News Story

The Union ‘Free-Rider Problem’ Myth in Right-to-Work Debate

The union is the one truly taking advantage of the collective bargaining arrangement

With Michigan on track to become a right-to-work state, which would make it illegal to fire an employee for refusing to pay union dues or agency fees, some opponents of the law maintain that this is unfair because those who don't pay will still be covered by the union contract.

They refer to those workers as "free riders." This argument is a distortion to shift attention from the benefits of worker freedom.

"No one is forced to join a union," said House Democratic Caucus Leader Tim Greimel, D-Auburn Hills. "They're asked to pay their fair share of the collective bargaining process. [RTW] gives them the chance to freeload and free ride."

This argument has been brought up repeatedly by unions and their supporters.

When continually focusing in the media on being “forced” to represent people who don’t pay dues under a right-to-work law, union heads are implying that they spend the vast majority of their money on contract negotiations, representation or other non-political work. That is a myth.

For example, according to the most recent federal filings, the Michigan Education Association — the state’s largest labor union — received $122 million and spent $134 million in 2012. They averaged about $800 from each of their 152,000 members.

According to union documents, "representational activities" (money spent on bargaining contracts for members) made up only 11 percent of total spending for the union. Meanwhile, spending on “general overhead” (union administration and employee benefits) comprised of 61 percent of the total spending.

So MEA members who disagree with the leadership of the union are paying up to 90 percent of their dues, but the union is only spending about a tenth of the dues money representing them.

The argument maintains that “nobody is forced to be in a union,” which is technically true, but a distinction without a difference — employees who work for the government or a unionized private company don't have to belong to the union; they just have to pay the “association fees.” Association fees, or agency fees, vary, but can represent up to 90 percent of the dues of full union members.

This is established by U.S. Supreme Court case Communication Workers v. Beck, which held that an employee can opt out of the political portion of union dues. That is, employees should not have to be forced to pay for union lobbying or political work. Unfortunately, the types of activities workers can opt out of are very small. Even if workers resign their union membership because they do not want to pay for union politics they still must pay for things like “internal communications,” attempts to persuade members to vote a certain way, food for workers rallying outside the capitol and get-out-the-vote drives aimed only at the union’s members. These expenses can be much higher and are harder to track.

It should be noted that most employee unions fought against the “Beck rights” established by the case — and still do to this day.

While the MEA spent a relatively small amount on direct political activities and lobbying ($4.84 million), it is hard to separate union administrators and political activity — especially when they spend 89 percent of their funds on things other than local representation.

As the Mackinac Center explains on our “Right-to-Work Policy” page, “Even in exercising Beck rights, an employee is still obligated to pay a union for services that the employee does not want. In addition, Beck rights have proven difficult to secure, as the union controls all the records needed to determine what employees should pay. Getting an accurate accounting often requires lengthy litigation.” 

A look at other groups yields similar results, and no major union spends the majority of its funds on local representation. The UAW spent about 41 percent of its receipts on “representational activities.” The Michigan branch of the SEIU got most of its money by forcibly unionizing home caregivers the past few years and used it to try and lock that into the state Constitution. Search for any major union with the United State Department of Labor here.

In the meantime, unions spent $4.4 billion from 2005-2011 on electing candidates and other political spending and twelve of the top 20 political donors going back to 1989 are unions. According to the Center for Responsive Politics, only 3 percent of union political spending goes to Republicans – while 40 percent of union members typically vote Republican. Here in Michigan, an MEA survey of its membership found that 45 percent of teachers under 30 classify themselves as “conservative” while 63 percent aged 40-49 say the same. At the same time, the union endorsed 97 percent Democrats.

In Wisconsin, allowing union members to have a choice in paying their dues has led to a shift in emphasis and positive changes. After the state’s largest union lost membership, the amount they spent on politics was refocused to “a potential shift to a much more grassroots model of advocacy and support for educators.”

According to the Milwaukee Journal Sentinel, “That could mean becoming better advocates for different practices in teaching or for methods that recruit, train and retain high-quality educators … That could mean organizing teachers to champion what's working best in the classroom by bringing new ideas to the school board, or working to get the community to support specific practices. It means working more collaboratively, and offering solutions.”

If members are not able to be fired for not paying dues, public employee unions are forced to be more accountable, less partisan and more responsive to their membership. And a lot of unions do that: States like Nevada and Iowa have relatively high unionization rates, despite having longtime right-to-work laws.

There are 23 right-to-work states in this country: It is nothing new, and certainly not a fringe idea. Lately, those states have faster job growth (particularly for young people), increasing wages, lower unemployment and higher “business-friendly” rankings.

When unions spend the vast majority of their employee dues on activities other then representing their members at the bargaining table, the true “free-rider” is the union on the backs of its members who disagree with the group’s activities outside of true representation. And the only way to solve that problem in Michigan is by becoming a right-to-work state.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.