Ted Boettner: Nothing 'Free Market' About Right to Work
Huntington Herald-Dispatch - The new Republican Legislature is looking to end free bargaining in West Virginia by adopting a so-called "right-to-work" (RTW) law that aims to cut wages and benefits for the state's working families. Read
This is the last thing West Virginia needs. The state already has the highest share of low-wage jobs in the country and efforts to make this worse should be stopped.
The principle aim of RTW laws is to diminish the ability of workers to collectively bargain freely without the interference of government. This is precisely why Milton Friedman, the godfather of "free market economics," adamantly opposed RTW laws.
Under RTW, it would be illegal for a union and a business to freely enter into a contract that requires every employee to pay for the benefits they are receiving under the agreement. This means that if a worker who does not pay a union representation fee is fired, the law requires that the union represent that worker through an appeals process. Non-dues paying workers would also receive other substantial benefits like workplace protections and higher wages and benefits.
While proponents of RTW say this will create "workplace freedom" and often tout their admiration for the "free market," this is a prime example of government intervention in the market distributing money upwards. RTW laws have nothing to do with forcing people to join a union or contribute to political causes they don't support - that's already illegal under federal law. The only freedom workers would receive is the ability to get something for nothing.
The requirement to pay a representation fee as a condition of employment is nothing unique to collective bargaining agreements. For example, if an attorney wants to appear in court in West Virginia, he or she has to pay dues to the West Virginia Bar Association. Or if you want to work for United Parcel Service (UPS), a condition of your employment is to wear a brown uniform. No one is talking about banning employers from these practices.
A case in Kentucky further illustrates this "free-rider" problem with RTW laws. Several years ago, the local Building Trades Council in Owensburg, Kentucky, asked the local Chamber of Commerce if it could withdraw its membership and still receive all of the benefits. The Chamber responded by stating: "It would be against Chamber by-laws and policy to consider any organization or business a member without dues being paid. The vast majority of the Chamber's annual revenues come from member dues, and it would be unfair to the other 850-plus members to allow an organization not paying dues to be included in member benefits."
What tends to happen in RTW states is that non-union members who get a "free ride" - while receiving all of the benefits contained in the collective bargaining agreement - opt out of becoming union members. This result is less money through dues and a weaker union, which ultimately strengthens the employers' hand in bargaining for lower pay and benefits.
The one thing proponents and opponents of RTW laws agree on is that these laws are intended to lower wages and benefits, decrease unionization, while aiming to encourage outside investment in the state. While this might make West Virginia a cheap place to do business, it doesn't make it a good place to do business if there is less consumer demand in the local economy and additional need for public assistance.
If you go back through the state's history, wages have steadily declined along with union membership. In the 1970s, when over a third of the state's workers belonged to a union, wages were higher than the national average and income inequality was much lower. As unions have declined, real wages for most workers have declined or stagnated, and the share of workers with pensions and health care benefits has eroded.
Instead of using the power of the state to reduce the power and income of workers, policymakers should be focusing on moving more people into the middle class. This could include enacting better workplace protections, such as paid family leave, work sharing, and flexible work schedules, and more targeted investments in higher education, workforce training, early childhood development, broadband, research and development, and transportation.
As President John F. Kennedy said, "Our labor unions are not narrow, self-seeking groups. They have raised wages, shortened hours, and provided supplemental benefits. Through collective bargaining and grievance procedures, they have brought justice and democracy to the shop floor."