David R. Henderson  

Right to Work Works

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Labor unions play a central role in the Democratic party coalition, providing candidates with voters, volunteers, and contributions, as well as lobbying policymakers. Has the sustained decline of organized labor hurt Democrats in elections and shifted public policy? We use the enactment of right-to-work laws--which weaken unions by removing agency shop protections-- to estimate the effect of unions on politics from 1980 to 2016. Comparing counties on either side of a state and right-to-work border to causally identify the effects of the state laws, we find that right-to-work laws reduce Democratic Presidential vote shares by 3.5 percentage points. We find similar effects in US Senate, US House, and Gubernatorial races, as well as on state legislative control. Turnout is also 2 to 3 percentage points lower in right-to-work counties after those laws pass. We next explore the mechanisms behind these effects, finding that right-to-work laws dampen organized labor campaign contributions to Democrats and that potential Democratic voters are less likely to be contacted to vote in right-to-work states. The weakening of unions also has large downstream effects both on who runs for office and on state legislative policy. Fewer working class candidates serve in state legislatures and Congress, and state policy moves in a more conservative direction following the passage of right-to-work laws.
This is from James Feigenbaum, Alexander Hertel-Fernandez, and Vanessa Williamson, "From the Bargaining Table to the Ballot Box: Political Effects of Right to Work Laws," January 20, 2018.

Many people who oppose, and many people who support, right-to-work laws think the following: because such laws weaken unions' power to use employees' dues to contribute to political campaigns,right to work laws will cause there to be fewer union contributions to Democratic candidates than otherwise. It turns out that both sides are right. Feigenbaum et al find, as the abstract above says, that union contributions are lower than otherwise in such states and that this makes the vote for Democratic politicians lower than otherwise.

The ideal libertarian solution to the issue of unions is not right to work laws; the ideal solution is freedom of association for employees and employers. People should be free to join unions or not, and people should be free to work for employers who require unions, for employers who don't require unions, and for employers who refuse to deal with unions. The freedom of association applies to employers as well as employees. That means that if some employers want a requirement that every employee be a member of a union or, if not a member, be required to pay dues to a union, this should be allowed. Right to work laws prevent this. However, the number of employers in this category is likely to be very small. So right to work laws are a substantial step toward freedom of association.


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CATEGORIES: Labor Market , Liberty




COMMENTS (16 to date)
Jon Murphy writes:

@Prof. Henderson:

The freedom of association applies to employers as well as employees. That means that if some employers want a requirement that every employee be a member of a union or, if not a member, be required to pay dues to a union, this should be allowed. Right to work laws prevent this. However, the number of employers in this category is likely to be very small. So right to work laws are a substantial step toward freedom of association.

I was wondering if you could expand upon this point a little bit as I don't quite see how the conclusion (which I bolded) follows.

If Right-to-Work (RTW) legislation prevents certain kinds of association, how can that be a step toward freedom of association even if the number of employers denied is small? It seems to me to be a small reduction of freedom of association, not an increase.

Brian M Saxton writes:
That means that if some employers want a requirement that every employee be a member of a union or, if not a member, be required to pay dues to a union, this should be allowed. Right to work laws prevent this. However, the number of employers in this category is likely to be very small.

I'm not sure about this. I assume that any union, no matter the legal regime, would happily forego the union shop clause in their contract if the company offered them enough otherwise to make it worth their while. If a company offered a union $10/hour over the market wage, I'm certain that their union would agree to having an open shop. The fact that few companies make this kind of bargain suggests to me that employers place little value on their employees' freedom of association.

David R Henderson writes:

@Jon Murphy,
If Right-to-Work (RTW) legislation prevents certain kinds of association, how can that be a step toward freedom of association even if the number of employers denied is small? It seems to me to be a small reduction of freedom of association, not an increase.
You’ve correctly identified the small loss in freedom of association. What you’ve left out is the huge gain in freedom of association. A lot of workers want to work for an employer but don’t want to be in the union. They also don’t want to pay dues to a union. But if a majority of employees at some point in time had voted for a union, the union becomes the sole bargaining agent. The employees can’t legally make their own deal. Moreover, they are forced, in non right-to-work states, to pay dues. With right to work, they aren’t forced.

David R Henderson writes:

@Brian M Saxton,
The fact that few companies make this kind of bargain suggests to me that employers place little value on their employees' freedom of association.
I bet most employers do place little value on their employees’ freedom of association. I’m not sure what that has to do with my argument.

Rob Thorpe writes:

The "solution" to this in Britain has been different.

