Wisconsin Bets That Weakening Unions Will Strengthen Its Economy

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Governor Scott Walker (Wi-R) prepares to face off with Democrat challenger Mary Burke in a debate at the WMVS-TV studios October, 17, 2014 in Milwaukee, Wisconsin.

Photographer: Darren Hauck/Getty Images

A smiling Republican Governor Scott Walker posed for television cameras Monday, holding up the bill he’d just signed making Wisconsin the nation’s 25th right-to-work state and declaring it a “powerful message” of economic development.

While the bill may buoy a presidential campaign by Walker, it might not be a economic panacea for Wisconsin. Nearby Michigan and Indiana, which in 2012 adopted similar laws, have yet to see payoffs directly attributed to employees’ new freedom to escape union dues and membership. Economic gains, such as a sharp drop in unemployment, can be linked to the national recovery, economists say, and right-to-work laws are largely symbolic.

“It would be an exaggeration to point to a specific fraction of an unemployment rate change that is due to right-to-work,” said Patrick Anderson, founder and chief executive officer of the Anderson Economic Group consultancy in East Lansing Michigan.

The effort to add to the roster of right-to-work states in the South and West has gained momentum since Republicans took over a majority of legislatures and governors’ offices in the 2010 election, and strengthened their hold in subsequent years. The three latest entries are industrial heartland states that generations ago fostered powerful unions.

Indefinite Effects

Indiana has seen its jobless rate drop to 5.8 percent in December, from 8.3 percent when then-Governor Mitch Daniels signed the union bill in February 2012. Yet neighboring Illinois, which isn’t a right-to-work state, saw its unemployment drop by to 6.2 percent from 8.9 percent in the same period.

“It’s really hard to isolate the effects of it,” said Mike Hicks, an economist at Ball State University in Muncie who has charted the law’s impact. “Right-to-work alone isn’t responsible for the vast majority of employment growth or wage drops.”

That’s not stopping states, and even municipalities, from forging ahead.

In Kentucky, counties are trying to bypass opposition in the legislature by enacting their own right-to-work ordinances in what has become a legal fight about local-government authority. Warren, home of the General Motors Co. assembly plant in Bowling Green that makes the Corvette, and nine other counties have passed right-to-work ordinances, said Brent Yessin of Protect My Check, a nonprofit promoting local action.

The United Autoworkers and eight other unions sued in federal court in January to block the ordinance passed in Hardin County, saying only states and U.S. territories can adopt right-to-work status. The county disagrees and says Kentucky’s home-rule law lets it act.

The Republican-controlled Missouri House of Representatives approved a right-to-work bill last month. A coalition of unions protested during the weekend in Charleston as West Virginia’s legislature considers a bill. And Illinois Republican Governor Bruce Rauner is pushing to give voters authority to create right-to-work zones at the local level.

Dwindling Unions

Those moves come as national union membership continues to slide, to 11.1 percent in 2014, down from 20.1 percent in 1983, according to the U.S. Bureau of Labor Statistics.

``The rise of the middle class in America coincided in large part with the rise of unions,'' President Barack Obama said in a statement Monday night in which he criticized the Wisconsin bill. ``It’s inexcusable that, over the past several years, just when middle-class families and workers need that kind of security the most, there’s been a sustained, coordinated assault.''

Wisconsin Democrats say the effort is about politics, not economics. Unions have typically been major suppliers of money and manpower for the party’s candidates.

“The governor is attempting to position himself as a Tea Party favorite in the Republican presidential primary,” said Democratic Representative Gary Hebl.

Shortly after signing the bill, the Friends of Scott Walker campaign sent out an e-mail asking for contributions of “$10 or $100 or $1,000” to fight “Big Government Labor Bosses.”

Republicans insisted that the motivation for the measure wasn’t to help Walker but to give workers choice and boost the economy. Proponents say right-to-work makes a difference to businesses and corporate officers deciding where to locate or expand operations, and that states without that statutes can be ruled out.

“We expect to see an immediate economic benefit,” Representative Daniel Knodl, an assistant Republican leader, said during a March 5 news conference in Madison, the day before the measure passed.

Just as politics divides right-to-work supporters and opponents, there are disagreements over the economic impact. Anderson said that, in Michigan, right-to-work’s impact is largely symbolic, helping the state’s image along with the revival of the domestic auto industry and Detroit’s emergence from bankruptcy.

“No one in the manufacturing world was unaware of the lengthy and powerful influence of organized labor in Michigan,” Anderson said.

“Now the state can compete for some of the manufacturing expansion in the way that it really couldn’t in the past,” Anderson said. “That will take time.”

Maybe a long time, said Robert Bruno, a Chicago-based assistant professor of labor and industrial relations at the University of Illinois.

“This really is fool’s gold,” Bruno said. “There’s a multitude of business incentives and drivers that are the principal causes of economic development, and right-to-work doesn’t move the needle much.”

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