Right-to-Work Laws Add Manufacturing Jobs
I posted a few days ago about unions in the US automotive industry:
Michigan has lost 100,000 automotive jobs in recent years, and they are not coming back. There is no point in misleading the people of Michigan into thinking that they are ever coming back. … It is too bad that some Republican candidate could not speak the truth about the automotive industry in Michigan. That would be that the 1930s labor laws, that forced the auto companies to begin signing expensive contracts with unions to get the labor they needed, have slowly ruined the US automotive industry. The Big 3 are slowly being put out of business.
You can’t pay for labor way above the market for wages and benefits, decade after decade, and expect to compete globally. Perhaps this worked in the 1950s, before international competition, but it is a cruel joke today.
This study notes (h/t Will Franklin):
…between 1986 and 2006, 11 right-to-work states have added 104,000 auto manufacturing jobs, a 63 percent increase. The non-right-to-work states lost 130,000 auto jobs, or 15 percent of their total over the same period.
Federal labor laws force companies to negotiate towards a contract with a union, if union activists manage to pull off getting workers to vote a union into a workplace. The owners of the company are forced to give up their freedom of association supposedly for the larger social good that unions bring to our society.
But no sane business owners, of course, would ever sign a union contract unless forced to. Right-to-work laws, that some states have, are partly designed to reduce the spread of this forced unionism (let’s not pretend otherwise).
Businesses of course survive by seeking out ways to improve their competitiveness, and they will factor in a state’s labor laws in choosing locations to build new factories. Will Franklin notes the results:
Erroneously believing they could extract lavish health and pension benefits out of employers ad infinitum, powerful and corrupt unions in places like Michigan essentially destroyed their own economic base. They engaged their companies in a high-stakes game of chicken, and lost. Employers realized that they could move to Tennessee or Texas (Right-To-Work states), still find qualified and dependable labor, still pay a good wage with good benefits, and ultimately produce a better product at a lower cost.
January 23rd, 2008 at 1:42 pm
Unions are not the only cause of declining domestic car sales. Right to work states also had a lower wage base. The shift in higher wage jobs to those states would be rational regardless of unionism. Union corruption is a judicial and in house membership issue. Unions want similar wages and benefits that others, i.e., management, working in the same companies get. Union members are not the ones who design the automobiles and make manufacturing decisions. The declining market for domestic automobiles has been more a function management choices than shop labor. Yet, management’s salaries and benefits widened from that of their unionized subordinates. Dealerships also treated their customers poorly and part of that can be traced to company decisions and attitudes. The car world is a better place for all of the competition in the market, but it cannot be dumped solely (or even primarily) on the role of unions.