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Right-to-Work on the Move

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Right-To-Work States Enjoying Faster Job Growth

Establishing a right-to-work law, by which employees in unionized workplaces can opt out of paying union fees without being fired, has become a familiar topic in state legislatures in recent years. With West Virginia legislators considering their own right-to-work law this month and similar laws under serious discussion in Kentucky, Missouri, and elsewhere, a question arises: What is the effect of right-to-work on the creation of new jobs?

Private Sector Job Growth

From January 1995 through October 2015, the seven states with the highest private sector job growth were all right-to-work.

Nevada: 66.4%
North Dakota: 65.0%
Utah: 59.8%
Arizona: 54.6%
Texas: 54.1%
Idaho: 49.9%
Florida: 42.2%

During the same period, four of the seven states with the lowest private sector job growth were forced unionization states.

Michigan: 2.9%
Mississippi: 3.2%
Ohio: 5.6%
Illinois: 7.2%
Connecticut: 8.9%
Alabama: 9.0%
West Virginia: 9.2%

Ohio, Illinois, Connecticut, and West Virginia are all forced-unionization states, as was Michigan until March 2013. Since Michigan’s right-to-work law took effect, its job growth ranks 16th of the 50 states.

Before the recent spate of right-to-work laws — Indiana became a right-to-work state in 2012 and Wisconsin adopted right-to-work in 2015 — the last state to implement right-to-work was Oklahoma in September 2001.

Oklahoma’s private sector job growth from September 2001 to October 2015 ranked 23rd of the 50 states, and Indiana’s job growth ranks 21st since Indiana’s right-to-work law took effect in March 2012.

Based on the most recent numbers from the U.S. Bureau of Labor Statistics, the four states with the fastest private sector job growth during the first 10 months of 2015 were Idaho, Nevada, Utah, and Florida, all with a right-to-work law.

Although letting workers choose whether to pay unions is just one policy in a long list of variables affecting job creation, right-to-work states continue to top the charts for private sector job growth.

About the Author: Jason Hart is an Ohio-based reporter covering labor issues for Watchdog.org, with a focus on right-to-work, public employee unions and Obamacare. Before joining Watchdog, Jason was communications director for Media Trackers Ohio. His work has been featured at FoxNews.com, The Daily Signal, RedState, Washington Examiner, Townhall and elsewhere. His investigations into labor union spending and Obamacare’s Medicaid expansion have been cited by national commentators including Michelle Malkin, Erick Erickson, Dana Loesch and Mark Levin.

In West Virginia Right-to-Work Debate, Unions Re-Use Scare Story Script

A labor union campaign against making West Virginia a right-to-work state is centered on scare tactics voters in Michigan would recognize.

With help from International Union of Operating Engineers Local 132, the West Virginia AFL-CIO is warning of lower wages, reduced benefits, and more dangerous working conditions if the state adopts right-to-work.

IUOE Local 132’s Stop WV Paycuts website asks visitors to contact their state legislators with those three reasons for opposing right-to-work.

West Virginia
Unions made the same arguments before Michigan enacted right-to-work several years ago.

“In states with RTW laws on the books, wages are lower, benefits are fewer, and workplace injuries and fatalities are more common,” AFL-CIO’s Working America warned in November 2012.

Since right-to-work took effect in Michigan in early 2013, employment and incomes in the state have grown faster than the national average.

Bureau of Labor Statistics data show that Michigan’s rate of nonfatal occupational injuries and illnesses was lower in 2013 than in 2012, and lower still in 2014. Compared to 2012, Michigan had two fewer fatal occupational injuries in 2013 and one more fatal occupational injury in 2014.

Right-to-work laws like the one proposed in West Virginia Senate Bill  give employees in unionized workplaces the ability to choose whether to pay a union without fear of losing their jobs. Right-to-work does not stop workers from joining unions, organizing unions, or collectively bargaining with employers over pay, benefits or working conditions.

“Right-To-Work laws lead to lower wages, less benefits and decreased work-place safety,” Stop WV Paycuts asserts in an online form letter meant for state lawmakers. The same claims are repeated elsewhere on the site. Under a graphic of a skull and crossbones is the warning, “RTW laws are intended to lower wages and benefits and decrease workplace safety.”

The website appears to be based on a graphic the West Virginia AFL-CIO adapted from campaign materials the national AFL-CIO has been using with mixed results for several years. In addition to Michigan, Indiana and Wisconsin have both passed right-to-work since 2011. Unions successfully blocked a Missouri right-to-work bill in 2015.

IUOE Local 132 did not respond to a voice mail request for comment.

A recent West Virginia AFL-CIO radio ad hammering right-to-work focused on the point of workplace safety, suggesting right-to-work should instead be called “right to die on the job.”

West Virginia has a higher rate of workplace deaths than 23 of America’s 25 right-to-work states, according to AFL-CIO’s own Death on the Job report. The risk of workplace injury or death is much greater in states where industries such as forestry, agriculture, and mining are more prevalent.

Trey Kovacs, a policy analyst at the Competitive Enterprise Institute, said CEI research shows “a significant and positive relationship between economic growth in a state and the presence of a right to work law.”

 

Trey Kovacs, a Policy Analyst at the Competitive Enterprise Institute. He focuses on economic impacts of labor and finance policy.

Trey Kovacs, a Policy Analyst at the Competitive Enterprise Institute. He focuses on economic impacts of labor and finance policy.

“In West Virginia, workers lost an estimated $2,623 from not having a right to work law,” Kovacs said.

Calling the union website an attempt to put a new spin on “old, tired rhetoric,” Kovacs added, “It is only a matter of time before a majority of states protect workers from being forced to pay dues to a union they do not support.”

About the Author: Jason Hart is an Ohio-based reporter covering labor issues for Watchdog.org, with a focus on right-to-work, public employee unions and Obamacare. Before joining Watchdog, Jason was communications director for Media Trackers Ohio. His work has been featured at FoxNews.com, The Daily Signal, RedState, Washington Examiner, Townhall and elsewhere. His investigations into labor union spending and Obamacare’s Medicaid expansion have been cited by national commentators including Michelle Malkin, Erick Erickson, Dana Loesch and Mark Levin.

Bye-bye Abood?

SCOTUS appears to be ready to dump mandatory public employee union dues payments.

Last Monday, the Supreme Court heard oral arguments in the Friedrichs v California Teachers Association lawsuit. The case centers around whether or not teachers and other public employees should be forced to pay dues to a union as a condition of employment in states that don’t have right-to-work (RTW) laws. Reviewing the comments and questions from the Justices, a favorable outcome is looking very good for the plaintiffs.

The lawyers and court-watchers have been anticipating a 5-4 decision, with Antonin Scalia being the swing vote. The typically conservative justice had in the past come down on the side of forced agency fees or “fair share,” which is a full dues payment minus the money the union spends on politics should a teacher object. The unions claim they are compelled to represent every teacher, and thus, every teacher should have to pay something for their services. That set up has been law since SCOTUS enshrined it in the Abood decision in 1977 in an attempt to ensure “labor peace.”

But Scalia seems to have had a change of heart. Noting the differences between private and public unions, he said, “But the problem is that it is not the same as a private employer, that what is bargained for is, in all cases, a matter of public interest. And that changes…the situation in a way that that may require a change of the rule. It’s one thing to provide it for private employers. It’s another thing to provide it for the government, where every matter bargained for is a matter of public interest.” (P. 76)

Even more damning, Scalia ended up essentially agreeing with the main point of the plaintiffs’ argument. “The problem is that everything that is collectively bargained with the government is within the political sphere, almost by definition. Should the government pay higher wages or lesser wages? Should it promote teachers on the basis of seniority or on the basis of all of those questions are necessarily political questions.” (P.45)

Anthony Kennedy, traditionally the Court’s swing voter, showed little sympathy for the union position. He dismissed the classic union rallying point that refers to those RTW state employees who “benefit” from union activities but don’t pay money to them as “free riders.” Kennedy rejected that argument, referring to them instead as “compelled riders.”

And you ­­ the term is free rider. The union basically is making these teachers compelled riders for issues on which they strongly disagree.

Many teachers think that they are devoted to the future of America, to the future of our young people, and that the union is equally devoted to that but that the union is absolutely wrong in some of its positions. And agency fees require, as I understand it — correct me if I’m wrong — agency fees require that employees and teachers who disagree with those positions must nevertheless subsidize the union on those very points. (P.43)

Kennedy also brought up the frequently fuzzy line between political spending and so called chargeable (non-political) fees, asking the lawyer for the state of California. “Do union — do unions have public relations programs of or newspaper articles, media programs to talk about things like merit pay, protecting underperforming teachers and so forth? Do the unions actually make those arguments, and aren’t those chargeable expenses? (P.44)

The union lawyers kept stressing that forced dues were essential to their survival, but Scalia disagreed, pointing out, “Why do you think that the union would not survive without these – these – fees charged to nonmembers of the union? Federal employee unions do – do not charge agency fees to nonmembers and they seem to survive; indeed they prosper….” (P.50)

The union lawyers and four Justices sympathetic to their cause didn’t have much of a defense. They kept making the same tired old points and added the stare decisis argument, the doctrine of precedent, which came up several times. Lawyers cite it when an issue has been previously brought to the court and a ruling already made. Generally, courts will adhere to the previous judgment, though this is not always the case.

There have been several landmark cases where prior rulings have been completely disregarded, most notably in Plessy v Ferguson (1896). The Court ruled the “constitutionality of state laws requiring racial segregation in public facilities under the doctrine of ‘separate but equal.’” But in 1954, stare decisis was set aside when the court overturned Plessy. In Brown v the Board of Education of Topeka, the Court reversed itself, saying that “separate educational facilities are inherently unequal.” Referring to Friedrichs, George Leef writes in Forbes, “Where First Amendment rights are at issue…stare decisis and the convenience of teachers’ unions seem very small considerations.”

The media weigh in

Reading countless reports and articles on the trial, I could not find one that thought it went the union’s way. Typical is a piece from Politico titled. “SCOTUS support for anti-union plaintiffs,” which begins, “The Supreme Court appeared ready Monday to bar public-sector unions from collecting ‘fair-share’ fees from non-members, a move that could deal a political blow to Democrats by reducing union membership drastically and draining union coffers.”

The only glimmer of hope came from American Federation of Teachers president Randi Weingarten who wrote, “As I listened (and admittedly, I’m not impartial!), I felt they failed to present a compelling argument for why the court should overturn 40 years of precedent — precedent that has led to labor peace in the public sector, better services for communities, easier administration for state and local governments, and, of course, fair pay and benefits for working families.”

But as she said, she is not impartial. In fact, anything but.

The usual pro-union suspects weighed in and essentially agreed that the plaintiffs would probably emerge victorious, but their reporting was leaden with a heavy dose of anger and angst. Perhaps the most hysterical was an article on Huffington Post titled, “This is Bad! Attack on Teacher Unions is an Assault on Students, Workers and Democracy.” His slant was obvious; in a brief article, he used the word “rightwing” seven times and just to change things up, he threw in “right-wing” a couple of times.

What happens next?

The justices may very well have already voted or will do so very soon, but it’ll likely be June before their decision is announced. Between now and then a lot can happen. The Justices’ minds can be changed by other justices and can be affected by public opinion and (indirect) union pressure. Hence the PR war will go on.

If the unions lose, how bad will it be for them?

Probably not nearly as bad as they are making it out to be. First, they can get rid of the free rider problem by becoming a members-only organization. (Some state laws may have to be tweaked, but that shouldn’t be an onerous task.) Then, if a teacher likes their union they can pay for services rendered. If they want no part of the union, they won’t join. There are other organizations like the Association of American Educators and Christian Educators Association International that provide many of the benefits and protections offered by the union.

Also, by becoming a members-only entity, the unions will enlist only true believers. But they will, however, have to be more responsive to the needs and wishes of their members since teachers as well as other public employees will no longer be forced to pay them.

Nina Rees, president of the National Alliance for Public Charter Schools, writes that children could be winners should the plaintiffs prevail, “…teachers may gain greater leverage in determining the policies that union leaders pursue. If that leads to policies that reward great teaching and put more of the best teachers in the classrooms that need them most, students will win.”

And there are union stalwarts who aren’t crying in their beer. Trade union activist Shamus Cooke asserts that unions need to step up their organizing game if they are to remain powerful. Samantha Winslow makes pretty much the same point in “Organizing Is the Key to Surviving Friedrichs.”

If Friedrichs is successful, who will be the big loser?

Democrats and the left.

There is no doubt that union warchests will take a hit if all teachers aren’t forced to fill them. While no one knows how many teachers will refuse membership, I think a conservative guess would be that one-third will choose to avoid ties to the union. If so, the California Teachers Association’s $180 million a year gravy train would be sliced down to $120 million. As you can see here (H/T Colin Sharkey), CTA gives 96.7 percent of that gravy to Democrats. And what doesn’t go specifically to Democrats goes to leftist causes. On a national level, National Education Association and American Federation of Teachers’ spending just about all goes in a leftward direction.

Final word

The Abood decision, which claimed it would ensure “labor peace,” did so at the cost of freedom of association for millions of teachers across America over a 39-year period. “Labor peace” has also come at great expense to parents, children and taxpayers who have suffered as the unions coffers were used in part to kill education reform, keep kids in failing schools and raise taxes. Hopefully, the judges will soon rid our lives of Abood and if they do, trading bad policy for “labor peace” will become a sad relic of another time.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

The Enemies of Choice

The teachers unions’ fight against parental and teacher choice is not going well for them.

Teacher union membership is dwindling. In fact, it has dipped below 50 percent nationwide, down from a high of almost 70 percent in 1993. Wisconsin, Michigan and Indiana, having  become “right-to-work” (RTW) states over the past several years, have given teacher freedom a big boost. Wisconsin, which also limits teachers’ collective bargaining activities via Act 10, has seen its National Education Association affiliate’s numbers cut by more than half. Prior to the legislation, the Wisconsin Education Association Council had approximately 100,000 members. It now has fewer than 40,000, according to the MacIiver Institute.

In Michigan, the teachers unions have lost 20 percent of their membership since becoming a RTW state in 2012, but this number will grow. Many unions, sensing the inevitability of RTW legislation in the Wolverine State, signed long-term contacts with their school districts. However, once those contracts expire, more teachers will be liberated from paying forced union dues. But as Michigan Capitol Confidential’s Tom Gantert points out, the RTW law is just one reason for the drop in union participation. He writes, “There also has been steady growth in the number of Michigan public charter schools. Hardly any charters are unionized.”

Nationally, the NEA has also seen its numbers dwindle; its membership is down more than 9 percent over the last four years. This includes a 7.5 percent decline in the number of classroom teachers, which is one reason why the union’s dues revenue has declined since 2011.

Of course freedom from forced unionism could greatly accelerate in 2016 courtesy of the Friedrichs v California Teachers Association case. If the litigants are victorious, no teacher – or public employee – in the country will be forced to pay any money to a union as a condition of employment. With oral arguments in just 13 days, the ruling will be finalized in six months.

In addition to losing members, the unions are also losing the PR battle. According to a recent Education Next poll, fifty percent of all teachers think that forced dues payment is wrong, while 38 percent support it. (The general public is 43-34 percent in favor of choice.) Interestingly, the same poll shows that while 57 of teachers think that unions “have a positive effect on schools,” just 30 percent of the general public thinks so.)

As the unions battle teachers over forced dues payments, their efforts are equally fierce against a parent’s right to choose the best school for their children. Other than an unfavorable ruling in Friedrichs, the worst nightmare for the unions is giving parents choices – charter schools, and worse, vouchers, tax credit scholarships and educational savings accounts. And the unions are not doing well on that count either. A national poll conducted earlier this year shows that nearly 70 percent of Americans support school choice. (The two battles are interrelated: As teachers leave their unions, there is less money for the unions to spend on fighting choice bills in state legislatures. And more private choice options translate to fewer unionized teachers.)

There are now 6,700 charter schools serving nearly 3 million students in 43 states and D.C. As for private sector choice, there are now 56 different programs operating in 28 states. In 2000-2001, there were just 29,000 students in these programs, but by 2014-2015, that number had grown over 12-fold to 354,000. In light of the fact that parents take advantage of the private option when available, their kids perform better in these choice programs and they save the taxpayers money, the unions can’t put up much of a reasoned argument.

Indeed, desperation is setting in.

Frequently unions use kids as human shields to couch their opposition to privatization. But one union boss had a unique (if ridiculous) take on it recently. When asked about a Fordham Institute study on America’s Best and Worst Cities for School Choice that ranked Atlanta as the ninth most “choice-friendly” city, Verdaillia Turner, president of the Georgia Federation of Teachers, responded, “That’s like saying Chicago is the most murder-friendly city in the nation.”

The new year looms large for choice. With a Friedrichs decision due in June, teacher and parental choice could get an enormous boost. And no one will be murdered because of it. The self-serving teachers unions’ bottom line will suffer some serious body trauma, however.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Right to Work 2.0

Summary: Unions and other advocates of Big Government defend policies—license requirements, for example, and other “barriers to entry”—that make it difficult if not impossible to create new businesses and new jobs. Existing businesses are also often backers of laws and regulations that limit competition, stifling innovation and growth. But real reforms—policies that might be called “Right to Work 2.0”—could knock down these barriers.

Imagine if, in 2005, a 21-year-old Mark Zuckerberg decided to launch what was then called “TheFacebook.com”—but before he could do so he had to apply for his organization to be a “licensed social network” in every state.

  • Imagine that to apply to be a licensed social network, Zuckerberg needed to pay large licensing fees to 50 states and regular renewal fees, while maintaining addresses in every jurisdiction, and be subject to lawsuits therein. Instead of hiring coders, Zuckerberg may have hired lawyers. He may even have had to hire a lobbyist. If that didn’t work, he may have had to pay PAC donations for political help to get approval across the country.
  • What if Zuckerberg had to take an exam to become a licensed social network provider? Not a joke exam, but an exam that had a passage rate comparable to the bar exam?
  • What if a licensed social network was only lawful if it followed certain prescribed market models, like prohibiting a private beta version to colleges and requiring it be open to everyone across the country before launching to the public?
  • Lastly, what if this exam was created, run, and operated by Myspace and Friendster, then the incumbent social networking companies?

    If that were the state of the law in 2005, there would be no Facebook.

This scenario may sound absurd. But today this sort of absurdity is the status quo in most states for many occupations. In fact, such requirements affect more than 25% of all occupations. It is not a coincidence that we see dynamic competition and growth in websites and apps, while the rest of the economy has slowed to a crawl.

Occupational licensing

The way that occupational licensing stifles employment opportunities is well-known. Across the country, licenses are required for locksmiths, ballroom dance instructors, manicurists, interior designers, upholsters, and, in Washington, D.C., even tour guides. All 50 states require licenses for anyone working with hair, which usually includes all hair braiders, despite the inconvenient fact that hair braiding is not actually taught in cosmetology school.

Screen Shot 2015-12-15 at 12.32.56 PMHair braiders are required to be licensed even though it is not taught in cosmetology school.

Regulations like these affect real people. Clark Neily’s book Terms of Engagement chronicles the story of how regulations on the floral industry impacted one individual:

Sandy Meadows was a widow who lived by herself in Baton Rouge and loved working with flowers. She had little education and nothing in the bank when her husband died. She’d never had to support herself before, and her only vocational skill was making floral arrangements. Unfortunately, Louisiana is the one state in the country that licenses florists, just like doctors or lawyers.

