Almost a year after Michigan lawmakers voted to repeal the state’s “right-to-work” law, that repeal went into effect on Tuesday. The law originally passed in 2013, allowed workers to opt out of paying dues to unions while still receiving benefits—effectively kneecapping unions, as workers no longer needed to pay to support them.
While right-to-work (RTW) laws are designed to give workers the choice of whether to join a union, they’re often used as a tool to weaken unions. These laws have been adopted in more than half of U.S. states.
With Michigan’s repeal, private-sector workers in unionized workplaces in the state will need to pay union dues, though there are some other variables in the mix. Right-to-work rules in Michigan cost unions more than $50 million in lost dues every year over the past decade, according to the Mackinac Center for Public Policy, a Michigan-based nonprofit policy group.
WHAT IMPACT WILL THIS HAVE ON THE LOCAL ECONOMY?
The decision to repeal its right-to-work laws may have a positive economic effect—at least, that’s what a brief released this week from the left-leaning Economic Policy Institute (EPI) shows.
The report says that states with RTW laws “have lower unionization rates, wages, and benefits compared with non-RTW states,” and that “on average, workers in RTW states are paid 3.2% less than workers with similar characteristics in non-RTW states, which translates to $1,670 less per year for a full-time worker.”
Further, the report finds that union workers are more likely to benefit from employer-provided health and retirement benefits and that overall, right-to-work laws generally tend to leave workers worse off, without creating job growth or economic stimulation—stymieing local economies, when it’s all said and done.
Accordingly, the brief’s authors argue that Michigan’s repeal of the law should help accelerate its economy—even as another state, New Hampshire, looks at passing a right-to-work law of its own. Notably, though, Michigan’s changes do not affect public-sector employees, and it’s unclear how much of an effect the repeal will have in the state.
Some groups are warning that there may be undesired effects. The Detroit Regional Chamber, in contrast to the EPI, says repealing right-to-work laws will not be a boon to the state, but rather will hurt it economically.
“[T]he repeal of Right to Work weakens Michigan’s global economic competitive position and harms our ability to vie for new businesses and jobs," a statement from the Chamber reads. "In reality, the Right to Work law has little impact on both unions and businesses—businesses that are union shops continue to partner with unions and only a small percentage of union workers opt out of paying dues.”
The recent release of survey data by American Express indicates a growing sense of optimism among small business owners regarding the economy. The report reveals that 85% of small businesses expressed satisfaction with their performance in 2023, with 86% stating that they achieved their goals. This marks a significant improvement from the previous summer when 80% of small businesses reported that their long-term financial confidence was negatively impacted by the economy.
Gina Taylor, the Executive Vice President and General Manager of Business Blueprint and Banking at American Express, noted that small businesses are demonstrating resilience and optimism, despite facing challenges such as higher operating costs and inflation. This positive sentiment aligns with the overall increase in confidence and economic outlook among the general population. Data from the University of Michigan shows a nearly 30% rise in consumer sentiment since November, as well as a 27% increase in short-term business outlook.
Taylor attributes much of the heightened optimism to improved stability and the ability of businesses to adapt and thrive in an uncertain economic landscape. Despite recent inflation numbers exceeding expectations, small businesses have learned to navigate these challenges and focus on efficiency and profitability. The increased stability in the macroeconomic environment has provided business owners with the confidence to plan for growth and expansion. According to American Express's data, 50% of the surveyed businesses are planning to grow or expand in 2024, offering hope to job-seekers following recent large-scale layoffs by several major companies.