Employees at Ford's Kentucky Truck Plant await the announcement of $1.3 billion in new investments.
Employees at Ford’s Kentucky Truck Plant await the announcement of $1.3 billion in new investments late last year. The company employs about 10,000 union workers in the Louisville area, according to union leaders. | Photo by Boris Ladwig.

State and local business associations are – once again – pushing so-called right-to-work legislation in Kentucky, and while they now have an ally in the governor’s mansion, the passage of such legislation remains unlikely so long as Democrats hold on to their tenuous majority in the House, opponents and proponents told IL.

Right-to-work laws bar agreements between employers and unions from making the payment of union dues a condition for employment. Opponents say such laws give workers a choice in whether they want to pay union dues, while opponents say it undermines unions and lowers wages.

Both sides make claims about the economic impact of such legislation, but academic research on the matter is unclear.

Jerry Miller
Jerry Miller

State Rep. Jerry T. Miller, R-Louisville, whose district includes parts of Jefferson and Oldham counties, told IL that the lack of right-to-work laws has harmed the state’s ability to attract businesses, especially compared to RTW neighbors Indiana and Tennessee.

He favors statewide passage of right-to-work.

“I think it puts us on a level playing field with the states that are our main competitors,” he said.

Rep. Jim Wayne, D- Louisville, said that workers have a right to unionize, which allows them to negotiate for better wages, working conditions and benefits. With RTW laws, the government is interjecting itself in negotiations between employees and the employer.

“It’s a real distortion of democracy in the workplace,” he said.

Areas like Louisville and Lexington fare better than many other places because they are supported by many strong unions including at UPS, Ford and GE, Wayne said.

Impassioned

Both proponents and opponents use loaded language to try to make their case: On his website, Miller writes that right-to-work limits “the oppressive power” of unions. Meanwhile, Wayne told IL it is another attempt by “greedy capitalists” to whittle away at the middle class.

 Jim Wayne
Jim Wayne

Miller’s side argues that lack of right-to-work legislation in Kentucky “deprives workers of the freedom” to get a job without being “coerced” into paying union dues, while Wayne’s side sees such laws as an attempt by the “greedy corporate elite” to maximize their profits by “busting unions.”

Looking beyond the vitriol, the actual impact of right-to-work legislation on job creation and wages is difficult to determine.

While the Heritage Foundation, a conservative think tank, reports that higher union wages come “at the expense of higher prices and lower wages for non-union members,” the Economic Policy Institute, which gets a quarter of its funding from labor unions, says, “Wages in RTW states are 3.1 percent lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic factors.”

Academic research, too, is unclear:

University of Minnesota economics professor Thomas J. Holmes wrote in 2000 that manufacturing employment in RTW states in counties that border non-RTW states was 6 percentage points higher in 1992 than in counties across the border. Holmes cautioned, however, that he could not specifically identify right-to-work as the cause.

“Right-to-work states historically have pursued a number of other smokestack-chasing policies, such as low taxes, aggressive subsidies, and even, in some cases, lax environmental regulations. Thus, my results do not say that it is right-to-work laws that matter, but rather that the ‘probusiness package’ offered by right-to-work states seems to matter.”

In a more recent study, researchers including Robert Bruno, professor and director of the Labor Education Program at the University of Illinois, found that right-to-work lowers worker earnings and benefits, and increases workplace fatalities and gender and racial wage inequality.

However, an analysis by economics professors Ozkan Eren, of Louisiana State University, and Serkan Ozbeklik, of Claremont McKenna College, showed that “the evidence regarding the role of RTW laws on state economies is mixed at best.”

“Some studies find significant effects of RTW laws on various state outcomes, while others find no effect… The lack of consensus among previous studies is likely to be driven by challenges in identifying the effects of RTW laws.”

Looking at Oklahoma, Eren and Ozbeklik found that between 1983 and 2007, RTW laws “significantly decreased private sector unionization rates” but had no impact on the unemployment rate or wages – though they warned that results could be significantly different in states that were larger than Oklahoma.

Timothy Bartik
Timothy Bartik | Courtesy of the W.E. Upjohn Institute

Timothy J. Bartik, senior economist at the W.E. Upjohn Institute for Employment Research, concluded in 2012 – and again this year – that “the effects of RTW laws are uncertain.”

