By John A. Tatom*
Governor Jay Nixon’s Labor Day message was “Today, with our economy driven by the strength of the middle class, giving workers the freedom to make their own voices heard is more important than ever before.” In his archaic view, this means continuing state sponsorship of mandated union fees, paid by unwilling workers who otherwise cannot work. The strength of our workforce and middle class are dependent not on the exploitation of workers by unions with their hands in workers pockets, but truly on freedom. And in states that recently allowed Right-To-Work (Indiana, Michigan and Wisconsin) this new freedom allowed previously union supporting workers to leave by the tens of thousands. Most of them had insisted that they supported unions, but when a choice came, they left.
In 2014 in Missouri, 249,000 workers paid for union representation. Based on experience in the three new states, the first-year reduction in union representation was about 12 percent, which suggests only about 30,000 Missouri employees will drop representation in the first year of Right To Work. Today they vocally support union representation; tomorrow they will be gone, happy to be free.
Some opponents complain that Right To Work will deprive employers the right to hire only union workers. They know better. The ability to hire only union workers was outlawed in 1947. It is just as illegal to discriminate against non-union workers as it is to hire only one ethnic, religious or gender group. Well not quite. In half the states, including Missouri, it is still legal to take the income of one group, non-union workers, for the benefit of another, unions, if they wish to work for some employers. In the other half of states, this practice is also illegal. Those are called Right-To-Work states.
In the three industrial states recently freed from mandatory union fees, workers voted with their feet. They believed they would be better off and they were. Following Right To Work, employment in those states grew 3.5 percent per year (2011 to 2014), double the national growth rate. In Missouri, employment growth was stagnant, less than half the national average. And in those states take-home pay went up immediately and it was subsequently boosted by wage increases. The primary losers from Right To Work are the union bosses, who lost union dues and fees.
A recent study by the Economic Policy Institute finds that workers in Right To Work States earn 3.1 percent less than in Right To Work states. It is biased in several respects that overstate the difference. Taken at face value, however, it contradicts Governor Nixon’s claim “In states that have passed similar laws workers make thousands of dollars less per year.” For a worker making $50,000 the more supportable figure is $1500, not thousands, and after union dues the difference is negligible. For a Teamster, for example, union dues take all but $500 of such a purported gain each year. More importantly, in new Right to Work states people are getting jobs and wage gains. Not so in Missouri, but that would change with Right To Work.
*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.