inherently bias the results of the study when trying to ascertain the effect that Right to Work laws have on wages. Doing this ignores the fact that becoming a Right to Work state may in and of itself have an effect on the composition of the jobs in a state (Greer, Senior Research).
It is easier to understand this point if we imagine two towns, Town Right to Work and Town Non-RTW. We will assume for the sake of analysis that at Time 0 both towns have only four residents, and that neither town has Right to Work laws. In each town one person is unemployed, two people are machine workers (“machine worker new” has two years experience, “machine worker experienced” has ten years experience), and one person is a manager. The unemployed person makes no money, machine worker new makes $3, machine worker experienced makes $6, and the manager makes $8. The results at time 0 are summarized below:
Town Right to Work @ Time 0 Town Non-RTW @ Time 0
Now at Time 1, Town Right to Work decides to pass a Right to Work law. Passing the Right to Work law affects the composition of the job market in Town RTW. The Right to Work law convinces a company to come into town RTW, and 1 new Machine Worker New job is created in Town RTW. Everything else remains unchanged.
Town Right to Work @ Time 1 (Passed Right to Work law) Town Non-RTW @ Time 1
Note, at time 1, Town non-RTW did not decide to implement a Right to Work law so their employment remains unchanged.
Look at the table above. Town RTW’s law changed the composition of the jobs in its economy, increased the total wages earned in its town, got one new person a job, and did not decrease anyone’s wages. Town non-RTW has not increased the wages earned by its town or created any new jobs. However, if you compare the average wages earned by machine workers between towns—as does Mishel’s study—it appears that town Non-RTW is doing better than town RTW: Town RTW’s average machine wages are $4.0 whereas Town non-RTW’s average machine wages are $4.5.
This example is simplistic, but it reveals a fundamental problem with trying to match workers based on their industry. In doing so, one misses the effects that Right to Work laws can have on the composition of jobs within a particular state. Next this paper will examine recent studies which are favorable towards Right to Work laws. (Note: no other recent studies characterize Right to Work laws effect on wages as negative.)
Recent Study Favorable to Right to Work Laws: Kendrick 2001
One recent 2001
study by David Kendrick
compared the after-tax wages people earn in Midwestern Right to Work states
(IA, KS, NE, ND) to the after-tax wages people earn in Midwestern non-RTW
states (IL, IN, MN, MO, WI), and found after-tax wages “to be $1,145 higher in
Right to Work states” (Wilson). There
are two problems, however, with this study.
Firstly, one could contend that the studies choice of non-RTW states
could be suspect. It is probably not
just a coincidence that the study does not include the state of
Note that this paper ignores the fact that Right to Work states have, on average, lower personal state tax rates, and the fact that non-RTW states, on average, have better government provided social services because these differences are a result of tax rate differences and not Right to Work laws (Greer, Senior Research).
Recent Study Favorable to Right to Work Laws: Wilson 2001
William Wilson, PhD
Recent Study Favorable to Right to Work Laws: Greer 2004
A recent study by Stan Greer, Senior Research Associate of the National Institute for Labor Relations Research, is of particular interest because of the credibility and apparently unbiased nature of the sources the study used. The study took the Bureau of National Affairs’ full-time wage employees earnings for all 50 states and adjusted this wage data for cost of living with Dr. Nelson’s Interstate 2001 Cost-of-Living Index. The study concluded that “when the 2001 mean weekly earnings for full-time wage and salary employees… are adjusted for differences in living costs… employees in Right to Work states earned a mean of $675 a week… compared to $660 in non-Right to Work states” (Greer, Real Earnings).
What makes this study so interesting is that Dr. Nelson’s Interstate 2001 Cost-of-Living Index is created by top researchers for the American Federation of Teachers (AFT), allies of the AFL-CIO (Greer, Real Earnings). The AFT would, if anything, be biased towards unions and against Right to Work laws. Similarly, the Bureau of National Affairs is an unbiased, objective government agency so its data would also seem to be beyond reproach. Nevertheless, this study finds only a relatively small, 2% advantage for Right to Work states in terms of weekly-adjusted real earnings.
