Repeal of Right-to-Work Law in Michigan: Impact on Unions, Workers, and the Economy

Introduction:

Right-to-work laws are state-level legislation that allows workers to choose whether or not to join a union or pay union dues as a condition of employment.[i] These laws make it unlawful for unions to compel workers to join the union or pay dues to get or retain employment.

Unions bargain with employers on behalf of employees for improved salaries, benefits, and working conditions in an unionised workplace. As a condition of employment, union security clauses, which are terms in collective bargaining agreements, compel workers to join the union or pay union dues. Right-to-work laws, on the other hand, render these clauses unlawful, allowing workers to opt out of union membership and dues.

Right to work law in Michigan:

The right-to-work law in Michigan is a law that prohibits union security agreements that require employees to join a union or pay union dues as a condition of employment. The law was signed in December 2012 and has been a controversial issue ever since. The law has led to a decline in union membership in the state, but its long-term effects on the economy and workforce are still unknown.

The repeal of Michigan’s right-to-work law for private-sector employees represents a significant shift in the state’s labour landscape.

The repeal effort gained momentum in 2023, with the Michigan House of Representatives passing a package of three bills on March 8 and the Michigan Senate narrowly passing a bill on March 21, both along party lines. Governor Whitmer signed the legislation into law on March 24, making Michigan the first state in decades to repeal its right-to-work law for private-sector employees.

The new law will go into effect on March 30, 2024, 91 days after the end of the current legislative session. Once the law takes effect, union security clauses will once again be legal in private-sector collective bargaining agreements, meaning that employees can be required to pay union dues or a service fee as a condition of keeping their jobs. The law also appropriates $1 million to the Michigan Department of Labour and Economic Opportunity for implementation and outreach efforts.[ii]

Arguments in Favour and Against:

Right-to-work law has been a point of conflict in the United States. Supporters for this legislation argue that these laws preserve workers’ freedom of choice while also creating a more business-friendly environment, which may help attract new businesses and generate employment. They argue that workers should not be forced to join unions or pay dues if they do not want to. Supporters also believe that right-to-work laws can prohibit unions from utilising workers’ dues to fund political activities with which they may not align.

Opponents of right-to-work laws argue that it weakens unions, resulting in lower wages and fewer benefits for workers. They believe that unions should be able to bargain on behalf of all workers and that allowing workers to opt out of union membership or dues weakens unions’ collective bargaining power. Opponents also say that right-to-work laws can lead to “free-riding,” in which workers who do not pay union dues continue to benefit from the union-negotiated wages and benefits.[iii]

Overall, right-to-work law is a controversial issue in the United States. Both supporters and opponents have deep opinions about how these laws will affect workers, unions, and the economy. Nonetheless, it is apparent that right-to-work laws provide workers with the option to choose whether or not to join a union or pay dues.

Impact on unions:

The ‘Right to Work (RTW) law was passed in 2010 had two aspects:

  • It removed the compulsion for workers to join labour unions.
  • It gave the workers the right to opt out of paying dues.

Due to these aspects of this law, there was a drop of 3.8% in the membership of Unions between 2010-2022 across Michigan and other states where this law was implemented. This drop is high when compared to the drop rates of the same in non-RTW states (1.7%) and pre-2010 period (0.9%). This can significantly reduce the strength and bargaining power of the unions. This can have negative repercussions on the rights of the workers. Therefore, it is of utmost importance that this law is repealed.

This repeal will cause an increase in the strength and bargaining power of the Unions due to two reasons:

  • Increase in number of members:

An increase in the number of members will provide an impetus to the strength of unions. The strength will further increase the bargaining power of the Unions.

  • Compulsory fees for Unions

An organization requires adequate funds to function well and therefore compulsory imposition of union fees on workers will increase the financial strength and will enable them to function better.

Therefore, the repeal will have a positive impact on the strength and bargaining power of unions.

Impact on workers:

The repeal will have an overall positive impact on workers’ rights and conditions.