Unions are prohibited from passing on funds to political parties unless the due paying member agrees. So, each member must sign a form saying that they want some of their dues sent to the Labour party.

Of course, this isn't exactly free association either.

Miguel Madeira writes:

"But if a majority of employees at some point in time had voted for a union, the union becomes the sole bargaining agent. The employees can’t legally make their own deal. Moreover, they are forced, in non right-to-work states, to pay dues."

Workers, in non RTW states, are forced to pay dues, or are only forced if the company and the union make an agreement saying that?

To say if the RTW are an increase or decrease of freedom of association, we have to imagine a conterfactual - how it will be an alternative reality where employers are not forced by law to recognize an union (but, of course, could be forced by strikes, boycotts, etc), but closed-shop agreements are accepted? Someone knows about some country with this legal system?

Miguel Madeira writes:

"I bet most employers do place little value on their employees’ freedom of association. I’m not sure what that has to do with my argument"

An indication that, in a free-market, many employers will accept closed-shop agreements with union in exchange for more favorable (for them) clauses in other issues?

Mattb writes:

"An indication that, in a free-market, many employers will accept closed-shop agreements with union in exchange for more favorable (for them) clauses in other issues?"

Employers don't accept closed-shop agreements. The unions and employees force these agreements upon the employers whether they want them or not.

Miguel Madeira writes:

"Employers don't accept closed-shop agreements. The unions and employees force these agreements upon the employers whether they want them or not."

Even if today closed-shops are forced by law (and I am not even sure if they are), this does not imply that could not be closed-shops by agreement between an employer and an union (and, by "agreement between an employer and an union", I am including the situation when an employer accepts the closed-shop because the alternative was a strike and also the unions of teamsters and dockers refusing to carry good from or for that employer); after all, i think that, in USA, even before the NLRA, it was closed-shops (at least, it was the impression that I have from watching some films and tv shows ambiented in the 1920s)

James Pass writes:

I'm not trying to argue one way or another, but from what I've seen over many decades, people who apply for union jobs would NOT get better pay or benefits if they could "make their own deal." In general, what I've seen is that people who belong to unions get better pay and benefits than people who don't belong to unions, even when the job is exactly the same. I've also noticed that employees who belong to unions generally are better protected from employer abuses. Presumably, unions justify mandatory dues because the benefits to union members greatly exceed the cost of dues.

I've also noticed some problems with unions. For example, unions tend to focus much more on "seniority" than merit. This can be frustrating for union members. Also, some unions offer too much protection to bad employees, or even entire companies. For example, at some of the hospitals I've worked at the union janitorial services were terrible and no amount of complaints from employees had any effect. I've often wondered why the hospitals can't just hire another janitorial company, but I assume it's got something to do with labor contract politics.

Phil writes:

This is one of the central issues in Janus v. AFSCME before the Supreme Court this term. The key question in this case is whether the Abood decision of the late 1970s that allows unions to collect agency fees from non-members to reimburse collective bargaining activities (as distinct from lobbying and political support activities) violates the First Amendment in the context of public sector unions. Some believe that labor contracts within government are inherently political and one cannot separate bargaining from lobbying. (A position with which I agree.)

A critical component of the plaintiff's argument is that those union activities allowable under the guise of "collective bargaining" includes a lot of politicking.

Even more interesting for the economists here is the government's argument that such fees alleviate the "problem" of free ridership among those who are not union members. A vital question in this case is whether non-members of public sector unions actually do benefit from free riding or whether they are compelled to compensate the union for taking positions they find distasteful.

For example, if a public sector employee believes the public sector unions were a key factor in the bankruptcy of Detroit and other municipalities, any "benefit" they received from union representation (in the form of unsustainable pay and benefits) is not really a benefit at all when the city ultimately declared bankruptcy.

There is a lot of empirical evidence that labor unions in right-to-work states are not starved of funding to advance their political causes. As such, a strong argument can be made that forcing non-members to fund collective bargaining is unconstitutional under a number of theories ranging from free speech to free association to even the right to petition the government for grievances (since the union contract often dictates how grievances are handled).