Sandy tried five times to pass the licensing exam, but it was too subjective. Besides taking a written test, applicants had to make four floral arrangements in four hours. A panel of working florists would grade the arrangements and decide whether the applicant was good enough to set up shop and compete with them. Usually they said no.

When agents of the Louisiana Horticulture Commission found out that Sandy was managing the floral department of an Albertsons grocery store without a license, they threatened to shut it down. The store had no choice but to let her go and hire a state-licensed florist instead. Prevented by government from doing the only work she knew, Sandy had no way to make a living. She had no car, no phone, and, on the last day I saw her alive, no electricity because she couldn’t afford to pay her utility bill. In October 2004, Sandy Meadows died alone and in poverty because the State of Louisiana wouldn’t allow her to work in a perfectly harmless occupation.

These occupational licenses requirements are not just harmful to individuals, but collectively the thicket of regulations form a barrier to competition across the economy. These barriers to competition, growing larger every day, have a definite economic impact upon our society by limiting competition and growth. In the 1950s, five percent of the workforce was required to hold a license; that percentage has quintupled to 25 percent today. The large number of occupational licenses across the economy means that more and more occupations are effectively off-limits to competition. This means that for one in four occupations competition and true market forces are stifled by government regulation, and often stifled specifically to protect incumbent firms (people who are already in that business).

Free-market capitalism is increasingly being replaced by licensure-based capitalism, which is generally a form of cronyism. As Nobel Prize-winning economist Milton Friedman explained, licensure is “essentially a medieval guild kind of regulation” where “the state assigns power to members of the profession.” He explained that a license requirement “almost inevitably becomes a tool in the hands of a special producer group to obtain a monopoly position at the expense of the rest of the public.” The impact goes beyond merely making many Americans unable to join these occupations. Because of these requirements, goods and services cost more, and a few incumbent companies who create, operate, or benefit from the licensure-based capitalism model receive a disproportionate share of the profit, while upstart companies can’t compete at all. We should expect, and the data show, that innovation and growth in these sectors of the economy slow to a trickle.

Permissionless innovation

Silicon Valley, where I work, has a concept that I hope policy-makers could embrace in Washington, D.C.: “permissionless innovation.” The concept of permissionless innovation is that an 18- or 25-year-old can have an idea on a Friday, pull together a team on Saturday, write software code on Sunday—often straight through the night—and then launch an app on Monday. Sectors of the economy with permissionless innovation produce economic dynamism with incredibly high competitive intensity. Thousands of new apps and websites launch per day, with new companies often displacing old companies. Dynamic competition is generally what a healthy economy looks like, if government policies get out of the way.

But this is not how the rest of the economy looks.

Facebook succeeded because of this permissionless innovation. Mark Zuckerberg and a few friends could launch a relatively primitive version of Facebook without hiring a lawyer or raising money.   Any individual can register a website on GoDaddy.com for about the cost of a drink at Starbucks, and they can complete the transaction even faster than a barista could pull together your drink. Zuckerberg could take his lunch money, register the domain, and get to work.

Zuckerberg was also able to launch small. The website was available at first only to Harvard students, then only to colleges, before it became available to the general public. He was able to improve his product as he grew. In Silicon Valley, this concept of starting small and improving accordingly is referred to as a “minimum viable product” or MVP. The goal of an MVP is to make a minimal investment to test a hypothesis about a business model. Often when pitching a company, investors will caution you to “go small” and use an MVP to test out your idea before they open their checkbooks.

The problem with most government licensure and similar regulation is that those restrictions make it almost impossible for entrepreneurs to start small and improve along the way. If Zuckerberg had to raise money to hire a lawyer and get licensing approval in all 50 states before he could launch the first version of Facebook, it’s unlikely any investor would have given him enough money to succeed. His idea was too risky a proposition to compete in a market then saturated by Myspace and Friendster. Zuckerberg believed that Myspace and Friendster could be displaced with a new market model. Few agreed, but he turned out to be right. (Famed Venture Capitalist Peter Thiel’s new book, From Zero to One, asks entrepreneurs to consider: “What important truths do very few people agree with you on?”)

Zuckerberg didn’t ask for large investments to launch the website. Instead, he started small. Then the viral success of Facebook across college campuses proved what Zuckerberg already knew: that there was a thirst for a new social network. With rapid growth, raising the money was easy, and the rest is history.

I know from personal experience that asking investors to invest to pay for lawyers is always a difficult proposition. I tried to launch a company in the heavily regulated sector of campaign finance, and while all the co-founders, myself included, were working without salary, we couldn’t find lawyers with expertise in the domain to work on equity. I was in law school at the time, but we needed a lawyer experienced in campaign finance law and who not only knew the players at the Federal Election Commission (FEC) well enough to ask permission, but also had the credibility to arrange necessary meetings with key people and elicit their positive response.

At first, legal approval was one of many issues our team was working on, but as FEC approval became a bigger issue, we gradually shifted our attention and resources to prioritize raising the money to pay for a lawyer. Eventually, it became the sole priority of our company, to raise money for legal fees. That completely sidelined the development of the product. After repeated attempts, we failed to find investors willing to pay for the lawyers necessary to test the market model we envisioned. Now, in truth, it’s entirely possible our model was uncompetitive in the marketplace, but we’ll never find out, because this catch—needing a lawyer, needing money for a lawyer, and not having investors willing to pay for a lawyer­—forced us to shut down the company.

This kind of story happens every day across the economy.

Success should never be assured in any marketplace, but success or failure should be based upon the strength of your team, your product, your market model, and your execution—rather than if you hired the right lawyer to ask permission.

If a government regulation shuts down an existing business, the owners and managers of that business can at least complain to the people responsible for that regulation, or to the officials responsible for overseeing the regulators. But what if a business never comes into existence at all?

When a start-up fails in incubation phase, where are the lobbyists to knock on the doors of Congress? Congress doesn’t appear to have ever held a hearing on companies that were shut down before they could become big enough to complain about it.

Policymakers rarely, if ever, hear the stories of the businesses that fail to exist because of over-regulation and licensing type requirements. Yet, if policymakers want to promote economic growth, these are stories on which they must focus. If we want growth, job creation, and wage increases, then one critical objective is clear: to increase permissionless innovation as much as possible. Make the physical world look more like the app economy, in which anyone with a good idea is able to launch his or her product in the real world—and sink or swim based on the merits of the idea. And where start-ups can’t advocate for themselves, policy-makers must investigate and meet with those on the frontiers of the economy to advocate on their behalf.

Licensure-based economies and creative destruction

As policymakers increase the sectors of the economy that require occupational licenses or that have other unwarranted restrictions, one would expect a decline in the intensity of competition. In Louisiana, no one can launch an Uber for flowers and survive as a business, because the state’s florist exam is twice as hard as the exam for lawyers. If Mark Zuckerberg didn’t have to ask for permission to launch Facebook, why is a florist required to ask for permission to launch a business in the floral field? (Each of these markets may seem small, but even the flower market is rather large as the cut flower market is an $8 billion national market.).

The German economist Joseph Schumpeter explained that a core driver of economic growth and innovation is a process he called “creative destruction.” It is, he wrote, a “process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.”

Under creative destruction, new firms force old companies to innovate or die. The effect is seen in the fact that, in the last 30 years, all net job growth in the United States has been as a result of new firms. As a general matter, a government policy is economically beneficial if it furthers the creative destruction process, and detrimental if it stifles it.

Occupational licensing is quite often a tool of big firms to throw a wrench in this process in order to avoid the process of innovating or dying. With this wrench, an incumbent firm can rake in “rentier” (monopolistic) profits by abusing its dominant position in the marketplace. Make no mistake: This is not free-market economics at all, and this is not capitalism. This is abject cronyism, as are most occupational licensing systems.

In Michigan, it will take you just 26 days to become an Emergency Medical Technician, but 1,460 days to become an athletic trainer. This disparity has no explanation other than cronyism. In Nevada, taking the bar exam costs $700, but getting a travel guide license costs $1,500; cronyism is the only explanation.

These problems are not merely sad stories for the professions involved. The wickedness of cronyism has major economic impacts upon the entire economy. People in the marketplace realize that the incentive to lobby is increasingly higher than the incentive to innovate, and they act quite rationally on that belief.

This is an existential issue for long-term growth in the United States. In fact, the often cited statistic that 25 percent of U.S. occupations require occupational licensing underestimates the problem. While 25 percent of professions are under licensure, that doesn’t count a number of other restrictions upon businesses such as 23andMe, Uber, and Tesla.

Direct to Consumer DNA testing

Over the past year, the cost of a home DNA test for active proteins has dropped well below $1,000. Analysts had predicted this as the tipping point at which the home DNA test market would expand rapidly. At a price point rapidly approaching $100, there is no reason why every American shouldn’t have his DNA sequenced once in his lifetime.

Home diagnostics has significant benefits for preventive medicine, which could save the federal government billions of dollars in health-related entitlement spending. DNA testing is just the beginning, as testing our entire proteome (including RNA) is feasible and provides enormous amounts of actionable information on the current state of a person’s health. It won’t be much longer until we have defined the genetic underpinnings of all seven thousand Mendelian diseases such as sickle-cell anemia and cystic fibrosis. But the Food and Drug Administration has decided that Americans can’t handle access to analysis of their DNA. Therefore, the FDA has shut down the competitive U.S. marketplace on consumer-DNA testing. As a result, China is beginning to dominate and undercut Western firms with its own DNA testing.

23andMe was the first direct-to-consumer genomic company. The people at 23andMe launched their product in 2007, with a $999 saliva test to provide information on gene variants related to risk of 14 medical conditions. (The name comes from the fact that humans have 23 pairs of chromosomes, the structures that contain most DNA.) Since 2012, costs dropped to $99 and provided gene variant reports for over 250 medical conditions, as well as DNA medication interactions for 30 drugs. These products were a commercial success, as millions of consumers found utility in knowing more about their DNA.

In 2010, Pathway Genomics was about to launch its saliva test kit at all Walgreen stores. Then, one day before the launch, the FDA sent a letter informing the people at that company that their test had not been approved. Subsequently, Walgreens dropped the program. The FDA’s assault was just beginning. On June 2010, the FDA sent cease-and-desist letters to all direct-to-consumer genomic companies, including Navigenics, Decide, Pathway Genomics, and 23andMe. Only 23andMe continued in the face of the order.

In 2013, the FDA effectively banned 23andMe from providing analytics services for its DNA tests. With that draconian action, government regulators put a brake on an entire industry, shifting significant investment abroad.

In its letter to 23andMe, the FDA referred to concerns about the way women would react to information that they have the BRCA2 gene that indicates a high predisposition to breast cancer. The FDA’s threat was stark. “Failure to take adequate corrective action may result in regulatory action . . . [T]hese actions include, but are not limited to, seizure, injunction, and civil money penalties.” The FDA wrote that “serious concerns are raised if test results are not adequately understood by patients.” The agency was supposedly worried that direct-to-consumer models may inspire people to “self-manage” their care.

Talk about being out of touch. More self-management is exactly what consumers want, and what the country needs to drive down costs.

Entrepreneurs quite logically interpreted this action against a well-funded start-up as a sign that this sector of the economy is simply not open for innovation. 23andMe was founded by Anne Wojcicki, soon-to-be wife (now ex-wife) of Google co-founder Sergey Brin, with over $50 million in capital and a large legal team. Venture capitalists concluded that, if a $50 million start-up with Google money and a robust legal team couldn’t survive in the DNA testing market because of the FDA, then no one can.

Since the shutdown of 23andMe, the launching of consumer-oriented DNA testing start-ups has slowed to a trickle, and the impact is larger than just DNA testing. Funding has likely decreased for start-ups in the entire health diagnostic marketplace—precisely where the United States needs more innovation and competition. In the past week, 23 and Me announced they will be re-releasing a limited DNA test, with 60 separate DNA reports, based upon a few specific approvals granted by the FDA. 23 and Me is still limited in the analysis it can provide to the general public.

Car dealership racket

The car-selling market is one of the most significantly regulated markets nationwide, for no coherent reason. In every state across the country, government-sanctioned monopolies restrict auto manufacturers from selling directly to consumers. These restrictions greatly stifle competitive innovation, hurting consumers for no justifiable reason. Forty-nine million Americans cannot legally procure Tesla cars because they live in states that ban Tesla dealerships, and 69 million live in states with significant state regulations limiting Tesla’s ability to sell cars to willing customers.

In Texas, Tesla cannot provide test drives, discuss price points, or even direct potential buyers to Tesla’s website; the company may only have car “galleries” where consumers may look at vehicles. In the other states where Tesla is not banned, car dealership laws stifle innovation nevertheless. Fixing this problem is bigger than just Tesla. It involves opening the floodgates to dozens of other Teslas and keeping innovation in America. These limitations are one reason why there has been almost no real competition in the car market in decades. The last successful new American-made participant before the recent entry of Tesla was—believe it or not—Chrysler in 1925.

The Justice Department’s Antitrust Economic Analysis Group recently published an economic analysis finding that, “as a matter of economics, arguments for state bans . . . are not persuasive.” If the arguments are not persuasive, then the bans need to go away. Studies find that the “tax” these regulations effectively produce is 9.3 percent. The same studies likely underestimate current costs, because the Internet has created myriad opportunities for new market models.

For instance, Scott Painter founded Carsdirect.com in 1998 to sell cars directly to consumers via a national “virtual” dealership. State regulations required Carsdirect to own dealerships in every state in order to sell cars directly to consumers online. The company needed to acquire 2,000 car dealerships, and abide by 50 separate state laws, before it could operate across the country. Why shouldn’t buying a car be as easy as looking it up on Amazon and paying shipping? Shouldn’t the consumer be able to choose?

These two non-occupational licensing examples, 23andMe and Tesla, were chosen to show that the problem of government-imposed barriers to entry is bigger than merely occupational licensing. Across the economy, policy makers are doubling down on the economy of old, and destroying the possibilities of the future. This is devastating for innovation, entrepreneurship, and growth and job prospects across the board. Every company that is stopped from competing is one that could have produced jobs.

The solution: Right to Work 2.0

State and federal agencies and legislatures have an incentive to pass laws and regulations that protect incumbent industries at the expense of competition. Not all regulations are the result of misguided thinking, but many of them are, and many remain on the books long after their usefulness ends. Each occupational license or 1920s-era regulation may seem small in its impact, but aggregated together these barriers produce a broader story of the way entire sectors of the economy gradually become off-limits to new entrants. This is not a partisan problem; governments in Republican and Democratic states alike are complicit in these acts of cronyism.

It is not enough to play Whac-A-Mole, to take action each time stupid regulations/laws inhibit legitimate innovations. Things are getting worse, too fast for us to tackle new problems as they pop up. Every year we sink further into this hole of our own making. It’s a bit like being in quicksand, sinking one inch every hour, and someone hands you a spoon when you really need a rope, anchored to some object, to pull yourself to safety.

Recently, more and more people on both sides of the political divide have come to recognize that occupational licensing and other barriers to entry are a major problem for the economy. Conservative and libertarians are largely united in the need to address this problem and have recently been joined by liberals such as Matthew Yglesias of Vox. Yet there have been few significant efforts at reform.

The reason we don’t have real reform is because this is a case of “industry capture,” a phenomenon in which a few businesses co-opt the regulatory system at the expense of new entrants who lack clout. I have spoken personally with hundreds of policymakers who told me something along the lines of “Yes, you are right on the problem, but you can’t possibly expect me to go up against X lobby/industry. Do you have any idea how much money they have?” This is the problem of “factions” that the Founders warned us about hundreds of years ago.

There is a secondary problem: Policymakers lack the imagination to recognize how a small idea today can become a huge industry tomorrow. So the impact of siding with the car dealership lobby against a Tesla, or taxi cab companies against Uber, or hotels against Airbnb, may seem small until we see the full potential of Tesla, Uber, and Airbnb.

These two problems were forecast five centuries ago by the political philosopher Niccolò Machiavelli:

It must be considered that there is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order; this lukewarmness arising partly from the incredulity of mankind who does not truly believe in anything new until they actually have experience of it.

Creative destruction requires a new order of things. And new entrants, like Uber, Tesla, and Airbnb, become enemies of those who profit by the old order. We can’t afford to be lukewarm defenders of the future.

Right to Work is the idea that an individual should be able to launch a business or join a profession without being forced to join a union. My colleagues at the pro-liberty group Lincoln Labs and I would propose a series of reforms that could be collectively called “Right to Work 2.0.”

Just as an individual should be able to join a profession without being forced to join a union, he or she should be able to launch a business or join a profession without being forced to get permission from a government regulator (or, worse, from incumbent companies). Right to Work 1.0—the traditional state law that allows “open shop” businesses—is in effect in 25 states. Right to Work 2.0 is in zero states currently, but we hope to make Right to Work 2.0 as popular as Right to Work 1.0.   Because what use is “right to work” legislation if you still need a license to compete in the marketplace?

Economic liberty

The Founders created a Constitution to protect our natural rights, including our natural right to economic liberty. The philosopher John Locke said the very purpose of government was to protect these natural rights, a view that was echoed in the Declaration of Independence (“[A]ll men . . . are endowed by their Creator with certain unalienable Rights . . . [T]o secure these rights, Governments are instituted among Men . . . ”). In the Founding era, the protection of natural rights was an obsession among the nation’s leaders. The Bill of Rights includes specific protections for several of them. Yet many Founders worried that a Bill of Rights could be counterproductive: If we protect these enumerated rights specifically, they asked, will future generations think these are the only rights protected under the Constitution? Theodore Sedgwick, who would later be the fifth Speaker of the House, challenged the proponents of a Bill of Rights by asking why they didn’t specify that “a man should have a right to wear his hat if he pleased; that he might get up when he pleased, and go to bed when he thought proper?”

So James Madison, considered the father of the Constitution, crafted a solution, the Ninth Amendment, which states, “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” In other words, the Bill of Rights was not exhaustive, and there were other unenumerated—uncounted—rights that were retained by the people.   The Fourteenth Amendment’s “privileges or immunities” clause also specifically protects natural rights against state action.

Unfortunately, the Supreme Court essentially gutted the Privileges or Immunities Clause in the Slaughter-House Cases of 1873. Today, almost any rule, regulation, or law is upheld by the courts as long as it passes a so-called “rational basis test.” Under this test the person complaining, not the government, must prove the regulation is not rationally related to a “legitimate government interest.” In practice, it’s almost impossible to strike down a regulation under this threshold, regardless of how preposterous it is.

By contrast, the courts have ruled that when laws/regulations affect “fundamental rights,” the government must establish that the measure is “necessary for a compelling government interest” and that it is “narrowly tailored” to that interest. If the government cannot meet this legal burden, then the regulation or law is struck down. This so-called “strict scrutiny” approach does not eliminate all regulations and laws, but it makes it more difficult to hamstring the economy, because fewer restrictions can meet this level of scrutiny.

Economic liberty is a fundamental right that the Founders intended to protect in the Constitution, and the courts should show it the same respect as other rights. Economic liberty is of comparable importance to our free speech rights, our right of assembly, and our religious freedoms. Just as the Founders didn’t want a country where individuals needed permission to speak or to criticize the government, they didn’t want a country where individuals needed permission to join a profession or launch a business. Such a system was ripe for abuse and violated the core concept of natural rights espoused by John Locke.

