A local (Michigan) radio show was recently discussing the right-to-work law being debated in the state legislature. One pro-union caller said (paraphrasing), “It’s simple math. When a union represents the employees of a company or of an industry, the employees earn higher wages because the union has major bargaining power with the employer and can negotiate better conditions and better pay.” I guess he skipped the part of elementary-school math where he would have learned that the more you pay each employee, the fewer employees you can afford to pay, which is why unions are often thought to increase the rate of unemployment of the lowest-skilled workers. That isn’t always the case, especially given all the ever-changing legal, demographic, economic, and historical complexities involved, but if you’re going to try to make unionization and wages a matter of “simple math”, then the simple math says that above-market wages increase unemployment. If, in a free and unregulated market, a union pushes wages higher than would otherwise exist, ceteris paribus, the employment rate must decrease, especially among the lowest-paid workers. That should be anathema to all purported “pro-worker” advocates, especially in today’s economic climate, especially in Michigan.
Anyway, right-to-work laws, just like pro-union laws, are undesirable for reasons entirely apart from mathematics or economics: they violate the freedom of association of employers and employees. Regarding the right-to-work law that Michigan Gov. Rick Snyder signed into law yesterday, J.D. Tuccille writes:
I'm not cheerleading for the right-to-work law just passed in Michigan, which bans closed shops in which union membership is a condition of employment. I'm disappointed that the state has, once again, inserted itself into the marketplace to place its thumb on the scale in the never-ending game of playing business and labor off against one another.
In an article for The Freeman after Indiana approved similar legislation, Gary Chartier stated the case well:
If employers choose to conclude union-shop contracts with unions, what gives the Indiana legislature the right to interfere? Employers own the wages they will pay and the sites where work will be performed under such contracts. So it’s their right to dispense the wages and make the sites available specifically to union members, just as it’s their right, more generally, to trade with anyone they choose. When a legislature interferes with voluntary employment contracts, it infringes people’s freedom to bargain with their own labor and possessions. Treating this kind of interference as acceptable means licensing arbitrary interventions into the market by politicians, who are ill-equipped to second-guess the decisions made by the real people making work agreements with one another.
Chartier went on to defend not only the right of businesses and unions to negotiate the terms of employment in a workplace, but also the (sometimes) value of unions. I agree with him when he writes:
Supporting a free society means embracing people’s freedom to form unions. And it means acknowledging that unions—and union-shop agreements—can offer both workers and employers something valuable. Unions can help to secure workers predictable terms of employment and protect them against arbitrary dismissal. And a union contract can help make workplaces more predictable for employers, ensure that information is disseminated to workers, and reduce a variety of workplace transaction costs.
The ideal role for the government in business-labor relations is to stay the hell out of it and let the parties work things out themselves. I may prefer one outcome or another, but I don't have the right to enforce it by law, and that's what right-to-work legislation does.
Addendum: Some commenters point out that Michigan had earlier legislated in favor of unions. The economist Percy Greaves addressed this issue, writing, "the agitators for ‘right-to-work’ laws forget . . . that the problem is basically one of getting the government out of moral business transactions and not into them . . . . The economic answer is to repeal the bad intervention and not try to counterbalance it with another bad intervention."