Traverse City Record-Eagle


Is a Right-to-Work law good for Michigan? Part 2

Team Mike, Ask The RealtorsHello again Record-Eagle readers,

Michigan’s current fight over “right-to-work” legislation is not only a big question for the people of Michigan and the future of this noble state, it is drawing the attention of citizens, economists, and politicians across the country and around the world as economies of every size and variety struggle with the challenges of being successful society-wide, and wrestle with the big question of organized labor vs. free-market employment. 

Recently, on a PBS Newshour program, Michigan lawmakers voiced their summaries of the arguments on both sides of this issue. State Congressman Sander Levin (D) highlighted the “deeply divisive” nature of these arguments, particularly during this lame duck period in Michigan Congressional houses, and pointed out the many that have benefited in Michigan and across the nation, both directly and indirectly, from organized labor’s bargaining power through history.  He also said that right-to-work laws depress wages.

State Senator John Proos (R) pointed out that Michigan workers now operate in a globally competitive marketplace, and that it is imperative for the State’s future to be as competitive as possible in order to reverse the flow of jobs, and workers, out of Michigan.  Only then, he argued, will the State’s economic health have the ability to regain vigor and prosperity. He also pointed to the fact that union membership has been, and continues to, decline as the State’s economic situation slowly improves. He argued that right-to-work laws increase both wages and job growth.

Nearly half (24) of the United States are now right-to-work states, and statistically, states with right-to-work legislation in place have higher average wages, greater job growth, and healthier economies than those states which lack it.

The Bureau of Labor Statistics reports that there has been a 12.5% increase in wages and the number of jobs in right-to-work states over the last ten years, versus just a 3.1% increase in more union-protected states over the same period.  That’s a four-fold difference.

Michigan had the lowest average Gross State Product (GSP) growth in the country during the twenty year period from 1990 – 2010, at 3.44% (ouch).  The Top Five growth states over the same period were:  Nevada (7.55%), Utah (6.86%), Arizona (6.55%), Colorado (6.36%), and Wyoming (6.13%), all enjoying roughly twice the GSP growth that Michigan did.

Not coincidentally, four of these Top Five also have the least unionized state workforces in the country: Utah (1.6% of its populace is unionized), Arizona (1.8%), Wyoming (2.6%), and Colorado (3.9%).  Many of the other states at the bottom of the average GSP growth comparison also have very heavily unionized workforces: Pennsylvania (15.7% of its population are union members), New York (23.2%), and Maryland (32.8%), and like Michigan, they have all struggled economically over the last twenty years.

On the other hand, the U.S. Congressional Joint Economic Committee’s 2010 Summary Report identified Michigan as the state with the largest number of new manufacturing jobs added per-capita, and Midwestern states dominated the category.  The same Joint Economic Committee’s most recent monthly statistics for October 2012 (released last month) again show the Midwest adding the greatest number of manufacturing jobs so far this year, with Illinois, Indiana, Michigan, and Wisconsin all in the Top Five.

Michigan, former historic cradle of industry and mass-producing defender of freedom for much of the last 150 years, has been brutalized by the changes in late twentieth- and early-twenty-first century global economy, and business people, lawmakers, employees and employers are all searching for ways to improve Michigan’s economic health, and her prospects for the future.

So, what do you think? Does Michigan’s heavily unionized history and labor environment inhibit potential economic growth? Will the slackening of organized labor’s power in the Michigan workplace increase our lure for growing or relocating companies in the future?  Or is this another example of the wealthy few gaining still further advantage over the struggling masses?

Keep warm, share your thoughts, and Think Snow!!!

Mike Gaines

Re/Max Bayshore Properties

  • GenePH

    Hmmmm. . . Here is a retrospective 2008 story from Autoblog;

    The large disparity between the value of the Euro and the U.S. dollar has given European automakers incentive to build plants Stateside. VW has been looking for the location of its next North American plant, and it appears as though we’ll have an answer by July 8. Tennessee and Alabama are said to be the two major candidates for the $788 million facility, which could come online as soon as 2011 and produce 300,000 units per year by 2018. Word from Auto Motor Und Sport is that Michigan is completely out of the picture, and considering the state’s history with the UAW and Volkswagen’s white collar exit from the mitten, the news isn’t all that surprising, though certainly disappointing for the depressed state. There is no word at this point which vehicles VW is planning to build at the new plant, though the German automaker will likely creately a flexible manufacturing facility that can build several vehicles on one line.

    • Mike Gaines

      Hmmmm indeed. What kind of affect should the progress and history of the labor movement in the United States, and in Michigan in particular, have on Michigan’s future? Particularly her economic future? What are the factors that make Tennessee and Alabama the best locations for VW and the millions of dollars their manufacturing plants add to an economy?

  • Bobdisqus

    Off topic but this might be a good topic for your next post Mike.

    Zombie titles:

    Can you give us a local example?

    • Mike Gaines

      Wow. This guy is in a pretty bad spot. He has a lot more going on in his life than just a home he still owns. My other thought is that property ownership is neither simple nor unimportant, and it doesn’t look like he sought much advice from people, who may have been able to help him, in a timely fashion, either.

      I will try to address this specifically in an upcoming post. Thanks for your input.

      My over-riding impression is still, “There but for the grace of God, go I.”

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