How to protect economic liberty

What should be done to protect economic liberty and our right to work? The easiest solution to drain the swamp of thousands of regulations and laws that stifle innovation and jobs and to implement a requirement for heightened scrutiny of these measures in the courts. Under such a rule, Louisiana would have to justify its onerous floral exam requirements as necessary to achieve a compelling government interest. The court would ask, “Why couldn’t the marketplace just create quality control over florists? What is the compelling government interest, and why is this regulation necessary?” It’s highly unlikely such regulation would survive this legal test.

But it’s up to the Supreme Court to reverse its Slaughter-House Cases and make this a reality. While there is renewed interest today on the court—Justice Thomas voiced it in his opinion in a major gun control case—this idea is at best a long-term solution. The Court as a whole appears extremely hesitant to reconsider its precedent of more than 140 years.

If we presume the Court won’t protect economic liberty, then the Congress, the states, and the people themselves can protect economic liberty instead. The options include

  • Congress passes a statute saying that all regulations must meet intermediate scrutiny or strict scrutiny by the courts. Given that Congress has largely given up its lawmaking role in many regulatory areas in favor of letting unaccountable bureaucrats regulate as they please, the least Congress could do is make it easier to invalidate rules and regulations which the government can’t justify in court. If Congress still thinks a particular regulation is worthy, even after invalidated by the courts, Congress can pass a bill the next day and accomplish the same objective via statute.
  • Congress and the states could pass a Constitutional amendment that requires heightened scrutiny for Congressional laws and executive regulations. This proposal has the advantage of applying to laws as well as bureaucratic regulations.
  • Since most of the barriers to entry are imposed at the state level, Congress could use an appropriately limited application of the Commerce Clause to place state laws and regulations that stifle interstate commerce under heightened scrutiny.
  • States could pass a similar law or state constitutional amendment to require that all regulations and laws need to survive heightened scrutiny.

Legislation or a new Constitutional amendment could establish that “Courts shall assess regulations and laws under a strict scrutiny threshold.” That simple, one-page bill could knock out ridiculous occupational licenses and regulations for good, creating a permanent check against regulations without strong justification and laws past their prime. With thousands of unneeded laws and regulations struck down, thousands of business start-ups could enter previously over-regulated industries.

To be clear, a heightened scrutiny world is not a no-regulation world. Many regulations will still be upheld, but first the government must show its homework.

Some ask, “How would heightened scrutiny work?” This is the same system we apply to laws and regulations that have a disparate impact upon different races, or that treat men and women differently, or that affect religious liberty and freedom of speech. We have tens of thousands of cases that analyze a law under heightened scrutiny to see if the law is narrowly tailored to an important governmental interest. Just as so-called “fundamental liberties” are protected in this way, economic liberty must be so protected.

A BRAC-type commission + Ending “Chevron”

Another approach worthy of consideration would be a National Innovation Commission. Congress could establish a temporary taskforce that would divide the economy sector by sector and assess the regulations and laws holding back growth without justification. The list of regulations and laws the commission suggests ending could then be given an up-or-down vote, like the BRAC commission list that shut down unnecessary military bases. Like military bases, these regulations and laws may be hard to kill individually, but lawmakers may find it easier to eliminate them if they are lumped in a group.

Lastly, Congress could choose to override “Chevron deference.” Chevron deference is a complicated doctrine in administrative law where the courts accept regulations by deferring to an agency’s “reasonable interpretation of the law.” In practice, this doctrine leads to a highly regulatory state in which bureaucrats have nearly free reign to make rules and regulations that have the force of law, regardless of how ridiculous they are.

Agencies prevailed 76 percent of the time in cases involving Chevron deference, according to a 2008 study. As Justice Scalia notes, “Too many important decisions of the Federal Government are made nowadays by unelected agency officials . . . rather than by the people’s representatives in Congress.” Congressional action can change how the courts defer to the decisions of agencies, and thereby provide more accountability for rules and regulations.

These three approaches would result in major changes to our economy. In fact, I think these changes would be the most significant advance in economic policy since President Ronald Reagan cut tax rates from 70 percent to 28 percent. These changes would be easy to implement and for the Courts to enforce, and they are also politically achievable.

Conclusion

The French thinker Alexis De Tocqueville noted a century ago, “I cannot help fearing that men may reach a point where they look on every new theory as a danger, every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that they may absolutely refuse to move at all.” Today, as Tocqueville feared, new theories are often attacked as dangerous and innovations as troublesome. The result is largely political stagnation. Policymakers have become one of the biggest impediments to long-term growth in the United States, and their track record is growing worse.

Free markets are messy, and creative destruction requires old businesses to innovate or die, and as those old business are forced to adapt or die they will be fierce opponents of any change to the old order, but the alternative to “messy” is “worse”—much worse. If we do not find ways to help the economy grow, the shortfall between spending and tax revenue will increase, our politics will become more divisive, and our problems will become more expensive to fix over time. The longer we wait to get the U.S. economy back on track and geared towards innovation, the more our competitors will grow and be able to outcompete us. Growth should be policymakers Number One priority.

Right to Work 2.0 is a common sense proposal consistent with the principles of limited government and the Founder’s original intent for the Constitution. If we care seriously about allowing individuals to work, then we must act swiftly to drain the swamp of regulations and occupational licensing. Going regulation-by-regulation and license-by-license will not work quickly enough.

Derek Khanna, a former aide to Sen. Scott Brown (R-Mass.) and the House Republican Study Committee, is a technology lawyer and political commentator based in San Francisco. For his work on technology policy, he was included on Forbes magazine’s 2014 list of “30 [leaders] under 30” for Law and Policy.

Could California Follow Wisconsin’s Teacher Union Jail Break?

If CA becomes a right-to-work state, a seismic political shift may ensue.

Last week Mike Antonucci reported that the Wisconsin Education Association Council, the National Education Association’s Badger State affiliate, is down to fewer than 50,000 members (40,000 currently employed) from a high of over 100,000 in 2009. This precipitous loss is a result of Governor Scott Walker’s Act 10 which became law in 2011. The law limits collective bargaining for teachers (and other public employees), requires annual votes for union certification and prohibits employers (taxpayer-funded school districts) from collecting union dues. Wisconsin, having become a right-to-work state in March, is sure to see those numbers fall even more in the years to come.

As Wisconsin’s MacIver Institute points out, it isn’t just individual members who are leaving their unions, “…an increasing number of teachers’ unions were being decertified by their members all together.” And over a 100 public school unions in Wisconsin have voted to do just that in the last two years. In addition to worker freedom, MacIver reports that Act 10 has saved taxpayers over $3 billion.

Needless to say, unionistas are furious with Walker, infusing their disdain with Marxist rhetoric and on any given day comparing him to Hitler. But is Walker really bad for workers? Hillary Clinton sure thinks so. Right after Walker announced that he was running for president, Clinton went off on him.

Republican governors like Scott Walker have made their names stomping on workers’ rights, and practically all the Republican candidates hope to do the same as president. I will fight back against these mean-spirited, misguided attacks. Evidence shows that the decline of unions may be responsible for a third of the increase of inequality among men, so if we want to get serious about raising incomes, we have to get serious about supporting union workers.

But the statistics tell a very different story for workers. Deroy Murdock points out that since Walker has become governor, Wisconsin has outperformed the country as a whole using a variety of metrics including unemployment rate, labor-force participation rate, inflation-adjusted, median household income, etc.

While California has no Act 10, it would become a right-to-work state if Friedrichs v California passes muster with the Supreme Court next year. And if teachers and others public employees are not forced into paying dues, what would the ramifications be for the Golden State? A political earthquake is imaginable.

The California Fair Political Practices Commission shows that by far the biggest political influence peddler in CA is the California Teachers Association, which spent over $211 million between 2000-2009 on candidates, ballot measures and lobbying. It’s no secret that CTA will fight any education reform measure that diminishes its influence; charter school proliferation, vouchers and reasonable teacher evaluation methods are but a few examples. But CTA also spends oodles on non-education issues, all of which swerve sharply to the left. As Troy Senik writes in City Journal,

Among these causes: implementing a single-payer health-care system in California, blocking photo-identification requirements for voters, and limiting restraints on the government’s power of eminent domain. The CTA was the single biggest financial opponent of another Proposition 8, the controversial 2008 proposal to ban gay marriage, ponying up $1.3 million to fight an initiative that eventually won 52.2 percent of the vote. The union has also become the biggest donor to the California Democratic Party. From 2003 to 2012, the CTA spent nearly $102 million on political contributions; 0.08 percent of that money went to Republicans. (Emphasis added.)

The second highest spender was another public employee union, the California State Council of Service Employees, a branch of SEIU, which spent over $107 million on politics during the same time period. California Common Sense, an organization that is dedicated to opening government to the public, reports that CSCSE spent broadly across various state-level positions in 2013, “focusing on Governor’s ($4.9 million), State Senate ($1.4 million), and State Assembly races ($1.2 million). Like most unions, CSCSE opposed Republican candidates in almost every case.”

The results of union largess in the Golden State have been devastating for Republicans, who have been marginalized in Sacramento for years. After a few crucial GOP wins in 2014, the Los Angeles Times wrote,

California Republicans scored a rare victory in Tuesday’s election by denying Democrats a two-thirds legislative supermajority that would consign GOP lawmakers to virtual irrelevance in the state Capitol.

For a party sharply diminished by two decades of relentless setbacks in California, it passed as a major achievement for Republicans to capture more than a third of the seats in the state Senate and possibly the Assembly as well.

Clearly the unions don’t deserve all the “credit” for the pathetic GOP results, but to be sure, they have played a huge part. If California experiences a 50 percent Wisconsin-type drop in union members, however, the Democrat’s stranglehold in CA could be eased considerably. CTA’s position as “the co-equal fourth branch of government,” would be history. Not having an endless supply of cash, it would have to pick and choose its political recipients much more judiciously. Also if teachers and others aren’t forced to pay the union for the right to work, the unions would have to become more of a political big tent in order to entice workers to join. And Democrats, who regularly carp about “getting big money out of politics,” will – to some extent – finally get their wish.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

The Friedrichs Free Rider Fraud

The Supreme Court’s decision to hear the Friedrichs case has the unions in a tizzy.

On June 30th, the Supreme Court decided to hear Friedrichs v. California Teachers Association et al, a case that could seriously change the way the public employee unions (PEUs) do business. If the plaintiffs are victorious, teachers, nurses, sanitation workers, etc. would be able to work without the financial burden of paying union dues. The responses to the Court’s decision from the teachers unions and their friends have ranged from silly to contradictory to blatantly dishonest.

In a rare event, leaders of the NEA, AFT, CTA, AFSCME and SEIU released a joint statement explaining that worker freedom would be a catastrophe for the Republic. Clutching their hankies, they told us that, “big corporations and the wealthy few are rewriting the rules in their favor, knocking American families and our entire economy off-balance.” And then, with an obvious attempt at eliciting a gasp, “…the Supreme Court has chosen to take a case that threatens the fundamental promise of America.” (Perhaps the labor bosses misunderstood the wording of the preamble to the Constitution, “In order to form a more perfect union….” No, this was not an attempt to organize workers.) While the U.S. is not without its problems, removing forced unionism will hardly dent the “fundamental promise of America.”

The California Federation of Teachers, which typically is at the forefront of any class warfare sorties, didn’t disappoint. The union claims on its website that the activity of union foes “has resulted in a sharp decline in median wages for working people and the decline of the middle class alongside the increasing concentration of income and wealth in the hands of the one per cent.” But wait a minute – the unions are the most potent political force in the country today and have been for a while. According to Open Secrets, between 1989-2014, the much maligned one-percenter Koch Brothers ranked 59th in political donations behind 18 different unions. The National Education Association was #4 at $53,594,488 and the American Federation of Teachers was 12th at $36,713,325, while the Kochs spent a measly $18,083,948 during that time period. Also, as Mike Antonucci reports, the two national teachers unions, NEA and AFT, spend more on politics than AT&T, Goldman Sachs, Wal-Mart, Microsoft, General Electric, Chevron, Pfizer, Morgan Stanley, Lockheed Martin, FedEx, Boeing, Merrill Lynch, Exxon Mobil, Lehman Brothers, and the Walt Disney Corporation, combined.”

So the question to the unions becomes, “With your extraordinary political clout and assertion that working people’s wages and membership in the middle class are declining, just what good have you done?”

Apparently very little. In fact, the National Institute for Labor Relations Research reports that when disposable personal income – personal income minus taxes – is adjusted for differences in living costs, the seven states with the lowest incomes per capita (Alaska, California, Hawaii, Maine, Oregon, Vermont, and West Virginia) are forced-union states. “Of the nine states with the highest cost of living-adjusted disposable incomes in 2011, Iowa, Kansas, Nebraska, North Dakota, South Dakota, Texas, Virginia and Wyoming all have Right to Work laws.” Overall, the cost of living-adjusted disposable income per capita for Right to Work states in 2011 “was more than $36,800, or roughly $2200 higher than the average for forced-unionism states.”

But the most galling and downright fraudulent union allegations about Friedrichs concern the “free rider” issue. If the case is successful, public employees will have a choice whether or not they have to pay dues to a union as a condition of employment. (There are 25 states where workers now have this choice, but in the other 25 they are forced to pay to play.) The unions claim that since they are forced to represent all workers, that those who don’t pay their “fair share” are “freeloaders” or “free riders.” The unions would have a point if someone was sticking a gun to their collective heads and said, “Like it or not, you must represent all workers.” But as I wrote recently, the forced representation claim is a big fat lie. Heritage Foundation senior policy analyst James Sherk explains,

The National Labor Relations Act (NLRA) allows unions that demonstrate majority support to negotiate as exclusive representatives. If they do so they must negotiate fairly on behalf of all employees, including those who do not pay dues. However unions may disavow (or not obtain) exclusive representative status and negotiate only for their members. Nothing in the National Labor Relations Act forces exclusive representation on unwilling unions. (Emphasis added.)

Mike Antonucci adds,

The very first thing any new union wants is exclusivity. No other unions are allowed to negotiate on behalf of people in the bargaining unit. Unit members cannot hire their own agent, nor can they represent themselves. Making people pay for services they neither asked for nor want is a ‘privilege’ we reserve for government, not for private organizations. Unions are freeloading on those additional dues.

If there are still any doubters, George Meany, the first president of the AFL-CIO, whose rein began in 1955 and continued for 24 years, told Congress,

When a union has exclusive recognition with a federal activity or agency, that union is required to represent all workers in that unit, whether or not those workers are members of the union. We do not contest this requirement. We support it for federal service, just as we support it in private industry labor-management relations.

While the NLRA applies only to private employee unions, the same types of rules invariably govern PEUs. Passed in 1976, California’s Rodda Act allows for exclusive representation and it’s up to each school district and its local union whether or not they want to roll that way. However, it is clearly in the best interest of the union to be the only representative for teachers because it then gets to collect dues from every teacher in the district. It’s also easier on school boards as they only have to deal with one bargaining entity. So it is really a corrupt bargain; there is no law foisting exclusivity on any teachers union in the state.

So exclusive representation is good for the unions and simplifies life for the school boards, but very bad for teachers who want nothing to do with organized labor. It is also important to keep in mind that the Friedrichs case is not an attempt to “bust unions.” This silly mantra is a diversionary tactic; the case in no way suggests a desire to do away with unions. So when organized labor besieges us with histrionics about “the promise of America,” the dying middle class, free riders etc., please remind them (with a nod to President Obama), “If you like your union, you can keep your union.” In this case, it’s the truth.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Advancing Right-to-Work, One County at a Time

Summary: In Kentucky and elsewhere, advocates for the rights of working men and women—including the right not to join a union or pay dues to a union if you don’t want to—are trying a new strategy: Laws that secure this right for a city or county, rather than an entire state. The courts have not yet ruled definitively on this strategy, which is not favored by the National Right to Work Committee, one of the most prominent champions of Right to Work efforts. This issue of Labor Watch examines the progress that has been made on the ground, as well as the legal and strategic disputes this approach raises.

“I hope to have God on my side, but I must have Kentucky.” – Abraham Lincoln

Bowling Green seems like an unlikely spot for the beginning of a revolution. Yet Bowling Green, seat of Warren County, Kentucky, is where a revolution has been sparked against the forced collection of union dues.

With the recent additions of Michigan and Wisconsin to the roster, 25 states now have Right to Work laws—laws that protect workers from being forced to join a union or pay union dues as a condition of employment. All those states have laws that apply statewide. The significance of what’s happening in Bowling Green, and across Kentucky, and perhaps soon in other states is that Right to Work protections are being extended at the local level, county by county.

Kentucky has often held a strategic position in U.S. politics. The birthplace of both U.S. President Abraham Lincoln and Confederate President Jefferson Davis, it was neutral at the beginning of the Civil War but quickly came over to the Union side. (The Confederacy, meanwhile, recognized a provisional government and counted Kentucky as a Confederate state.) As of the 1880 Census, the population center of the United States was in Kentucky.

20150625-UW_LocalRTWWith states split evenly on Right-to-Work, Kentucky is in play.

Through most of the 20th Century, the state’s U.S. Senate seats flipped between the parties, while Democrats usually controlled the state government. Currently the home of the Senate Majority Leader, Mitch McConnell (R), and of a major presidential candidate, Senator Rand Paul (R), the state government is split, with Democrats controlling the governorship and the state House (54-46) and Republicans controlling the state Senate (23-14 with one independent).

Today, the 50 states are split dead even between Right to Work and non-RTW status. Local Right to Work in Kentucky could be a game-changer in the struggle to establish a worker’s right not to join or pay dues to a union.

At this writing, Local Right to Work has been passed in 12 Kentucky counties. It started in Bowling Green.

Where are the site selectors?

Bowling Green, Kentucky’s third largest city, is a comfortable Southern-style town with an antebellum courthouse of red brick and soaring columns, just by the historic town square. The city sits comfortably at the intersection of the Old South and Industrial Midwest. It straddles that concrete ribbon of I-65, known here as the “automotive corridor” running from the Great Lakes to the Gulf of Mexico—a stretch of territory that includes most of the country’s manufacturing of automobiles and accessories.

Closer to Nashville than Louisville, Bowling Green is the commercial center of Southern Kentucky. It’s home to Fruit of the Loom and to Western Kentucky University, and it’s where some 800 workers at a General Motors plant assemble the Chevrolet Corvette.

The city offers many advantages for businesses, but it had one huge disadvantage—a disadvantage that competing cities were quick to point out to site selectors: it’s not a Right to Work jurisdiction.

Since 2012, when Indiana and Michigan went Right to Work, the area has suffered the odd anomaly of being the only stretch of I-65 from the Great Lakes to the Gulf where workers could be fired for not paying union dues. That has little appeal to employers looking to enter the U.S. market with a modern plant and a flexible, union-free workforce, nor does it appeal to an employer fleeing a unionized facility tied in knots by irrational work rules and unproductive habits.

The list of suitors who decided to go elsewhere included Beretta, the iconic American gun manufacturer that liked Bowling Green but chose nearby Gallatin, in Tennessee, which has a Right to Work law. Kyoto Tires wanted to come to the area, but its wary international owners changed their minds late in the process, picking Georgia, a Right to Work state.

