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Nixon out of step with labor movement

By John A. Tatom

tatom
Tatom

Governor Nixon is out of step with the American labor movement. His notion that Right to Work (RTW) damages all workers is false.  The late H. Gregg Lewis, one of the founding fathers of modern labor economics, explained more than 50 years ago that while unions raise wages for union members, they do so primarily at the expense of other workers. Lewis’ subsequent survey of research (1986) found the consensus of leading labor economists was that unions created a 10-15% wage premium over non-union wages in the glory days for unions, when  membership was about a quarter of the labor force. Since then, workers have voted with their feet. Private sector membership fell to only 6.6 percent of employment by 2014.

The three most recent states to vote for RTW, Wisconsin (March 2015), Michigan and Indiana, have larger shares of union membership and are more industrial than Missouri, yet their union workers are also tearing up their membership cards. In Indiana, union employment fell 53, 000 – about 17 percent, in the first two years after RTW became effective.  From 2011 to 2014, union employment in Michigan fell 86,000 – about 13 percent, in anticipation of RTW and its implementation. The Wisconsin law for the private sector just became effective, but the earlier lifting of requirements for public sector union membership led to a decline in the union share of total employment from 14.2 percent in 2010 to 11.7 percent in 2014. In 2014, employment in these three states grew 3.5 percent, about twice the 1.7 percent in the rest of the states. Meanwhile, Missouri employment was stagnant, rising only 0.8 percent. Ask workers in the new RTW states if their pay and job prospects did not go up after the votes; just getting out from under from union dues raised take-home pay.

The ultimate issue, however, is the loss of freedom that unions impose on workers that are forced to pay for unwanted union representation. RTW will improve  their job prospects and raise take-home pay immediately. There were 249,000 Missouri workers forced to pay for union representation in 2014, much less than the 1.3 million employees represented by unions in the three new RTW states.  RTW allows these workers to choose to end their union representation and stop paying union dues. Based on Indiana and Michigan experience, 28,000 to 36,000 Missouri union members will drop their membership within a few years if RTW becomes law.

Missouri is growing more slowly than the rest of the country and this hurts union and non-union workers alike. Companies do not come here or expand, in part because of state labor law. This hurts all workers’ employment and wages. Failure to override the Governor’s veto of RTW would not protect labor. It would only protect union financial support for some politicians and protect union bureaucrats, not the lion’s share of workers or consumers.

Missouri cannot wait for the U.S. Supreme Court to rule against the legality of forced union dues for state and local government employees in a case they have agreed to hear in the next year. The Missouri legislature should confirm their May vote for RTW in the upcoming September session and by enough votes to overturn the Governor’s recent veto.  The effects on Missouri’s economic and employment growth, as in Indiana, Michigan and Wisconsin, will far exceed the small loss of union membership.
John A. Tatom is a retired research official at the Federal Reserve Bank of St. Louis and Fellow at the Institute for Applied Economics, Global Health and the Study of Business Enterprise at Johns Hopkins University in Baltimore.