Employees and Right to Work Laws: Employment Levels
The effect of Right to Work laws on levels of an employment in a state is a particularly salient issue, and deserves a great deal of attention. This section examines unemployment rates, poverty levels, overall job creation, and manufacturing job creation.
Unemployment and Poverty Levels:
The Mackinac Center for
Public Policy’s 2001 Right to Work study, which compared the employment rates
in Right to Work and non-RTW states, found that “from 1978 through 2000, average
annual unemployment was 0.5 percent lower in Right to Work states”
(Wilson). Moreover, they found that
General and Manufacturing Job Creation:
Just by looking at the raw aggregate numbers from the U.S. Bureau of Labor Statistics it is quite clear that more jobs have been created in Right to Work states than in non-RTW states over the past twenty years: “Between 1982 and 2002 the average right-to-work state increased its job rolls by 62 percent. By contrast, the average non-right-to-work states increased jobs by only 42 percent” (Kersey). Only looking at the most recent information, data from 1992 to 2002, the trend continues: Right to Work states’ job creation was 26% whereas non-RTW states’ job creation was only 18% (Kersey).
Results from approximately the same twenty-year period for manufacturing jobs paints an even more negative picture for non-RTW states because, instead of a net increase in jobs, non-RTW states have been experiencing a net decrease in jobs. On the other hand, Right to Work states have been experiencing a net increase in jobs: “Right-to-work states created 1.43 million manufacturing jobs, while non-RTW states lost 2.18 million manufacturing jobs [and] Michigan lost more than 100,000 manufacturing jobs” (Wilson).
Some may argue that there is a correlation, but not causation. They might also argue that there has been a gradual population shift from non-RTW states to Right to Work states and that the change in manufacturing jobs just mirrors the gradual regional shift in the U.S. population or that even without Right to Work laws, Right to Work states are relatively anti-union, and would consequently be more appealing to firms hoping to prevent unionization (Holmes). When studying something retrospectively it is almost always impossible to definitively say that variable X is the cause of variable Y. Therefore it is important to note that there are other factors, which may in part have contributed to Right to Work states’ apparent superior performance compared to non-RTW states’ in terms of job creation. However, given the overwhelming amounts of available evidence linking Right to Work laws with job creation it appears likely that Right to Work laws do to a certain extent affect job creation, unemployment levels, and poverty levels in a state. This is especially true because it appears that a company’s decision on where to locate is affected by the presence of Right to Work laws.
Companies’ site selection affected by Right to Work Laws:
The above data on job creation and unemployment rates is interesting, and it does appear that a state’s decision to adopt a Right to Work law may bring jobs and companies to the state. The question is why is this the case. This section focuses on whether businesses consider Right to Work laws as a factor when deciding where to locate.
Automaker Plant Locations:
According to The Industrial Outlook (2003) all new
auto plants built in the
This limited example is supported by the findings of the important researchers on Right to Work laws—Tannenwald 1997, Moore 1998, and Holmes 1998—who collectively suggest that “RTW has been positively related to plant location, the rate of business formation, manufacturing employment, and other dimensions of state economic development”(Reed, How Right to Work Laws Affect).
Holmes Study Findings:
Holmes 1998 study examined changes in the levels of manufacturing activity when one crosses state lines between Right to Work and non-RTW states. He found that “relative manufacturing employment declines by one-third as one moves from within 25 miles of the border in the Right to Work state to within 25 miles of the border in the non-RTW state” (Wilson). He also found that ”eight of the 10 states with the highest manufacturing employment growth rates are [RTW] states. All 10 states with the lowest growth rates are not [RTW] states” (Reed, Does Right to Work Boost).
Tannenwald Study Findings:
Tannenwald is an economist at the Federal Reserve Bank of
I identified 11 studies that estimate the impact of right-to-work laws on either plant location, the rate of business formation, employment, or some other manifestation of economic development…Eight of them find that the existence of a right-to-work law exerts a positive, statistically significant impact on economic activity. (Reed, Does Right to Work Boost).
In summary, all the available data and research suggest that Right to Work laws do affect business location decisions. The next question is “why do they affect the decisions?” One reason is that it appears that Right to Work states employees’ are more efficient and productive. The next section explores this idea further.