  • Warren County Judge Executive Mike Buchanon (R), head of the local government, can list the projects and count the jobs that almost came to Bowling Green and Warren County before suitors jilted the area for locations in Right to Work states. Jim Waters, head of the state’s conservative think tank, the Bluegrass institute, can quote economic development experts who told legislators at a hearing last year:“Approximately 40 percent to 50 percent of our clients still prefer making right-to-work a qualifying pass-fail criteria. . . . Kentucky is considered for fewer manufacturing projects than if they were a right-to-work state.” —Mark Sweeney, Senior Principal, McCallum Sweeney Consulting, Greenville, South Carolina
  • “A majority of Atlas Insight’s manufacturing clients, especially those manufacturers from European countries looking to expand in the U.S., express a definite preference for right-to-work states. In fact, unionized states are often filtered out on the first screen and won’t even make the long list of locations.” —Kathy Mussio, Managing Partner, Atlas Insight LLC, New Jersey
  • “One of the first filters that can eliminate a state from site location consideration is its right-to-work status. . . . [W]hen a corporation uses their own process your state will be nearly immediately removed from consideration.” —Josh Bays, Site Selection Group, LLC, Dallas, Texas

Kentucky’s state Senate has passed a Right to Work measure repeatedly, most recently S.B. 1 (Senate Bill 1) passed on a vote of 24-12. But, despite a concerted effort by Republicans to take over the state House in last year’s election, that chamber remains under Democratic control, specifically control by Speaker Greg Stumbo, who has repeatedly sent RTW legislation to committee, never to emerge. (S.B. 1 died in a House committee by a vote of 15-3.)

That meant that, if localities in Kentucky were to protect workers’ rights and create a pro-business climate to attract jobs, they would have to take matters into their own hands.

Overlooked opportunity?

The opportunity to pass Local Right to Work is one that has been available for some 68 years. It’s just that nobody noticed, it seems.

Since the New Deal, the basic law concerning labor unions has been the National Labor Relations Act of 1935, known as the NLRA or as the Wagner Act after its sponsor, Senator Robert Wagner (D-N.Y.). Under the Wagner Act, unions could successfully demand that employers operate a closed shop (all workers must be members of the union), a union shop (non-union employees could have jobs but had a deadline to join the union), or an agency shop (workers could refuse to join the union, but had to pay the equivalent of dues).

In the 1946 campaign, congressional Democrats, except for some in the South, were seen as being in the pocket of labor unions. Republicans picked up 56 House seats and 11 Senate seats and gained control of both chambers. Senator Robert Taft (R-Ohio) and Representative Fred Hartley (R-N.J.) introduced the Labor Management Relations Act of 1947, known as the LMRA or Taft-Hartley, which received the two-thirds vote necessary to overcome a veto by President Harry Truman.

As noted by George C. Leef in his history of the Right to Work movement, Free Choice for Workers, the legislation amended the Wagner Act to, for the first time, protect employers and workers from unfair practices by unions, including coercion, the use of secondary boycotts (pressuring companies to cave in to union demands by hurting the companies they do business with), and prohibiting the closed shop.

Importantly, under the heading “Construction of Provisions,” Taft-Hartley included the language we now know simply as “14(b)”: “Nothing in this Act shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.”

The Supreme Court held in 1949 that language didn’t convey to states the right to pass Right to Work laws to states; they retained that right under the Wagner Act, as Justice Felix Frankfurter noted, but “14(b) was included to forestall the inference that federal policy was to be exclusive.” (Algoma Plywood v. Wisconsin Board) That’s an important distinction, and one that local officials point to as evidence that the states, having never lost the authority to regulate union security, are free to delegate that authority to their political subdivisions, including counties and sometimes cities.

As a general rule, federal laws pre-empt—that is, overrule—state laws that run contrarily. But Taft-Hartley explicitly provides for state and territorial governments to prohibit forced unionization. Thus, states and territories can pass Right to Work laws, as have 25 states plus the U.S. territory of Guam.

What about localities? Generally, local governments are treated as the creations of states. As such, they would seem to have the power to pass RTW. That’s especially clear when those localities operate under Home Rule provisions, in which state governments explicitly grant legislative powers to local governments—for example, to pass measures promoting economic development.

Last August, James Sherk and Andrew Kloster of the Heritage Foundation kicked off a spirited debate on Local Right to Work with their paper entitled “Local Governments Can Increase Job Growth and Choices by Passing Right-to-Work Laws.” They noted that “The Supreme Court has not ruled on whether federal law pre-empts local RTW ordinances. But since Congress has not clearly pre-empted them, localities are on strong legal footing to pass their own RTW ordinances.”

Sherk and Kloster noted:

Surprisingly, almost no cities or counties have passed local RTW ordinances since Congress modified the [1935 National Labor Relations Act] in 1947 [with the Taft-Hartley Act]. Many local government officials believe, likely erroneously, that federal law prevents them from doing so.

In the United States, federal law is “the supreme law of the land.” In other words, where there is a conflict between a valid federal law and a state, local, tribal, or other law, federal law pre-empts that law.

Determining whether federal law pre-empts another law is difficult, and often leads to court cases, some of which end up in the Supreme Court of the United States. As the Supreme Court has noted, “the purpose of Congress is the ultimate touchstone in every pre-emption case.” And in determining the intent of Congress in any pre-emption case, federal courts look at what Congress expressly said or what Congress clearly implied. Put another way, there is a “presumption against pre-emption”: Where Congress does not clearly pre-empt states in one area of the law, states are presumptively free to legislate in that area. Sometimes, as in the case of the NLRA, certain parts of a federal law are intended as the last word on the subject, while other parts of a law are designed to allow states and locales to set their own rules.

Congress has not clearly pre-empted local RTW laws: With this ambiguity as the legislative background, locales should feel free to experiment with their own RTW ordinances…

As the legislative record clearly shows, one of the reasons for enacting Taft-Hartley — specifically, for including section 14(b) dealing with RTW laws—was to remove any ambiguity as to whether states could pass such laws. Sherk and Kloster:

[Taft-Hartley] expressly renounces pre-emption of RTW laws: “Nothing in this subchapter shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.” In other words, clear statutory language in the NLRA as amended allows states and territories to pass RTW laws.

But what about cities, counties, or tribal governments? Would 29 U.S.C. § 164 prevent these entities from passing RTW laws? Does silence on this point indicate that Congress in 1947 sought to make clear that these entities could not pass RTW laws, or did Congress intend no federal preemption of RTW policies at the local level or on tribal territories? Certainly many local government leaders have simply assumed the former…

In fact, a Stanford Law Review article in 1957 raised this very question, which the Supreme Court has not resolved in the intervening 57 years. The article concluded that the NLRA did not prevent local governments from passing RTW ordinances.

Courts have often held the term “state” to mean “state and local” in contexts like this. In Wisconsin Public Intervenor v. Mortier (1991), the Supreme Court, without dissent, followed that reasoning. Writing for the Court, Justice Byron White declared that, “When considering pre-emption, ‘we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’” White was quoting Rice v. Santa Fe Elevator Corp. (1947). He added, “The principle is well settled that local governmental units are created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them . . . in [its] absolute discretion. The exclusion of political subdivisions cannot be inferred from the express authorization to the States because political subdivisions are components of the very entity the statute empowers.”

The Court, in City of Columbus v. Ours Garage and Wrecker Service, Inc. (2002), held unanimously that authority belonging to the states includes the states’ political subdivisions like counties, in the absence of Congress setting forth a “clear and manifest purpose to preempt local authority.”

Some commentators, arguing against Local Right to Work, point to a 1990 case, New Mexico Federation of Labor v. City of Clovis, in which a local RTW law in Clovis, New Mexico, was thrown out by a federal court, but the Kentucky counties point out, that case was effectively trumped by a higher court holding “What Congress has not taken away by § 8(a)(3) it need not give back by § 14(b) . . . When Congress enacted Section 14(b), it did not grant new authority to states and territories, but merely recognized and affirmed their existing authority.” (NLRB v. Pueblo of San Juan, 2002) Although Pueblo involved tribal powers, the legal argument was the same: Congress never preempted regulation of union security clauses.

Opponents in Kentucky cite a 1965 case, Kentucky State AFL-CIO v. Puckett, in which the state Court of Appeals invalidated a local RTW law that had taken effect several years earlier in the city of Shelbyville. However, the state passed a Home Rule statute in 1978 delegating to counties the power to regulate commerce “for the protection and convenience of the public” and to promote “economic development” of the county. They say that the Home Rule legislation effectively overruled the Shelbyville decision.

In Kentucky, the office of state Attorney General Jack Conway weighed in that they believe Local RTW is illegal in that state. (Conway, who lost to Rand Paul in the 2010 race for the U.S. Senate, is expected to be the Democratic nominee for governor this year.) Local RTW proponents have support for their legal argument from Chief Justice Joseph Lambert (retired) of the state Supreme Court and Justice Will Graves (retired)—one a Republican, the other a Democrat.

Gathering momentum

The Local Right to Work idea began to attract attention in August at a forum at the Heritage Foundation in Washington, D.C. Tied into the Sherk-Kloster paper, the forum featured Sherk, a research fellow in labor economics at Heritage; Kloster, legal fellow at the Meese Center for Legal and Judicial Studies (named for Edwin Meese III, a board member of the Capital Research Center); Patrick Gleason, director of state affairs for Americans for Tax Reform; William Messenger, staff attorney at the National Right to Work Legal Defense Foundation; and Jon Russell, director of the American City County Exchange, a local-government offshoot of the American Legislative Exchange Council, which is a national organization of conservative state legislators.

Russell said that, “In working with local officials across the country, I have come to realize that many of them don’t fully understand how much leeway they have in decision-making such as” Right to Work.

In his coverage of the Heritage forum, Moshe Z. Marvit of the leftist magazine The Nation wrote of Local RTW proponents that “Their goal seems to be to create beachheads in non-right-to-work states, such as Illinois, Ohio, or even New York, where the practice could spread and flourish. Whether the idea has any legal standing, or whether it’s simply being promoted to halt progressive momentum on the local level, its boosters have racked up enough past success that workers and labor-rights advocates should be concerned.” (Marvit’s attitude toward members of the panel was exemplified by his description of Russell as “a baby-faced partisan of the right.”)

Brian Mahoney of Politico reported from a meeting of the American Legislative Exchange Council that Local RTW proponents were “looking at counties in Washington, Montana, Wisconsin, Ohio, Pennsylvania, and—perhaps most aggressively—Kentucky.”

The Bluegrass Rebellion

Almost immediately after the Heritage forum, on September 8, Robert Stivers, president of the Kentucky Senate, wrote to the state’s attorney general asking about the validity of Local RTW.
By December, the topic was under active discussion throughout Kentucky political circles. Scott Jennings, a former aide to President George W. Bush and Senator Mitch McConnell (R-Ky.), wrote in an op-ed for the December 10 Louisville Courier-Journal:

Companies looking to open a new facility often will not consider states that aren’t right-to-work, meaning Kentucky isn’t in the conversation for countless opportunities.

Contrary to the political rhetoric from labor leaders, unions aren’t outlawed in right-to-work states but workers would have the option of not joining if they don’t want to. In Kentucky, if you work for a union shop, you are compelled to pay union dues whether you like it or not. Polling routinely shows people hate the idea of having their paychecks raided against their will.

At any rate, this is a dead issue in Frankfort for the next two sessions of the General Assembly. But the idea is very much alive elsewhere, as people close to the right-to-work movement tell me that several Kentucky counties are preparing to move forward with local ordinances over the next few weeks. Legal experts say that counties are permitted to do so under a state law known as “home rule,” and that recent rulings in other courts give local right-to-work laws an excellent chance of holding up under challenge.

Under Kentucky law, counties are permitted to pass local laws for a number of purposes including the “regulation of commerce for the protection and convenience of the public,” and for the “promotion of economic development of the county.”

Counties that lie near the Tennessee border feel a particular pinch when competing for economic development projects. Not only does Tennessee have a right-to-work law but it has no state income tax, another idea that would make Kentucky more competitive. Local officials in south central Kentucky compete for new jobs against their Volunteer State counterparts who aren’t running with anvils tied to their ankles. And, with Indiana’s new right-to-work law in effect, businesses along the Ohio River are no doubt looking north at greener pastures.

County governments can’t do anything about Kentucky’s uncompetitive state income tax but they appear to be boldly moving on the right-to-work front, no longer content to wait for Frankfort to get its act together. To be sure, passing a local right-to-work law would “promote economic development” in any county that did it.

Oh, what wonderful free-market chaos would exist if a few Kentucky counties passed these local right-to-work laws? What if Bullitt County, for instance, took the plunge? How many Jefferson County companies, already faced with a local government threatening a minimum- wage increase, would simply decide the business climate was better a few miles down the road

While this local right-to-work effort is in its early stages, Kentucky is apparently about to be a frontier where local governments, faced with state leaders who continue to force economic development constraints upon them, simply decide that enough is enough and take matters into their own hands.

Sure enough, as Jennings predicted, the deluge came, with one county after another passing Right to Work laws. It was Warren County (the Bowling Green area) that got the ball rolling.

Mike Buchanon, Warren County’s judge executive (head of county government), has often complained about the effect of not having RTW in Kentucky. “Site selection experts indicate that anywhere from a third to a half of all manufacturing projects do not consider Kentucky because of our Right to Work status,” he pointed out. He decided to do something about the problem.

Buchanon said that Senator Rand Paul (R), who lives in Bowling Green, put him in touch with the workers’ rights group Protect My Check, and he was promised that the county’s legal bills would be covered by the group in any court battle on the issue. That promise was important in giving the locality the freedom to act, because in today’s political climate, left-wing groups practice “lawfare”—litigation as a form of corrupt, hard-knuckled politics. Reform-minded officials are often the targets of intimidation by well-heeled national organizations and their affiliates, based on threats of lawsuits that could bust the budgets of many local governments.

Finally, on December 19, the Warren County Fiscal Court—the governing body in the county that includes Bowling Green—passed an ordinance making the county the first locality in more than a half century to enact its own Right to Work law.

“We’ll see you in court,” shouted Kentucky AFL-CIO President William J. Londrigan following the vote. Sure enough, a lawsuit against Local RTW was filed in January in Hardin County, the county that includes Elizabethtown in the Fort Knox area, by affiliates of the United Auto Workers, the International Brotherhood of Electrical Workers, the Teamsters, the Communication Workers of America, and the United Food and Commercial Workers.

Not surprisingly, Senator Paul praised the measure, declaring in a press release that “Local leaders will be able to attract and keep good quality jobs in the community while preserving the freedom to contract for employees and employers. I believe that workers should not be forced to pay dues just to keep a job let alone pay them to organizations that spend hundreds of millions of dollars electing candidates that so many of their members oppose.”

As described by Katie Brandenburg of the Bowling Green Daily News:

The ordinance would prevent employees from having to join a union or not join a union as a condition of their employment. It also would prevent employees from being made to pay dues, fees or assessments to a labor organization or to make a payment to a charity or other third party in lieu of such a payment as a condition of employment. It prevents recommendation, approval, referral or clearing through a labor organization from being conditions of employment.

Ron Bunch is president and CEO of the Bowling Green Chamber of Commerce and serves as the area’s economic development czar. Following the approval of the ordinance, he walked out of that historic meeting with his telephone pressed to his ear, calling site selectors who liked the college town’s blend of Southern charm and industrial development but, up to that moment, couldn’t see past the area’s forced-dues status. He would often hear them say something like “Call us when you have Right to Work”—which he did.

The result was dramatic. In less than four months, scores of businesses would express interest in Warren County regarding more than 30 new projects with the potential for more than $300 million in capital investment and some 3,000 jobs.

By the end of March—by a combined vote of 97-5 among county officials—Local Right to Work laws covered 12 Kentucky counties with almost 600,000 people.

That’s 150 miles of an almost unbroken stretch of counties along Kentucky’s southern border with Tennessee that have enacted identical right to work ordinances, with Bowling Green at the center of it, and some counties along the Indiana border as well.

Strong support

In a poll of 600 registered voters conducted by the Kentucky affiliate of Americans for Tax Reform, 58 percent backed Local Right to Work and 35 percent opposed.

Respondents were asked whether they agreed with this statement: “While workers should have the right to unionize, they should not be forced to join a union or pay dues to one they don’t support.” The statement was supported by 80 percent; 16 percent disagreed.

Pollster Kristen Soltis Anderson said that, “When we asked voters how they felt about arguments both for and against right-to-work laws, the most powerful message was about worker liberty. Across the political spectrum, voters think that while workers should have a right to unionize, they shouldn’t be required to do so as a condition of employment. Not only did nearly nine out of ten Republicans agree, but so did more than 70 percent of Democrats.”

The opinion of the general public matters. Ultimately, though, as the Local Right to Work rebellion spreads from Kentucky, it’s the opinions of union members and potential union members that count the most. Workers are fed up with being forced into unions.

A union official at Bowling Green’s Corvette plant told the New York Times: “We haven’t had a raise in eight years . . . you hear people say all the time ‘if I were in a right-to-work state, I’d withdraw.” Union Local 2164 President Eldon Renaud predicted in one public meeting that half his membership would drop out, given the option.

A look at that the UAW track record in Bowling Green Gives reveals one reason why members are so dissatisfied. Financial reports filed by the union in 2013 showed that, despite taking in over $500,000 in dues, the local spent less than $12,000 on “representational activities” and nothing “on behalf of individual members.”

As USA Today pointed out in a recent editorial:

Organized labor—suffering from decades of declining membership—is up in arms about the trend [in favor of Right to Work], which significantly reduces unions’ power. But from a standpoint of individual rights, it has to be seen as a positive development. Right-to-work states have stood up for people’s freedom to associate (or not associate) that courts have held is contained in the First Amendment.

Without right-to-work laws, employees can be forced to support an organization with which they disagree.

They might, for instance, be ardent social conservatives miffed by how unions almost always work to elect Democrats. While workers can usually opt out of financing political contributions, they have a harder time extricating themselves from union endorsements and the positions unions take on pending legislation. And workers might also object to union rules they feel hold them back, like those that reward seniority over initiative or protect unproductive co-workers. . . .

With forced membership, unions don’t need to be responsive. Right-to-work states force them to be, and when they are, they thrive.

Sometimes, in private conversations, union officials in Kentucky counties say they disagree with how the union spends their money and whom they endorse. They acknowledge that their members are tired of seeing their dues go to candidates they oppose and causes they abhor. Yet, as the last union miner in Kentucky was laid off last month, the union continued to shill for the Obama Administration in Washington that wages a War on Coal and that vetoed the Keystone XL pipeline.

Samuel Gompers, founder of the American Federation of Labor, observed that “No lasting gain has ever come from compulsion. If we seek to force, we but tear apart that which united, is invincible.” Union bosses seem to prefer the quick and easy fix of compulsion to the long-term challenge of working to stay relevant and to respond to the needs and political sentiments of millions of union members at the grassroots.

In communities across West Virginia, Missouri, Illinois, Ohio, Pennsylvania and Minnesota—all states with an interest in Local Right to Work initiatives—the union’s indifference to the views and concerns of their members may cost them everything.

About the Authors:  Brent Yessin is an attorney and a member of the advisory board of Protect My Check. Dr. Steven J. Allen (JD, PhD) is editor of Labor Watch. This article originally appeared in the April 2015 edition of Labor Watch and is republished here with permission.

