One big reason for GOP optimism
There are 25 reasons for Republican optimism in the wake of a disappointing November. Twenty-five is the number of states next year where Republicans will have unified control of the governor’s mansion and both chambers of the legislature. Up from the current 24.
The significance of this is already clear in Michigan — where state lawmakers are seeking to make it the nation’s 24th right-to-work state.
Governor Rick Snyder announced Tuesday that right-to-work will be on the docket during the Michigan legislature’s lame duck session this month.
This underscores that the states are where the most significant policy reforms will likely take place over the next two years. Exhibit A is Michigan, which President Barack Obama won by 9 points — despite its being the home state of GOP nominee Mitt Romney. This state is now on the cusp of enacting a labor law reform that the White House and its allies vehemently oppose.
Right-to-work laws give workers freedom from being forced to join a union and pay dues. Prior to the 1947 Taft-Hartley Act, which permitted states to pass right-to-work laws, all American workers could be coerced into joining a union as a condition of obtaining and maintaining employment.
While the idea has been floated for years, until recently it seemed as though efforts to pass right-to-work in Michigan, traditionally home of the automobile industry and a bastion of organized labor, were futile. But recent developments have caused this important reform to finally gain traction.
Vincent Vernuccio, a Labor Department lawyer during the George W. Bush administration who is now director of labor policy at the Michigan-based Mackinac Center for Public Policy, explains that when Indiana Governor Mitch Daniels enacted right-to-work laws in February, it had a serious impact on Michigan.
“Michigan’s neighbor Indiana,” Vernuccio said, “became the 23rd state in the country to give workers the freedom to choose whether or not to pay a union and still keep their jobs. As a result, employers, job creators and businesses that once passed Indiana over now gave the state another look.”
Vernuccio cited Caterpillar as one example. The heavy equipment manufacturer recently moved its plant from London, Ontario, to Muncie, Indiana.
“Indiana’s new right-to-work law,” said Vernuccio, “played a large role in Caterpillar’s decision to locate the plant in that state. Incidentally, if any equipment had to be moved, it probably traveled through Michigan to get to its new home.”
Vernuccio also points to Bureau of Labor Statistics data showing that since January, Indiana has added 43,300 jobs, while Michigan has lost 7,300. One wonders: How many of Indiana’s new businesses had to travel though Michigan?, and how many would have stopped early if Michigan had a right-to-work law?
Facts and history demonstrate that right-to-work laws are just as important to a state’s economic competitiveness as a sound and hospitable business tax climate. From 2000 to 2008, approximately 4.7 million Americans moved from forced-union states to right-to-work states, according to a Cato Journal study by economist Richard Vedder.
Right-to-work states are indeed witnessing greater prosperity. Between 1977 and 2007, per capita income rose 23 percent faster in right-to-work states than in non-right-to-work-states.
The advantages don’t end there. Right-to-work states outperform non-right-to-work states in practically every metric of economic health, according to National Institute for Labor Relations Research data, from lower unemployment rates to greater after-tax purchasing power and beyond.
Passage of right-to-work in Michigan would be an economic game-changer for the state, which had the dubious distinction of being home to a single state recession even during boom years of the last decade — largely because of then-Governor Jennifer Granholm’s disastrous policies. At the beginning of the 2008 economic collapse, for example, the national unemployment rate was 5.8 percent, but Michigan’s unemployment rate was already at 8.3 percent. Snyder has slowly but surely begun to right the fiscal ship of state since being elected two years ago.
The tax relief for employers that Snyder signed into law last year was a good first step. But enacting right-to-work would provide a momentous shot in the arm for the economy by immediately making the state far more attractive to employers looking to move or expand their operations in the region.
The chattering classes in Washington and the Acela corridor crowd are fixated with the happenings on Capitol Hill. Yet, with one party having total control of government in more than three-quarters of the states, expect the most meaningful reforms to happen at the state level — starting with Michigan.
PHOTO: Michigan Governor Rick Snyder, here introducing presidential nominee Mitt Romney at the Republican National Convention, wants to enact a right-to-work law in his state. REUTERS/Rebecca Cook