Labor Productivity Theoretical:
Proponents of Right to
Work laws argue that one of the positive effects of these laws for companies is
that they increase labor productivity by increasing unions’ accountability to
their members. They contend that in
Right to Work states’ unions can no longer take their members for granted
because no one has to pay union dues. In
order to survive, unions in Right to Work states must become “more responsive
to their members and more reasonable in their wage and work rule demands” (
Labor Productivity Actual:
Concrete data does support proponents of RTW’s claim
that Right to Work states have higher productivity. For example, the
Employees and Right to Work Laws: Forced Union Dues
Unions Political spending and activism:
Some proponents of Right to Work laws argue that states should pass Right to Work laws not only for the financial implications, but also for the ideological implications. These proponents contend that in non-RTW states many union members are forced (or tricked) into paying their full union dues, and that these dues are in part used to support political candidates and ideologies which they do not agree with. To a certain extent, proponents of Right to Work laws do have a point here, especially when one looks at unions’ political campaign contributions and support versus the political affiliation of union members.
Union Members Political Affiliation vs. Union Political Activism:
Unions are active political organizations. For example, in the previous presidential campaign the AFL-CIO distributed more than 31 million pro-Democratic leaflets, and made nearly 12 million phone calls to Union members (“The Union Difference”). They did nothing of the sort for Republican organizations. However, according to the AFL-CIO’s own research, in the past presidential election union members only supported Democrats over Republicans “by a margin of 63 percent to 32 percent” (“The Union Difference”).
Some proponents of Right to Work argue that this means that nearly 1 out of 3 union members who were paying full union dues could have their money being used for political purposes which they do not agree with. They argue this is still true today even after campaign finance reform, and that this is wrong.
Even after campaign finance reform unions can still be active political players. There are numerous loopholes that allow unions to bypass campaign finance reform and donate money to “independent” issue organizations called 527 organizations. However, many unions do have a policy whereby the only union fees directly used for political purposes are the fees from union members who want this done. For example, the political portion of the AFL-CIO’s site is not supported by general union dues but only by union members who wish to support the union’s political ideology. Moreover, as a result of the Beck decision it is difficult, if not nearly impossible, to argue that in non-RTW states union members forced union dues are all being used for political purposes.
The beck decision:
The Beck decision was a landmark 1988 Supreme Court decision (Communications Workers v. Beck) in which the Court found that union security agreements do not “permit a union, over the objections of dues-paying nonmember employees, to expend funds so collected [pursuant to a union-security clause] on activities unrelated to collective bargaining, contract administration or grievance adjustment” (Page). Note that when one becomes a “Beck Objector” and does not pay full union dues, one effectively quits the union, becomes a financial-core represented worker, and gives up the right to vote in union elections. The chart below highlights some activities for which Beck Objectors must pay (“Legislative”).
In plain English, the court found that even in non-RTW states, people cannot be forced to pay the proportion of union dues being used for political purposes. For example, if a person were a member of the UAW and wanted to become an objector he or she could do so by following the UAW’s instructions reprinted below:
comply with the Beck decision, the UAW honors objections by nonmembers of the
WORD GAMES AND THE BECK DECISION:
At first the Beck Decision seems simple enough with clear implications but word games complicate matters. The Beck decision is problematical because many union members are not aware of their rights to become Beck Objectors. For example, a 1997 national voter survey found that 67% of union members were not aware of their Beck rights (Boehm). To date it appears that unions are still fighting hard to keep their members in the dark about these rights.
Unions’ desire to keep workers in the dark about their Beck rights in the 21st century became apparent in 2001 when President George W. Bush signed Executive Order 13201, which required all “companies with federal contracts to inform [their 12 million workers] of their rights” under the Beck Decision (“Bush Urged”). The UAW Labor Employment and Training Corporation then challenged and successfully won an injunction against the order “on the grounds that the action was preempted by Congress” (“Bush Urged”). One might question the motives of the UAW for wanting to keep their members in the dark about their Beck rights. Additionally, one could logically conclude that the union would not have cared about this executive order unless many union employees were not aware of their rights. In short, the union’s behavior suggests that many workers are still unaware of their rights.
