GRAND RAPIDS — If Michigan opted to be a right-to-work state back in the 1960s, it could have up to 60,000 more auto-related jobs, but they wouldn't pay as well as they do today, according to a study commissioned by The Grand Rapids Press and Booth Newspapers.

Grand Valley State University economist Hari Singh authored the report, "Right to Work and Economic Impact: What It Means for Michigan?" as part of The Press' Michigan 10.0 series on crucial questions for the state's future.

The highly contentious issue — long considered a nonstarter in the home state of the United Auto Workers — is being raised anew by business groups and conservatives who argue such a law will help Michigan reverse its severe job losses.

Unions staunchly resist the idea, calling it instead “the right to work for less,” and say the deep recession’s credit crisis, housing slump and stalled auto sales were to blame for the state’s job losses, not its stand on union shops.

Right-to-work laws, in force in 22 states, do not ban unions but prohibit agreements between trade unions and an employer that make union membership and dues a job requirement. Such prohibitions make it harder for unions to organize, operate and collect dues.

Union shops are found across Michigan — at General Motors, Ford, Chrysler, Delphi, Whirlpool and some Johnson Controls plants.

In the Grand Rapids area, there also are union shops at Bradford White Corp., American Seating Co., Kellogg Co., Dematic North America, a Benteler plant and General Electric Aviation, for example.

Those on both sides of the right-to-work debate quickly pull out stats, from unemployment to poverty rates, to support their positions. To plow through the mountain of conflicting studies and fervent arguments, The Press asked Singh to examine previous studies and provide an independent analysis of the impact right-to-work would have on Michigan.

In his study released today, Singh focused on nine states that have major auto-related industries. He compared six right-to-work states, Alabama, Georgia, Kansas, South Carolina, Tennessee and Texas, with Michigan, Ohio, and Indiana, which all allow union shops.





Singh’s findings? Michigan could have 50,000 to 60,000 more people working in the auto industry today if it had become a right-to-work state in 1965. Those jobs would have accumulated over the years as more auto companies, suppliers, and other union-averse companies had moved to Michigan over time, Singh said. Taking the recent industry downturn out of the equation, the increase in auto-related jobs would total nearly a quarter of those employed in recent years.

But Singh also found those jobs would not be the high-paying jobs long associated with the industry.

“If we were an RTW state, annual wages of these workers would be significantly lower initially, dropping from the current $74,000 to perhaps in the mid-$60,000 range,” Singh said in an interview.

However, the wage advantage is shrinking. “Recently, wages in the RTW states are beginning to converge with wages in non-RTW states, as workers in new plants gain more experience and seniority,” he said.

Michigan’s auto-related jobs last year paid an average $74,498, up 18 percent since 2002, he said, citing U.S. Bureau of Labor Statistics estimates. The average encompasses most workers, from part-timers in the shop to white collar workers in the front office, in what the federal government defines as the “transportation equipment sector.”

Texas, where the number of auto jobs grew as Michigan’s shrank, saw the average annual wage rise nearly 30 percent, to $68,919.

In Georgia, where a new Kia plant opened last fall, annual wages were $60,128, up almost 35 percent.

The gains in the Southern states come as Michigan has lost 57 percent of its auto-related employment — since 2002, 165,777 jobs evaporated here, according to the data in Singh’s study.

Meanwhile, Alabama now has 47,000 auto-related jobs, up 28 percent since 2002. Texas has 85,000, up nearly 7 percent.

But other RTW states such as South Carolina and Tennessee saw declines of 15 percent and 33 percent, in part because of the contraction in the Detroit automakers, while foreign automakers have grown.

Dennis Williams, secretary treasurer of UAW International, had not read Singh’s report but concurred with the finding about lower wages. That would be true not just for auto workers, but across Michigan if it were a right-to-work state, he said.

“If he’s correct, it would be a much lower rate of pay for everybody. That includes white collar, blue collar. It doesn’t matter what sector — it’s all a lower standard of living, that affects schools, police, fire, everything,” Williams said.

Newly elected to his UAW leadership post, Williams, of suburban Chicago, is familiar with right-to-work states. He previously was in charge of UAW Region 4 in nine states that included five right-to-work states: Iowa, Nebraska, North Dakota, South Dakota, and Wyoming. Region 4 also covers Illinois, Minnesota, Montana, and Wisconsin, all union-shop states.

