Many wonder how right-to-work laws will affect Wisconsin. To see how, consider another question: Do monopolies help or hurt customers?
Until now, unions have had a monopoly in many Wisconsin workplaces. They didn't have to persuade workers to purchase their services; they could force them to. Anyone who didn't pay dues — averaging about $700 a year — lost his or her job.
A lack of competition leads to complacency in any organization, whether a business or a union. It is customers' ability to shop elsewhere that gets them better service. Federal anti-trust law prohibits monopolies for exactly this reason.
If, say, AT&T had maintained its telecommunications monopoly, would "Ma Bell" have invented the iPhone?
Unions operate no differently. Right-to-work forces unions to work harder to represent their members. Just ask Gary Casteel, the new secretary-treasurer of the United Auto Workers. He spoke out in favor of workplace-freedom laws last year, explaining that "it's a voluntary system, and if you don't think the system's earning its keep, then you don't have to pay."
In fact, many unions do not earn their keep. Wages do not rise at most newly unionized companies. It is true that the average union member makes more than the average non-union member. But this primarily happens because unions tend to target larger — and higher-paying — firms for organizing drives. Taking that into account, wages rise just as quickly for workers who vote against unionizing as for those who vote for it.
Why would or should workers pay dues to a union that doesn't raise their pay? Right-to-work pressures unions to deliver better working conditions.
Right-to-work also pressures unions to pay attention to all their members. Union contracts often disadvantage individual employees. Seniority-based layoffs, for example, force new hires to stand first in line for layoffs. Right-to-work lets them stop paying dues for the privilege of getting laid off first. This ability pressures unions to stop ignoring their concerns. Indeed, customers usually get better service when they can shop elsewhere.
Unions justify forced dues by arguing stronger unions raise wages. They prefer to call right-to-work the "right-to-work for less."
On the surface, they appear to have a point. Government statistics show right-to-work states have below-average wages. But this overlooks workers' real purchasing power. Right-to-work states also have below-average living costs.
Take Wisconsin, for example. Bureau of Labor Statistics data show wages in Wisconsin are 5% below the national average. But Wisconsin's living costs are even further below-average. Consequently, Wisconsinites enjoy slightly above-average living standards. New Yorkers or Californians make more on paper, but their earnings do not stretch as far. Most researchers accounting for living cost differences find that workers make just as much or more in right-to-work states.
Recently the Economic Policy Institute — a left-wing think tank — claimed the opposite. I replicated the institute's study. I found that EPI made several methodological errors, such as failing to account for measurement error in its control variables. Correcting these errors changed the conclusion: Right-to-work laws have no statistically detectable effect on private-sector wages.
Federal law allows unions to bargain on behalf of all workers at a company. If they do, they must represent all employees equally, whether or not they pay dues. However, federal law also allows unions to negotiate contracts only covering their members.
The Supreme Court has long upheld "members' only" union contracts. Wisconsin unions cannot force non-members to pay dues — but they don't have to bargain for them either. Unions in Wisconsin should stop doing so and become members' only. This would be a win-win solution for everyone.
Members' only contracts would eliminate "free riding." They would release unions of any obligation to represent workers who do not pay dues. Most unionized employers also would rather negotiate with a members' only union. This would give them flexibility to hire workers who dislike parts of the union contract. (Many highly performing employees, for example, will not work for seniority-based raises at unionized companies.)
Most of all, members' only unions would let individual workers choose what works best for them. Employees who see value in union representation could pay for it. Employees who see little value in it could opt out. Workers who like seniority systems could join them without forcing reluctant colleagues on board, too. And the need to attract members would force unions to pay closer attention to workers' desires.
Wisconsin's unions must now compete for their members' dollars. This may reduce their membership. But if they rise to the challenge, it could instead mean better workplace representation. Competition — not monopolies — serves customers and workers best.
- James Sherk is a research fellow in labor economics at The Heritage Foundation.