Labor Movement: Will ‘Right-To-Work’ States Attract More Businesses?

Feb 20, 2017

General secretary-treasurer for the Teamsters, Ken Hall, at a rally against right-to-work.
Credit International Brotherhood of Teamsters

The Ohio Valley region once helped give rise to the labor movement. Now it’s shifting toward what’s known as right to work. West Virginia and Kentucky have passed right to work laws, and Ohio is considering a similar bill. One of the big selling points for right to work proponents is that the law can attract new businesses. Opponents argue that potential comes at too high a cost to workers.  

Mike Mullis is a site selection consultant who has spent 25 years helping global corporations, such as Toyota, pick the places where they will build major projects. He said some companies – particularly in manufacturing – will perk up when they hear the words “right to work.” However, that doesn’t mean businesses will come flocking to a state.


 

“The thing that is misunderstood by many people is that right to work does not guarantee you projects,” Mullis said. “It simply guarantees you more opportunity.”

 

He said other factors are more important, such as the skill of the workforce, infrastructure, and transportation. Mullis supports right to work, but he notes many oversimplify its connection to workplace growth.

 

 

An engineer at Trace Die Cast, a Bowling Green manufacturing facility.
Credit Becca Schimmel

The Supreme Court ruled in the 1970s that an employee cannot be forced to join a union as a condition of employment. Right-to-work laws, which are decided on a state-by-state basis, often go a step further. They eliminate the requirement for non-union workers to pay what are called “fair share fees,” which are less than full union dues. Unions are still responsible for collectively bargaining for all employees and defending them in the event of a grievance, with or without those fair share fees. Unions strongly object to that.

A Business Perspective

But University of Kentucky economist Kenneth Troske says such laws can help attract businesses.

“[It] sends a signal to businesses that, as a state, we are trying to make ourselves more open and friendly and flexible as possible for businesses that want to locate here,” Troske said.

He said businesses like the promise of flexible workplace schedules which can increase productivity.

“That’s essentially what the research shows, is that when plants become unionized, you see a decline in their productivity,” Troske said.

Credit Alexandra Kanik

Explore our right to work timeline. 

Troske acknowledges that right to work is a “mixed bag” because, as unions argue, the flexibility that employers want can lead to exploitation of workers, which is why they need the protection of unions. But Troske argues that new businesses that locate in right to work states are competing with other businesses for the same pool of skilled workers. That means that, even if wages drop, it will not be as dramatic as opponents of the law suggest.

Troske  noted that higher quality products and services are going to require higher  skilled -- and higher paid -- workers. But business leaders won’t always want the most skilled worker. Troske said employers want the worker with the skills commensurate with the product they’re trying to produce, and the price they’re charging for that product or service.

 

Businesses considering relocating do want to know about right to work, he said, even if the region’s skilled workforce remains a top concern. Troske pointed out that the effect of right to work laws in the Ohio Valley region are not clear because the changes are too recent.

Credit Lisa Autry

The Workers’ View

 

Ross Eisenbrey is vice president of the Economic Policy Institute, a nonprofit think tank focused on the needs of middle and low income workers. He said right to work laws have never been shown to make a difference in employment growth, and he is skeptical of claims that right to work laws do much to attract new business.

 

“Corporate CEOs who answer surveys about the factors that determine where they locate, don’t even have right to work in the top ten factors that influence their decisions,” Eisenbrey said.

 

He doubts that businesses make right to work a priority because only 6 percent of private sector workers are unionized. And he warns that anyone hoping that the law will bring a dramatic increase in manufacturing jobs and new businesses will be disappointed.

 

“I don’t believe for a minute that that’s an important factor in a business decision about where it locates,” Eisenbrey said.

 

Eisenbrey pointed to economic evidence showing that right to work laws come at a cost in the form of weaker unions and lower wages. He said unions generally have an impact of increasing wages by 10 to 15 percent compared to non-represented employees.

 

“As right to work reduces union finances and weakens the union's ability to represent workers over time, wages go down,” Eisenbrey said. “And that’s what will happen eventually in West Virginia and Kentucky.”

 

Eisenbrey noted that while business-friendly legislators vote for right to work laws, many voters don’t. Historically when right to work laws are put to a statewide vote, they typically don’t pass.  

 

Ohio’s experience with right to work proposals offer an example, he said. Right to work laws were first introduced in Ohio’s legislature in 1958 and didn’t pass. The legislature passed a law eliminating collective bargaining in 2011 only to have it overturned by a statewide vote later that year. Now the legislature is considering it once again.

 

A Court Challenge

In West Virginia, a group of unions is suing the state over its right to work law, which passed last year. A judge placed a stay on the new law shortly after it was signed. Ken Hall is general secretary-treasurer with the Teamsters, one of the unions involved in the lawsuit.

Credit Alexandra Kanik

“If this was good for workers, why is it that eight of the ten states with the lowest per capita income are right to work states?” Hall said. “Why are the majority of the top 15 states with the highest rate of poverty, right to work states?”

 

Hall feels it’s unfair that non-union workers get something for nothing. He said it means  that right to work laws will weaken unions and hurt workers far more than they help an area generate new business.

 

The unions expect a decision on their challenge to West Virginia’s law in a couple of weeks. Kentucky is just beginning to implement its new right to work law, and Ohio is reviving its debate on the issue. The real effect of right to work in this region once dominated by union labor remains to be seen.