MARK RHOADS: “Thank you Madam Chairman, my name is Mark Rhoads and I’m here representing Missouri Rising, an affiliate organization of America Rising Squared, we’re their first state chapter. I’m not going to go over my testimony, you all should have a copy and it’s been distributed to you and it has some of the data points that you already heard. We simply believe that passage of this legislation will bring Missouri into the majority of states that have passed such bills that will allow us to compete. It will create new jobs, it will assist existing employers and hopefully entice new employers. With that, Madam chairman, I’m happy to answer any questions…”
Right to Work Written Testimony
Mr. Chairman and Members of the Committee: I am Mark Rhoads, appearing on behalf of Missouri Rising, to support SB 19 / HB 91 which will bring Missouri into conformance with 27 other states that have enacted Right to Work laws. Of the eight states touching Missouri’s borders, seven have enacted Right to Work laws.
Missouri’s Competitive Disadvantage
Missouri is at a competitive disadvantage in relation to states that have Right to Work laws. Passage of this legislation will result in additional economic opportunities by creating an environment that benefits existing employers and sets the stage for competition with other states to bring new employers and consequently new jobs, to Missouri. The U.S. Bureau of Labor Statistics has tracked private sector growth trends since 1991. The Bureau’s statistics show that, from 2005 to 2015, private sector payroll employment in Right to Work states grew by 9.7%, 68% greater than the growth in forced-unionism states. Additionally, data indicates that eight of the ten bottom ranking states during this time period did not have Right to Work laws. The U.S. Bureau of Economic Analysis reported that, from 2004 – 2014, all of the top five states in private sector employment growth are Right to Work states.
A 2015 study by NERA Economic Consulting, a global firm of experts in economic, finance and quantitative research, confirms that Right to Work laws “directly affect economic performance through their impact on business location decisions, especially in heavily unionized industries such as manufacturing. Other things being equal, businesses are more likely to locate in states with RTW laws. There is also evidence that RTW laws have a direct, positive effect on employment, output, and personal income.” That same study found that, from 2001 – 2014, the annualized unemployment rate in Right to Work states was 0.5% lower than non-Right to Work states.
Most recently, the Missouri Chamber of Commerce and Industry engaged Gallop to conduct a survey of 1,000 Missouri CEO’s and that survey revealed that becoming a Right to Work state would make Missouri more competitive. Further, a survey of business and manufacturing site selectors from around the nation indicated that Missouri was operating at only 60% of capacity without a Right to Work law. The survey presents clear evidence that Missouri is losing out on opportunities to draw new businesses and industry to the State.
In 2015 testimony before the Wisconsin Senate Committee on Labor and Government Reform, James Sherk of The Heritage Foundation referenced a statement by David Brandon (President of Pathfinders, an economic development consulting firm) who said “About 35-to-45 percent of manufacturing enterprises in the automotive industry insist on operating in a right-to-work state…More than half of our companies either make it a threshold or a very important factor in making a decision on where to locate a factor or other operations.”
RTW Impact on Wages and Unemployment
Right to Work opponents will argue that passage of legislation will negatively impact average worker wages. There is a degree of truth to this claim in that RTW states, on average have lower wages. In analyzing this issue, it is important to recognize that RTW laws have been adopted in states that generally have a lower cost-of-living (COL). It is reasonable to assume that employers compensate at a higher rate in high COL states.
A June, 2015 study by NERA Economic Consulting concludes that “RTW laws do not lead to lower wages in either unionized or non-unionized industries. There is some evidence that the long-run effect of RTW laws is to raise wage rates as a result of increased productivity.”
That same study addressed the issue of the correlation between RTW laws and unemployment rates. It concludes that “On average, the annual unemployment rate in RTW states was 0.5 percent lower than in non-RTW states. In concrete terms, if non-RTW states had had the same unemployment rate as RTW states in 2014, approximately 402,000 more people would have been employed.”
RTW Impact on Union Membership
The precise impact on union membership as a result of passage of a Right to Work law is unknown. Washington University Professor Jake Rosenfield, in a December 26 article by Missourinet, points to the State of Nevada as one that has a robust union participation in a Right to Work state. He noted that some other RTW states such as Alabama and Mississippi have experienced some of the highest unemployment rates in the nation. Professor Rosenfield’s advice to organized labor in Missouri is to follow Nevada’s lead which has “active and effective union leadership which keeps workers involved and motivated” (quote from Missourinet). Indiana, which passed Right to Work legislation in 2012, experienced an increase of approximately 50,000 in union membership from 2013-2014, according to statistics compiled by the Bureau of Labor Statistics. Michigan, which also passed RTW legislation in 2012, experienced a decline in union membership of about 48,000 members from 2013-2014.
It is important to also recognize that decline in organized labor membership over time is a result of a changing national economy. According to The Heritage Foundation Senior Policy Analyst James Sherk, union density was at about a third of the overall economy and private sector workforce in the mid-1950’s. As global competition increased, union membership steadily declined. Mr. Sherk indicated that from 1954-1970, union density declined from 34.7% to 27.3%, a loss of over one-fifth of membership.
Employee Freedom to Choose
The time to permit Missouri workers to decide whether to join a labor organization and pay dues or other charges as a part of union membership is overdue. Right to Work laws do not deprive non-union members from the benefits of collective bargaining agreements, but prohibit compulsory union membership as a condition of employment or continuing employment. While some view Right to Work laws as a business versus labor issue, these laws actually represent a freedom for employees to choose participation in a labor organization and provide a choice regarding payment of dues, fees, assessments or similar charges to a labor organization.
- The State of Missouri is at a competitive disadvantage in retaining and attracting new jobs, businesses and industries as a non-Right to Work state. Passage of RTW legislation will result in more jobs and add to the overall economic benefits to the state;
- Passage of a Right to Work law will increase private sector employment in Missouri;
- Missouri’s Right to Work law will not significantly impact average wages paid to Missouri workers and could, in the long-run, increase the average due to increased productivity and output;
- The impact on labor organization membership will depend on organized labor’s approach to their membership after implementation of a Right to Work law;
- Right to Work legislation is about providing workers in Missouri the individual right to choose to belong to a labor organization and to pay dues, fees and other charges commensurate with that membership.
Missouri Rising is pleased to join other supporters in urging passage of Right to Work legislation.