Ambiguous Wording in Union Contracts:
It is not hard to imagine that many workers might be confused about their Beck rights when one examines the ambiguous wording used in some employees’ contracts. For example, the United Paperworkers International Union “have a union security clause that requires all present maintenance and production employees to ‘become and remain members of the union in good standing’ as a condition of continued employment” (Baird, The Myth). The fact that the contract states that employees must “remain members of the union in good standing” as a condition of employment would make it seem as if one could not quit the union as a Beck Objector and only pay partial union dues, even though one can do just that.
The issue as to
the legality of the ambiguous contract wording was brought to the Sixth Circuit
Court of Appeals on September 8, 1997. (The Sixth Circuit of Appeals serves
However, in 1998 the U.S. Supreme Court overturned the Sixth Circuit Court of Appeals decision with their ruling in Marquez v. Screen Actors Guild, when a unanimous Court ruled that “collective bargaining contracts do not have to spell out what it means to be ‘in good standing’ because requiring membership to be specified in a contract would force all terms to be specified. There would be no limit” (Marquez v. Screen). Therefore, as the law currently stands unions can still legally use ambiguous wording in their contracts to make it appear as if one must remain a member of a union to keep one’s job.
This issue is only relevant in non-RTW states in which unions are allowed to use these ambiguous security clauses. If a state has a Right to Work law these ambiguous clauses are illegal and cannot be included in union contracts. Consequently, one added benefit of Right to Work laws is that they ensure that employees are not tricked into paying union dues by semantics.
DIFFICULT TO EXERCISE BECK RIGHTS:
In theory the Beck decision lets union employees easily avoid paying the proportion of union dues that are being used for political purposes. Unfortunately, becoming a Beck Objector is not always easy. There have been documented cases in which Beck Objectors have faced harassment and have been given misinformation. Consequently, proponents of Right to Work suggest this is another reason to adopt a Right to Work law. With a Right to Work law a state’s citizens do not have to go through the ordeal associated with becoming Beck Objectors.
Harassment & Unions:
William Goodling, past chair of the House Education and the Workforce Committee, held a number of hearings on “problems encountered by workers trying to assert their rights in the workplace” (Boehm). After his investigation in 1999 he concluded: "We heard worker after worker testify about the incredible burdens they have faced trying to exercise their rights under current law" (Boehm). The quote that follows is the testimony of Kerry Gipe. It is provided as an example of the difficulties people faced when trying to exercise their rights:
The union began an almost immediate smear campaign against us...portraying us as scabs and freeloaders….We had our names posted repeatedly on both union property and company property accusing us of being scabs. We were accosted at work, we were accosted on the street. We were harassed, intimidated, and threatened. We were told our names were being circulated among all union officials in order to prevent us from ever being hired into any other union shop at any location. (Boehm)
Now the above case is an extreme and inflammatory example that may not be reflective of the general experience most people have when they try to exercise their Beck rights. The above example is from the Congressional Record, but should be taken with a grain of salt as it was highlighted by an organization that is arguably quite anti-union. They most likely searched through the entire congressional record to find the most egregious case possible. Most unions do not behave in this manner. The UAW makes it very clear and very easy to become a Beck Objector.
That being said, an added benefit of having Right to Work laws is that they make it harder to isolate and harass people for deciding not to pay union dues. In a Right to Work state, not paying any union dues is more mainstream, which makes harassment of non-paying members more difficult.
More recently, in 2001 the House Committee on Education and the Workforce’s Subcommittee on Workforce Protections heard a case on Mark Simpson’s experience with attempting to exercise his Beck rights. Mr. Simpson tells a very compelling tale. He starts out by saying he “used to be a union loyalist” and “was even a union shop steward” (Simpson). He then found out that some of his union dues were being used to support causes he did not believe in, so he tried to exercise his Beck rights. He gave notice to his union in June 2000 that he wanted to exercise his rights, and it took his union six months to respond to his request. Mr. Simpson testified that “Their response said that only 1.3% of their spending was eligible to be rebated. The other 98.7% were bargaining expenses, chargeable to me as agency shop fees even after my exercising my Beck rights. And if I didn't pay them, I was fired” (Simpson).