He said it is not competition from right-to-work states that is holding back the state’s job growth. “If you look at Iowa and Illinois as an example, the amount of work that left did not leave for the South. It left to China or Vietnam or Mexico,” Williams said.

Political issues

Singh’s study did not weigh in on the political issue, but it’s a hot topic in this state.

This year, for the first time in Michigan history, right-to-work became a major plank in a gubernatorial candidate's campaign, that of Republican hopeful Michael Bouchard.

The fourth-place finish for Bouchard proves Republican primary voters don't support right-to-work, said Mark Gaffney, president of the Michigan AFL-CIO, the umbrella association for many unions in the state.

“It’s a right-wing fringe that has the wrong idea about how to move Michigan forward,” he said of the state’s right-to-work advocates. “Michael Bouchard spent almost $1 million running for governor on that issue. He lost badly.”

Proposed legislation has been introduced and quickly rejected several times in Lansing.

But West Michigan's first Regional Policy Conference, sponsored by Grand Rapids and Lakeshore chambers of commerce in 2008, made right-to-work a priority for the area's economic future. That issue will surface again when the second conference convenes in Grand Rapids on Sept. 16-17, this time with even more chambers as sponsors.

Those who favor right-to-work say Michigan is losing out on jobs without it.

David Cole, chair of the Center for Automotive Research in Ann Arbor, has no doubt Michigan is suffering for lack of such a law.

The state has missed out on an estimated $10 billion in corporate investment because it’s not a right-to-work state, he said. He worked with the state when the German auto company Volkswagen was considering Michigan for a new assembly plant.

“Our group actually provided the state with a lot of data on the industry; unionization in West Michigan looks like Mississippi and Tennessee (rates),” Cole said. “But the lack of right-to-work was a killer.”

Volkswagen had its eye on a site in Battle Creek-Kalamazoo, he said. Michigan’s tough union image did not help.

ABOUT THE STUDY

To our readers: Whether Michigan should become a right-to-work state has been long discussed; the topic even reared its head in the primary election for governor this summer.

Proponents say it would bring more jobs, while opponents say it would reduce wage levels.

Both arguments sound persuasive, but what would really happen if Michigan banned compulsory union membership and dues-paying in union workplaces like 22 other states have?

That was the question The Grand Rapids Press and its sister media companies in the state put to Grand Valley State University economics professor Hari Singh. At our request, he pored over economic studies and employment data, and determined there is truth in what both sides have been saying. His report, however, puts actual numbers on the table that make the debate more real.

He concludes that, had Michigan become a right-to-work state in the 1960s, it would have between 50,000 and 60,000 more jobs in its auto sector than it does today. And, yes, auto jobs would pay less than they do today, down from the current $74,000 annually to something in the mid-$60,000s, Singh estimates. The average includes most employees except for top executives.

Is that a good tradeoff to make in a time of extremely high unemployment in our state? That is a question for Press readers and policy makers in Lansing to consider. The Press’ role is to bring new information to the debate. This package of stories, which continue Monday and next Sunday, does that.

— Paul M. Keep, editor

• Read the complete right-to-work study

“When you’re making a decision in Stuttgart or Tokyo or wherever, and you’ve been to the (Detroit) auto show and seen picket lines at Cobo Hall, the picture you have in mind of Michigan is one of militant unions,” Cole said, referring to 2006, when UAW workers protested Delphi’s wage and benefit cuts on opening day.

And while Michigan has attracted 70 percent of the $60 billion global investment in auto research and development, the state really needs to attract assembly jobs.

“The economic multiplier on jobs in auto manufacturing is now 10 in the restructured industry,” Cole said. “For every job in manufacturing, nine other jobs are created in the economy.”

He said he understands the union’s struggle to fight the open shop system.

“It’s a very visceral issue for the unions,” Cole said. But an open shop assembly plant in Michigan is better for the UAW than one in Tennessee, Mississippi, or Georgia, he said.

“It’s hard for them to think, ‘Well, if those jobs were here, we’d at least have a shot at them,’” Cole said.

Blaming labor?

Hard times prompt these attempts, UAW’s Williams said. “Every time there’s an economic recession, I think a lot of people right away want to go ahead and blame the workers in organized labor.

“From my experience, if you take Illinois, Minnesota, and Wisconsin, they have a higher standard of living, a better tax base for public schools, fire, police, because they’re a unionized state.

“Other states are always struggling with tax base,” he said.

MICHIGAN 10.0: SHOULD MICHIGAN BE A RIGHT-TO-WORK STATE?

