Right to Work: freedom of association or union busting?

A historical background: Before the 1935 Wagner Act, laws pertaining to unions were haphazard and specific to particular states or industries. Under the act, unions could form closed shops. This meant that employers could only employ members of the company’s official union. However, in 1947 the Taft-Hartley Act was passed and amended the standard process for forming a union. Close shop unions were outlawed, leaving only agency and open shop unions. This is where right to work laws come into play.  Agency shop is where employees do not have to be a member of the union but can still be required to pay an agency fee for the benefits the union brings to all employees. Right to work laws seek to ban this practice and only allow open shop unions. Open Shop is where workers can completely dissociate themselves from the official union.

The political consequences: You will likely hear that agency shops are an unreasonable infringement on a worker’s freedom of association. Is this true though? The purpose of requiring agency fees from all employees is to allow unions to have funds with which to function and bargain on behalf of all employees. The contracts that are collectively bargained for by unions apply to all workers. This creates what is known in economics as a free rider problem.  When given the option of paying for group benefits or receiving the same benefits without pay, many members will free ride and not contribute to the group. Hence why groups that function solely on volunteer contributions often face chronic underfunding and chronic underperformance. Right to work laws therefore primarily serve to weaken the ability of a union to collectively bargain. The question now is: is it economically beneficial for the state to ensure a workers ability to not pay for the collective bargaining benefits she receives?

An economic analysis: At first glance, the median hourly wage was 10.3% higher, but unemployment was .6% higher in the 28 states that did not have right to work laws in 20111.  However, right to work(RTW) states are much more rural and more Republican so a direct comparison doesn’t mean much. RTW states had an average unionization rate of 7.2% compared to the 16.1% rate of non-RTW states2. That’s a 124% increase, so the real question is: do unions positively impact the economy?  We know that, “[unions’] decline can account for over one quarter of the rise in inequality over the past 30 years3”. Benefits of unions include increased health care4, fewer workplace accidents5 and higher median wages6. The theoretical cost is increased unemployment, but empirical evidence shows no significant correlation or effect chart, 7.

Conclusion: The purpose of right to work laws is to weaken unions, and by lowering unionization rates these laws negatively affect the economy. The state has no legitimate reason in preventing a union from collecting agency fees from workers who are represented by the union’s collective bargaining efforts. Thus, when right to work laws come up for debate it is the duty of responsible citizens to reject such a craven assault on all workers.

Notes:

Chart 1:

Footnotes:
1. http://www.bls.gov/oes/current/oessrcst.htm, http://www.bls.gov/web/laus/laumstrk.htm
2. http://www.bls.gov/news.release/union2.t05.htm
3. economics.mit.edu/files/6950
4. www-personal.umich.edu/~jdinardo/NBER/w8238.pdf
5. http://irlee.umich.edu/Publications/Docs/RightToWorkLawsAndFatalitiesInConstruction.pdf
6. http://www.epi.org/publication/briefingpapers_bp143/                                                                                                                               7. www.epi.org/page/-/BriefingPaper300.pdf

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