Anti-Worker Right-to-Work Law Repealed; Prevailing Wage Restored

LANSING — The Michigan legislature repealed Michigan’s Right-to-Work law that was enacted under the cover of darkness in December of 2012. The law restored Michigan workers’ rights to form a union without being forced to pay for those who benefit from collective bargaining agreements without paying their fair share.

The Senate Labor Committee recommended the package of bills at an early morning meeting that featured a few contentious moments. Republican Senator Thomas Albert lashed out at Senator Darrin Camilleri at one point and was called out for, “shilling for corporations.”

The bill was historic as Michigan became the first state this century to repeal a so-called Right-to-Work law. However, House Labor Committee Chairman Jim Haadsma stated, “This bill is not about making history. It is about restoring the rights of workers from whose work we’ve all benefited.” Michigan is known as the birthplace of the modern labor movement. In the 1930s the famous UAW Sit Down Strike at General Motors in Flint led to the modern labor movement and built the middle class. Another history lesson shared during testimony was a quote by Dr. Martin Luther King, Jr. on Right-to-Work legislation, “It’s purpose is to destroy labor unions. In our glorious fight for civil rights, we must guard against being fooled by false slogans, such as ‘right to work. ‘ It is a law to rob us of our civil rights and job rights.”

In February, Teamsters General President Sean O’Malley wrote an Op-ed in support of repealing Right-to-Work, “Right-to-Work legislation is carefully and deceptively crafted to prevent labor unions from collecting dues from the members they serve and represent. It replaces the traditional and fair union dues model with a free-rider program where unions are forced to collectively bargain on behalf of non-dues paying members. Without full resources, unions would be unable to adequately protect and represent their members and would face certain financial collapse.

This is the true intent and final solution inherent in Right-to-Work legislation — to kill unions and end collective bargaining for good.

In states where right-to-work legislation is currently in place, the data is not good. Workers have lower wages, less retirement security, worse health care benefits and higher rates of workplace injuries and deaths,” wrote O’Malley.

During the Senate vote, Senator Ed McBroom stated that Republican power brokers were, “about to get their comeuppance,” explaining he voted no on enacting Right-to-Work in 2012 but would vote no on repeal as well.

In addition to repealing the Right-to-Work law, the Democratic majorities in both the House and Senate also restored prevailing wage legislation to ensure better wages and higher construction quality in public works. A study by the Economic Policy Institute shows that prevailing wage is good for workers and does not raise costs.

Research by EPI has shown:

  • Labor costs are not the dominant costs in government construction contracts. Even including benefits and payroll taxes, labor costs are roughly 20-30% of construction contracts, according to the Census of Construction (Phillips 1998).4 Thus, for example, if labor costs are 25% of total costs and prevailing wage rules raise wages by 10%, the impact on contract costs would be no more than 2.5%. Thus, even if there is an increase in contract costs, it is likely to be small—to the point of being undetectable in some instances and/or by some studies.
  • Higher wages might be offset by a rise in productivity. Prevailing wages can attract better-skilled, more productive workers, or firms may rely on higher managerial productivity or invest in labor-saving technologies to offset higher labor costs (Philips 1996).
  • Higher wage costs might also be offset through “factor substitution,” i.e., substituting more expensive labor with, say, cheaper materials.
  • Contractors not subject to prevailing wage laws might retain the money they save in wages as higher profits rather than passing the savings on to the government. Alternatively, contractors paying prevailing wages might absorb the higher wage costs, paying for them out of their profits rather than passing them on.

In addition to the research showing prevailing wage laws to be good for workers with no added costs to government entities, EPI has also studied the effects on ending existing prevailing wage laws and found that:

“For more than 40 years, big business and the Republican party have teamed up to drive down the wages of construction workers by attacking their unions, passing so-called “right-to-work laws”, and weakening or repealing prevailing wage laws— which protect construction wages from downward pressure. They have, unfortunately, been very successful. Construction wages are lower today  than they were in 1970, despite 40 years of economic growth and a higher national income.”

The vote passed the House last week and today the Michigan Senate voted 20-17 (with one member absent) to advance the bill to the Governor. Both the Right-to-Work and Prevailing Wage bills now await signature by the governor and will soon become law.

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