Right-to-Work Comes to Michigan: An Interview with Joe Lehman of the Mackinac Center for Public Policy

IN DECEMBER, Michigan—the land of the United Auto Workers—became the 24th right-to-work state, which means workers can’t be forced to join a union in order to obtain a job. A key reason that reform happened is the work of the Mackinac Center for Public Policy, a free market think tank founded by Lawrence Reed in 1988. Mackinac introduced the idea of right-to-work to the public shortly after opening its doors and did not stop talking about it until the reform was enacted. Joe Lehman, President of the Mackinac Center, talked with us about right-to-work, unions, Michigan’s economic situation, and the work of changing people’s minds in the long run.

The Insider: How did Michigan become the 24th right-to-work state?

Joe Lehman: It certainly didn’t all come about in the last few weeks or months. In fact, it’s the high point on an arc drawn over the last 20 years by the Mackinac Center and its allies.

TI: When did the Mackinac Center start pushing for a right-to-work law?

JL: Lawrence Reed opened the doors to the Mackinac Center in 1988, and he recalls talking about right-to-work the very next year and being ridiculed for it. In 1994, Larry and Joe Overton—our senior vice president—wrote a report calling for Michigan to pass a right-to-work law. That was our first report on the topic. It took another year to convince the Detroit Free Press, the biggest newspaper in the state, to even allow us to ask the question on its pages: Should workers be forced to support a union in order to hold a job.

At that point right-to-work was still an idea in Michigan that seemed utterly impossible, but we knew it would always be impossible unless we put the idea on the map, developed it, described it, explained how it could work, and made it politically possible.

TI: So how does right-to-work work?

JL: Right-to-work is a very simple concept that is often confused by unions. All right-to-work does is say a worker can’t be fired for refusing to support the union.

TI: How do you think right-to-work will make the Michigan economy better?

JL: It’s important to understand that right-to-work is not a magic bullet. Merely allowing workers the freedom to decide on their own if they’ll support a union is great for workers, but it is not a magic elixir for the economy. The effects of right-to-work come into play over time.

Right-to-work requires unions to be more responsive to their members. They can’t freeload on their members’ paychecks anymore. They have to earn their members’ trust. They have to earn those dues. To do that, they have to constrain their bargaining in ways that won’t bankrupt the companies they’re negotiating with.

One reason the auto companies are in such dire straits is that there is very little holding the union back from demanding more and more. Government, through the Wagner Act, gave unions the power to compel bargaining, and management gave in too often. We saw what happened to those companies. Michigan’s economy was greatly affected by that.

So those are the economic effects, but I would say there is an even larger effect of passing right-to-work—a psychological effect that is the same as hanging a huge billboard in space over Michigan that says: “Michigan is open for business.”

Over the past half century, when companies all around the country and the world looked at Michigan, they said: Well there’s a place that has a lot of talent, a lot of resources, and a lot of advantages, but the unions are running the place.

Now when they look at Michigan, they’ll say: Wow! You mean the legislature actually passed a right-to-work law? They must be really serious about getting their act together. They must be really serious about fixing their economy. And if they passed a right-to-work law, they must be doing a lot of other smart things, too.

So I think some companies that wouldn’t have considered locating in Michigan before will now rethink that decision.

TI: Is it true that right-to-work will mean the end of unions and lower incomes for workers?

JL: It’s not true. If anybody is contemplating right-to-work as a way of getting rid of unions, they need to find a different strategy. It doesn’t work. There is robust union membership in right-to-work states. In fact, Nevada has one of the higher rates of unionization, and it’s a right-to-work state.

Right-to-work doesn’t change collective bargaining, and right-to-work doesn’t change the right to organize. All it does is say: The unions are not automatically entitled to a slice of the paychecks of all the workers they unionize. They have to earn those dues.

TI: Michigan is the only state in the country that lost population between 2000 and 2010. And even with all the people leaving, Michigan’s unemployment rate is still a percentage point higher than the national average. So do these reforms represent the rare case of government learning from failure?

JL: Economic hard times certainly opened many people’s eyes to different policy possibilities. It’s hard sometimes for people to change when things are going reasonably well, but things were not going reasonably well in Michigan for really more than a decade. Things are just starting to turn around maybe in the last year or so. Michigan lost about a million jobs in a decade. So the Mackinac Center was there with the idea, keeping the idea alive until policy makers needed our idea as an alternative.

TI: Even before right-to-work passed, the unions had a setback in the November elections, right?

JL: That’s right. The unions advanced several ballot measures in November. The most important of those was Proposal 2. That was a very radical constitutional amendment that would have given government union contracts the ability to overrule acts of the legislature.

That amendment did more than enshrine collective bargaining rights in the constitution. It actually said anything that a union manages to get into a contract can trump state law. For instance, if the law says teachers have to pay a portion of their health insurance, but the contract says they don’t, the contract trumps the law. It would have turned the governance of the state on its head. We worked very hard to educate voters on that point, and they very soundly defeated Proposal 2 by about 15 percentage points.

TI: What other labor policy reforms would you count as successes?

