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Here’s a fearless prediction: The promised payback from organized labor and the Democratic Party for passage of Michigan’s “Right-to-Work” legislation won’t amount to much.
The unions’ share of the state’s labor force already had shrunk to less than 18 percent, concentrated mostly in public sectors such as education, police, fire and municipal services. Private companies – with the exception of the auto industry – have already figured out they must manage labor skillfully to have a chance of succeeding in the marketplace.
In other words: The union movement is dying. Right-to-work speeds the process only marginally.
Union advocates look nostalgically and sentimentally to the past, when they could expect pay raises and benefit increases with each new contract. But those advances were a consequence of the sweet spot in the nation’s history after World Wars I and II, when U.S. corporations dominated and could pass along cost increases to customers.
Today’s global economy is fiercely competitive. U.S. corporations are in life-and-death struggles against top-notch foreign competition. Cost, speed to market, quality, ingenuity are among factors that keep American CEOs awake at night.
Corporations of the 1930s needed organized labor to wake them up. But too many unions never evolved to the next level as a creative partner in the enterprise. The United Auto Workers, for example, existed mostly in recent decades for the purpose of negotiating above-market wages and benefits for hourly workers. The result has been migration of Japanese, German and South Korean transplants and jobs to the nonunion South.
The importance of organized labor’s retreat for Michigan is that private employers will now consider expanding operations at home instead of looking for opportunities in South Carolina and Kentucky. And Chinese or German or Indian manufacturers who wish to come to the U.S. will start putting Michigan, with its excellent education system and transportation infrastructure, on their list of possible locations.
Most importantly, a significant statement has been made against the historical contentiousness of the Michigan workplace, where employer was pitted against employee – with union stewards and the National Labor Relations Board serving as referees. The state has lots of untapped potential in terms of land, water and expertise – there’s no reason why economic growth and population growth won’t unfold to the benefit of all its citizens.
A key feature of Detroit’s cartwheel towards bankruptcy is the struggle between the city’s labor unions and a management structure unable to rationalize costs. Eventually the unions will lose this battle -- as they have the one in the private sector -- because, as a famous White House economist once declared: “Things go until they can’t anymore – and then they stop.”
