Indiana Bill May Breach Unions’ Fortress in Industrial Midwest

When Greg Eckert joined the painter’s union in Fort Wayne 25 years ago, one of every five Indiana workers was a dues-paying member of organized labor. The ratio now is one in nine.

Declining union membership and rising Republican clout have put Indiana on the edge of becoming the first so-called right- to-work state in an industrial region known for titanic labor battles that paved the way for modern-day contracts, health care and retirement benefits.

A bill moving through the Republican-controlled General Assembly in Indianapolis would exempt nonunion employees from paying dues when working alongside union workers. Republicans view it as a cost-cutting, job-creating tool. Democrats call it union-busting that will lower wages. And if the measure passes in Indiana, it may energize the right-to-work movement in a region that has repeatedly beaten it back.

“Ohio, Michigan -- if Indiana goes down, they’ll all have targets on them,” said Eckert, 52, who was outside protesting the bill as Republican Governor Mitch Daniels promoted it in his Jan. 10 State of the State speech.

While Republicans have the votes to pass the bill, Democrats can prevent a quorum by refusing to come to the floor. That’s what they did for five weeks last year and for four of the six days during the session that started Jan. 4.

Daniels, who backed off a similar measure in 2011, supports it now, calling it a “bold stroke.”

“We just cannot go on missing out on middle-class jobs our state needs just because of this one issue,” Daniels told lawmakers.

Silence Equals Dissent

Almost half the House Democratic caucus stayed away from the speech, normally a polite and ceremonial annual event during which the political tools of combat are left under the desk. Most of the Democrats who attended didn’t applaud.

Outside the House of Representatives chamber, hundreds of union members booed and chanted during Daniels’s speech, yelling, “No right to work,” “Shame on you” and “Mitch is a liar.”

Fighting the bill “is like having tanks roll in while you’re fighting with sticks,” House Democratic Leader Patrick Bauer said in an interview. He told reporters Jan. 6 that “we can’t stay out forever.”

‘Simple Erosion’

Twenty-two states, mostly in the Deep South and the Rocky Mountain West, have enacted right-to-work laws. Republican statehouse gains in the 2010 election prompted legislation in states including Wisconsin and Ohio that was aimed at restricting bargaining rights for government workers’ unions. Indiana’s bill, however, targets labor contracts with businesses.

In that state, union members composed 10.9 percent of the workforce in 2010, according to the U.S. Bureau of Labor Statistics. That’s down from 15.4 percent in 2000.

“It’s the simple erosion of a lot of good-paying manufacturing jobs,” Nancy Guyott, president of the Indiana State AFL-CIO, said in an interview. The labor coalition represents more than 300,000 members in 800 locals, according to its website.

Carmakers illustrate the trend: Employees of domestic auto companies in Indiana, including Chrysler Group LLC and General Motors Co. (GM), are represented by the United Autoworkers Union. People who work in newer assembly plants belonging to Toyota Motor Corp. (TM), Fuji Heavy Industries Ltd. (7270)’s Subaru and Honda Motor Co. (HMC) aren’t unionized.

Three Strongholds

Union membership nationwide in 2010 was 14.7 million, or about 11.9 percent of the workforce, down from 12.3 percent in 2009, according to the bureau. While it has been dropping steadily since the 1980s, three regions offer rates higher than the national average. The Northeast has the highest concentration, led by New York with 24.2 percent and New Jersey with 17.1 percent; the West Coast, led by Washington at 19.4 percent and California at 17.5 percent; and the Midwest, which remains a center of heavy manufacturing of motor vehicles and parts, steel and farm equipment.

There, Indiana is a laggard. Union employment in surrounding states is higher, according to bureau data -- 13.7 percent in Ohio, 14.2 percent in Wisconsin, 15.5 percent in Illinois and 16.5 percent in Michigan, birthplace of the United Autoworkers Union and home of the Flint sit-down strike of 1937.

“If it passes in Indiana it would certainly galvanize people looking to weaken unions,” said William Jones, a labor historian at the University of Wisconsin at Madison.

Hoosier Sinkhole

Studies and experts have been called upon at each pole of the debate. Fred Morgan, chief executive of the Oklahoma Chamber of Commerce, told an Indiana legislative committee Jan. 6 that his state’s economy “improved dramatically,” thanks to the right-to-work law, which passed there in 2001.

At the same hearing, Morton Marcus, an economist and former director of the Indiana Business Research Center, said if Indiana becomes a right-to-work state, it would “create a sinkhole between Ohio and Illinois, Michigan and Kentucky.”

Gordon Lafer, an economist at the Labor Education and Research Center at the University of Oregon, testified that some right-to-work proponents’ claims are “misinformation.” Indiana’s job growth has been 25 percent higher than Iowa’s, the closest right-to-work state, he said.

“There are potentially hundreds of state policies and natural features of state economies that are a factor in economic growth,” Lafer said.

The average worker in a right-to-work state is paid $30,167 a year, or about $5,333 less than workers in states without the rule, according to U.S. Labor Department data.

Border State

“This will start a conversation about the value of trade unionism,” John Russo, a labor studies professor at Youngstown State University in Ohio, said in a telephone interview. Russo questioned how representative Indiana is in the labor debate; he called it “an outlier.”

“Indiana is closer to Kentucky in terms of its orientation,” Russo said in a telephone interview.

Competition among states has engendered debate over the role unions play in attracting or discouraging jobs, Jones said. Public employee unions have also been criticized for burdening taxpayers through pension and health-care costs.

Wisconsin (STOWI1) Governor Scott Walker’s effort to curb collective-bargaining rights for most public employees provoked a recall effort against him. Leaders of the ouster drive say they will deliver signatures Jan. 17 to force an election to remove him from office.

Labor’s Pains

At the same time, the move to restrict unions in the name of cost-cutting or job creation has gained strength, Jones said.

“We’re in a really volatile political situation right now with labor, and in a way we haven’t seen in decades,” Jones of the University of Wisconsin said in a telephone interview. He said the future debate will hinge in part on the outcome of elections in November.

At the capitol in Indianapolis, Mary Jo Finley of Plymouth, carried a sign that said, “Right-to-work means right to work ‘em over.’’

Finley, 51, is married to a union electrician.

‘‘I’m an at-home mom for my two daughters and my sick mother,’’ Finley said. ‘‘If he wasn’t making a living wage, I couldn’t do that.”

To contact the reporter on this story: Timothy Jones in Indianapolis at tjones58@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.