The ‘Right to work’ law had reduced the bargaining power of the Unions and also their overall standing. This had a negative domino effect on the rights of the workers.[iv] Workers in Michigan and other states which had these ‘Right to Work’ laws had lower wages and lesser work-related benefits when compared to their counterparts in the other states where these laws were not present.

This widened the wage gap and in turn, increased income inequality. Businesses had misused these laws to cut their costs arbitrarily and unfairly and reduced the wages of the workers in a bid to extract more profit. Therefore, repealing these laws was very crucial to protect the rights of the workers at large.

Concerns about the repeal’s impact on:

Economy

Sudden changes caused by this change in policy is a cause of concern for many.While it can be agreed that such changes can cause short-term instability in the economy and both workers and businesses will find it difficult to function according to this new scheme in the short run, it will have a healthy long-term impact on the economy.

Economy is made up of people. To ensure a healthy and smoothly functioning economy, it is essential that people have wages which are sufficient to provide for a person’s and his/her family’s basic needs at the least. Other work-related benefits are also required to ensure a better quality of life and financial security after retirement.[v]

The ‘Right to Work’ laws were resulting in lower wages and lesser work-related benefits and thus was hindering the long-term progress of the economy. Hence, it is favourable for the economy that RTW laws are repealed.

Businesses

There are concerns that global businesses will hesitate to set up and invest in Michigan since it will become costlier to work and conduct business there in the future.

However, businesses need to remember that well-functioning employees are crucial for profit-making and overall success. A person can only function well if his/her basic needs are fulfilled and he/she has a good quality of life. This is possible for workers only when they have reasonable wages and other work-related benefits.[vi]

Appropriate working conditions are required to ensure better productivity and better quality of life for workers. It is important that they get both adequate wages and reasonable working hours. There has been a successful experiment in the United Kingdom
(UK) with regards to providing adequate rest to workers and improving their overall working conditions. The ‘4-day work week’ experiment was carried out in the United Kingdom. It led to lower stress, better work life balance, lesser resignations, extra time for childcare. The employees felt less burnt-out.[vii]

Companies on the other hand saw an increase in their profits and revenues. Their revenue grew by about 1.7%.[viii] This is the most contemporary and relevant example of how providing better working conditions to employees can actually increase profits and revenues of the companies.

Therefore, this repeal will be profitable for businesses in the long run.

Conclusion:

Workers are the backbone of an economy and their rights ought to be protected. The concerned state government, the businesses, the judiciary, and society as a whole should work together in sync to ensure that workers get reasonable wages and work-related benefits.

It should be ensured that laws are designed in a way, that they help in bolstering workers’ rights. They should not hinder them in the way that the repealed ‘Right to Work’ Laws did.

It has been rightly said that ‘With great power, comes great responsibility.’

The legislative and the judiciary of any country/state have a lot of power when it comes to impacting people’s lives and this power should be channelized wisely and in a way that it impacts and changes people’s lives for the better.


[i]Michigan becomes 1st state in decades to repeal ‘right-to-work’ law PBS (24 Mar 2023) <https://www.pbs.org/newshour/politics/michigan-becomes-1st-state-in-decades-to-repeal-right-to-work-law> accessed 30 March 2023.

[ii]Ibid.

[iii]Jennifer Sherer, Elise Gould, Why ‘right-to-work’ was always wrong for Michigan, Economic Policy Institute (13 March 2023) <https://www.epi.org/blog/why-right-to-work-was-always-wrong-for-michigan-restoring-workers-rights-is-key-to-reversing-growing-income-inequality-in-michigan/> accessed 30 March 2023.

[iv]Supra i.

[v]Supra i.

[vi]What Right to Work Repeal means for Businesses, Detroit Regional Chamber, detroitchamber.com (17 March 2023) <https://www.detroitchamber.com/what-the-right-to-work-repeal-means-for-businesses/ accessed on 30 March 2023.

[vii]Courtney Bonnell, ‘4-day work week trial yields overwhelming success in U.K., researchers say’ ,pbs.org (21 February 2023) <https://www.pbs.org/newshour/world/4-day-work-week-trial-yields-overwhelming-success-in-u-k-researchers-say> accessed on 30 March 2023.

[viii]Ibid.


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