In November, Democrats took control over the Governor’s Mansion and solidified their control of the state Senate and the Assembly. In the heady afterglow of their victory, there is talk the Legislature may choose to revisit one of the longtime staples of Nevada’s labor law, its right-to-work law.
Since 1952, the law has blocked any pact whereby employers agree with unions not to hire anyone who refuses to join a union or pay fees in lieu of union dues. The argument that union interests make for repeal is familiar: The union expends hard cash to get benefits for nonunion members, who should not be allowed a free ride on union efforts. Those who benefit should be made to pay.
Indeed the national AFL-CIO puts the position in stark us vs. them terms: “The real purpose of right-to-work laws is to tilt the balance toward big corporations and further rig the system at the expense of working families. These laws make it harder for working people to form unions and collectively bargain for better wages, benefits and working conditions.”
To take this statement at face value is to think that the case against right-to-work is a no-brainer. But if that were the case, it would be hard to explain why in the past decade the trend nationally has run strongly in the opposition direction. Thus, at present, some 27 states have in place right-to-work laws, with the addition of six states, largely in the Midwest, in the past eight years. The number had been 28, but large union contributions in Missouri recently led to the repeal of that state’s statute. By the same token, however, none of the right-to-work states in the South has undone such laws, as repeated efforts — for example, by the UAW to organize Volkswagen in Chattanooga, Tennessee — have fallen short. In explaining away this result, People’s World, a strong pro-union publication, unintentionally gave away the game when in frustration it observed ruefully that “the South is the nation’s fastest-growing and least-unionized region.”
What union supporters miss is that correlation has deep causal roots. The South is growing precisely because it has very low levels of union penetration. Right-to-work states do a better job in attracting firms. Here’s why.
It is no secret that employers are often opposed to unions — and for the obvious reasons. Negotiating a collective bargaining agreement with any union can be costly, frustrating and time-consuming. The ability of a union to call a strike is a constant threat that induces employers to give workers higher wages than they offer in competitive markets. Worse still, the union agreements tend to limit the flexibility of firms in reorganizing their production lines or introducing new technologies. The basic rule under the National Labor Relations Act is that any material change in the collective bargaining agreement can made only with union consent, which is frequently withheld unless some quid pro quo is received in exchange.
All of these impediments to production tend to drive firms away from states that have laws favoring union organization. The massive shrinkage in UAW membership in Michigan and Wisconsin, for example, induced both states to adopt right-to-work laws in order to prevent a further hemorrhaging of their local workforces. It is therefore idle for any union to claim that the only consequences of unionization are bargains “for better wages, benefits and working conditions.”
Aggressive union moves to obtain these gains for their members often come at a very high price. In the extreme, some firms may be forced into bankruptcy or be required to make major job cuts when they are unable to keep profit margins in ever more competitive product markets. Short of that, the local economy could stagnate as a unionized firm will decide to open new plants in or take new business to right-to-work states. The AFL-CIO does not like to talk about the simple point that its ranks have dwindled from about 34 percent of the private labor force in 1954 to about 6 percent today. The usual explanation is implacable employer hostility. But employers facing an organizing drive commit no unfair labor practice when they point to the firms that have failed because they signed onerous collective bargaining agreements.
Those stories are not lost on workers when faced with the question of whether to support or join a union. The dissident workers may be in some cases free riders. But the reality is far more complex than unions would have us believe.
First, workers who stay out of a union lose any and all control over union activities, which means that their dissenting voices are not heard in formulating union policies. Second, many of these workers stay out because they strongly disagree with the dominant union bargaining strategy. It makes perfectly good sense for some workers to resist high pay in the short run if they think it can lead to long-run firm failure.
More specifically, workers with accumulated seniority might be wiling to bargain hard because they think they will be happily retired when the firm fails. But younger workers with longer time horizons could easily take the position that lower wages and greater job stability are the winning combination. So long as union governance remains in the hands of workers with high seniority, it makes good sense for the dissidents to opt out, which is what right-to-work lets them do.
Ironically, right-to-work laws often help union stalwarts as well, for once unions are faced with the risk of defection, they often alter their ways.
Thus they lower their salaries and reduce union dues in order to keep workers in their unions. It is worth remembering that competition improves the performance of unions as well as that of firms.
So while it may be tempting for Nevada’s legislative Democrats to heed the union’s clarion call, they should remember that today’s rippling public discontent with Donald Trump won’t keep them in office tomorrow. Indeed, the party could pave the road to its own defeat by seeking repeal of Nevada’s long-standing right-to-work law.
Richard A. Epstein is a professor at the New York University School of Law, a senior fellow at the Hoover Institution and a distinguished service professor of law emeritus and senior lecturer at the University of Chicago. His Review-Journal column appears monthly.