Bartik told IL via email, “The fundamental problem of using states as laboratories of democracy for RTW laws is that there simply isn’t much variation over time in the ‘experiment’ for a given state.”

“In contrast, the minimum wage literature has dozens of cities with all kinds of minimum wages, and lots of variation over time for many cities. Lots of evidence there,” he said. “Not much evidence on RTW laws.”

Chances of passage

State leaders in Indiana saw thousands of people rallying at the statehouse in 2011 and 2012 when the legislature debated the issue. Then-Gov. Mitch Daniels signed the legislation in 2012.

In Kentucky this year, pro-business interests are heavily pushing the passage of RTW legislation, in part because of those actions by neighboring Indiana.

logo-kentucky-chamberThe local chamber of commerce, Greater Louisville Inc., and the Kentucky Chamber of Commerce have identified right-to-work as among their priorities for this year.

In a report released late last month, the state chamber said that since the bottom of the recession, Kentucky recorded stronger job and wage growth than all neighboring states except Indiana and Tennessee. Chamber officials said they believe Indiana and Tennessee performed better because they have passed RTW legislation.

Unlike in the previous eight years, the chambers now have an ally in the statehouse with Republican Gov. Matt Bevin, who has said he wants Kentucky to become an right-to-work state.

Kentucky’s state Senate is firmly in Republican control, but Democrats still have more legislators in the House — though their lead has slipped to four seats and remains tenuous, with several Democrats having switched parties or resigned to take an appointment from Bevin since his election.

Rep. Miller said that budget talks and the Democratic Party’s control of the House make passage of right-to-work legislation unlikely this year.

“I just don’t see a great appetite for the kind of battle to see it get passed,” the Republican told IL.

Kentucky AFL-CIO President Bill Londrigan agrees, telling IL that Republicans do not have the votes this year.

Given the difficulties of passing right-to-work at the state level, some counties have opted to adopt local laws. Opponents argue, however, that such laws may be prohibited by federal law. Unions have taken the battle to court: In January of last year, unions including the United Auto Workers and the Teamsters sued Hardin County to get the local law there repealed. A ruling in the case has not yet been issued.

With Democrats enjoying a comfortable majority on the Louisville Metro Council – and unions being strongly represented by the biggest local employers – a local RTW law seems improbable. Mayor Greg Fischer could not be reached to convey his position on a local or state right-to-work law.

An October survey in Site Selection Magazine indicated that the presence of RTW legislation in a state holds some importance for corporate real estate executives. The execs ranked right-to-work seventh among a list of the most important location criteria.

However, the lack of right-to-work does not seem to have hurt Kentucky’s business-friendly reputation. Site Selection last year ranked Kentucky’s business climate third-best in the nation. RTW states Tennessee and Indiana ranked seventh and ninth.

Londrigan said he believes proponents of RTW are pushing for the legislation for reasons other than the state’s economic competitiveness.

“The ultimate goals is … to weaken unions, so that (business interests) can have more political control,” he said. “It shouldn’t be a real surprise to folks that there’s a political motivation behind this.”

By the way, the top location criterion, according to Site Selection Magazine: existing workforce skills.

Economist Timothy Bartik agrees.

“Probably the state policies with the greatest evidence for long-run effects on state economic growth are policies to increase the skills of a state’s workers,” Bartik said. “These include policies to increase participation by the children of a state in high-quality preschool, as well as policies to make postsecondary education more accessible.”

Boris Ladwig is a reporter with more than 20 years of experience and has won awards from multiple journalism organizations in Indiana and Kentucky for feature series, news, First Amendment/community affairs, nondeadline news, criminal justice, business and investigative reporting. As part of The (Columbus, Indiana) Republic’s staff, he also won the Kent Cooper award, the top honor given by the Associated Press Managing Editors for the best overall news writing in the state. A graduate of Indiana State University, he is a soccer aficionado (Borussia Dortmund and 1. FC Köln), singer and travel enthusiast who has visited countries on five continents. He speaks fluent German, rudimentary French and bits of Spanish, Italian, Khmer and Mandarin.


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