How Unions Use "Scab" Lists to Intimidate Workers

Unions have long sought to demonize replacement workers, union members who cross picket lines, and others whom the unions label “scabs.” Sometimes, this takes the form of implied or explicit threats or other efforts to create fear and to intimidate. Now the Obama administration’s National Labor Relations Board is pressuring employers to give personal information to unions, while the Internet is providing new ways to publicize “scab lists” and make people toe the union line.

In the annals of labor history, few characters are more reviled than the so-called “scab”—the worker who refuses to join a union, or worse, whether or not a member, crosses a picket line during a strike. Unions have long have practiced the dark art of gathering the identities of such persons and exposing them to shame and intimidation among fellow workers. Often, names are compiled on a “scab list.” Over the years, unions have made effective use of the hatred of scabs, to maximize their bargaining advantage. You may have seen this description:

After God had finished the rattlesnake, the toad, and the vampire, he had some awful substance left with which he made a scab. A scab is a two-legged animal with a corkscrew soul, a water brain, a combination backbone of jelly and glue. Where others have hearts, he carries a tumor of rotten principles. When a scab comes down the street, men turn their backs and Angels weep in Heaven, and the Devil shuts the gates of hell to keep him out. No man has a right to scab so long as there is a pool of water to drown his carcass in, or a rope long enough to hang his body with.

Jack London, the early-20th Century fiction writer and journalist, is supposed to have said that. He didn’t, but the passage is often cited by union activists to express their opinion of replacement workers and picket-line crossers.

20150617-UW_Scabs-1

The word scab suggests something unsightly and diseased. That’s the point. The intent is to inflict intense feelings of fear, shame, and self-loathing upon persons who choose to go to work at wages less than those demanded by a union, to tell dissenting individuals that they must join the union-driven majority or face frightful consequences. A union anti-scab campaign does more than simply express disapproval; it enables full-scale character assassination. Such campaigns may produce assaults, vandalism, and among the targets, medical problems and suicide attempts.

The term comes from Latin scabere, “to scratch,” and from Old Norse for the crust that forms over a wound or sore. For more than 800 years, it’s been applied to people who are untrustworthy or despicable. In 18th Century England, laborers used it to denounce their peers who were unwilling to join a strike. One description from 1777 stated that “the Conflict would not have been so sharp had there not been so many dirty Scabs; no Doubt but timely Notice will be taken of them.” The spurious quote from Jack London was in use by 1926.

Today’s union loyalists know the power of the term “scab,” and understand that it serves their purposes more effectively than something less incendiary on the order of “replacement worker” or “strikebreaker.” To diehard unionists, scabs, even if poor and barely scraping by, are the vilest of the vile, lowest of the low.

Obama Administration policies are now helping unions in their witch hunts for “scabs.” The National Labor Relations Board (NLRB), as Diana Furchtgott-Roth reported in the February 2015 Labor Watch, is assisting the Administration’s friends in unions by issuing a new regulation that will force companies that face union elections to turn over workers’ contact information, such as home phone numbers and e-mail addresses, to labor organizers, who will then be able to threaten the employees with ostracism if they don’t do as they’re told.

The website of United Auto Workers Local 31 in Kansas City, Kansas published a “Scab List” from July 2014 that names employees and gives their department numbers. Similarly, during a 2010 employer lockout, United Steelworkers Local 7-669, which represents workers at the Honeywell uranium enrichment plant in Metropolis, Ill., posted a list of hundreds of “confirmed scabs” who “infect our community.”

Members of the International Association of Machinists and Aerospace Workers Local Lodge 1426, the union representing workers at the Smurfit-Stone Container Corp. plant in Sioux City, Iowa (and which struck in 2007), addressed an open letter to “scabs” within the local.

Dear Union Scab:
You have now sunk to the deepest point in the bowels of life. You have sold out your brothers and sisters. Was it you who fed management information in the months leading up to the contract? Every company has one! You, my former brother, have now turned into the lowly yellow-tailed scab rat. This type of rat is rarely seen up close. They slither along through the cracks and crevices. However, I did get a good glimpse of your yellow tail though as you scurried into the plant.

Members of the Air Line Pilots Association periodically update a “U.S. Master Pilot Scablist” that describes scabs this way:

A SCAB takes your job, a job he could not get under normal circumstances. He can only advance himself by taking advantage of labor disputes over the backs of workers trying to maintain decent wages and working conditions. He helps management destroy his and your profession, often ending up under conditions he/she wouldn’t even have scabbed for. No matter. A SCAB doesn’t think long term, nor does he think of anything other than himself. His smile shows fangs that drip with your blood, for he willingly destroys families, lives, careers, opportunities and professions at the drop of a hat. He takes from a striker what he knows he could never earn by his own merit: a decent job. He steals that which others earned at the bargaining table through blood, sweat and tears, and throws it away in an instant—ruining lives, jobs and careers.

This is ugly stuff. Yet it constitutes rational and expected union behavior—so commonplace, in fact, that the “Jack London” scab definition made its way into a 1974 U.S. Supreme Court opinion on libel, as an example of the usual attitude toward replacement workers: “Jack London’s ‘definition of a scab’” is “a lusty and imaginative expression of the contempt felt by union members towards those who refuse to join. . . . It has become a familiar piece of trade union literature . . . published countless times in union publications . . . “ In an earlier case, the National Labor Relations Board cited the “Jack London” description as permissible speech during a labor dispute.

Why the hate?

Strikebreakers, whether or not they belong to a union, undercut representation and collective bargaining. By making themselves available for work in the event of a strike, they effectively lessen the power of the strike as a bargaining tool. Employers, especially in local labor markets with high unemployment rates, may have large pools of such workers at their disposal, especially for unskilled jobs. And these employees, by providing labor in a quantity sufficient to maintain production at full or near-full levels, induce strikers to return to work with their demands unmet.

Unions see an employer’s decision to hire replacements as an act of war. Their response often includes old-school persuasion against non-joining workers, who make for more vulnerable targets than the employer. When solidarity is critical to success, a forgiving approach to dissent isn’t an option. The imposition of violence, and fear of it, becomes a way of doing business. Even independent-minded employees may decide against crossing a picket line if retaliation against them appears imminent, overwhelming, and lasting. The label “scab,” once acquired, becomes almost impossible to remove.

To what extremes do unions go to discourage non-joining workers?

Consider the behavior of the United Auto Workers during a pair of strikes against Caterpillar Inc. during the 1990s. The union’s behavior during these strikes, which lasted a total of nearly two years, prompted eight “scabs,” and four of their spouses, to sue the UAW and an affiliate for “extraordinary harm caused to them by the union’s outrageous conduct.” Operating from scab lists, union loyalists made frequent threatening phone calls to the line-crossers’ homes on the order of: “Look out for your wife and son” and “Look out for your house.” Callers also would warn wives with lines such as “Your husband could get shot” and “Your husband better not cross that picket line if he knows what’s good for him.” Offspring were not spared either. In one case, a union caller asked a scab’s daughter, “How would you like to have your home burned down?” Another caller delivered this message: “Your daughter has a cute ass. It would be a shame if something happened to her.”

Automobile surveillance was a part of the scab treatment. Brawny men would cruise up and down streets where known picket line-crossers lived, honking their horns, staring at family members, making violent gestures and yelling threats. Union saboteurs also vandalized employee cars, often planting jack rocks and roofing nails under their tires, whether at home or work. Union officials not only didn’t discourage such behavior, they openly encouraged it. The president of one UAW local addressed a meeting of stewards and committeemen this way: “If you happen to recognize any of the people going across the line and it happens to be your neighbor, and you happen to catch him out at night with a baseball bat or a golf club and beat the hell out of him and put him in the hospital, that’s alright, but no violence on the picket line.” And a bargaining committee chairman told stewards: “Give us their names and we will counsel them (line crossers) over the phone. If I see them on the street, I will counsel them on the street. Then, if that doesn’t work, you guys can go out and beat them up.”

In the end, Caterpillar in March 1998 renewed its collective bargaining agreement with the UAW, after a period of more than six years in which no contract was in force. While the new contract preserved management-supported productivity gains, it also required that all 160 workers fired for participation in acts of violence be rehired. Regardless of who won, if anyone truly won, one thing was clear: The UAW had no compunctions about inflicting criminal terror upon its competition. Equally to the point, the compilation and posting of scab lists made the terror possible.

Right to Work states targeted

The United Auto Workers’ fondness for scab lists never really went away; it just went south. In Right to Work southern states, where “voluntary” unionism ostensibly prevails, the UAW increasingly has been resorting to this tactic in trying to organize foreign-owned assembly plants. It is of more than passing significance that a key organizer of those Caterpillar strikes, Dennis Williams, last June became UAW general president after having served as secretary-treasurer. Whether or not Williams had sanctioned or taken part in the intimidation campaign is a separate issue. But he is a supporter of using scab lists to win representation. The new UAW secretary-treasurer, Gary Casteel, the union’s point man during its unsuccessful 2013-14 organizing drive at the Volkswagen plant in Chattanooga, also backs the practice. It’s much easier to persuade reluctant workers to join, he argues, when the law tells them that “if you don’t think the system’s earning its keep, then you don’t have to pay.” Yet the true test of a union’s respect for individual worker rights is what happens if and when the union wins representation. And the UAW, predictably, isn’t about to defend any dissenters.

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According to an article appearing in the Washington Free Beacon in early-October 2014, United Auto Workers officials at General Motors’ unionized Saturn plant in Spring Hill, Tenn., which closed for a while when GM when bankrupt in 2009, but reopened later on, have been putting the squeeze on non-joiners. UAW Local 1853 published a “Scab Report” listing the names and work stations of more than 40 Spring Hill workers. The heading read: “The following individuals are NON-dues-paying workers. They have chosen to STOP paying Union Dues. If you work near one of these people please explain the importance of Solidarity and the power of collective bargaining.”

Apparently, this was more than a polite request. One nonunion employee, who requested anonymity for fear of union retribution, said harassment began soon after the release of the report. Three separate persons approached him, two of them visibly hostile. “They put our names out there so people will pressure us,” said the worker. “One guy called me a scab outright. I don’t appreciate that. I was disgusted by it.” Local 1853 President Tim Stannard admitted to publishing the list. Another anonymous employee, a longtime union member, already disenchanted with union nepotism and support for subpar workers, stated that the scab list was the reason for his desire to drop out of the United Auto Workers. He stated: “I’ve had more trouble with the union than with management. After this I will never come back to the UAW.” And he added: “What they do behind the scenes is harass non-members, those who choose not to belong. The workers [in Chattanooga] can look forward to seeing their names on a list just like this one.”

United Auto Workers scab lists have popped up in the Midwest, too. UAW Local 31, which represents nearly 3,000 wage and salary workers at the Fairfax GM assembly plant in Kansas City, Kan., has published the names of non-joining workers on its website under the category, “Important Information.” One nonunion worker at the plant, insisting upon anonymity, said the motive is coercion: “They can’t have dissenters among their ranks because it doesn’t look good to anyone thinking about joining.”

Other unions also are using scab lists to intimidate dissenting workers. In August 2011, two days into a two-week walkout at Verizon by 45,000 members of the Communications Workers of America and International Brotherhood of Electrical Workers, a group of strikers sent a message to “scabs” via Facebook. Dripping with low, taunting sarcasm, the message read:

Dear Scab:
I bet you didn’t expect to see us at 4 A.M. this morning! We were bright-eyed and bushy-tailed, and waiting to give you our daily union greeting. You looked a little tired…is everything ok? Pretty tricky trying to get the jump on us, but we’re a lot smarter than you think. Can you see how our tactics are changing? How it seems like you can’t shake us? Can you feel the noose tightening? That noose is called union brotherhood. See, you’ve got only yourself to rely on, we have each other and our families. When we shut you down, stop insulting me by saying, “I had no choice.” I’m tired of hearing it. Life is full of choices. You’re just too cowardly to make the right one.

Government workers, too

Public employee unions also have taken to assembling scab lists. Like their private-sector brethren, they are adept at rationalizing the practice. American Federation of State, County and Municipal Employees (AFSCME) District Council 25 recently revealed the identities of workers who had opted out of continued union membership in the wake of Michigan’s enactment late in 2012 of Right to Work legislation. Lawrence Roehrig, secretary-treasurer of the Lansing, Michigan-based council, sees such lists as nothing more than an attempt to educate and inform. “You’re not harassing them,” says Roehrig. “It gives you an indication of who’s paying and who isn’t.” Yet anyone with political smarts can see the ulterior motive is to ostracize and intimidate non-members. The context of his remark was a news report that AFSCME Local 1603, which represents workers at Hurley Medical Center in Flint, had posted the names of workers who exercised their legal right to leave the union. A number of unidentified workers at the facility had stated the point of the campaign was pressure.

Unions, ever on the lookout to expand membership, may become more brazen in their use of scab lists as an organizing and bargaining tool. So long as they know that making (or carrying out) threats of physical assault and property damage have a good chance of not being punished, they have an incentive to generate these lists.

The issue thus can be restated as one of colliding rights. On the one hand, a union, as a matter of freedom of speech, has a right to collect and disseminate the names of non-joiners. On the other hand, non-joiners, who for obvious reasons don’t consent to having their names revealed, have a right not to be harassed or assaulted.

Actual malice

The courts have set a high bar for successful defamation suits against unions with regard to scab lists.

In 1999, the U.S. Court of Appeals for the 11th Circuit ruled in Dunn v. Air Line Pilots Association that ALPA’s compilation of a scab list during a 1989 sympathy strike against Eastern Air Lines, and its distribution of 50,000 copies of that list after the strike, did not constitute defamation. The court applied the “actual malice” test established by the U.S. Supreme Court in New York Times v. Sullivan (1964), which applied to public figures and public issues. Actual malice means that one must have made the statement “with knowledge that it was false or with reckless disregard of whether it was false or not.” That must be shown by clear and convincing evidence. (On labor law, as in this case, federal law often preempts—that is, takes the place—of state and local law.)

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Similarly, the Supreme Court of Iowa, in Delaney v. UAW Local 94 of John Deere Manufacturing Co. (2004), dismissed a suit filed by four nonunion workers who routinely had been subjected to taunts, insults, and threats for crossing a picket line during a 1987 strike at the John Deere Dubuque Works. A union newsletter contained what could be called incitements to violence against the nonunion workers. Yet the court concluded: “The content of the union newsletter is protected speech, and federal law preempts the plaintiffs’ state defamation claim.”

One potentially effective approach to protect dissenting workers from union bullying would be a wider application of the doctrine known as Intentional Infliction of Emotional Distress, or the “tort of outrage.” Here, a claim of harassment must pass a four-part test: (1) the defendant acted intentionally or recklessly; (2) the defendant’s conduct was extreme and outrageous; (3) the defendant’s act was the cause of the distress; and (4) the plaintiff suffered severe emotional distress as a result of the defendant’s behavior. The bar is at once high enough to guard against abusive and/or frivolous lawsuits, yet low enough to discourage behavior palpably intended to traumatize the innocent. In the UAW’s Caterpillar campaign of two decades ago, dissenting workers and family members suffered a good deal more than the proverbial hurt feelings. They lived for months with a well-grounded fear of being beaten or killed—and unions are no strangers to beating or killing.

Scab lists enable the creation of such duress. Would it not make sense, therefore, to treat the dissemination of such lists as punishable insofar as they facilitate terroristic threats or behavior.

From unions’ perspective, it makes sense to employ every method at their disposal, legal or otherwise, to persuade new workers at a unionized worksite to join—and once having joined, to behave in accordance with union dictates. Yet the primary goal of sound labor policy is to facilitate worker freedom, whether with or without unionism. Union bargaining power is a means to this end, not an end unto itself. While unions have a right to expand their membership, they decidedly don’t have a right to terrorize workers into becoming members and being docile in the event of a strike.

Time and again, by their demonstrated behavior, unions have revealed that the real purpose behind creating and disseminating scab lists is intimidation. Glenn Taubmann, a staff attorney with the Springfield, Va.-based National Right to Work Legal Defense Foundation, puts it this way: “It comes as no surprise that unions in Right to Work states engage in all sorts of harassment and pressure tactics against independent-minded workers. The ugly truth is that once UAW bosses get into power, they will not tolerate any worker who refused to ‘voluntarily’ join and pay dues.

“Their view of ‘voluntary’ unionism,” he said, “is an iron fist against anyone who dissents.”

About the Author:  Carl F. Horowitz heads the Organized Labor Accountability Project for the National Legal and Policy Center in Falls Church, Virginia. This article originally appeared in the May 2015 issue of “Labor Watch” and appears here with permission.

Strategists Split Over Local Right-to-Work

The Local Right to Work strategy is not universally supported, even among conservatives, business organizations, and others who support a worker’s right not to join or pay dues to a union.

Presidential candidate Rand Paul, who helped get the Local RTW movement underway in the state, joined with his fellow Kentucky Senator, Senate Majority Leader Mitch McConnell, to author a February 8 op-ed in which they stated: “Local jurisdictions throughout the commonwealth are fed up with waiting for a state or federal law that will provide them with the safety net from big labor they need. That’s why we support Warren County’s recent move to pass its own right-to-work legislation. Other Kentucky counties, including Simpson, Fulton, Todd and Hardin, have followed Warren County’s lead to stay competitive. Local jurisdictions should do everything they can to increase their own competitiveness, which is why we applaud other counties in Kentucky following in their footsteps.”

The concept is backed by people associated with most of the leading groups in the Right to Work field, including Americans for Tax Reform and its affiliate, the Center for Worker Freedom; the Bluegrass institute, Kentucky’s state-level conservative think tank; the American City County Exchange, representing conservative local officials; the Tea Party-oriented group Americans for Prosperity; the Kentucky Chamber of Commerce; and Protect My Check, a 501(c)(4) nonprofit organization that helps workers who stand up to unions.

But there’s a group missing from the list: the National Right to Work Committee, the nation’s most prominent organization focusing on the issue. The committee was formed in 1955, with Fred Hartley, the co-sponsor of Taft-Hartley, as its president. (Disclosure: My father, a movie projectionist, was helped by NRWC in the early 1960s after the local theatrical workers’ union refused to let him join and he was fired from his job for not being a union member.) NRWC’s sister organization, the National Right to World Legal Defense Foundation, was founded in 1968.

Sean Higgins of the Washington Examiner reported:

The rift came into public view Wednesday [February 4] when the president of the National Right to Work Committee said he had been . . . chewed out by Sen. Rand Paul, R-Ky.

“I got lectured for 15 minutes by Senator Rand Paul yesterday on this very issue, saying that we had made so many people mad about our position,” said NRTW President Mark Mix during an appearance at the conservative Leadership Institute. The comments were in reaction to a question from the audience.

Later in the speech, Mix said: “Like I said, I got a call from a well-recognized politician saying, ‘People are so mad at you. You’ve set back the right-to-work cause for years.’ That’s literally a quote.” . . .

Matt Patterson, executive director of the Center for Worker Freedom . . . says that that progress shows the approach is working. “Clearly what we are seeing in Kentucky and elsewhere is legislators realizing that there is an appetite for this,” he said.

NRTW sharply disagrees, saying the legal argument is weak and that it is bad political strategy to boot because it will undermine efforts to pass laws at the state level. Lawmakers higher up in the political establishment won’t feel as much pressure if they think the issue has already been addressed, Mix said.

“In Kentucky, we are very close to passing a right-to-work law. In fact, the state senate passed a right-to-work law by a two-to-one vote,” Mix said in his Wednesday speech. “The [legislative] sponsor of the right-to-work bill down there is now saying that they will not have a vote in the Kentucky statehouse because the local option is the way to go.”

