Right To Work: The Negative Impacts Of Unions

One of the benefits to the Tea Party election of 2010 has been the effort to reduce labor’s influence in America.  You’ve seen it in Wisconsin, you saw it in Indiana and now the results coming in from Tennessee.

States are turning to “Right to Work” legislation that allows employees to opt in or opt out of a union.  To be clear, some state allow you to opt out of a union, however, you still “get” to pay the union dues – wonderful option opting out is, yes?

So, how is Tennessee benefiting from their labor stance?

Michigan may be Motor City’s home in most people’s minds, but Tennessee has emerged as another major hub of auto manufacturing and related industries. Big domestic and foreign automakers have several facilities here and are expanding rapidly.

Tennessee, one of many Super Tuesday GOP primary states, has mostly been spared the trauma of mass layoffs, closures and bailouts that plagued the Rust Belt. Business and free-market groups cite a key advantage: It is a right-to-work state, effectively preventing Big Labor from being a major player there.

It’s growing.  And growing rapidly.

And the advantage of Right to Work laws are such that even shops that ARE union are forced to innovate, to invent to become more productive.  If they don’t, they fail.  This same incentive is not in place in full union states.  When all shops are controlled by the unions, the productivity of one slow plant isn’t different than the productivity of the other slow plant.

And why might businesses wanna come to these Right to Work states?

Tennessee’s law has held down labor costs. VW pays $27 an hour for new employees in wages and benefits, about half of the $52 an hour labor cost in Detroit. When the unionized GM agreed to reopen the Spring Hill plant last year, it forced the UAW to accept a starting wage of $15.78

It keep the cost of labor down.  Now, you may ask how that’s a good thing; how paying someone $27 an hour is better for that someone than paying them $52 an hour.

Critics cite the lower wages as proof that the laws hurt workers. But locals say that’s offset by lower living expenses. Nashville’s cost of living is 11% below the U.S. average, the Census Bureau reports. Detroit’s is only 1% below.

Tennessee isn’t immune to the auto industry’s ups and downs, but seems to weather them well.

“We got through the recession without major layoffs,” Woolley said. “There were a lot of curtailments and furloughs (for workers), a lot of short workweeks, but now we are back at full speed.”

When labor is less expensive, the things made with that labor are less expensive as well.  And, as always, while unions may increase wages for their members, they increase wages to the point that fewer and fewer workers are hired in the first place.

Big Labor’s place in America has gone by the roadside; and THAT is great news.

 

8 responses to “Right To Work: The Negative Impacts Of Unions

  1. The decline of labor unions is one of the biggest reasons that the gap is growing between the upper elite and the middle class. Labor unions were what saved workers from massive exploitation; right to work laws simply mean that labor can be paid less. That doesn’t necessarily translate lower prices. Depending on the market, the equilibrium could simply mean higher profits — or management could simply pay itself more. It’s illogical to think that powerful corporations acting as they want in their interests is OK while organized labor acting in its own interest is somehow bad. That will lead us further down a path to third world like conditions, with a wealthy elite protecting what they have, disappearance of the middle class, and people being paid so little that over half don’t even make enough to pay federal taxes. Looking at Wisconsin, a backlash may already be forming.

    All that said, I have to agree that unions need to avoid class war too, even if they feel it’s being waged against them. I agree unions have often been short sighted and have harmed their own workers with unreasonable demands and militancy. I have to agree that many of the complaints against unions are sound. Here’s how to fix that: View Labor – Management relations not as adversarial but as a partnership. Union membership on the board of directors of major corporations. Let the unions see the books, let them have a stake in the company and see the management perspective. Have a partnership with government bureaucracies where union and business leaders can work with bureaucrats to help the industry (get rid of unnecessary regulations, etc.) Have strict limits on when strikes and other work slow downs occur with protections for both sides and a process designed to promote mutual agreement rather than conflict.

    • The decline of labor unions is one of the biggest reasons that the gap is growing between the upper elite and the middle class.

      I think I’ll disagree on this one.

      right to work laws simply mean that labor can be paid less.

      No. It means that labor can’t be legislated to be paid more.

      It’s illogical to think that powerful corporations acting as they want in their interests is OK while organized labor acting in its own interest is somehow bad.

      You are right. Except that corporations are not passing laws that force salaries down.

      • Corporations have a lot more influence on politicians than unions, and they are passing laws designed to increase their profits and protect themselves. I think the laws favored by corporations help increase the gap between the rich and the poor and they do support laws that keep salaries down. But we can disagree on that — the point is that if it’s OK for corporations to have power and influence, it’s illogical to argue that unions should not. That would be overt class war.

        • Corporations have a lot more influence on politicians than unions, and they are passing laws designed to increase their profits and protect themselves.

          I’m willing to buy that. Look at the power GE has had in the tax situation.

          I think the laws favored by corporations help increase the gap between the rich and the poor

          This I don’t buy. I’m in a non-union shop and don’t find that my wages have been negatively impacted.

          if it’s OK for corporations to have power and influence, it’s illogical to argue that unions should not.

          Fair enough. While we work towards making the power level more equitable, we should also work on reducing the power of each.

    • Scott wrote: “The decline of labor unions is one of the biggest reasons that the gap is growing between the upper elite and the middle class.”

      What if it was the other way around? Is it possible that unionized middle class workers, in an effort to save money, willing purchased imported products at lower prices. This forced local businesses to transfer some of their manufacturing overseas in order to lower costs and remain competitive. This caused some union workers to lose their jobs and lowered the household’s disposable income. With less money to spend, families of the unemployed union worker were even more likely to purchase cheaper imports, which shipped even more American jobs overseas.

      • Places with very strong labor unions (Scandinavian states and Germany for example) have relatively low unemployment, are doing well economically and have the smallest gap between the rich and poor in the industrialized world. That at least seems to be evidence that unions are both good for workers and can be good for the economy.

  2. Daddy’s from Tennessee, so we hit Knoxville quite often and I’m a bit familiar with it. But what about North Carolina? Is it a right-to-work state?

    • But what about North Carolina? Is it a right-to-work state?

      We are right to work and one of the least unionized states in the country.

      While the State is overwhelming Democrat, it is also overwhelmingly conservative. For the first time in more than 100 years, republicans control the senate and the house.

      The reason is that Lincoln was a Republican and General Lee was a Democrat. They’re still fightin the war down here.

      So yes, we don’t like unions!

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