SWEET HOME ALABAMA
December 11, 2007
States with right-to-work laws -- which prevent workers from being forced to pay union dues or fees as a condition of employment while leaving the rest of the labor law, including collective bargaining, intact -- grew faster and created jobs at more than twice the rate of states that allowed forced unionism, says Paul Kersey, director of labor policy with the Mackinac Center for Public Policy.
Consider Michigan, a non-right-to-work state, and Alabama, a right-to-work state:
- While GM and Ford -- both headquartered in Michigan -- have been slashing their payrolls, automakers in Alabama are building new plants and creating jobs.
- According to the U.S. Census, between 2001 and 2006 employment in auto manufacturing in Alabama more than tripled and employment in parts manufacturing increased by more than a third.
But it isn't just cars:
- According to the Bureau of Labor Statistics, between 2001 and 2006 Alabama added 73,000 jobs, increasing payrolls by 3.9 percent, while Michigan lost 220,000 jobs, a loss of 4.8 percent.
- Alabama's unemployment rate averaged 4.7 percent during that period, compared to 6.5 percent in Michigan.
- In 2001, per capita disposable income was $4,000 higher in Michigan than in Alabama, but by 2006 that advantage had shrunk to less than $2,000.
As a result, Michigan should be prepared to learn from and even emulate Alabama, says Kersey:
- That means freeing up Michigan's workforce with reforms like a right-to-work law.
- Repealing or reforming Michigan's strict prevailing wage law, which requires the payment of union wages on state-financed construction, would also be helpful; the prevailing wage adds 10 percent to the cost of construction, adding roughly $250 million to the cost of government.
- Prevailing wage also costs jobs; Alabama, which does not have a restrictive prevailing wage law, added 5,000 construction jobs between 2001 and 2006 while Michigan lost 26,000.
Source: Paul Kersey, "Sweet Home Alabama," Mackinac Center for Public Policy, October 1, 2007.
Browse more articles on Economic Issues