Mix also argued that it was a bad approach because county ordinances can be fairly easily overturned and unions are well-organized at that political level. On the other hand, no state right-to-work law has ever been overturned, he noted.

The split is of a familiar type to anyone who follows politics or history. It arises between those who believe in a strategy of incremental change and those who take an all-or-nothing approach.

Should the American colonists seek the rights of British citizens while remaining loyal to the King, or fight for independence? Should opponents of slavery in the U.S. seek to limit the importation of enslaved people and prevent the extension of slavery into new territories, or demand immediate abolition? Should the U.S. attack the Soviet Empire, or contain it, deny it money and technology, and otherwise create the conditions to bring about its collapse from within? Should supporters of healthcare reform demand the outright repeal of Obamacare, or settle in the short term for “fixing” its worst provisions?

On the one hand, every time a jurisdiction enacts a Right to Work law, it puts competitive pressure on neighboring governments to enact such laws. On the other hand, a patchwork approach prevents RTW supporters from, say, turning the next election into an up-or-down referendum on the concept, which is supported by an overwhelming majority of Kentuckians.

As in football—Do you go for three yards and a first down, or throw the bomb for a touchdown?—the correct answer isn’t always clear. Sometimes an incremental approach creates a domino effect and helps you reach your ultimate goal, and sometimes it lets the steam out of your engine. Sometimes an all-or-nothing approach gets you all, and sometimes it gets you nothing.

About the Author:  Dr. Steven J. Allen covers labor union organizing and the environmental movement for Capitol Research Center. He previously served as press secretary to U.S. Senator Jeremiah Denton, as editor of Tea Party Review magazine, and as senior researcher for Newt Gingrich 2012. He has a master’s degree in political science from Jacksonville State University, a law degree from Cumberland Law School, and a PhD in Biodefense from the College of Science at George Mason University. This article originally appeared in the May 2014 issue of Labor Watch and appears here with permission.

Jejune in April

NEA rolls out its plan for what to do in case its worst nightmare – worker freedom – comes to pass.

Last July, the California Teachers Association released “Not if, but when: Living in a world without Fair Share,” a 23-page PowerPoint presentation unearthed by Mike Antonucci. The document revealed that teacher union honchos in the Golden State are expecting that pending litigation may very well put an end to mandatory union dues, and they’re exhorting local labor leaders to rise to the challenge.

Just last week, Antonucci “declassified” a similar document, this one coming courtesy of CTA’s parent, the National Education Association. Whereas CTA’s dispatch was downright perky – easy-to-read history, timeline and suggestions – its NEA counterpart (actually put together in April of 2014, three months before CTA’s version) is a snooze of Van Winklean proportions. Its 23 pages are packed solid with endless lists, boring bullet points and useless information. Perhaps a warning should have been posted: “Do not read before driving or operating heavy machinery.”

And while the CTA version took a few obligatory swipes at conservatives (what would a union missive be without them?), NEA devoted almost an entire page to its #2 bogeyman – the American Legislative Exchange Council (ALEC). Interestingly, the graphic the union uses for the think-tank includes descriptors like limited government, free markets, and federalism – all of which suggest that ALEC believes in the Constitution. NEA clearly has other ideas on the nation’s governance. (The memorandum’s exclusion of union enemy #1, the Koch Brothers, is inexplicable.)

And then there are the factual errors in the document, perhaps the most glaring of which is in the introduction. It reads,

Fair Share is a commonsense way to protect equity, individual rights, and the pocketbooks of educators. Also known as Agency Fee, Fair Share provisions ensure that all educators contribute to the legally required representation and negotiated benefits provided to them by local associations. Fair Share does not force individuals to join the Association. It simply makes sure that all educators contribute to the negotiated benefits and legally required representation that they all enjoy. (Emphasis added.)

NEA and other unions repeat this lie so often that it’s commonly accepted as fact. But it’s not truthful at all, and the unions know it. As Heritage Foundation senior policy analyst James Sherk points out,

The National Labor Relations Act (NLRA) allows unions that demonstrate majority support to negotiate as exclusive representatives. If they do so they must negotiate fairly on behalf of all employees, including those who do not pay dues. However unions may disavow (or not obtain) exclusive representative status and negotiate only for their members. Nothing in the National Labor Relations Act forces exclusive representation on unwilling unions. (Emphasis added.)

In other words, if unions don’t want to represent non-members they are not required to do so. But they invariably insist on providing benefits to all.

The document contains another lie that NEA and other unions like to perpetuate.

The poorest states in the US are those in which unions don’t have many members or much power. These are called “Right to Work” states, but what that phrase really means is that workers there have no rights and work for less.

But as I have written before, right-to-work states are actually much stronger economically than their forced-dues counterparts. The Illinois Policy Institute’s Paul Kersey reports that:

  • From 2002 to 2012, states with right-to-work laws saw a 7.2 percent increase in payroll employment, compared to a 2 percent increase in other states.
  • As of September 2014, right-to-work states had an average unemployment rate of 5.5 percent, compared to 6 percent in non-right-to-work states.
  • From 2000 to 2010, right-to-work states saw population growth that was twice as fast as that in other states (13.6 percent compared to 7.3 percent).
  • Median wages in right-to-work states appear $4,345 lower than in other states. However, once you take into account cost of living and local taxes, right-to-work state wages rise. In fact, the cost of living is 16.6 percent higher in states without right-to-work laws.
  • Right-to-work economies grew by 62 percent from 2002 to 2012, compared to just 46.5 percent growth in other states.

With its professed dedication to teachers’ best interests, there is also an omission that needs to be addressed. Typically when teachers join a union, they are forced to join three – the local, a national union and its state affiliate. However, there are teachers who enjoy the perks they get from their local but feel no need to send most of their dues money to the state and national entities which suck up about 80 percent (over $800) of a teacher’s total dues payment. If your politics are on the right, or you are a centrist or maybe not political at all, do you really want hundreds of your dues-dollars going to the leftist causes that the state and national unions regularly support? It is possible to form a “local only” teachers union, but only after engaging a lawyer and going through a laborious disaffiliation process. And NEA, far more interested in its bottom line than its teachers, has no mention of this option in its document.

Beyond the errors of omission and commission, there is not much else to comment on. It can be summed up as, “Tell people why they should join the union.” “Go after the younger workers.” “Engage non-members.” “Develop an app.” Tired tactics. Fallacious arguments. Same old, same old.

Zzzzzzzzz.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

“Scott Walker Fails the Test of Common Decency”

… or at least that’s what protection racket leader Randi Weingarten wants us to believe.

My goodness! From the response in certain quarters, you would think that Wisconsin governor Scott Walker breached national security – and then maybe tried to lie his way out of it! But no. All he did last week was sign off on right-to-work (RTW) legislation that lets workers in the Badger State choose whether or not they want to join and pay dues to a union as a condition of employment..

That’s it. Nothing more. Unions are not outlawed. Union members don’t have to ride on the back of the bus. Unions – heaven forbid – still don’t have to pay a penny in income tax. All they have to do is compete for members just like every other privately run organization in the country. If you buy a gun, you are not forced to pay money to the NRA. If you take out a book from the library, you don’t have to pay tribute to the American Library Association. So why in God’s name should a worker be forced to pay a union in order to be employed in certain fields?

I really can’t answer that question, and after reading condemnations from all the usual suspects, I’m still clueless. American Federation of Teachers president Randi Weingarten came out with a press release after the Wisconsin right-to-work law was passed that transcended hysteria. In addition to claiming that Walker fails “the test of common decency,” she lectured,

By his actions and statements, Walker has revealed that his plan to win the Republican nomination is a willingness to say and do anything to attack and tear down workers.

If you want a strong middle class, then you can’t take out the unions that built it. If you want higher wages, then workers need a voice.

The workers of Wisconsin are resilient. They will continue to fight back and wait until they have a governor who will work with them, not work to break them.

Again, no workers are being attacked and torn down. No one is refusing them their union. No one is trying to break them. (A few cynical types, but not me of course, have suggested that the real reason Weingarten is upset is because fewer union members would result in less money for the union. And a lower membership rate could mean that her $543,679 income, well within the top one percent, is in jeopardy.)

Other responses to Walker have been just as over-the-top. Marc Perrone, president of the 1.3 million strong United Food and Commercial Workers International Union, weighed in.

The truth is by standing against hard-working families, Gov. Scott Walker should be ashamed, but we know he is not. He has chosen to pursue a radical agenda that willingly ignores that this law will devastate countless workers and their families. Make no mistake, this law gives irresponsible corporations, let alone politicians, the right to exploit and mistreat countless men and women all across Wisconsin.

This barely coherent statement is pathetic, as is the notion that countless men and women are now going to be “mistreated.” In fact, since Michigan went RTW, the reverse is true. There, in less than two years of worker freedom, employment has grown 3.3 percent and earnings have increased 5.4 percent, both above the national average.

Even President Obama put on his pity-party pajamas and intoned,

… it’s inexcusable that, over the past several years … there’s been a sustained, coordinated assault on unions, led by powerful interests and their allies in government.

So even as its governor claims victory over working Americans, I’d encourage him to try and score a victory for working Americans — by taking meaningful action to raise their wages and offer them the security of paid leave.

That’s how you give hard working middle-class families a fair shot in the new economy — not by stripping their rights in the workplace, but by offering them all the tools they need to get ahead.

Perhaps the president would be advised to examine the facts instead of engaging in demagoguery. James Sherk, senior policy analyst in labor economics at the Heritage Foundation, recently pointed out that in addition to protecting a worker’s freedom, right-to-work laws attract new businesses and jobs (unionized firms were 10 percent more likely to go out of business within seven years). Also, if a business is going to relocate, RTW laws are a major selling point. Also as I wrote last month, the Illinois Policy Institute’s Paul Kersey reports that RTW states are much stronger economically than their forced-dues counterparts:

  • From 2002 to 2012, states with right-to-work laws saw a 7.2 percent increase in payroll employment, compared to a 2 percent increase in other states.
  • As of September 2014, right-to-work states had an average unemployment rate of 5.5 percent, compared to 6 percent in non-right-to-work states.
  • From 2000 to 2010, right-to-work states saw population growth that was twice as fast as that in other states (13.6 percent compared to 7.3 percent).
  • Median wages in right-to-work states appear $4,345 lower than in other states. However, once you take into account cost of living and local taxes, right-to-work state wages rise. In fact, the cost of living is 16.6 percent higher in states without right-to-work laws.
  • Right-to-work economies grew by 62 percent from 2002 to 2012, compared to just 46.5 percent growth in other states.

And for those who insist that this is a “big business vs. the little guy” battle, a recent Gallup Poll found that 71 percent of Americans favor RTW laws with just 22 percent opposing. Gallup also found that 82 percent agree that “no American should be required to join any private organization, like a labor union, against his will.”

Again – and this cannot be stressed enough – RTW legislation is not about outlawing unions, but rather freeing employees from a burden they never bargained for. Scott Manley, vice president of government relations for Wisconsin Manufacturers & Commerce, put it best. “If you don’t support right-to-work, you support the proposition that workers should be fired if they don’t pay dues to a union,” he said.

Without RTW, workers have to pay up or else. When the Mafia engaged in this kind of activity, it was called a protection or extortion racket. Unions try to sanitize their operation by claiming that workers are paying their “fair share.” But in fact, it’s nothing more than a shakedown, and I congratulate Scott Walker and his legislature for liberating workers and enabling Wisconsin to become the 25th RTW state. We are officially half-way there.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Fifty States of Right-to-Work?

Elected officials, the courts and John Q. Public are supporting worker freedom these days; teachers unions and other public employee unions are on the run.

Last Monday, Illinois governor Bruce Rauner issued an executive order that, if it stands, will absolve state workers from paying forced dues to a union. As The Wall Street Journal reports, Rauner declared that Illinois’s contracts with public unions “violate the First Amendment by forcing workers to associate with the union against their will.” Rauner instructed all state agencies to keep the workers’ dues in escrow, pending the outcome of a federal court lawsuit that he filed the same day.

Needless to say, the unions and their friends in Springfield aren’t doing cartwheels over his right-to-work (RTW) directive. Even prior to the order, the teachers unions had targeted the recently elected governor. Two weeks ago, Chicago Teachers Union boss Karen Lewis attacked Rauner, accusing him of being (Wisconsin governor) “Scott Walker on steroids.” Also before the announcement, local teacher union lobbyist Matthew Johansson declared that the governor is trying to “destroy us.”

After the announcement, Illinois Education Association president Cinda Klickna said that the attack on “fair share is extremely serious and will be monitored very carefully.” She added, “This attack is clearly intended to weaken the unions that fight for the middle class and for the students who attend our schools. We can’t let that happen.” The Illinois Federation of Teachers referred to the action as a “blatant abuse of power.”

The reality – beyond the union harrumphing and all-around hysteria – is this: In 26 states and D.C., workers are forced to pay unions as a condition of employment. The unions call this “fair share” because they say all workers benefit from their collective bargaining efforts. But if a worker doesn’t want to be part of the collective, he/she still must belong because the union demands monopoly status; a worker is not allowed to bargain on his/her own or hire another party to do so.

Hence RTW is quite simply an individual-rights issue. The workers the unions refer to as “free riders” are really “forced riders.” If you were going from Point A to Point B and wanted to walk, how would you feel if someone told you that you had to take the bus … and, of course, pay for the ride to boot?

Very importantly, not only does RTW liberate workers, it has many other far-reaching benefits. After Michigan became a RTW state in 2012, the West Michigan Policy Forum reported, “… of the 10 states with the highest rate of personal income growth, eight have right-to-work laws. Those numbers are driving a net migration from forced union states: Between 2000 and 2010, five million people moved to right-to-work states from compulsory union states.”

Also, in a new economic profile, the Illinois Policy Institute’s Paul Kersey reports that RTW states are much stronger economically than their forced-dues counterparts:

  • From 2002 to 2012, states with right-to-work laws saw a 7.2 percent increase in payroll employment, compared to a 2 percent increase in other states.
  • As of September 2014, right-to-work states had an average unemployment rate of 5.5 percent, compared to 6 percent in non-right-to-work states.
  • From 2000 to 2010, right-to-work states saw population growth that was twice as fast as that in other states (13.6 percent compared to 7.3 percent).
  • Median wages in right-to-work states appear $4,345 lower than in other states. However, once you take into account cost of living and local taxes, right-to-work state wages rise. In fact, the cost of living is 16.6 percent higher in states without right-to-work laws.
  • Right-to-work economies grew by 62 percent from 2002 to 2012, compared to just 46.5 percent growth in other states.

Much to the unions’ consternation, the RTW movement is picking up momentum across the country. Politico’s Brian Mahoney reports that legislation has been introduced in New Mexico, Missouri, West Virginia and Kentucky.

The bills have already cleared committee hurdles in New Mexico and Missouri. All but the Missouri bill were introduced by Republicans; in Missouri, the measure was introduced by state Rep. Courtney Curtis, a Democrat and an African-American who would limit right to work to the construction industry to combat what he sees as bias in minority contracting. In Kentucky, right-to-work ordinances have been passed in five counties, though it isn’t clear federal law allows the adoption of right to work anywhere except at the state and territorial level. Legal challenges are already underway.

Additionally, the American people are strong supporters of RTW laws. In a poll conducted right before Labor Day last year, Gallup found that 82 percent of Americans agree that “no American should be required to join any private organization, like a labor union, against his will.” Also, as Mike Antonucci reports, by a 2-1 margin – 64 to 32 percent – “Americans disagree that workers should ‘have to join and pay dues to give the union financial support’ because ‘all workers share the gains won by the labor union.’”

Much of the recent RTW activity has been undoubtedly spurred by the June 2014 Harris v Quinn Supreme Court decision, in which SCOTUS agreed with the National Right to Work Legal Defense Foundation, ruling that homecare workers in Illinois could not be forced to join the Service Employees International Union.

And in the legal on-deck circle is Friedrichs et al v CTA, which is on a path to reach SCOTUS within a few months. This litigation has ten teachers and the Christian Educators Association International – a union alternative – taking on the California Teachers Association with a lawsuit aimed squarely at California’s “agency-shop” law, which forces teachers to pay dues for collective bargaining activities. The Center for Individual Rights is representing the teachers, with help from Jones Day, an international law firm.

So, let’s see – RTW is gaining favor in state houses, the courts and with the citizenry. And please keep in mind, no one is talking about outlawing unions; RTW is simply about making them voluntary associations, just like every other organization in the U.S. Really nothing controversial, unless you are a wolf that preys on workers … all the while pretending to be a shepherd.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Union Power in the States: Lost Pay, More Taxpayer Debt

Summary: New studies on the harms of American labor laws paint a grim picture. The laws drag down economic growth, suppress workers’ wages, and cause government debts to soar.

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Could your family use an additional $13,100 a year? If you live in a forced-unionism state, that’s what the lack of a Right to Work law may be costing you.

At the same time, you’re harmed by the federal mandate that gives unions the power of monopoly (a.k.a. “collective”) bargaining. That federal mandate, it’s estimated, costs workers about 15 percent in forgone income.

In addition, unionization of government employees has helped add many billions of dollars to the unfunded liabilities of public employees’ pensions—a debt for which taxpayers will be held responsible.

Three new studies from the Competitive Enterprise Institute (CEI), the Washington, D.C. think tank where I am a senior fellow, examine these harmful consequences of unionization and of laws that push unionization. The purpose of the studies is to identify the problems caused by union power in states across America; express the problems in numbers; rank the states based on the problems’ severity; and point the way toward solutions by comparing states to see what policies work.

1. Monopoly (“collective”) bargaining

Labor law history makes clear that a key factor in union power is monopoly bargaining, also known as collective bargaining. Monopoly bargaining is an element in the National Labor Relations Act (NLRA), also known as the Wagner Act after its lead sponsor in 1935, U.S. Sen. Robert F. Wagner (D-N.Y.). The Wagner Act’s Section 7 provides:

“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining…”

Collective bargaining becomes monopoly bargaining when a union acts as the exclusive collective bargaining representative for all members of a bargaining unit (a group of workers who are said to share an economic interest, such as all the assembly-line workers at a factory). If one is not a member of the union or disagrees with the union’s bargaining position, one is left without a voice in bargaining. Workers who disagree with the union have no recourse, as they have no way to bargain individually with the employer regarding their own employment conditions and wages.

The intellectual groundwork for the NLRA, set during the first half of the 20th Century, was known as the High-Wage Doctrine. According to this doctrine, higher wage rates translate into greater purchasing power and a more prosperous economy, and a business downturn cannot be reversed by lowering wage rates.

The High-Wage Doctrine enjoyed wide support. Several prominent business leaders, including Henry Ford, Thomas Edison, Edward Filene, and Gerald Swope supported the idea, as did major political figures, including Herbert Hoover when he served as President Harding’s Secretary of Commerce.

When the stock market crashed in October 1929, then-President Hoover convened a series of conferences at the White House with prominent business leaders. He sought to persuade them to set an example for the nation by refraining from reducing wage rates. In late November 1929, following one of Hoover’s high-wage conferences, the New York Times cited a White House press release:

“The President was authorized by the employers present at this morning’s conference to state on their individual behalf that they will not initiate any movement for wage reductions, and it was their strong recommendation that this attitude should be pursued by the society as a whole.”

