Right-to-work legislation isn’t worth it

If the goal is economic prosperity, simply lower taxes and cut red tape, says James Cowan
James Cowan
Union members and supporters march to the Michigan State Capitol building to protest against right-to-work legislation in Lansing, Michigan December 11, 2012. The Republican-majority Michigan legislature on Tuesday approved laws that ban mandatory membership in public-and-private sector unions, dealing a stunning blow to organized labor. REUTERS/Rebecca Cook (UNITED STATES - Tags: POLITICS BUSINESS CIVIL UNREST EMPLOYMENT)
Rebecca Cook/Reuters

James Cowan is deputy editor of Canadian Business.

Canada’s largest industrial union lumbered into existence on the Labour Day weekend under the moniker Unifor—the sort of name usually reserved for dating services and antidepressants. Born from the merger of the Canadian Auto Workers and the Communication, Energy and Paper Workers Union, the new organization boasts 300,000 members spread across 20 sectors.

It is a good time for organized labour to gather an army. Politicians in Ontario, Alberta and on Parliament Hill are championing “right-to-work” rules, measures designed to hobble unions in the name of prosperity. Similar laws have antagonized American unionists since 1943, and they yield a valuable lesson for Canada: they aren’t worth the trouble.

Simply put, right-to-work legislation allows workers in organized shops to opt out of union membership and paying dues. Twenty-four states have them, with Michigan and Indiana joining the ranks last year. Within days of Michigan passing its bill, Conservative MP Pierre Poilievre began pushing to import the idea. Alberta’s resurgent Wildrose Party are also fans, along with Ontario’s Progressive Conservatives. Leader Tim Hudak released a policy paper this summer calling for “worker choice reforms,” positioning the issue as a hot button for the next election. If Hudak becomes premier—a decent possibility—the laws would mean individuals could no longer be required to join a union as a condition of employment. “Numerous economic reports and academic studies confirm that such reforms boost economic performance,” the document asserted. Indeed, a Fraser Institute study released earlier this month claiming Ontario could boost its economic output by $11.8 billion and add 57,000 jobs if it adopted right-to-work laws; in B.C. the figures were $3.9 billion and 19,000 jobs.

The Ontario Federation of Labour parried with its own report, claiming workers in right-to-work states make an average of $5,300 less than individuals elsewhere. The opposing reports are indicative of the reams of research on the subject. Right- wingers say right-to-work creates jobs; lefties say it drives down wages. All of it is woefully inconclusive.

Even the Fraser Institute report concedes this ambiguity. Its projections for Ontario and B.C. were based upon Oklahoma’s experience after adopting right-to-work laws in 2001. Since then, the state’s manufacturing has grown two per cent per year. But manufacturing grew seven per cent annually in neighbouring New Mexico, where there are no right-to-work rules. Economic outcomes across U.S. states are literally all over the map.

The problem with most of these studies is they zealously focus on a single variable, the right-to-work legislation itself. As the economist Thomas Holmes has noted, the new laws tend to come alongside other “smokestack-chasing policies,” like lower taxes, subsidies and the loosening of environmental legislation. It’s not the right-to-work policy that creates jobs and boosts economic output: it’s a holistic pro-business package. For example, far more manufacturers have located in Mississippi than across the border in Louisiana. Both are right-to-work states, but Louisiana’s attitude toward business is otherwise apathetic.

Canadian right-to-work legislation would never resemble American laws anyway. The two nations have very different legal approaches when it comes to unions, both based in legal precedents more than 60 years old. At the heart of American labour law is the 1947 union-restricting Taft-Hartley Act; in Canada, we have the Rand Formula, from 1946, which affirmed unions’ ability to collect dues, even from non-union members. This means any Canadian politician seeking to pass right-to-work laws would not only have to fight a protracted war with every union in Canada, but a lengthy legal battle as well.

For those with a principled objection to unions’ influence, right-to-work laws are a righteous cause. But if the goal is economic prosperity, then it is wiser to chase smokestacks with initiatives like lower taxes and more streamlined regulations. Right-to-work laws generate plenty of debate, but no clear results.

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