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Online Seminar


March 1, 2012

On February 1, 2012, Indiana became the first state since 2001 as well as the first state in the U.S. industrial heartland to become a right-to-work state. The right-to-work laws, which were provided for under the Taft-Hartley Act of 1947, allow individual U.S. states to prohibit agreements between labor unions and employers that make membership and payment of union dues a condition of employment either before or after hiring.

Before the Taft-Hartley Act which was adopted by Congress over President Harry S. Truman’s veto in 1947, unions and employers were covered by the National Labor Relations Act (NLRA) and they could lawfully agree to a closed shop, in which employees at unionized workplaces were required to be members of the union as a condition of employment. Under the NLRA and before
Taft-Hartley, an employee who ceased being a member of the union for whatever reason, from failure to pay dues to expulsion from the union as an internal disciplinary punishment, could also be fired even if the employee did not violate any of the employer’s rules.

With Taft-Hartley’s adoption in 1947, there were nine states that quickly established right-to-work laws in 1947 (ND, SD, NE, VA, NC, TN, AR, GA, & IA). By 1960, an additional seven states (AZ, NV, AL, SC, UT, KS, & MS) established right-to-work laws bringing the total to 16. Over the next 40 years, an additional five states (WY, FL, LA, ID, TX, & OK) became right-to-work states with Oklahoma being the last one in 2001 prior to the recent passage in Indiana. With Indiana, we now have 23 right-to-work states.

There have been several studies conducted on right-to-work laws. In general, the studies have shown that right-to-work laws
have no impact (positive or negative) on wages. However, the studies have also shown that such laws have a statistically significant positive effect on employment levels and job creation, including faster growth in manufacturing jobs and lower unemployment rates. This may be because right-to-work laws affect where companies locate and manufacturing plants open. As an example, all
of the new auto plants built in the U.S. in the last 10 years have been built in right-to-work states.

Supporters of the recently enacted Indiana right-to-work legislation have said that the law would bring more jobs to Indiana, where unemployment has crept up to around 9 percent. Also, many Indiana companies have been wanting right-to-work because the new law would make it illegal for businesses and unions to negotiate contracts that require all employees — even those who do not wish to be union members — to pay union fees as a condition of their employment.  At the same time, opponents of the new law say that it is focused on breaking unions and call it “right-to-work for less” because they believe it would weaken unions and
ultimately drive down average wages.

The recent right-to-work victory in Indiana definitely provides national conservatives and business groups a major win. It also deals another blow to organized labor, which has seen mixed results in its fight against initiatives to curb union rights nationwide that followed the Republican victories in 2010. Plus, in general, there’s been a relative decline in unionization over the past
several decades. According to the US Department of Labor Statistics, the number and percent of union workers in 2011 respectively were 14.8 million or 11.9% of the total workforce. If you go back to 1983, that number was 17.7 million or 20.1% of the workforce. As a matter of fact, the number of union workers in the U.S. today is the same as it was in 1952, although the workforce has more than doubled over the past five decades—from 50 million to 121 million.

With right-to-work legislation now in America’s industrial heartland, there are increasing signs that neighboring states to Indiana (Michigan, Ohio and Pennsylvania) are considering the change as well. This is especially so if Indiana’s economy begins to improve over the next few years.

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