Hoover’s employment conferences appeared to succeed—at first. Between the fourth quarters of 1929 and 1930, real wage rates in the United States rose by more than 5 percent (despite an average labor productivity decline of over 5 percent during that period). Rising real wages largely resulted from stable money wage levels and falling prices. But Hoover’s apparent success was short lived, as this inflation-adjusted increase in the cost of labor led to a near-doubling of the unemployment rate over that period, from 5.7 to 10.7 percent.

If the High-Wage Doctrine were valid, the United States would have been enjoying a roaring prosperity. The reality was quite different, as the unemployment rate climbed above 18 percent in 1931.

High wages are good, if driven by higher productivity. But raising demand does not create supply all by itself. One cannot improve aggregate living standards via high wages unless sufficient productivity exists to support the increased demand. Otherwise, the result is either inflation or unemployment.

Origins of monopoly bargaining

The National Labor Relations Act’s monopoly bargaining provision saw its origins in a predecessor law, the National Industrial Recovery Act (NIRA), whose Section 7 was essentially revived in Section 7 of the NLRA.

The NIRA was enacted during the first session of the 73rd Congress on June 16, 1933. What a bill it was! Its very first sentence declared a national emergency:

A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist.

A declaration of national emergency is often a prelude to the curtailment of individual rights. The NIRA was no exception. It included a long litany of measures “to provide for the general welfare by promoting the organization of industry” (“organization” meaning “unionization”), “to induce the united action of labor and management under adequate governmental sanctions and supervision,” and “to improve standards of labor.”

The NIRA gave the President the authority to establish whatever agencies he wanted, staffed by whomever he wanted, to achieve the broadly stated purposes of the Act. It gave the President power to establish industrial codes (regulations for all transactions). And it allowed the President to investigate businesses at will and to require whatever paperwork he wanted from businesses.

The NIRA’s Section 7 imposed collective bargaining. It also capped work hours, instituted a “minimum wage,” and set conditions for employment, all approved or prescribed by the President. All of these concepts were radical at the time.

The two-year authorization of the act was due to expire in June of 1935, but just before expiration, on May 27, 1935, the United States Supreme Court ruled the act unconstitutional in Schechter Poultry Corp v. United States. By July 1935, however, a replacement for the NIRA was sent to President Roosevelt. Echoing Section 7 of the NIRA, it established a formal mechanism for certifying specific labor unions as monopoly bargaining agents for certain groups of workers and for requiring employers to negotiate with those unions. Monopoly bargaining was thus resurrected in another Section 7 which operates today.

To protect his New Deal policies, FDR went after the Supreme Court itself. On February 5, 1937, Roosevelt unveiled his plan to pack the United States Supreme Court with additional justices of his own appointment. The President spoke about his court-packing plan in his Fireside Chat of March 9, 1937, in which he explained how court-packing would give the President the additional power he desired:

“In 1933 you and I knew that we must never let our economic system get completely out of joint again-that we could not afford to take the risk of another Great Depression. We also became convinced that the only way to avoid a repetition of those dark days was to have a government with power to prevent and to cure the abuses and the inequalities which had thrown that system out of joint.”

Three weeks later, the U.S. Supreme Court ended its 40 years of strong support for the liberty of contract (a period known to Constitutionalists as the Lochner Era). West Coast Hotel Co. v. Parrish was the first case upholding a state minimum wage law. Immediately thereafter, in April 1937, the Supreme Court, in National Labor Relations Board v. Jones & Laughlin Steel Co., held the National Labor Relations Act (Wagner Act) to be constitutional.

With that decision, labor policy in the United States shifted toward active federal encouragement of unionization and toward the legal certification of unions’ status as monopoly bargaining agents.

Monopoly bargaining hurts a state’s economy

In the CEI study “The Unintended Consequences of Collective Bargaining,” authors Lowell Gallaway and Jonathan Robe analyze and rank the effect of unionization on economic growth on a state-by-state basis, and calculate the “deadweight loss” resulting from unionization.

By raising the cost of labor, unions decrease the number of job opportunities in unionized industries. That, in turn, increases the supply of labor in the nonunion sector, driving down wages in those industries. The effect of this situation is to increase the natural rate of unemployment, thus imposing a deadweight loss of economic output on the economy. Deadweight loss in this context means that unionization artificially increases the price of a factor of production—labor—above the price that would be established in a free and competitive marketplace. The artificially high cost of labor then lowers economic output, known as GDP (Gross Domestic Product).

The presence of deadweight losses that arises from labor union activity can be shown by a formulation devised by labor economist Albert Rees. Rees demonstrated the consequences of union wage-raising initiatives on employment in both the union and nonunion sectors of the labor force.

The Rees formulation can be used to calculate the value of these deadweight losses from unionization if three factors are known: (1) union density (the percentage of employees who are unionized), (2) the wage premiums associated with the presence of unions, and (3) the general elasticity of demand for labor (how much the quantity of labor demanded by employers changes because of a change in the price of labor). Using this and other estimates, the CEI study calculates the deadweight losses for six different years during the period 1967 through 2000.

Over 50 years, the cumulative reduction in worker wages would be about 15 percent. Because wages are only a fraction, though a large one, of total output or GDP, the deadweight losses from unionization in GDP are smaller, but over a long period of time those small annual effects add up to produce a substantial cumulative loss of GDP—as much as 10 to 12 percentage points over a half century. (And the real number may be much worse. The Rees analysis understates the harm because it doesn’t consider the way that lower wages shrink the labor force.)

Different effect in different states

Deadweight loss contributes to significant differences in income among residents of various states. To explore the extent of this phenomenon, Gallaway and Robe’s analysis uses a statistical model to explain the differences in real per capita personal income among states. The unionization rates and five other independent variables are included in the model to account for additional factors that are likely to affect the growth in income: manufacturing, income tax rates, real per capita income in 1964, politics, and college education.

Table 1.  The Effect of Unionization on Per Capital Income by State20140919_CRC-1

The study indicates that every additional percentage point of average unionization from 1967 to 2000 reduced the growth in real per capita personal income by 1.73 percentage points. Knowing this relationship makes it possible to estimate the effect of union-related deadweight losses on the growth in real per capita income in the various states. The above chart, based on that analysis, shows the different effects of collective bargaining on the several states.
Two broad conclusions emerge from this study. First, the presence of labor unions that operate as collective bargaining agents has the potential to seriously inhibit economic growth in the several states and the District of Columbia. This conclusion suggests that the National Labor Relations Act’s provision mandating collective bargaining was rife with (presumably unintended) bad consequences.

Second, the disparity in the relative incidence of unionization of the workforce across the United States leads to widely disparate impacts on the states. Some states, such as Michigan (which only recently enacted a Right to Work law), have suffered large amounts of foregone economic growth, while others, such as South Carolina (which has had a Right to Work law for decades), have been far less affected.

2. Right to Work laws

In December 2012, President Obama made an ultimately futile attempt to thwart Michigan’s proposed Right to Work (RTW) law. Speaking at the Daimler Detroit Diesel plant, the President declared, “These so-called Right to Work laws, they don’t have anything to do with economics. . . . What they’re really talking about is giving you the right to work for less money.”

Contrary to the President’s claim, Right to Work laws have a lot to do with economics. Contrary to the President’s suggestion, Right to Work laws mean better pay for most people. The evidence is compelling that Right to Work laws are good for both the American worker and the financial health of states across the country. Economic growth in a state is significantly related to the presence of a Right to Work law.

Short of repealing the monopoly bargaining contained in the federal Wagner Act, the best way to repeal forced unionism is to enact Right to Work laws in individual states. Here, history provides a guide.

The onerous effects of the 1935 National Labor Relations Act continued unabated for over a decade. Then, in 1947, the Taft-Hartley Act became law, providing a modicum of relief by amending the National Labor Relations Act to read:
Nothing in this … shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.

From that point forward, states, if they chose, could pass Right to Work laws. Currently, 24 states have such laws, which give workers the right not to join unions as a condition of employment and which prohibit the coercive collection of dues from workers who choose not to join. In the CEI study “An Interstate Analysis of Right-to-Work Laws,” authors Richard Vedder and Jonathan Robe analyze the effect of Right to Work laws on state economies, and rank states’ loss of per capita income from not having such a law.

Table 2. Estimated Per Capita Income Loss Associated with NOT
Having a Right to Work Law, 30 non-RTW States

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The top 10 states most harmed by their failure to adopt Right to Work laws are Alaska,
Connecticut, California, New Jersey, Illinois, Hawaii, Maryland, Wisconsin, New York,
and Michigan. The study analyzes the period 1977-2012. Idaho, Oklahoma, Michigan, and
Indiana enacted their Right to Work laws in 1985-86, 2001, 2012, and 
2012, respectively.
Over the study period, these states faced full or partial 
economic losses associated with
the absence of RTW. 
Indiana’s law is currently making its way through the courts.

People have been migrating in large numbers from non-RTW states to RTW ones. The evidence suggests that economic growth is greater in RTW states, as indicated by some key factors:

►Attracting investment. Right to Work laws tend to lower the presence of unions, reduce the adversarial relationship between workers and employers, and make investment more attractive. As one would expect, these factors have a positive impact on measures of economic performance including job creation and, ultimately, on the general standard of living. Over the study period, employment grew 71 percent nationwide, with a big difference between RTW and non-RTW states: Employment grew by only 50 percent in non-RTW states, compared to 105 percent in RTW states.

► Causing the migration of labor. Conversely, lack of a RTW law may be a factor in the out-migration of labor from a state. From 2000 to 2009, 4.95 million people migrated from non-RTW states to RTW states. Legislation favoring unionization raises labor costs and makes employers less likely to invest. This, in turn, reduces the capital resources available to support workers, lowers both productivity growth and wealth creation, and makes people less well off than they would be in a fully free labor market.

► Pushing incomes higher. Incomes rise following the passage of RTW laws, even after adjusting for the substantial population growth encouraged by those laws. The evidence suggests that if non-RTW states had adopted RTW laws 35 years ago or so, income levels in those states would be on the order of $3,000 per person higher today, with the impact varying somewhat from state to state.

The bottom line:

The median loss of income is $3,278 per capita, which translates to over $13,100 for a family of four. The total estimated loss of income in 2012 from the lack of RTW laws in a majority of U.S. states was an extraordinary $647.8 billion.

Thus, when a state refuses to enact a Right to Work law, that choice doesn’t just hurt workers who are forced to join unions or make payments to unions against their will. That choice hurts everyone.

*   *   *

Aloysius Hogan is a senior fellow at the Competitive Enterprise Institute, a free-market think tank in Washington, D.C. This article originally appeared in the September 2014 issue of “Labor Watch,” published by the Capital Research Center, and appears here with permission.

Bad Week for Teachers Unions

These days, the teachers unions have landed on the wrong side of judges, teachers, the general public and just about everyone else whose lives they touch.

Seems like the teachers unions are getting it from all sides these days. In a Wall Street Journal piece, the writers note that the percentage of elementary and secondary teachers who are union members is down about 20 percent since 1988. But as private and charter schools proliferate and the right-to-work movement grows, the last 26 years will look like the good old days.

Big Apple Kerfuffle

In response to the death of Eric Garner while in New York Police Department custody, United Federation of Teachers command central decided to join forces with Al Sharpton in blaming the police. However, New York City teachers responded by giving UFT president Michael Mulgrew a one-finger salute, and on the first day of school last week teachers all over the city wore pro-cop T-shirts. This independent streak was way over the top for Boss Mulgrew, whose union emailed a brief warning, “…as public employees, one must remain objective at all times.”

Teachers union members remain objective?!! WHAT!!! This followed UFT’s sponsorship of an Al Sharpton rally in support of Mike Brown, who died while in police custody in Ferguson, MO.

Now, how teachers should respond to non-education-related community events is a discussion for another day; the issue here is the union’s hypocrisy. But then again, Mulgrew has always shot from the hip … and as often as not, the bullet has wound up piercing his shoe. Most recently, despite teacher misgivings with Common Core, the union president decided that the standards were worthy. And at the American Federation of Teachers convention last month, in classic thug style, he closed with these pearls,

If someone takes something from me, I’m going to grab it right back out of their cold, twisted, sick hands and say it is mine! You do not take what is mine! And I’m going to punch you in the face and push you in the dirt because this is the teachers! These are our tools and you sick people need to deal with us and the children that we teach. Thank you very much!

If they ever decide to recast Goodfellas, Mulgrew is a shoo-in for the Joe Pesci role. (Extreme profanity alert.)

Michigan Shenanigans

After Michigan went right-to-work in 2012, the Michigan Education Association decided to play hardball. Most teachers didn’t know that the only period they could resign from the union was when most of them weren’t paying attention to school or union matters – in August. Some teachers sent in their resignation notice before the union-mandated allotted time and thought they’d legitimately opted out and stopped paying dues. However, they were soon faced with threats that unless they paid up, the union would do its best to damage their credit ratings. But the Mackinac Center Legal Foundation took the teachers’ side and brought suit against the union. Then, just last Tuesday administrative law judge Julia Stern recommended that the “ Employment Relations Commission order the Michigan Education Association to no longer limit school employees to leaving the union solely in August of each year. She said the law that took effect last year incorporated a federal law interpreted to give public employees the ability to leave their union anytime.”

Furious with the decision, the union went into spin-mode to divert attention from it, triumphantly pointing to the fact that only 5,000 teachers (out of 110,000 total) had resigned during the August window. But as Mike Antonucci notes, the bigger picture is not so rosy. “In 2008-09, the union had 129,000 active members. The latest loss brings that number down to 106,000 – a drop of almost 18 percent.” Also, as more contracts expire, more teachers will have the opportunity to disengage from the union. Additionally, as teachers see that the world of their non-unionized colleagues does not come to an end without Big Daddy, many will realize that the $1,000+ dues they pay on a yearly basis could be much better spent elsewhere.

Sophistry Vergara

Hardly a surprise, but immediately following Judge Rolf Treu’s final decision in the Vergara case, which affirmed his original one, the California Teachers Association, the California Federation of Teachers and Governor Jerry Brown (under pressure from his biggest political backers – the unions) filed an appeal. In a dual release, the unions trotted out the usual off-subject malarkey in an attempt to convince people of the evil intent of the suit.

All along it’s been clear to us that this lawsuit is baseless, meritless, and masterminded by self-interested individuals with corporate education reform agendas that are veiled by a proclamation of student interest.

The Vergara ruling makes clear that Judge Treu failed to engage the evidence presented in court by education experts and school superintendents who testified that teacher rights are not impediments to well-run schools and districts.

He also failed to take into account the impact of underfunding, poverty, growing inequality, and lack of decent jobs in the communities surrounding our schools….

… this ruling doesn’t address any of the real solutions to problems facing public education, solutions such as adequate funding, peer assistance and review programs for struggling teachers, and lower class sizes.

Blah, blah, blah.

While this kind of union spin has traditionally been successful, the general public at long last has become hip to it. In an Education Next  poll released in August concerning the issue of tenure – a major part of the Vergara suit,

… Survey respondents favor ending tenure by a 2-to-1 ratio. By about the same ratio, the public also thinks that if tenure is awarded, it should be based in part on how well the teacher’s students perform in the classroom. Only 9% of the public agrees with current practice in most states, the policy of granting teachers tenure without taking student performance into account.

Fair Share Flim-Flam Fades

Every year around Labor Day, Gallup polls Americans on their attitudes toward labor unions. This year a question was added about right-to-work laws, and the responses were not good news for the forced-union crowd. As Mike Antonucci writes,

The poll finds 82% of Americans agreeing that ‘no American should be required to join any private organization, like a labor union, against his will,’ a position advanced by right-to-work proponents. Pro-union forces partly oppose right-to-work laws because of the ‘free-rider’ problem, with non-union workers benefitting as much as union workers when unions negotiate pay and benefit increases with employers. But by 64% to 32%, Americans disagree that workers should ‘have to join and pay dues to give the union financial support’ because ‘all workers share the gains won by the labor union.’

The teachers unions are starting to remind me of a man at sea flailing away for help, but the courts, the general public and even many of their own members are not not throwing out a life raft. Perhaps Mr. Mulgrew needs to start breaking some legs. Nothing else seems to be working.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues.

The United Auto Workers on the Skids?

Summary: it’s been a long, slow slide for the United Auto Workers, which hit its peak in the early 1950s. Defeated in a critical unionization election in the South and facing a critical change in state law in its home base in Michigan, the UAW has responded to the challenge by raising dues and by staying the course on policy and leadership. 

Things have not gone well at Solidarity House recently, and may be getting worse.

When the headquarters of the United Auto Workers was dedicated on June 9, 1951, news accounts called it “America’s most up-to-date union headquarters . . . Streamlined and spacious but not plush, the four story brick and sandstone structure is nestled among swank hotel apartment houses overlooking the Detroit river.” It was said that the union’s “nerve center” would be “the envy of many top industry executives.” The UAW was riding high, and it seemed appropriate that the UAW headquarters’ three-acre site had once been the estate of the late Edsel Ford, the son of Henry Ford and himself the president of Ford Motor Company.

The website Detroit1701, which celebrates the city’s history, describes the headquarters as “a very significant site, perhaps the most symbolically significant site, in the history of the labor movement in the United States. . . . Solidarity House was built in a very desirable location on Detroit’s riverfront at a time when the United Auto Workers were still celebrating their very favorable victory in a struggle with General Motors, Chrysler and Ford.”

That victory included the famous “Treaty of Detroit” with GM and favorable-to-the-UAW deals with the other automakers. Long-terms contracts protected the companies against strikes, while the union received medical insurance and improved cost-of-living adjustments at GM, employer-funded pensions at Chrysler, supplementary unemployment benefits at Ford, and other perks.

UAW membership exceeded one million, at a time when the U.S. population was 150 million. Within two years of the Solidarity House dedication, total labor union membership in the U.S. as a share of the workforce would hit an all-time high, roughly one worker in three. Back then, Detroit was the fifth-largest city in the United States, and the wealthiest.

How times have changed—for the city that’s synonymous with the U.S. automobile industry, for the auto industry itself, and for the union that was once the nation’s largest!

Bad times

UAW membership peaked in 1979 at 1.5 million. In 2011, the UAW hit a modern-day low of approximately 355,000 members, and there was a slight recovery to about 391,400 in the union’s latest filings with the Department of Labor. UAW’s “annual dues collected were down more than 40 percent to $115 million from 2006 to 2012, as the union’s ranks fell by 30 percent,” reports the Associated Press. The union’s strike fund fell from roughly $1 billion in 2006 to about $627 million at latest count.

And then there’s the recent passage of a Right to Work law in Michigan. Next year, the UAW will no longer be able to get its Michigan members fired on the grounds that they haven’t paid their union dues. Some UAW members in Michigan already have rights under the new law, but the major effects of the law will occur when contracts expire with the Big Three auto companies. At that point, auto workers will finally have a choice of whether to pay UAW dues. As the contracts expire, the UAW will also face the prospect of strikes for which it may be ill-prepared.

Meanwhile, UAW members are forced to spend big on a bloated bureaucracy. Financial reports submitted to the Department of Labor show large, highly paid staffs at the national headquarters. At the national level, the UAW has 16 officers and 783 employees; fully 440 of the employees (56 percent) make six-figure salaries. In addition, 15 of the 16 officers make more than $100,000 per year.