Eventually Mr. Simpson’s situation was resolved, but his situation demonstrates the procedural hurdles people can face when they attempt to exercise their Beck rights. First and foremost, they have to get their unions to respond to them, and then they have to make sure that they are getting a large enough refund and that the union is not overcharging them for the services they provide. The only way to perfectly ensure that people do not face these procedural hurdles and that allocation percentage used by the union is not too high is for a state to adopt a Right to Work law that would make the aforementioned points moot.
Unions and Right to Work Laws: Union Membership
STUDIES OF THE EFFECTS OF Right to Work LAWS ON UNIONIZATION RATES
The most current
information on Right to Work laws’ effect on unionization rates is at best
studies by Hunt & White 1983, Moore 1986, and Koeller 1985-1992-1994, which
adjust for taste factors “such as congressional voting [records] or public
sector bargaining laws,” have actually found that Right to Work laws usually
have no effect on the extent of unionization within a state (Moore). A
caveat to these studies, however, is that there is the possibility the Right to
Work variable in these studies mirror the taste variables mentioned above,
which would make their results meaningless (
In summary, the evidence on Right to Work laws affect on unionization within a state is unclear. Many studies have been done on this topic (Wessels 1981, Farber 1984, Moore 1986, Fines & Ellwood 1987, Koeller 1985-1992-1994). Some used stock models; some examined organizing success while others adjusted for taste variables. However, one can be fairly confident that Right to Work laws either have no effect on the proportion of union membership within a state or decrease it by somewhere between zero and eight percent.
I. Okalahoma Union Membership and Representation rates from 2000 through 2003
II. Okalahoma percentage change in union membership rates relative to 2000
III. National average percentage change in union membership relative to 2000
FREE RIDERS AND Unions:
One of the AFL-CIO’s main philosophical complaints about Right to Work laws is stated on their website: “A ‘right to work’ law would allow nonmember workers to get all the benefits of union membership and pay nothing, while forcing unions and their members to foot the bill for those not willing to pay their share” (“RTW States Are Rest.”) This argument appeals to one’s common sense: It does not seem fair to require unions to provide benefits for free to nonpaying member or “free riders.”
Right to Work laws and Moore as well suggest that the above statistics
overstate the positive impact of Right to Work laws on true free riding,
because the above analysis treated “all covered nonunion members as free
Now we will turn our attention to the question of whether unions even have to represent free riders at all. On the PAA-AFL-CIO’s website, there is an area containing a question and answer section about Right to Work laws. In this section the union asks, and then replies to a question about whether or not unions are required to represent all workers, even free riders:
Question: Is the union required to represent all employees—members as well as nonmembers—in a company with a union contract?
Answer: Yes. Federal law requires a union to represent all employees where the union has a contract with the employer. [In] 'right-to-work' states, where many nonmembers often pay nothing, the union must still represent them just the same as they represent dues-paying members.(“The Big Lie About RTW”).
Now the above statement is partially true and partially misleading. The above question and answer would be totally true if the question included the words “exclusive representation” before the word “contract.” Federal law allows unions the special power to create “exclusive representation” agreements with employers. If they choose to create these exclusive representation agreements, they are indeed required to represent all members, both dues paying members and free riding members alike. However, it does not appear that unions are actually required to set up these exclusive agreements (Greer, Union Representation).
Some proponents of Right to Work laws rightfully argue: “Nothing in federal law prevents union officials and employers from negotiating contracts in which the employer recognizes the union for its members only” (Greer, Union Representation). As support for this claim these proponents point to the fact that Roberts' Dictionary of Industrial Relations has an entry for Bargaining Agent, for Members Only, including a sample members-only contract clause (Greer, Union Representation). They also cite William Gould’s 1993 book, Agenda For Reform, as evidence. Gould, a former union lawyer, Stanford law professor, and former Chairman of the National Labor Relations Board, wrote in his book “[that federal] law permits 'members-only' bargaining without regard to majority rule or an appropriate unit and without regard to exclusivity" (Greer, Union Representation).