JL: One of the most underappreciated achievements of Governor John Engler was moving all state employees from a defined-benefit to a defined-contribution pension system in 1997. That reform saved the state billions of dollars. He did not manage to move the teachers into that system. That work remains to be done. But you’ve got to hand it to John Engler because he took all the political heat for a reform that future politicians and future taxpayers and constituents would benefit from. You don’t see that very often.

TI: How much money has that reform saved Michigan taxpayers?

JL: The Mackinac Center estimates that those reforms save $167 million in current spending and between $2.3 billion and $4.3 billion in future liabilities.

TI: Any other victories on labor policy?

JL: There are. Since 2000, the Mackinac Center has handed the unions several defeats in the courts and in the legislature.

In 2001, the Michigan Education Association sued us demanding our donor list. In that suit, the MEA was trying to prevent us from quoting their president. The MEA president had called a news conference and told reporters he admired what the Mackinac Center had done in terms of getting its research to legislators. We quoted him when almost nobody else did, and then he sued us because he didn’t want us using his quote. The union lost that case. The union leaders did not get our donor list, but they got national embarrassment every time their lawsuit made the news and the quote, “Frankly, I admire what the Mackinac Center has done,” was reported.

Since then, Mackinac Center Legal Foundation has put a stop to three separate illegal government unions that were extracting a total of about $10 million per year from people who were not even government employees.

TI: Who were those workers?

JL: One group was home health care workers. Another was university graduate students. That litigation is actually still pending, but we have got them stopped for now. The other one was home day care workers.

TI: How does one illegally unionize workers?

JL: Most of those workers were not even aware they had been unionized. The unions claim they had conducted an election by mail for the day care and home care workers, but for some reason most of the 100,000 people who were swept into those schemes—at least the ones we’ve talked to—don’t remember ever being asked if they wanted to be part of a union. They just noticed that the union started taking money from them.

TI: Now that right-to-work has been passed, what other labor law reforms do you think Michigan needs?

JL: The state’s prevailing wage law still costs taxpayers as much as $400 million a year by shielding union construction firms from competition. That needs to go. The unions claim to be democratic institutions, yet the vast majority of unionized government workers have never even voted on forming a union. These unions were formed by their parents and grandparents. All government unions should have to stand for approval by the workers every two years at least.

TI: Anything else that you would advise Governor Snyder to support in order to help Michigan’s economy?

JL: Even a Republican governor like Rick Snyder could learn from President Franklin Roosevelt, who was very clear about his skepticism of the whole idea of government unions. President Roosevelt said the idea of collective bargaining as usually understood cannot be transplanted to the public service. Roosevelt may have been the best friend unions ever had in the White House, but he understood that unions should not want to be in the position of bargaining against the taxpayers. That is, of course, what happens when unions organize government workers.

I would also advise Governor Snyder to finish the job on pension reform. We still have a teacher pension system that continues to pile up unfunded commitments that there is no way to pay until we convert the system to a 401(k) type arrangement. So that is work that remains to be done.

TI: Does the federal government bailing out some of the state’s biggest employers (i.e., Chrysler and General Motors) make it harder for you to make the case for smaller government?

JL: It is harder. Federal bailouts are a true moral hazard. You see some political officials in other states calling for federal bailouts, but it’s the worst thing that could happen to fiscal discipline. Sometimes a federal subsidy looks attractive to a governor. But we’ve explained to our governor that the taxpayers really don’t care which government is overtaxing them, the state or the federal. The people are paying for it one way or another. Nobody should be fooled by this federal shell game of taxing the people in one state to subsidize those in another. It’s like people standing in a circle trying to get rich by putting their hands in each others’ pockets. It just doesn’t work.

TI: The teachers union does seem to have the upper hand on one issue: Your state constitution says taxpayer money can’t be spent on any kind of education voucher program. Is that limitation going to prevent Michigan from participating in the wave of school choice sweeping the country? Or will charter schools be sufficient to provide the competition needed?

JL: We support charter schools, but they are not enough. At the end of the day, even though they are typically not hidebound by the unions, they are still government schools that lack the flexibility and incentive structure of private options.

We are very heartened to see Governor Snyder doing a lot to expand public school choice. The cap on charter schools has effectively been eliminated. That was legislation he signed. Currently, the legislature is considering legislation that would essentially knock down the school district “Berlin Walls” that separate children from the schools that might be better for them. That would create more choice and competition within the public school system. That’s all good as far as it goes, but we won’t see the change we need until we amend our constitution to let the money follow the child to whatever school the child’s parents choose.

TI: Would you care to look into your crystal ball and make a guess about where Michigan will be 10 years from now?

JL: My prediction is that in 10 years, there will be newspaper stories written about all the people who in their 20s and 30s felt like they had to leave Michigan when times were getting bad but now they are returning home, and the grandkids can be with the grandparents again. There will be more stories written about the state that came close to the brink of losing its economic productive capacity. They’ll tell a turnaround story that really began to take hold when a governor embraced some ideas nobody expected him to—but he did it, because a lot of the other alternatives had been tried and they had failed.