At its recent convention, the union did eliminate one region (merging the offices in Flint and Grand Rapids) and reduce the number of vice presidents from four to three, but given the continued large overhead at the national office, those moves were seen as largely symbolic.

And headquarters overhead is not the only evidence union spending is out of control. The website LaborUnionReport noted in 2011:

According to the UAW’s financial reports, at the end of 2010, the United Auto Workers’ headquarters brought in more than $274 million from its local unions and other income, but it spent $275 million—including nearly $10.5 million on political activities and lobbying and sent over $3 million to the AFL-CIO.

Given all those factors—

  • The UAW’s current low membership (down 74 percent since 1979, even as U.S. population increased more than 40 percent)
  • The 37 percent decline in its strike fund
  • The prospect that many autoworkers, seeing little or no benefit to union membership, will refuse to pay UAW dues—now that Michigan has a Right to Work law protecting them from being fired for making that choice
  • The failure of the UAW’s massive effort to penetrate the South [about which, more below], and
  • The continued presence of a huge, wasteful bureaucracy

—what big step did the UAW take at its 36th Annual Constitutional Convention in June?

Declaring the union’s first dues increase since 1967, a hike of 25 percent.

Skyrocketing dues

The dues increase comes at a time when members in the auto industry are split in two: current workers who make a full rate of $28 an hour with generous benefits; and entry-level “second-tier” workers who earn an initial $15.78 an hour, increasing to $19.28.

UAW officers are trying to link the two-tier system and its recent failure to expand organizing. Norwood Jewell, one of the three UAW vice presidents, told Reuters, “If we don’t organize [non-union plants in the South] and bring them up to our standard, we’re never going be able to totally eliminate the second tier [of wages].”

The union needs to replenish and renew funds to further its organizing efforts in the South. While the dues increase will raise about $45 million annually for the strike fund, the UAW is spending big on new organizing drives, using money from the strike fund and its Emergency Operations Fund. As the Michigan online news service MLive.com reported, as members approved the dues increase, they also voted

  • to transfer $85 million from the “Emergency Operations Fund” to a newly created VEBA trust [Voluntary Employee Beneficiary Association, a trust fund for employee early retirement benefits]
  • to transfer $25 million from the Strike Fund to the “International Union General Fund” in June
  • to allow leaders to use up to $60 million from the Strike Fund over the next four years to support major organizing drives or other initiatives intended to increase UAW membership
  • and to take other smaller financial measures related to dues

During the debate at the convention over the dues hike, UAW Local 140 President Mark Dickow claimed that “the UAW is the only organized union that has not been raised in almost 50 years.”

Actually, although the dues rate has been steady for decades, the actual dues paid by individual members have gone up. That’s because a member’s UAW dues are tied to his or her hourly pay. When a member receives a raise, dues also go up.

The new rate increase, which will take effect in August, raises the number of hours’ pay that a member must turn over to the union, from two hours of salary a month to two and a half hours per month—a 25 percent increase.

Outgoing UAW President Bob King called the argument over the vote to raise dues a “great demonstration of democracy for the UAW.” Yet the vote was taken among only the 1,100 delegates at the convention. The other 390,315 UAW members did not have a direct say. Nor was there a recorded vote at the convention. An initial voice vote was supposedly too close to call, and President King ordered a show of hands. King declared that “the ayes certainly have it.”

“I agree with the dues increase, but I don’t think it’s the time,” Rich Boyer of UAW Local 140 told MLive.com. “This membership is divided. If we increase these dues now and don’t go to the bargaining table and get significant increases in wages, we are in trouble.”

Still, the linkage between the dues hike and the two-tier pay structure is clear, admits Dennis Williams, who was elected to succeed King as UAW president. Williams told Bloomberg News, “The two-tier [wage] system will be in place until we can organize the transnationals,” that is, the automakers that operate in the U.S. but are headquartered in other countries.

Desperate to increase membership and end the bifurcated wage system, the UAW has targeted nonunion Southern auto plants. So far, though, the union has not convinced Southern autoworkers that they need the UAW as much as the UAW needs them.

Defeat in Chattanooga

The UAW’s most significant defeat in recent memory came in February at Volkswagen’s Passat plant in Chattanooga, Tennessee. It was, some say, the UAW’s Gettysburg—its last-ditch effort to snatch a victory, an attempt whose failure makes final defeat inevitable.

If the UAW had succeeded in Chattanooga, the plant would have been the first foreign-owned auto assembly plant in the South to be organized. Most importantly for the UAW, Chattanooga would have been a beachhead to organize the booming, mostly non-unionized Southern auto industry. [For details on the union effort to penetrate the South, see the December 2013 Labor Watch.]

Four years ago, President King vowed to unionize a Southern, foreign-owned plant. Three years ago, he said that, if the UAW couldn’t break into the South, the union’s continued existence was in jeopardy. “If we don’t organize these transnationals, I don’t think there’s a long-term future for the UAW,” he said. “I really don’t.”

The UAW intended to accomplish its breakthrough in the South partly by changing the rules of the game. In December 2011, the union released its “Principles for Fair Union Elections.” Chief among those Principles were card check and other provisions typical of so-called “neutrality agreements.” UAW President King threatened, if a company refused to adhere to the Principles, to “launch a global campaign to brand that company a human-rights violator.”

One of the reasons that prospects for victory were so high in Chattanooga, and the defeat so stinging, was that the company was effectively on the side of the union. On January 27, prior to the vote at the Passat plant, Volkswagen adopted a position of (supposed) neutrality with regard to the UAW. Volkswagen agreed it would not stand up for its workers who opposed joining the UAW—workers who would be outgunned by professional union organizers.

Standard neutrality agreements typically contain three main criteria for the employer:

  1.  A gag order not to talk to their employees about unionization
  2.  Turning over employees’ contact information to the union, including phone numbers, email addresses, and home addresses
  3. An agreement to a card-check election, under which a union can organize the company simply by having employees sign cards indicating their support for unionization. This process replaces the standard secret ballot election procedure administered by National Labor Relations Board. It effectively eliminates the secret ballot, and can lead to deception, coercion, and intimidation of employees by union organizers.

Employers often agree to a neutrality agreement because a union has promised a benefit to the company in return, or the company may be avoiding a threat from the union. Some unions threaten damaging public relations campaigns against a company. These campaigns, known as corporate campaigns, attempt to harm an employer’s business by damaging the reputation of the company or in some cases the personal reputations of the company’s officers, all to exert pressure for the employer to sign a neutrality agreement. (For more on corporate campaigns, see the June 2013 Labor Watch.)

In the Chattanooga fight, the National Labor Relations Board was likewise effectively on the union’s side. The National Right to Work Legal Defense Foundation, which represented VW workers opposed to unionization, obtained several NLRB e-mails that, the Foundation claimed, brought into question the board’s impartiality regarding the card-check process during the UAW’s organizing efforts at VW.

Apparently a majority of the targeted workers had signed the cards, indicating their support for unionization. But, according to National Right to Work, “Several VW workers filed charges alleging improprieties in the UAW union hierarchy’s card-check process, including getting workers to sign union authorization cards by coercion and misrepresentation and using cards signed too long ago to be legally valid.” To sidestep this controversy, Volkswagen agreed to permit workers to have a secret ballot election, rather than simply declaring the UAW to be the workers’ representative on the basis of the cards.

VW’s accord with the UAW was called a neutrality agreement, but the company did more than simply stay neutral with regard to the prospect of the UAW unionizing its plant. National Right to Work alleged that “Some of those workers also filed a federal charge against the company alleging that statements by German VW officials are illegally coercing their fellow workers to accept UAW monopoly bargaining power over their workplace.”

The company actively assisted union organizers by filing the petition for unionization. This is very rare in labor organizing. Also, by not voicing an opinion, VW helped expedite the election, which denied workers who opposed the UAW time to effectively make their case to their coworkers.

Former NLRB board member John N. Raudabaugh told the website Real Clear Markets that he had “never seen such a quick election.” Workers opposed to the UAW faced even greater difficulty when VW kept anti-UAW employees out of the plant while letting union organizers in.

The public reason for the support of the UAW was that VW hoped to create a German-style “works council,” a joint labor-management board for governing the plant. Volkswagen Chattanooga’s CEO Frank Fischer claimed, “Our works councils are key to our success and productivity.” He said, “Our plant in Chattanooga has the opportunity to create a uniquely American works council, in which the company would be able to work cooperatively with our employees and ultimately their union representatives, if the employees decide they wish to be represented by a union.”

Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute, pointed to the crossover leadership between Volkswagen and the UAW’s union counterpart in Germany, IG Metall. For example, she wrote, “the deputy chairman of Volkswagen’s German supervisory board is Berthold Huber, chairman of the powerful German labor union IG Metall.”

Peter Schaumber, former chairman of the National Labor Relations Board under President George W. Bush, warned that the VW’s German-style works council may be illegal under American labor law, because the  National Labor Relations Act requires

that the employer negotiate terms and conditions of employment with the workers’ union as their exclusive bargaining representative. The German model of dual representation—with an industrywide union required by law and plant-level works councils negotiating workplace terms of employment—is inconsistent with U.S. law.

Schaumber argued that the works council would have been a “company union,” which federal labor law prohibits because a union is supposed to represent workers, and if the company controls it, the union may not have the employees’ best interests at heart. That’s why President Clinton in 1996 vetoed legislation called the Team Act that would have allowed companies to form employee-management teams.  The AFL-CIO commended the veto at the time: “Under the guise of ‘cooperation,’ this damaging and unnecessary piece of legislation would have given management the say-so over who speaks for workers on issues such as wages, hours and other terms and conditions of employment—an unfair infringement on employee rights.”

The Chattanooga neutrality agreement included a clause assuring the German car manufacturer that “the UAW would delegate to the Works Council many of the functions and responsibilities ordinarily performed by unions as bargaining representative in the United States.” The agreement went on to state that this works council would help in “maintaining and where possible enhancing the cost advantages and other competitive advantages that [Volkswagen] enjoys relative to its competitors in the United States and North America, including but not limited to legacy automobile manufacturers.”

Workers worried that the union would endanger the plant’s viability and possibly cost them their jobs. They saw how the unions, and politicians backed by the unions, turned the wealthy city of Detroit into a ruin. They didn’t see union membership, with the accompanying dues and bureaucracy, as a good deal. And they worried that, once the union was in place, it would be very difficult to dislodge.

Once a union has successfully organized a worksite, it’s almost impossible to get rid of it, no matter how bad a job it does. That fact is clear from an amazing statistic dug up by James Sherk of the Heritage Foundation: Only seven percent of private-sector union members ever voted to join their union.

In February 2014, autoworkers at the VW plant handed the UAW a bruising defeat, rejecting the union 712 to 626. The UAW compounded its embarrassment by refusing to take no for an answer and spending two months appealing the result.

No Free Speech for you!

The strongest point in the UAW’s appeal of its defeat was that opponent organizations and politicians had interfered in the election process. The UAW claimed that they had done so by speaking out against the union and making promises regarding government-provided financial incentives that the plant, like most such plants, might receive for future expansion.

The idea that labor law or the National Labor Relations Board might limit the free speech of union opponents (but not union supporters) may seem farfetched, but the UAW is correct that employers are strictly limited in what they can say to employees during union organizing election campaigns.

Federal labor law limits an employer’s Free Speech rights after a union files a petition with the NLRB for an election. The law prohibits an employer from threatening, interrogating, promising, or spying on their employees during this time. These actions are known by the acronym “TIPS.”  (Employers can tell their employees what they think unionization would do as long as they do not violate the TIPS restrictions.)

Unions, on the other hand, violate the law only if they verbally threaten or physically assault a worker. In 1996, the NLRB in the case of HCF, Inc. d/b/a Shawnee Manor deemed even threats to be legal if a third party does the threatening on behalf of the union.

Claiming that “interference by politicians and outside special interest groups” skewed the vote, the UAW asked the National Labor Relations Board to throw out the election results. UAW President King complained publicly that the anti-union efforts were coordinated, saying “Whether it was the Koch brothers or it was Grover Norquist or it was Senator [Bob] Corker [R-Tenn.], Governor [Bill] Haslam [R-Tenn.], the leaders of the legislature—all make threats against voting ‘yes’ and promises if people voted ‘no.’” (Norquist is a prominent taxpayer advocate in Washington, D.C., and the Koch brothers are philanthropists who give money to charities and pro-liberty organizations.)

Outside groups and sympathetic politicians did indeed try to educate workers on what would happen if the UAW organized the Chattanooga plant. They were concerned that, because Volkswagen sided with the union, workers would not otherwise hear both sides of the story.

During the NLRB appeal, Senator Corker, a former mayor of Chattanooga, asked the NLRB to “understand and realize the magnitude of what they are going to be deciding and in no way try to muzzle public officials who are community leaders from expressing their point of view.”

The union thought it had a smoking gun when documents leaked to a local TV station showed the Governor had promised $300 million in economic incentives if “works council discussions between the State of Tennessee and VW [were] concluded to the satisfaction of the State of Tennessee.” Governor Haslam responded that the documents weren’t “a threat at all. It was just a statement of reality” and that “any incentive deal that we do has to be approved by the Legislature. And we had that discussion with them all along, that it was going to be much, much more difficult if the union vote happened.”

During the preparation for the NLRB appeal hearing, the UAW sent a wave of subpoenas to those it felt had interfered with the vote. Recipients included Haslam, Corker, and 18 other officials. The UAW went so far as to subpoena an intern working at Norquist’s organization, Americans for Tax Reform.  The union demanded all written communications and other documents concerning the union in the weeks before the vote.

Tennessee Attorney General Robert Cooper fought the subpoenas aimed at Governor Haslam, noting that the requests were “overly broad, unduly burdensome, and seek information that is not relevant or material to the matter under investigation or in question in the proceedings.”

On April 21, though, as participants in the case were gathered in a courtroom in Chattanooga, the UAW sounded retreat. Reuters reported:

The United Auto Workers, surprising even its supporters, on Monday [April 21] abruptly withdrew its legal challenge to a union organizing vote that it lost at a Volkswagen AG plant in Chattanooga, Tennessee in February.

Just an hour before the start of a National Labor Relations Board hearing on the challenge, the union dropped its case, casting a cloud over its long and still unsuccessful push to organize foreign-owned auto plants in the U.S. South.

VW workers due to testify at the hearing were already at the courthouse in downtown Chattanooga when they heard the news, which left lawyers in the hearing room wondering how to proceed.

The union did not explain why it waited until the 11th hour to drop the case, but UAW official Gary Casteel said the decision not to go ahead was made last week. That was when Tennessee Governor Bill Haslam, U.S. Senator Bob Corker from Tennessee, and Washington small government activist Grover Norquist said they would ignore subpoenas to attend the hearing, which was to have focused partly on their conduct in the days leading up to the plant workers vote.

“It became obvious to us that they were going to become objectionists and not allow the process to go forward in a transparent way. When that happens, these things can drag on for years,” Casteel said in an interview.

If, in fact, the decision to drop the appeal was made the previous week, the timing of the withdrawal was strange. Lawyers and others working on the case—including, apparently, those on the UAW’s side—had worked over the Easter holidays to prepare for the hearing that never occurred.

The UAW’s decision to drop the appeal did not end the matter. Two left-wing members of Congress, Reps. George Miller (D-Calif.) and John Tierney (D-Mass.) launched their own inquiry into whether “outsiders” tainted the election.  The day the UAW withdrew the suit, King said, “Frankly, Congress is a more effective venue for publicly examining the now well-documented threat,” he said.

Governor Haslam responded to the Miller/Tierney inquiry by noting sardonically that “we got a letter from two Democratic congressmen who are minority members of the House, so…” At that point, the Governor shrugged dismissively.

Bob King: a legacy of failure

Bob King won the UAW presidency four years ago with 97 percent of the vote. He left the union in worse shape than he found it. Some events were set in motion long before his time as president, such as the bankruptcy of General Motors and Chrysler and the two-tier wage system (he was at the negotiating table as a vice president when it was negotiated, but he was not president). Still, King did preside over disastrous failures of his own making.

One of the key strategists in the fight against the UAW in Chattanooga was Matt Patterson, a former editor of Labor Watch and now executive director of the Center for Worker Freedom (an affiliate of Americans for Tax Reform). Patterson noted in an op-ed that “The UAW spent an estimated $5 million in its two-year campaign to organize the Volkswagen facility in Chattanooga, Tennessee. The union lost. . . . Was that a wise way to spend its members’ money? Even if the union had won in Chattanooga, how would that have profited its members in Detroit?”

Besides the loss in Chattanooga, King was largely responsible for the crisis facing his union in its historic home, the state of Michigan. Next year—when many new autoworkers are taking home second-tier wages even as most UAW staffers and officers make more than $100,000 and the union has lost millions of dollars failing to organize workers far from home—Michigan members angry at the dues hike will have a choice to keep their dues money in their own pockets.

That Michigan workers have this choice is one of Bob King’s legacies (a good legacy from workers’ standpoint, of course, but not from the standpoint of the union). As Daniel Howes of the Detroit News observes, King backed a “ballot measure that backfired on union interests—chiefly the question that triggered the right-to-work law.” Proposal 2, a failed constitutional amendment on Michigan’s 2012 ballot, would have given government unions an effective veto over state legislation and would have banned any right-to-work law.

Before the UAW spent millions trying to pass the proposal, Howes wrote, “Republican Gov. Rick Snyder personally advised King against it, saying, ‘Don’t kick the elephant.’ He did it anyway.” Previously, unions and their opponents had had a sort of mutual non-aggression pact. The unions wouldn’t try to gain absolute power over state government, and most elected officials wouldn’t push for a state Right to Work law.

Knowing the possible consequences, King broke that détente. Then, when Prop 2 failed [see the December 2012 Labor Watch], the opponents of forced unionization reasonably saw the result as reflecting the voice of the people. They believed the time was ripe for worker freedom. So they made Michigan—the state most strongly associated with labor unions—into a Right to Work state.

You might think that UAW members would push for a change in leadership, but you would be wrong. As has been the case in the selection of every UAW president since 1970, the choice was really made by the “Reuther Caucus,” the UAW’s administrative committee, so called in tribute to longtime union president Walter Reuther.  The vote at the convention was a formality.

The new president, Dennis Williams, was the secretary-treasurer during the King presidency and presided over much of the loss of the strike fund. His replacement as secretary-treasurer was Gary Casteel, director of the UAW southeast region for the past dozen years and one of those most responsible for the union’s failure to penetrate the South’s foreign-owned auto manufacturing plants.

To an outsider, at least, both men seem to have failed in their previous jobs, but they were promoted nonetheless.

The UAW does not show signs of changing. It will continue to spend big on corporate campaigns against Southern auto companies, even as workers there repeatedly say no. Employees and officers at the union’s national headquarters will continue to make six-figure salaries. Soon, with Big Three contracts expiring, UAW leaders will be pressed to prove their relevance. Will they take a hard line with General Motors, Ford, and Chrysler? Will they force the Big Three into stringent work rules and unsustainable benefits—the course that bankrupted two of the three? Will UAW members finally say that enough is enough? In their desperation, what will the UAW leadership  do?

As the saying goes, nothing is more dangerous than a wounded animal.

About the Author:  F. Vincent Vernuccio is director of labor policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. Nathan Lehman, a 2014 research intern with the Center, contributed to this article. This issue originally appeared in the August 2014 issue of Labor Watch and is republished here with permission.