Opinion and Taking Issue

KENNEDY: Pols playing games with right-to-work

December 31, 2011

Sheila Suess KennedyThe General Assembly will soon be in session, and the Super Bowl is coming to Indianapolis. It’s hard to decide which game to watch.

Over at the Legislature, House Speaker Brian Bosma is solemnly assuring us that job creation requires passage of right-to-work legislation, which he claims (presumably with a straight face) is the most important issue facing Indiana.

Let’s get real: If so-called “right-to-work” laws generated economic growth, Mississippi would be an epicenter of economic activity.

As Brian Howey recently wrote, the current push for a right-to-work law is simply a continuation of Gov. Daniels’ war on unions. Unions are already weak in Indiana, and the sorts of jobs we’ve been trying to grow—life sciences, biotech, etc.—aren’t union jobs, anyway.

But even if we were to suspend the “smell test” and take the governor and speaker at their word, their argument boils down to the contention that creating a “good business environment” requires that we be a low-wage, low-tax state.

A story that received a good deal of coverage a few years ago may be instructive. Toyota had been negotiating with three Southern states to locate a new plant. The states in question all had low-wage work forces and low business tax rates; in addition, all were offering generous tax incentives.

Toyota ended up going to Canada. The economic development officers of the losing states were dumbfounded, because taxes were higher and no incentives were involved. Toyota’s explanation? The work force was more highly educated, and thanks to Canada’s “socialized” system, the company wouldn’t need to provide health care.

As we academics like to say, the plural of anecdote is not data. But when you look at independent research on right-to-work laws (research that hasn’t been paid for by either unions or chambers of commerce), there is absolutely no evidence that such laws affect job growth one way or the other. Once you control for other factors affecting economic conditions, the only effect of such laws is to lower wages for both unionized and non-union workers.

If right-to-work laws have no effect on job creation, if their only demonstrated effect is to reduce wages and thus depress consumer buying power, and if the motivation isn’t simply to further weaken a constituency that supports Democrats, why pass them?

Proponents say the issue is liberty, but that cuts both ways.

The “liberty” argument for right-to-work laws is that no one should have to join a union in order to work. I agree—and under current law, they don’t. They do have to pay for services rendered by the union that directly benefit them—that is, their share of the costs of negotiation for wages and working conditions. But that’s it. They don’t have to join or support any other activities with which they disagree.

The “liberty” argument against right-to-work is that such laws limit the right of employers to set the terms and conditions of employment. The state should not have the power to dictate an owner’s otherwise lawful workplace policies and arrangements.

If we really wanted to promote job growth and a healthy economic environment, our focus would be on creating efficient, transparent state government, and providing high-quality public education and public services (especially public transportation).

Employers looking to relocate don’t just look at tax and wage rates; they consider all the costs of doing business in a particular location. If they must provide remedial education to a work force, if employees can’t easily get to work, if local consumers can’t afford their goods or services, they don’t come.

The Super Bowl is a game. The legislative process shouldn’t be.•

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Kennedy is a professor of law and public policy at the School of Public and Environmental Affairs at IUPUI. Her column appears monthly. She blogs regularly at www.sheilakennedy.net. She can be reached at skennedy@ibj.com.

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