Right-to-Work Sweeps Midwest, Heads for Passage in Wisconsin

Right-to-Work legislation is sweeping the Midwest. It's one of many reforms needed to makes states more competitive, reduce cost pressures on infrastructure projects, and hold down the necessity of tax hikes.

Today the Wisconsin Senate Passed 'Right to Work' Legislation.

The proposal would let workers opt out of paying mandatory dues. Many would do just that, preferring to keep money for themselves rather than for the priorities of union officials, including corruption, graft, and various political goals that workers may not at all agree with.

The Wisconsin House of representatives is expected to approve the legislation making passage all but certain.

His staff issued this statement "Governor Walker continues to focus on budget priorities to grow our economy and to streamline state government. Governor Walker co-sponsored right-to-work legislation as a lawmaker and supports the policy. If this bill makes it to his desk, Governor Walker will sign it into law."

Illinois Again Lags Neighboring States

Unfortunately, and as typical, Illinois lags other Midwest states in passing much-needed legislation.

I wrote about that on Febuary 11, in my first article for the Illinois Policy Institute. Let's recap Missing the Boat on Right-to-Work.

Illinois Chamber Misses the Boat on Right-to-Work

The Illinois Chamber of Commerce recently took interesting, as well as contradictory, positions regarding the minimum wage and Right-to-Work legislation.

On one hand, the chamber is not in favor of minimum-wage hikes for Illinois. On the other, the chamber says “Illinois doesn’t need right to work (laws) to compete with its neighbors.”

At the root of both of these policy issues is the state’s ability to compete and attract job creators. If the chamber acknowledges that a minimum-wage increase is a jobs killer, how can it oppose Right to Work, which is proven to attract new businesses?

Contradictory Positions

Illinois Chamber of Commerce Chief Executive Todd Maisch says that minimum-wage increases put employers at a competitive disadvantage. Maisch also contended “Illinois doesn’t need right to work (laws) to compete with its neighbors.”

Those positions are contradictory. To understand why, one must investigate the tie between “prevailing wage” laws, Right-to-Work laws and collective bargaining.

Prevailing Wage

Illinois’ Prevailing Wage Act governs the wages a contractor or subcontractor is required to pay to all “laborers, workers and mechanics” who perform work on public projects. This wage is to be “no less than the general prevailing hourly rate as paid for work of a similar character in the locality in which the work is performed.”

As the Illinois Policy Institute noted in Unions take advantage of Illinois’ prevailing wage law, “This almost always is taken to mean the union rate, even though union workers make up less than 40 percent of the construction workforce and union wages are often 50 percent higher than those of nonunion workers.”

Want to repair roads? Add another wing onto a public school? Fund a bond for any public project? Cities have to pay the “prevailing rate.” Those prevailing rates apply to every imaginable public project, spilling over into many private projects as well.

Prevailing rates are in direct opposition to the idea behind Right-to-Work laws. Under properly formed Right-to-Work legislation, any contractor should be able to bid on any project, regardless of a government-mandated prevailing wage.

Preferably, the needed legislation on these two issues should be accomplished in one fell swoop. If it takes two acts, one for Right to Work and another to repeal prevailing wages, so be it.

The third piece of the puzzle is collective bargaining.

Wisconsin Offers Example on Collective Bargaining

Wisconsin Gov. Scott Walker passed legislation in 2011 to eliminate collective bargaining for most public workers in the Badger State.

Then a curious thing happened, as reported by the Washington Examiner:

“The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it’s all because of the very provisions that union leaders predicted would be disastrous.

Some of the most important improvements in Kaukauna’s outlook are because of the new limits on collective bargaining.

Overnight, the Kaukauna, Wisconsin, school district turned a $400,000 deficit into a $1.5 million surplus. In essence, Illinois needs to do the same.

Specifically, Illinois desperately needs to do three things, all of them related:

1. Eliminate collective bargaining of public unions
2. Pass Right-to-Work legislation
3. Scrap prevailing-wage legislation

Whether this is done in one fell swoop or in three separate acts does not matter except in terms of time, and Illinoisans have little time to spare.

Businesses and private citizens are fleeing the state at record rates in search of a healthier business climate and to avoid enormous property taxes. Illinois cannot afford for these losses to continue much longer, especially if another national recession should occur. Illinois fared poorly in the last recovery, and another recession may very well do in the state – especially state pension plans – unless appropriate measures are enacted soon.

See The Light

The Illinois Chamber of Commerce, and others coming out against Right to Work in the Land of Lincoln, would be wise to reconsider their position.

One by one, neighboring states have seen the light. Illinois needs to join the right-to-work party or be left behind, lagging in job growth, while paying more in taxes for infrastructure improvements.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com