Thursday, March 26, 2015

"Right To Work" is just a race to the bottom

The Wall Street Journal is reporting that yet another state has passed a law that allows non-union workers to enjoy the benefits of union workers, without paying the dues. It's a fantastic plan to kill the unions in that state. Which state is it? Michigan. You know, the state with Motor City where the Big Three car makers (with unions) started out.

Their goal? To suppress wages in the faint hopes that with lower wages more jobs will be created. You might want to avoid that state if you're considering moving.

The WSJ is very tentative in their wording. They seem to think that it's difficult to determine if there is really a difference between Right To Work economies and the other kind, you know, the union kind. Nevermind that states that have raised the minimum wage have performed very well since doing so. There is considerable data to show at least some correlation with an improved local economy from a higher minimum wage. Business For A Fair Minimum Wage is website dedicated to this cause and they have recent evidence to show that raising the minimum wage does not cause job loss. So why all this effort to abuse unions?

Economist Dean Baker nails the logic of the Right To Work laws here. The economics are simple and devastating in their effect. He calls it "representation without taxation". Conservatives will hail Michigan's move as a vote of confidence in the free market. Actually, this is nothing of the kind. The government is intervening in the market, but on behalf of and in favor of employers.

Consider that unions should have the right to contract, just as individuals do. The new law impairs the right of a group of people to contract for work, nothing more. If the law precludes the right to negotiate a contract that requires everyone to pay the dues for the same benefits, that's an impairment of the right to contract. I suspect that our courts would agree. As Baker notes, in most states, you can get a job and work with a union shop, but you don't have a right to the union benefits. In a free market, this is what one would expect.

Right To Work laws amount to socialism of a different kind. The unions work hard to secure rights, benefits and pay and that costs money. When a worker enjoys the union benefits without paying the dues, the union suffers and soon, can no longer finance it's operations. This is the goal.

So if workers can't organize, how come businesses can? Ever heard of the Grocery Manufacturers Association? How about SMACNA, The Sheet Metal and Air Conditioning National Association? Many businesses are member of associations dedicated to supporting businesses. Now we wouldn't call them a union of businesses, but if they can join an association, they can "collaborate" and pool their resources to achieve political and economic goals.

Yet, we never see headlines about how some law or other would decimate their power, now, do we? I sure haven't. If businesses can join together in an association, why they must be acting like people, just like an association of people acting in union together. It seems funny that so few have questioned this collection of power in the hands of business. Well, not that funny.

Suffice it to say, when you see that a state has "Right To Work" laws, remember that just means that the government has intervened in the market in favor of the business, against the worker. Nothing more, nothing less. Right to Work laws have nothing to do with a free market, and have everything to do with suppressing wages and benefits. On the other hand, right to work laws are great for executives trying to justify a splurge on that vacation home on the coast of Spain.
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