We've spent the past several months exploring issues of vital interest to Michigan. For a full overview of topics, go to mlive.com/mi10.

Here's a rundown of our September installment on labor:

SUNDAY:

• Study finds right-to-work means more jobs at lower pay

• What does right-to-work mean?

• What will end this debate?

• About the author of the study

• What are Michigan's neighboring states doing about unions?

• Differences between doing business in a union shop or an open shop

MONDAY:

• Will right-to-work policies ever be enacted here?

• Concept: Should we create right-to-work zones or counties?

• Labor historian writes about Grand Rapids' role in the union movement

SUNDAY, SEPT. 12:

• Explore West Point, Georgia, where Korean automaker Hyundai built its first Kia plant.

• The Georgia Kia plant will employ 3,000, but former UAW workers are learning they need not apply.

MONDAY, SEPT. 13

• Join us for a live chat at 1 p.m. with Grand Rapids labor lawyer Fil Iorio and Stanley Greer from the National Right to Work Foundation.

Right-to-work’s open shop system rankles another union leader, Marv Russow, president of United Food and Commercial Workers Local 951, which represents 15,000 Meijer, Kroger and Rite Aid workers in Michigan.

“I don’t know of any other business that allows you to use their services, but not pay for them,” said Russow, who is based in Grand Rapids. “It requires the union to represent the non-union member for free.”

He understands the Michigan economy is under reconstruction.

"While we have to change and adapt, doing it to diminish our standards isn't the answer," Russow said. "We don't want our kids to work in sweat shop conditions."

Other labor leaders point to disparities in pay, benefits, and fairness.

“Right-to-work states actually have income that is at least $5,000 a year less,” said UAW community action organizer Sue Levy. “And the percentage of individuals who don’t have health insurance is substantially higher. I think there is a direct correlation there.”

In any case, union ranks have been falling. The UAW, which had 1.5 million members at its peak in 1979, today has about 335,000.

Nationwide, about 12.3 percent of all workers are unionized, only 7.2 percent of the private sector, according to the Center for Economic and Policy Research. In the Midwest, it is higher, 15 percent to 17 percent.

For labor historian Michael Johnston, the heightened right-to-work talk seems cruelly timed.

“It’s ironic people are still critical of unions at their weakest point,” said Johnston, a retired Kenowa Hills school teacher. “It’s like ‘The animal is wounded. Now let’s kill it.’ No country has a vibrant democracy unless it has a vibrant labor movement.”

Other factors at work

Beyond the 2009 recession and right-to-work laws, other forces are in play for the shift to the South, according to researcher Thomas Holmes, economics professor at the University of Minnesota, whose work was part of Singh’s analysis.

Trucking allowed manufacturing to move beyond the traditional Great Lakes shipping and rail hub; farm workers in RTW states are moving to the factory, particularly as textiles shift to Asia; it’s warm in winter and air-conditioned in summer; longtime right-to-work states were already hostile to unions, Holmes wrote.

Then there are incentives. “Typically, the local governments of RTW states have also been aggressive about providing tax incentives and other sweeteners to firms considering locating new plants,” Singh said.

After analyzing stacks of research pro and con, Singh chose the work of Holmes, published in the Journal of Political Economy in 1998. Why Holmes? His expansive survey measured manufacturing growth along every border shared by right to work and union shop states. Holmes checked 25 miles deep and 45 years wide to try to isolate the impact of right to work laws, and found bordering right-to-work counties had 26 percent more manufacturing jobs over time.

Singh’s finding — a 24 percent increase in Michigan’s auto related jobs with right-to-work — is slightly lower than Holmes’ because Singh took an average of all counties (those on the border and away from the border) based on Holmes’ analysis.

Both researchers sought to measure the impact of right-to-work laws while excluding many other factors. But the issue is “quite complicated,” Singh said, and, like Holmes, he warns against a single cause conclusion.

“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,” Holmes wrote.

“My results do not say that it is right-to-work laws that matter, but rather that the ‘pro-business package’ offered by right-to-work states seems to matter.”

Interviewed later, Singh said he took on The Press assignment to cut through the maze of conflicting data and sort out trends that could help Michigan recover.

“There has been a lot of anecdotal evidence about auto jobs going south,” Singh said.

“Our historic advantage in this industry is getting lost. Somehow, we have to reverse this trend.”

E-mail Julia Bauer: jbauer@grpress.com and follow her on Twitter at twitter.com/jbauer5800