In Michigan and two neighboring states that passed Right to Work laws, wages have grown slower than in three other Great Lakes states that have preserved collective bargaining rights.
That’s according to the findings of a new study by the left-leaning Illinois Economic Policy Institute (ILEPI) on Right to Work laws in Michigan, Indiana and Wisconsin and their impact on wages.
The study found that from 2010 through 2016, workers in the three states earned an average of 8 percent less per hour than people in nearby Illinois, Minnesota and Ohio, states that have not enacted Right to Work legislation.
The ILEPI report determined that unionization rates in the Right to Work states were 2.1 percent lower than in the states that maintain collective bargaining. Comparatively, union membership also contracted at an accelerated pace in Michigan and the other Right to Work states, according to the report.
But leaders in West Michigan said changes for organized labor have been slow to materialize since Gov. Rick Snyder in late 2012 signed the controversial legislation that allowed members of private- and public-sector unions to opt out of paying union dues and still receive the benefits of membership.
“We’ve barely noticed,” said Ken Deering, labor relations manager for the city of Grand Rapids.
In the city, only about a dozen employees have opted out of paying union dues, although around 800 people are eligible to do so under the new law, according to Deering. Grand Rapids has collective bargaining agreements with 10 different unions, according to its website.
“We’ve not seen a big difference,” Deering said.
His sentiments echo the opinions of union leaders contacted for this report who represent professional and skilled trades workers.
Jeffrey Wilkerson, the business manager, financial secretary and treasurer of the Coopersville-based West Michigan Plumbers, Fitters & Service Trades Local Union 174, told MiBiz that the trade union he represents has changed little since the law took effect in early 2013.
“We’ve not experienced too much because people understand what their dues go for,” Wilkerson said, referring to the myriad training programs the union offers its members.
The union’s apprenticeship and training programs provide workers access to the in-demand skills they need to compete in a highly competitive construction industry in West Michigan, Wilkerson said.
“We keep beating the drum for more skilled people,” he said.
While many still question the effects of Right to Work, the law has not changed the decades-long downward trend in the number of union members in Michigan, despite a brief uptick in 2015, according to Bureau of Labor Statistics data.
In the 2016 fiscal year, just 14.4 percent of all employed individuals in the state were members of unions, down from 19.6 percent a decade earlier. In the same time period, union membership fell from 842,000 in 2006 to 606,000 last year, according to the data.
At its peak, union membership stood at 26 percent of all employed individuals in Michigan in 1989, or slightly more than 1 million people, according to historical data from the Bureau of Labor Statistics. However, Michigan in 2016 continued to have higher union membership rates than the national average, which stood at 10.7 percent of employed workers.
A QUESTION OF WAGES
Gov. Snyder’s signing of Right to Work legislation in 2012 caught organized labor leaders off guard. The Republican governor, known for his pro-business policies, had previously called the issue “divisive” and said he had no interest in pursuing it for the state.
Once the legislation was introduced in the lame duck session at the end of that year, thousands of union members and activists from around the state descended on Lansing to protest.
Snyder’s office touts that the state has added 350,000 private sector jobs since the implementation of Right to Work.
“We don’t attribute the incredible rate of job growth solely to Right to Work, but it’s clear it has made an impact, relative to other Midwest states,” Anna Heaton, a spokesperson for Snyder, wrote in an email to MiBiz. “Michigan continues to lead the Midwest in job growth and some of that has to do with companies now considering Michigan because of Right to Work when they may not have previously.”
Critics of Right to Work laws frequently voice concerns that even if there is job growth associated with the policy, it frequently brings about lower wages.
“Lawmakers in other states that are debating the merits of passing ‘right-to-work’ laws should consider these research findings,” the authors of the ILEPI study wrote in the report. “Between 2010 and 2016, the enactment of ‘right-to-work’ legislation reduced unionization and resulted in lower hourly earnings on average in states across the Midwest. Ultimately, ‘right-to-work’ laws have had negative consequences for many workers in Indiana, Michigan, and Wisconsin.”
According to the ILEPI report, wages in Michigan grew more slowly (2.65 percent) since the Right to Work law took effect compared to the three collective bargaining states in the data set, which had wage growth of 6.45 percent.
By contrast, Deering said the city of Grand Rapids has offered annual raises of at least 2 percent to its unionized staff.
ONE OF MANY FACTORS
Besides the ILEPI report, other academic studies have noted that workers in Right to Work states have suffered from suppressed wages, but the true gauge of the policy’s impact on pay remains a point of contention.
In 2010, Politifact tackled the claims of Robin Vos, a Republican state representative from Wisconsin, who reportedly said, “states that have non-forced, compulsory union membership when you want to work somewhere have higher rates of income growth, have higher rates of manufacturing — actually, over time, have seen much greater increases in their standard of living.”
Picking apart Vos’ language and citing five different economists, Politifact ultimately rated the Wisconsin politician’s claim as “half true.”
“In a nutshell: None of the economists said right to work has no effect on raising income. But opinion is mixed on just how much of a factor it is,” the fact-checking organization said in its conclusion.
Additionally, the ILEPI study noted that it could not directly tie the lower wages in the Right to Work states with the passage of the laws, stating that multiple factors could contribute to the wage issue.
While Right to Work polarized the state’s labor and business communities, Wilkerson from the local Plumbers union told MiBiz he tries to avoid the paradigm of “union versus non-union,” preferring instead to work collaboratively with companies in the region.
As an example, he noted that Local 174 is a financial supporter of Grand Rapids-based The Right Place Inc., an economic development organization.
While The Right Place never took a formal position on the Right to Work legislation, President and CEO Birgit Klohs has said publicly that out-of-state businesses look favorably on the policy when they’re making decisions about site selection.
Tim Mroz, vice president of marketing and communications for The Right Place, told MiBiz that businesses frequently ask for information about unionization rates in West Michigan. He said unionization is one of many factors — along with tax policy, infrastructure and availability of incentives — that companies consider.
“Unions and unionization rates are a fact of doing business,” Mroz said, noting that the involvement of unions such as Local 174 in The Right Place is somewhat unique.
“The biggest impact that Right to Work has had on business attraction is allowing us to share the collaborative union environment in West Michigan, which is often seen as contradictory around the country,” he said.