Industry Market Trends

What You Need to Know about Right-to-Work Laws

Jan 15, 2013

Many states have adopted new right-to-work laws, which prevent workers from being forced to pay union fees. While supporters of these laws claim they are an important step in boosting competitiveness, opponents argue that they hinder a union's effectiveness. Here we separate the truth from the misconceptions in this controversial debate.

A great deal of attention has been paid to Michigan Governor Rick Snyder's recent decision to introduce right-to-work legislation in his state, eliciting strong opinions from both sides of the political aisle.

To understand the true significance of right-to-work regulations, it's important to sort the myths from the realities. For one, no American worker can be legally forced to join a union, and no non-union American worker can be forced to pay dues to a union as a condition of being hired or keeping a job.

Furthermore, there are no "closed shops" allowed either: Since 1947 it has been illegal for employers to require union membership for employment, or to fire an employee for losing his union membership for nonpayment of union dues.

However, some non-union workers are pressured into joining their company union while union-friendly authorities look the other way, but unions are legally required to represent the interests of all workers in situations that are covered by existing union contracts, whether they're members of the union or not. That's right - if a worker decides not to join a union, and if he has a grievance in a situation covered under a union-negotiated issue, like wrongful termination, the union must go to bat for the non-union employee if he feels he's been wronged.

The Taft-Hartley Act, passed in 1947, which banned closed shops, also said non-union workers must pay "agency fees" to unions to cover such representation. Agency fees are basically union dues prorated out to the amount unions would spend on advocacy for employee grievances, minus the political activism non-union members presumably don't want to pay for.

The current right-to-work laws exempt non-union employees from paying agency fees. In that sense, "right-to-work" is a bit of a misnomer, an emotionally-charged term coloring the debate, since there is, legally, no lack of an actual right to work.

Labor unions and their allies oppose right-to-work laws, claiming that if non-union employees benefit from union-negotiated policies and representation in the workplace, they should pay for them. Right-to-work supporters claim that it's just wrong to force someone who's not in an organization to pay fees to the organization when they specifically declined to join in the first place. Moreover, if a non-union employee doesn't have a grievance with his employer, he's required to pay the agency fees anyway.

Unions also fear that right-to-work laws weaken the reasons to belong to unions, as some employees may feel that if they can receive representation and support for free, why bother officially joining the union?

Both sides do agree that right-to-work laws are a detriment to labor unions in that they lower overall revenues. Pro-union advocates say non-union employees are getting a free ride, while right-to-work advocates say unions use the money from agency fees to pursue political activism that non-union employees generally oppose.

Currently, 24 states have right-to-work laws, with Michigan the most recent state to pass them. Given Michigan's status as one of the labor union strongholds in the U. S., this was hailed by right-to-work supporters as a historic achievement.

States that have right-to-work laws say they are more attractive to employers. Indeed, nine of the top 10 states on the most recent Forbes "Best States for Business" list have right-to-work laws. Opponents counter by saying that there may be more jobs in right-to-work states, but that they're lower-paying ones.

Right-to-work critics say there is no clear connection between right-to-work laws and increased employment, and they're correct. States with thriving business climates and right-to-work laws invariably have tax breaks and other reasons why they're good places for business, and there are simply too many macroeconomic factors to consider at any one time to isolate right-to-work laws as the single contributing factor.

Another common mistake is using right-to-work, a fairly limited issue, as a symbol of one's attitudes towards organized labor in general. It's possible to be pro-union and recognize that right-to-work laws are defensible. It's also possible to be opposed to unions in general and recognize that if non-union employees benefit from union representation it's reasonable to ask them to pay for it.

But asking workers and business owners to view the problem as merely an agency fees issue is unrealistic. According to the Economist, although "RTW [right-to-work] makes it harder for unions to collect dues (weakening their political clout), it also makes them more accountable, as they now have to recruit members actively."

In fact, it appears that right-to-work often serves as a broader indicator of business conditions, showing whether a state government is going to be in favor of the union or the employer should substantive issues arise. States typically pass right-to-work laws as incentives to attract businesses, sending a message that unions don't have too much clout in the state, and that local authorities will probably see things from the employer's point of view in general.

Where do you stand on the right-to-work issue, and what do you think is the proper course of action for state governments? Let us know in the comments section below.