Unions have two problems. First, unions make the companies they organize more sluggish and less competitive. They constantly have to organize new members to replace those at declining unionized firms. Second, they have not changed to appeal to modern workers. That makes organizing those new members challenging.
Late last year, while conservatives were still coming to terms with the re-election of President Obama, something remarkable happened in Michigan. A state that is synonymous with Big Labor enacted a right-to-work law.
Governor Rick Snyder (R-MI) and Republican lawmakers had just witnessed the overwhelming rejection of a union-backed measure at the ballot box in November. Fearing the state was losing jobs to states with more friendly business climates — and workers could also lose freedoms in the workplace — they moved swiftly to make Michigan the 24th right-to-work state in America.
Earlier this week, Heritage hosted Michigan businessman and entrepreneur Dick DeVos, a former candidate for governor and a Heritage member. I sat down with him to talk about how it happened and what lessons conservatives can take away from the victory as they make the case for freedom nationally and in states.
Michigan’s enactment of right-to-work legislation this week is a major win for the conservative movement. Predictably, the established labor unions are lashing out at the laws and calling them unfair “right-to-freeload” measures.
While federal pay has been a long-running issue, the cost of the federal workforce has drawn heightened scrutiny in the last several years, and especially during this year’s presidential campaign. In addition to proposing a 10 percent workforce cut through attrition, Republican nominee Mitt Romney argues that federal workers are overcompensated by 30 to 40 percent on average.
That assertion is based on a study by the conservative Heritage Foundation that included the value of benefits; based on salary alone, that study found an average advantage to federal workers of 22 percent. The government’s own data do not reflect the value of benefits.
Do you think federal workers should be paid more in line with private-sector workers?
Their analysis earned praise on Capitol Hill. “Your paper with Zywicki on the auto bailout was excellent,” a senior House of Representatives legislative aide told Sherk. “Very on-point. It was very useful when we were preparing for the hearing” on the pensions of Delphi’s nonunion retirees.
Unions were originally created to give a voice to under-represented workers and to work in their members’ best interests.
Now though, many unions are doing just the opposite by refusing their members compensation for hard work. Not only do many union contracts set wage floors, they also establish pay ceilings. This prevents employers from offering wage increases without negotiating with the unions first.
More specifically, it was a United Auto Workers bailout. Typically, when a company goes bankrupt the labor costs are lowered to a more competitive level. UAW worker wages were as high as $56 per hour in pay and benefits. The politically influential UAW solicited federal tax dollars rather than following the usual bankruptcy procedure of lowering wages. If they had simply lowered wages, taxpayers could have saved $26 billion.
This is especially unsettling considering President Obama’s 2008 presidential campaign. Candidate Obama ran on a platform of refusing to spend tax dollars on special interest groups. The UAW is a special interest group, and President Obama spent $26 billion on them.
Among other research on the subject, Sherk produced a memo last February arguing that repealing Davis-Bacon would save taxpayers $10.9 billion per year. The Romney campaign has linked Sherk’s work directly on its website.