Michigan Democrats go 0-6 in predictions on right-to-work’s economic effects
In the decade of right-to-work in Michigan, dire predictions have not panned out
Michigan’s legislators approved right-to-work in 2012 over the objections of Democratic members. Those members predicted that allowing workers to keep their jobs without having to pay unions would harm the state’s economy and Michigan’s workers. A number of legislators reiterated this talking point, recorded in the Michigan House of Representatives Journal:
So-called ‘right-to-work’ legislation will not boost economic growth and will not benefit Michigan or Michigan workers. To the contrary, this legislation will result in lower wages and cuts to benefits. Lower wages mean people have less money to spend which hurts small businesses and local economies throughout our state. ‘Right to work’ erodes the financial security of all middle-class families, eroding their ability to earn decent wages and have safe, dignified working conditions.
A decade is more than sufficient to evaluate whether these predictions were accurate.
Since lawmakers enacted right-to-work, Michigan’s average annual pay increased from an inflation-adjusted $55,140 to $61,683.
Average incomes in the state increased from 38th among the states to 35th. There is still room for improvement, but the higher personal income ranking indicates the law’s detractors were missing something when they predicted dire losses. Contrary to predictions, income is up in Michigan and is improving relative to other states.
Nor did employment benefits take the predicted dip. The average benefits package per worker is up 5% above inflation over the period.
Right-to-work’s opponents said the law would harm the middle class, but the trends don’t support that claim, either. The state’s median household income has increased from $46,859 in 2012 to $63,498 in 2021, a 15% increase above inflation.
Opponents also predicted that workplaces would become less safe, but worker safety has only improved since passing right-to-work. The state’s occupational injury and illness rates declined 28%, at least before the pandemic started. Michigan’s rates are 21% lower than the national average.
More difficult to evaluate are the claims that right-to-work would hurt small businesses. But according to the U.S. Census Bureau, there are more Michigan businesses with fewer than 500 workers, and they employ more people now than in 2012.
As for the anticipated harm to local economies, the inflation-adjusted per-capita personal income in every Michigan county improved since 2012. Given that growth, it’s hard to say opponents were reading the tea leaves correctly.
The jobs picture has looked even better. Michigan added 382,100 jobs in the time between right-to-work’s passage and the eve of the pandemic. That 9.4% increase was the best in the region. But while right-to-work has been an economic boon, other policies have not been.
Thanks in no small part to Gov. Gretchen Whitmer’s ordering the most restrictive lockdown in the country, Michigan has not fully recovered from the job losses it suffered during the pandemic.
The state is down 94,500 jobs, the worst in the region, while 23 other states have more jobs than they did when governors started shutting down so-called nonessential workforces. And of the states that have recovered, 17 of them are right-to-work states.
Residents can be relieved that the harms predicted for right-to-work predicted did not show up. Opponents of right-to-work went 0 for 6. The Detroit Lions have a better record.
The right to voluntarily associate with whom you choose is important, but it’s an issue that gets forgotten when paying a union is required. Right-to-work laws keep unions from taking their members for granted. An employee’s ability to opt in or out of dues-paying is an important check. People only pay in if they’re getting their money’s worth.
There is a better way to assess the economic effects of a policy than reviewing what happens to major trends after it is enacted. Economists can separate the effects of the law from everything else going on in a state. Our attempt at the Mackinac Center found that, excluding other factors, right-to-work improves inflation-adjusted income, employment and population growth, and employment gains. This can be seen more clearly in counties on the border between states with right-to-work and those without.
With Democrats holding all the gavels in Lansing come January, some lawmakers have said that they want to force workers to contribute to unions again. They ought to reconsider their stance. Their predecessors were wrong in their dire predictions of economic ruin, and the law has improved Michigan’s economic performance.
A prediction that’s far more likely to come true is that repealing right-to-work would hurt Michigan and its workers.
James M. Hohman is director of fiscal policy at the Mackinac Center for Public Policy. Email him at email@example.com.
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.