Right to Work – 2 Sides to Every Coin

by Anita Sherman, CPA and John Fisk | Team Members of the Manufacturing & Distribution Services Group

There has been a lot of discussion recently about this proposed legislation. If you have an opinion, now is the time to share it with your senator and representative.

In an article entitled “Indiana: Where We’ve Been and Where We’re Headed,” Patrick Kiely, President of the Indiana Manufacturers Association, reflects on Indiana’s status as a non-right-to-work state. Including Indiana, there are 28 states “that allow labor unions to compel, as a condition of employment, individual employees to become union members or pay union fees in lieu of membership, regardless of whether or not that person wants to join a union.” This issue is at the forefront of conversation as the 2012 Indiana General Assembly reconvened on January 4^th.

Kiely’s position is that it should be the employee’s right to determine if he or she wants to join a union or support it monetarily. There are currently over 14,000 workers in Indiana who have been forced to pay “agency fees” to a union even though they have made the decision to not join the organization. He supports his stance with statistics which suggest right-to-work states perform superior to non-right-to-work states on an economic level. The growth in real per capita income in right-to-work states from 1977 to 2008 was 62.3% while only 52.8% in non-right-to-work states. Additionally, over the same time period, job growth in right-to-work states was 100% while only 56.5% in non-right-to-work states. Kiely and other supporters of the current legislation point to the loss of job opportunities as the root cause. Quoting his article, “Studies and testimony by major economic development assessment firms indicate that non-right-to-work states are losing anywhere from 35% to as high as 80% of prospects.” In his opinion, passing right-to-work legislation would level the playing field for Indiana and make it more competitive for economic development opportunities.[i]

Morton Marcus, an economist at the Indiana Economic Digest, does not share Kiely’s viewpoint. In his opinion piece “Right-to-work is the wrong way to go,” Marcus argues against changing Indiana’s status as a non-right-to-work state for a variety of reasons. For one, he believes it is unfair for non-dues paying workers to reap the benefits of union negotiations as these workers would essentially be freeloading. Secondly, Marcus questions the legitimacy of such economic growth statistics noted above which are relied upon as indicators Indiana is losing out on job prospects as a direct result of the current legislation. He writes, “This claim is based on questionable research and fallacious assumptions.” Lastly, he contends right-to-work is connected with “lower wages, fewer benefits and less employee influence over working conditions,” and overall, not in the best interest of the workers of Indiana.[ii]

Regardless of the outcome, the right-to-work conclusion is bound to have a significant impact on Indiana businesses and residents. Expect to see a steady stream of information on the subject for weeks to come.

The latest update from the 2012 Indiana General Assembly is the Indiana Senate committee voted 6-4 to send the bill to the full Senate and then the House committee voted 8-5 to send a similar bill to the full House.

[i] Kiely, Patrick J. "Indiana: Where We’ve Been and Where We’re Headed." Indiana Manufacturers Association. Dec. 2011. Web. 06 Jan. 2012.

[ii] Marcus, Morton J. "Right-to-work Is the Wrong Way to Go." Indiana Economic Digest 01 Jan. 2012.