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RELEASE: Michigan’s ‘Right-to-Work’ Bill Would Harm Middle Class, U.S. Economy

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Contact: Katie Peters
Phone: 202.741.6285
Email: kpeters@americanprogress.org

Washington, D.C. — As protests in Lansing, Michigan, intensify in reaction to the likely prospect of Gov. Rick Snyder (R-MI) signing into law “right-to-work” legislation later this week, the Center for American Progress today released two analyses demonstrating the ways in which passing this measure will hurt the state’s already-struggling middle class.

“Right-to-work” legislation will make it illegal for workers and employers to negotiate a contract requiring everyone who benefits from a union contract to pay their fair share of the costs of administering it. This will weaken unions and thereby hurt workers, the middle class, and local economies.

The first analysis released today reviews economic evidence on the effect of labor unions on productivity and economic growth, showing that unions foster high-productivity, high-profit firms. Unions support a strong middle class and play a critical role in supporting our nation’s economic competitiveness by:

  • Supporting high-productivity workplaces where information can flow from the bottom up
  • Supporting higher wages and benefits, not just for union members—but high union density tends to support wages, especially at the lower end of the distribution
  • Contributing to macroeconomic stability, to give certainty to consumption, saving, and investment in the economy
  • Advocating for broader worker protections needed for families to make human capital investments—strong public education, social safety nets, minimum wages, paid leave days, and even civil rights and efficient regulation

Unions play a central role in building middle-class societies, which are key to competitive economies with high standards of living. And what the research on economic growth shows is that the tried and true path to sustained economic growth is to build from the middle out—an economy where growing economic opportunity and financial security build a burgeoning middle class. A strong middle class is key to all the building blocks that research says are the foundation of long-term economic growth: education, skill development, and health of the workforce; incentives for entrepreneurship; stable macro and financial balances; and higher-quality governance in both public and private institutions.

In contrast, “right-to-work” laws have failed to increase employment growth in the 22 states that have adopted such laws, and in states more recently adopting “right-to-work,” employment growth and business relocations have reversed their previous expanding trends. In other words, the economic evidence shows that unions and not “right-to-work” laws are what are conducive to broad economic growth.

The second analysis, authored by David Madland and Nick Bunker, provides crystal-clear evidence that “right-to-work” laws harm the middle class:

  • The average worker—unionized or not—working in a “right-to-work” state earns approximately $1,500 less per year than a similar worker in a state without such a law.
  • Workers in “right-to-work” states are also significantly less likely to receive employer-provided health insurance and pensions. If benefits coverage in non-”right-to-work” states were lowered to the levels of states with these laws, 2 million fewer workers would receive health insurance and 3.8 million fewer workers would receive pensions nationwide.
  • All of the states with the lowest percentage of workers in unions—Mississippi, Arkansas, South Carolina, North Carolina, Georgia, Virginia, Tennessee, Texas, South Dakota, and Oklahoma—are “right-to-work” states and they all have a relatively weak middle class, with the share of total state income going to the middle 60 percent of the population below the national average.
  • Over the past several decades, unions in Michigan have weakened and the middle class has been hollowed out—a trend that would significantly worsen if “right-to-work” became law. Michigan’s middle class earned 53.6 percent of the state’s income in 1979, a year when more than 37 percent of the state’s workers were in unions. Today less than 18 percent of Michigan’s workers are unionized and the middle class receives only 47 percent of the state’s income.
  • Moreover, “right-to-work” laws do not reduce unemployment.  Indeed, “right-to-work” states Nevada—with the highest unemployment rate in the country—and North Carolina both have higher unemployment rates than Michigan. Not surprisingly, researchers find that “right-to-work” laws have “no significant positive impact whatsoever on employment.”

Read the analyses:

To speak with an expert on this topic, please contact Katie Peters at kpeters@americanprogress.org or 202.751.6285.

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