Economic Outlook: RTW as a false alarm

By ANTHONY HALL, United Press International  |  Dec. 12, 2012 at 10:26 AM
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With nods, winks and nudges, Republicans in Michigan assaulted their union member constituents Tuesday.

It is hard to see the process failure of the right-to-work laws signed by Gov. Rick Snyder as any different. The bills were pushed through the Legislature in six days, without a public hearing. Lame-duck lawmakers with some of the more imaginative explanations uttered in a state capital voted yes. A furtive governor thought it best not to sign the bills with a public ceremony "because this isn't us versus them," which means he didn't look out his window to notice 12,000 angry protesters and police in full riot gear. And, incidentally, police and firefighters were exempted from the right-to-work legislation with explanations The Detroit News called "murky." That ensured there wasn't an additional 2,000 protesters in the state capital Tuesday and those holding batons would clunk the right heads if it came down to that.

But much of the process of passing a right-to-work law in a state such as Michigan has to be done with small smirks and suppressed giggles while looking at one's shoes. While a cohort speaks bravely to reporters, the cohorts in the background gathered around to block the wind and make it look like the speaker is surrounded by tweed. The speaker, however, must be talking in code or a prescribed double-talk that means nothing but sounds quite important.

Firefighters and police were left out of the legislation because their unions "behave more like value-adding trade associations than unions," said state Rep. Mike Shirkey. Apparently, this means something. Unfortunately, the vote was taken before cryptographers could break the code.

"These are men and women who must respond and rely on each other in ways no other union must," said Republican Rep. John Walsh, failing to explain why electricians and corrections officers were not also exempted from the legislation.

It is also possible Walsh was attempting to say that division among workers in other jobs was the point of the legislation. He didn't say it that clearly, however.

A study at Ball State University in Indiana completed this year found right-to-work would not increase manufacturing jobs, nor does it affect wages. The Economic Policy Institute, however, found annual wages in right-to-work states for union and non-union workers averaged $1,500 less than in states without such legislation and that access to healthcare was affected, as well.

Bill Cosby said "intern" was French for "slavery." President Obama said Monday that right-to-work was about the right to work "for less money." Perhaps the point is becoming clearer now.

The Economic Policy Institute labeled right-to-work a "failed policy," but it must have its points or Republicans wouldn't embrace it so enthusiastically.

Pure and simple, if it's about money, how does this break down?

On a personal level, the News reported, union members on average pay 1.5 percent of their pay into union dues, or about $750 per year for someone earning $50,000 per year.

That doesn't add up to more spending money, however, when you take away $1,500 in wages. It doesn't contribute much to the state's tax revenue or discretionary spending.

Relatively speaking, $750 subtracts plenty from a union's budget and puts $1,500 in the employer's pocket. That has some impact.

The long-term ability of unions to attract members to have an impact on workplace rules and wages, pension plans and healthcare is where the real difference lies, and this could put some unions right out of work.

Imagine a situation in which a company is doing poorly. Labor contracts are due or get tossed out in a bankruptcy court and unions workers, temporarily, have to take a hit with wages and benefits put on hold and the cessation of pension plans. Then, when the contract is renegotiated, union members take a bigger hit, vote on the contract and sign it.

At this point, the union has an array of its own members who are dissatisfied. The union wasn't quite as magical as previously thought. More members stop paying dues.

Right-to-work doesn't dismantle unions, it only makes it possible to do so. It unlocks the door. It's like yelling fire in a theater with locked doors watching patrons trample themselves to death, then going up to a podium and explaining it wasn't your fault, because there was never a fire in the first place.

In international markets Wednesday, the Nikkei 225 index in Japan rose 0.59 percent, while the Shanghai composite index in China gained 0.39 percent. The Hang Seng index in Hong Kong added 0.8 percent, while the Sensex in India slipped 0.16 percent.

The S&P/ASX 200 in Australia climbed 0.17 percent.

In midday trading in Europe, the FTSE 100 index in Britain gained 0.23 percent, while the DAX 30 in Germany rose 0.34 percent. The CAC 40 in France shed 0.06 percent, while the Stoxx Europe 600 was up 0.08 percent.

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