Freedom and Freeloaders

March 11, 2015
Posted by Jay Livingston
A Wall Street Journal op-ed heralded Wisconsin’s “right to work” (RTW) law that Gov. Walker signed earlier this week. The column carried the byline of  Luke Hilgemann and David Fladeboe of Americans for Prosperity, which gets a ton of money from the Koch brothers, so their support of the anti-union measure is no surprise.

One of their arguments is that RTW states see a greater growth in jobs and income. Or put another way, capital will move to where labor costs are low. If a corporation shifts its work to a low-wage country like Mexico or a low-wage state like Arkansas, Mexico or Arkansas will see a growth in jobs. The wealthier and non-RTW country or state will see a decrease. Mexico or Arkansas will also see an increase in wages since the corporation, to attract good workers, may have to offer higher-than-average wages.

There’s a methodological problem here, for Wisconsin is not Mexico nor is it Arkansas. Because of its history, a history which includes unions, Wisconsin's workers are fairly well paid. Will RTW laws mean greater incomes for Wisconsin workers? Hilgemann and Fladeboe don’t say. They compare states - those with and without RTW laws. They do not compare workers  - those represented by unions and those who are on their own.

Currently, states with RTW laws have lower per capita incomes, not a great prima facie case for busting unions, but Hilgemann and Fladeboe say that taking cost of living into account reduces and reverses this difference. But with or without the cost-of-living adjustment, state per-capita income may not be such a great measure of workers’ wages.*

The better comparison would be between workers’ wages before and after the passage of anti-union laws. Wisconsin’s RTW law is only a few days old, and it will mostly affect workers in the private sector. Public sector employees have already lost their unions. A 2010 law known as Act 10 prohibited public sector unions from collective bargaining for their members. According to Bureau of Labor Statistics Quarterly Census of Employment and Wages , the 2010-2013 increase in the average weekly wages for local government employees (which, I think, includes most of Wisconsin’s teachers) was about 2.6%.  I compared this with the figures for neighboring state Minnesota, whose public employees still had the right to be represented by unions, and with the national average.  Those increases were higher – 3.8% and 4.7% respectively. 

For state employees, US and Wisconsin salaries increased by about 7.2%, Minnesota by 5.4%, though Minnesota salaries started from a higher point, remain higher, and show a larger increase in the most recent year in the BLS database. As the chart shows, the dollar gap between Wisconsin and Minnesota has widened since Wisconsin Republicans disenfranchised public sector unions.  

Hilgemann and Fladeboe find their own evidence on the economic benefits of of RTW laws very convincing. Your mileage may vary. But it’s not really the money that makes RTW laws so glorious, they say. It’s Freedom. “these economic benefits . . .  pale in comparison with the individual freedom that right-to-work laws provide.”
Their evidence that workers want to be free of unions comes mostly from Wisconsin

Wisconsin’s government employees similarly left unions when given the opportunity in 2011. Nearly 70% of the state’s 70,000-member state employees union have since chosen to leave. The powerful American Federation of Teachers and the National Education Association saw their ranks decline by more than 50% and 30%, respectively.

This is just a tad disingenuous. If the state passes a law that says your union cannot represent you, would you continue to pay dues? That’s what happened in Wisconsin. The decline in membership (and Hilgemann and Fladeboe’s numbers are probably inflated) surely is much less a matter of workers seeking freedom from unions than their sensible decision not to join an organization that by law can bring no benefits. If a law were passed forbidding corporations to pay dividends and forbidding shareholders to sell at a higher price than they bought, many people would exercise their freedom to get out of the stock market.

Union dues are often compared to taxes. Everyone pays dues, everyone gets the benefits. Under RTW laws, you still get the benefits, but you don’t have to pay. Basically, you’re a freeloader. If there’s a union where you work, and you don’t pay dues, not only to you get the wages and other benefits that union members get, but the union is legally obligated to represent you if you have a grievance.  The freedom so beloved of RTW advocates does not include the freedom of the union to represent only its members and to ignore freeloaders.

It’s like making taxes optional.  If that happened, many Americans would no doubt seize the freedom not to pay. Those who continued to pay their taxes would feel like schmucks and would sooner or later (probably sooner) defect, with the result that government would be unable to provide the things that governments in advanced societies provide. No doubt, economic conservatives would herald this change. What is government after all but coerced collectivism? But people who send their kids to public schools, who prefer to drive on roads with few potholes, who enroll in Medicare, who pay lower tuition at state universities rather than private ones, etc., might be less enthusiastic about this increase in their freedom.


* For their statistics the authors round up numbers from right-wing sources like  ALEC, Arthur Laffer, and Stephen Moore. It’s possible that less partisan sources (e.g., BLS) have other statistics to measure differences between states and between workers.

No comments: