If Michigan “right-to-work” legislation becomes law this week—as the legislature and Gov. Rick Snyder (R-MI) are poised to make it—it will hurt the state’s already-struggling middle class.
Unions are essential for building a strong middle class, yet right-to-work laws weaken unions by making unions provide services without being paid for them, which forces certain workers to pay the costs of union representation for all workers.
And by harming the middle class, a right-to-work law will harm Michigan’s economy because a strong middle class leads to additional business investment, greater entrepreneurship, more growth-enhancing public policy, and higher levels of trust that facilitate business transactions.
The evidence that right-to-work laws harm the middle class is crystal clear.
- 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. They all have a relatively weak middle class, as the share of total state income going to the middle 60 percent of the population is 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. As Figure 1 shows, Michigan’s middle class earned 53.6 percent of the state’s income in 1979, a year when over 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 does not reduce unemployment. Indeed, right-to-work states such as Nevada—which has the nation’s highest unemployment rate—and North Carolina both have higher unemployment rates than Michigan. Not surprisingly, researchers find that right-to-work has “no significant positive impact whatsoever on employment.”
From pushing for fair wages and good benefits to encouraging citizens to vote, to supporting Social Security and advocating for family-leave benefits, unions make the middle class stronger by giving workers a voice in both the workplace and our democracy. Certainly, unions—like any other organization—sometimes act in a self-interested manner. But unlike any other organization, the core of what unions do helps all workers and fuels a strong middle class.
In fact, dollar for dollar, strengthening unions is as important to the middle class as boosting college-graduation rates, according to a study we conducted at the Center for American Progress Action Fund on the strength of the middle class in all 50 states.
The study controlled for a host of other factors that also impact the strength of a state’s middle class—such as education, unemployment, and types of industries—and found that if unionization rates increased by 10 percentage points, the typical middle-class household, unionized or not, would earn $1,501 more each year. To put that figure in perspective, we found that a 10 percentage-point increase in the share of the population with a college degree would increase the average middle-class income by $1,664 a year.
Similarly, sociologists Bruce Western and Jake Rosenfeld of Harvard University and the University of Washington, respectively, calculated that approximately one-third of the increase in male wage inequality from 1973 to 2007 was due to decreasing unionization—about the same amount they ascribed to the increasing payoff of a college education.
And as unions have weakened over the past several decades and the middle class has struggled, the rich have gained dramatically. The share of pretax income earned by the nation’s richest 1 percent of Americans more than doubled between 1974 and 2007, climbing to 18 percent from 8 percent. And for the richest of the rich—the top 0.1 percent—the gains were even more astronomical: They quadrupled over this period, rising from 2.7 percent to 12.3 percent of all income.
Gov. Snyder once claimed a right-to-work bill would be “too divisive” for Michigan. He was correct—right-to-work would further divide the state into rich and poor, and it would shrink the middle class.
Michigan politicians should make rebuilding the middle class one of their most important goals, and a good start would be killing this destructive legislation.
David Madland is a Senior Fellow at the Center for American Progress. Nick Bunker is a Research Assistant at the Center.