Lastly, and most persuasively, these proponents of Right to Work cite Justice William Brennan’s 1962 opinion for the unanimous U.S. Supreme Court in Retail Clerks v. Lion Dry Goods which acknowledged not only exclusive contracts representing all of the workers but also the possibility of members-only contracts representing some of the workers: (Greer, Union Representation)
Section 301(a) of the Labor Management Relations [Taft-Hartley] Act, 1947, which confers on federal district courts jurisdiction over suits "for violation of contracts between an employer and a labor organization representing employees in an industry affecting" interstate commerce, applies to a suit to enforce a strike settlement agreement between an employer in an industry affecting interstate commerce and local labor unions representing some, but not a majority, of its employees. (Greer, Union Representation)
The term "labor organization representing employees," as used in 301(a), is not limited to labor organizations which are entitled to recognition as exclusive bargaining agents of employees. (Greer, Union Representation)
Therefore, it appears that unions are not required by law to enter into exclusive bargaining agreements with their employers, and that if they wanted to they could form member-only bargaining agreements in which they only represent their members, only their members are required to pay union dues, their contracts only pertain to their members, and other people are allowed to work for the employer independent of the union.
By creating member-only bargaining agreements, unions would be able to eliminate their free rider problem. However, by creating member-only bargaining agreements unions may feel that they lose some of their bargaining leverage. The question as to why unions are not choosing to do so is an interesting one, which goes beyond the scope of this paper. In summary, if unions were willing to bargain for member-only agreements they could avoid the free rider problems associated with Right to Work laws.
Companies and Right to Work Laws: Stockholder Wealth
RTW laws and STOCKHOLDER wealth:
The stock market is no longer a place where just the rich invest their money. In the 21st century more and more Americans are counting on stock performance to fund their retirements: In 2003 half of all Americans are invested in the stock market (“Politics as Warfare”). Therefore, if the stocks of companies in a state benefit from adopting Right to Work laws, a state’s citizens—who invest a disproportionate amount of their money within their own state—also benefit from the adoption of Right to Work laws. For this reason, this paper now focuses on a unique and fascinating study of this topic published by the Southern Economic Journal in 2000.
The study looked at the stocks of businesses from
In order to
quantify their results they made three test date ranges. Test 1 for
above results suggest that as a direct result of
the study’s results for
This paper has finally reached the end of its long journey into the world of Right to Work laws, and is now ready to answer the question: Should a state adopt a Right to Work law? In analyzing that question this paper has primarily focused on how adopting a Right to Work law impacts what matters most to a state: its people. And as unions and companies affect people indirectly it has analyzed them as well.
The main reasons people claim a state should not adopt Right to Work laws are that they lead to lower wages, are damaging to unions, and are morally wrong because they allow people to receive union services without paying for them. This paper’s critical analysis of Right to Work literature has provided strong evidence that the first two potential drawbacks of Right to Work laws are red herrings. Numerous credible studies have shown that real wages in Right to Work and non-RTW states are about the same, and if anything Right to Work states have slightly higher real wages. Additionally, although Right to Work laws do make it easier for people to free ride or receive union services without paying for them, the best estimate available suggests the proportion of people who are truly taking advantage of unions in this way is insignificant. As to how Right to Work laws affect union membership, the jury is still out. Most research suggests that total union membership within a state could decrease by between zero and eight percent after a state adopts a Right to Work law. This would be the most significant negative effect to a state of adopting Right to Work laws. However, it seems fairly safe to say that the possible reduction in union size does not negatively affect workers’ wages.
The main reason to
adopt Right to Work laws is that Right to Work laws spur a state’s economic
activity, lead to lower unemployment and higher job growth, and make a state
more attractive to business. The aforementioned benefits are supported by the
preponderance of available research on this topic, and by the experiences of
the two most recent adopters of Right to Work laws,
When one weighs the benefits of Right to Work laws, mainly stronger economic growth and new job creation, against the negative effects of Right to Work laws, mainly the possibility of somewhat weakened unions, the choice is clear. In either case the real wages people earn are the same, but the economic growth and job creation are different. States wanting to be well positioned for success in the 21st century should adopt a Right to Work law.
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