2012 May Be the Year for Right-to-Work

Kiely		By Patrick J. Kiely, IMA President, pkiely@imaweb.com, 800.462.7762, ext. 228 or 317.217.6990 Predicting what will happen in a legislative session is always a risky proposition. A good rule of thumb is to expect the unexpected. That said, early signs indicate that the 2012 session of the Indiana Legislature will be dominated by so-called “right-to-work” legislation. That is, the enactment of a law securing the right of employees to decide for themselves whether or not to join or financially support a union. Indiana has been down this road before. In 1957, Indiana became a right-to-work state, only to repeal the provision in 1964. Indiana is the only state to have adopted RTW and then repealed it. The Issue: Indiana is presently a non-right-to-work or “forced-unionism” state. Indiana is one of 28 states (see map below) that allow labor unions to compel, as a condition of employment, individual employees to become union members or pay union fees in lieu of
membership, regardless of whether or not that person wants to join a union. This status violates an individual’s right to free association. It also adversely impacts Indiana’s economy. It is estimated by economic development professionals (i.e., those who seek to bring additional business investment into Indiana) that at least one-third of business investment prospects will not consider investment in a non-right-to-work state.

Significantly, right-to-work legislation is supported by Indiana voters. According to a statewide voter poll conducted by Market Research Insight in December of 2010, 69 percent of Indiana voters favor right-to-work, with only 23 percent opposing (41 percent strongly support, 13 percent strongly oppose). In the poll, support for RTW was strong across all demographics – age, income, gender, occupation and political affiliation: Republicans (80 percent support, 13 percent oppose), Independents (74 percent support, 13 percent oppose), Democrats (53 percent support, 37 percent oppose). The poll also found that 44 percent of Indiana union-member households support right-to-work.

Origins of Right-to-Work: During the Roosevelt Administration, as part of the New Deal legislation in 1935, Congress passed the National Labor Relations Act (Wagner Act). Section 7 of the act gave unions the right to organize and the right to bargain as a collective entity. The Wagner Act created the National Labor Relations Board (NLRB), with the primary responsibility of enforcing Section 7 and mediating labor disputes.

Besides guaranteeing the rights of organized labor, the Wagner Act also contained several provisions strengthening a union’s bargaining power vis-à-vis management. The legislation condoned the establishment of “closed-shops” – businesses where management must require union membership before an individual may be employed – in addition to “union shops,” where unions themselves force membership once an individual is hired.

The Labor Management Relations Act (Taft-Hartley Act) of 1947 reversed some of these provisions in order to facilitate labor-management relations. In particular, the Taft-Hartley Act outlawed the establishment of “closed shops” and gave states the power to outlaw “union shops” by enacting right-to-work legislation. To date, 22 states have enacted such legislation, the most recent being Oklahoma in 2001.

Reasons for Indiana to Enact RTW:

• Workers’ Rights. To not have a right-to-work statute means that in a unionized workplace individuals are required to either join the union or pay “agency fees” to that union to remain employed in that workplace. Currently more than 14,000 workers in Indiana are employed in union shops but have made the choice not to join the union. Nonetheless, these individuals are compelled to financially support the organization they have decided not to join because Indiana has not enacted right-to-work legislation.

• Enacting right-to-work legislation will raise, not lower, the growth in real per capita income in Indiana. While this may seem counter-intuitive to some, numerous studies have confirmed this fact. The most recent study, Right-To-Work and Indiana’s Economic Future, 2011, (Indiana Chamber of Commerce Foundation) compared the growth in real per capita income in the states during the period 1977 to 2008. They found growth rates as follows:
Indiana, 37.2 percent; Non-RTW States, 52.8 percent; U.S., 54.7 percent; RTW States, 62.3 percent.

• Enacting right-to-work legislation will increase job growth. The study noted above measured state job growth from 1977 to 2008 as follows: Indiana, 42.8 percent; Non-RTW States, 56.5 percent; U.S., 71 percent, RTW States, 100 percent.

• Enacting right-to-work legislation will help grow economic activity in Indiana. To again excerpt from the study noted above, Indiana’s gross state product in 2008 was $269 billion. If RTW had been enacted in 1977, the state’s GSP for that year would have been an estimated $292 billion, a $23 billion (or 8.6 percent) increase. Indiana’s gross state product per capita would have increased from 29th among the 50 states to 22nd.

How is RTW in Indiana Different from Recent Labor Legislation in Ohio? On Election Day 2011, voters in Ohio overwhelmingly supported a referendum question, which overturned the enactment of legislation to restrict collective bargaining rights for state and local public employees in Ohio. Is there a similarity between the suggested right-to-work legislation in Indiana and what voters reacted to in Ohio? The answer is clearly no. The Ohio enactment dealt with negotiating wage and benefit levels for public employees. It was enacted in an effort to close substantial budget shortfalls at both the state and local levels in Ohio. Right-to-work in Indiana is driven by economic development concerns. It can be demonstrated that enacting right-to-work increases economic activity, promotes investment and job growth, as well as helps to grow real per capita income.

Moreover, Ohio’s enactment impacted all public employees in that state, a huge number of workers. Ohio has more than 725,000 public employees. By contract, Indiana has less than 100,000 public employees. In Ohio, 46 percent of state and local workers are covered by union contracts. In Indiana, the suggested RTW legislation is private-sector based only. The public sector is not impacted. Indiana has about 2.1 million private-sector workers, only about 178,000 (8.9 percent) of whom are union members. As noted above, a number of union households support right-to-work.

In short, the Ohio enactment was seen as taking existing bargaining rights away from a large segment of the Ohio workforce. The Indiana-suggested proposal will be geared toward increasing private-sector employment opportunities.

STATE OF INDIANA OFFICE OF THE GOVERNOR

Mitchell E. Daniels, Jr. Governor State House, Second Floor Indianapolis, Indiana 46204

Governor Announces Support of
Indiana Becoming a Right-to-Work State

Governor Daniels issued a statement on December 15, 2011, about right-to-work in Indiana. Here is his statement:

After a year of study and reflection, I have come to agree that it is time for Indiana to join the 22 states which have enacted right-to-work laws.

Right-to-work says only that no worker can be forced to pay union dues in order to keep a job. Lack of that simple freedom to choose costs some workers money they’d rather keep, but it also costs something even larger: countless
middle-class jobs that would come to Indiana if only we provided right-to-work protection.

Seven years of experience at our Indiana Economic Development Corporation has confirmed what every economic development expert tells us: despite our top-ranked business climate, Indiana gets dealt out of hundreds of new job opportunities because we have no right-to-work law. When a business allows us to compete, we win two-thirds of the time. But between a quarter and a half of the time, we don’t make the first cut due to this single handicap. Knowing how many additional jobs we could be capturing is what has persuaded me that we must enact this reform.

I have listened with respect to the advocates of compulsory dues and looked into their arguments, but they just don’t hold up. Right-to-work states have, if anything, better rates of worker safety. The vital right to organize is totally unaffected; every right-to-work state has significant union presence, and some have higher rates of unionization than Indiana does.

If the national economy were not in such terrible condition, we might not find this step necessary, but in this time when so many are jobless, or struggling, it would be irresponsible not to act when we know that thousands of good jobs are at stake.

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