David R Henderson writes:

@James Pass,
I'm not trying to argue one way or another, but from what I've seen over many decades, people who apply for union jobs would NOT get better pay or benefits if they could "make their own deal." In general, what I've seen is that people who belong to unions get better pay and benefits than people who don't belong to unions, even when the job is exactly the same.
You’re right. That’s certainly what I’ve seen in the evidence. And that’s the problem. As much research shows, union members do get a better compensation package, all else equal, and they get this by exercising their monopoly power. What does a competitor want to do to compete with a monopolist? Raise price? No. Lower price. The price in this case is the wage. So the unseen workers who don’t get jobs at the unionized plant or firm because the monopoly wage prices them out would want to bargain for lower wages so they could get jobs.
I've also noticed that employees who belong to unions generally are better protected from employer abuses.
That sounds plausible, but I’ve seen anecdotal evidence both ways.
Presumably, unions justify mandatory dues because the benefits to union members greatly exceed the cost of dues.
Their explicit justification is closely related: they worry that non dues paying workers will free ride on their activities and get the benefits without the costs. They might be right. But the benefits the non-paying members get are monopoly benefits.
I've also noticed some problems with unions. For example, unions tend to focus much more on "seniority" than merit. This can be frustrating for union members.
Yes, and, by the way, that can mean that the highest performers would get a better deal by making their own bargain. Unions tend to compress wage scales or have wages that are only somewhat connected to worker productivity.

James Pass writes:

Phil wrote: "if a public sector employee believes the public sector unions were a key factor in the bankruptcy of Detroit and other municipalities . . ."

But you and I both know it isn't quite as simple as that, and then there is the question of where to draw the line. For example, it could be said that US labor and environmental regulations make the US less competitive than countries with lower standards. If we're just talking about jobs, it could be said that higher standards are "not really a benefit at all." It could also be said that Americans enjoy "free ridership" because of lower standards in other countries.

In other words, the issues with unions extend beyond unions. Indeed, issues of sustainability, benefits and costs permeate just about everything. And let's not forget about all the professions protected by de facto unions, such as doctors and lawyers.

James Pass writes:

Mr. Henderson wrote: "the highest performers would get a better deal by making their own bargain."

That sounds plausible, but I've never seen or heard of this happening in the real world. Historically, union jobs were relatively low-skill jobs. If anything, unions, over time, managed to ratchet up the wages and benefits for relatively low-skill jobs. Without unions, I estimate that many of those jobs would have easily cut the compensation and still attracted plenty of applicants.

I have a brother-in-law who gets high pay and benefits for a public sector union city job cutting the grass at ONE school. It sometimes makes me sick to think about it, because I know for a fact that without a union the city could hire a part-time worker to cut the grass for a small fraction of his compensation. Heck, the city could hire a high school student to take care of the grass.

So, in this example, the "highest performer" for grass-cutting would receive far less compensation.

Of course not all union jobs are low-skill. Many nurses (RN's) are in a nursing union, and nursing is a high-skill profession. Some of my family members are nurses who have worked at jobs both in and out of the nursing union, and I know that when they "bargained" for compensation in non-union nursing jobs, they always received less compensation than union nursing jobs. From what I could tell, this is because the non-union nursing jobs were offered by small physician practice groups, and they weren't willing (or able) to be as generous as hospitals.

It could be generally true that nurses that work at non-union hospitals benefit from the higher compensation of nurses that work at union hospitals, but that isn't necessarily the case. For example, I'm familiar with a non-union Catholic hospital that offers significantly less compensation to its nurses, and I'm familiar with some convalescent homes that pay relatively low salaries to the nurses (which might explain why so many of the nurses at convalescent homes are from countries like the Philippines).

I'm trying to think of how a nurse could make the case to an employer that she is a "high performer" who deserves higher compensation, relative to the other nurses doing the same job. When nurses apply for jobs, employers already take skills and experience into account when deciding compensation - even unions allow for that. And in the case of non-union low-skill workers, well, they generally receive low wages. Companies that employ a lot of low-wage workers might already have incentive bonuses for "high performers." In other words, they might give employees a small bonus as a reward for working their tails off. I've known non-union and union managers who receive bonuses if they meet certain production targets.

Regarding the "ideal libertarian solution," I'm not sure there is a consensus among libertarians. That's because libertarians differ on some key fundamentals related to labor standards. Unions are just one aspect of the much larger and more complex areas of labor standards and the economy, as well as social welfare.

This is an interesting topic and I could say more, but I've already gone on too long.

john hare writes:

A number of years ago there was a union construction job in my area that couldn't get union concrete finishers and my non-union company got the work. It caused considerable fuss when they found out that some of my people were making more than the union people. Slightly more per hour, but full weeks all year and bonuses.

One thing that bugs me about unions is the blindness towards the fact that overcompensated workers are still paid by the end customer of that product. If/when the product becomes too overpriced relative to the alternatives, the company and its' jobs go away. Absent force of course.

mercer writes:

"Fewer working class candidates serve in state legislatures and Congress"

Is that your libertarian goal? Don't be surprised when the working class vote for people like Trump when you ignore them and try to reduce their numbers in elected office.

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