Nov. 7 (Bloomberg) -- Unions went for broke in Michigan and they lost big time.
Michigan voters soundly defeated a measure that would have given public-sector unions a potent tool to challenge any law -- past, present or future -- limiting their benefits and powers. It would also have permanently barred Michigan from becoming a right-to-work state where payment of dues is no longer required as a condition of employment in unionized companies.
Will this defeat now open the right-to-work floodgates?
Although both sides raised a whopping $20-plus million for their campaigns, ultimately the proposal lost by a wide margin because of opposition across the political spectrum. Both the Detroit News and the Detroit Free Press, the state’s flagship conservative and liberal papers respectively, counseled a “no” vote. The Free Press, usually an ardent supporter of collective-bargaining rights, concluded: “Michigan just can’t afford those kinds of limitations in an era when debt from pension and health obligations to current and retired employees are pushing many local governments to the brink of insolvency.”
All of this would have rung the death knell for the last two years of fiscal reforms by Governor Rick Snyder, a moderate Republican, paving the way for future tax increases on individuals and businesses. This would have been economically devastating for Michigan, which went into a recession several years before the rest of the country -- and is only now beginning to post a slow recovery. Its unemployment is still about a point above the national average.
The unions may wish they had never overplayed their hand in this battle. They were field-testing a strategy to take back existing right-to-work states that allow legislative action through ballot referendums.
If anything, however, they hurt their cause. Ever since Indiana became the first right-to-work state in the Rust Belt earlier this year -- and 23rd in the country -- Governor Snyder has been under tremendous pressure from his party, which controls both legislative chambers, to push a right-to-work law in Michigan as well. Snyder resisted because he wanted to concentrate on tax and regulatory changes and avoid a distracting fight with unions. But conservative lawmakers are going to interpret the resounding defeat for the ballot proposition as essentially a mandate for a right-to-work law in the state. It is now unclear whether Snyder will have the will or the clout to hold them at bay.
High labor costs are the biggest obstacle deterring manufacturers from setting up shop in Michigan, depressing employment. If Michigan had been a right-to-work state, according to research by economist Hari Singh of Grand Valley State University, the auto industry, for example, would have seen a 25 percent gain in jobs since 1965. Instead, it lost 56.6 percent just from 2002 to 2009, shrinking its work force by 165,777.
Even before the collective-bargaining measure, polls showed that 50 to 60 percent of Michigan residents supported a right-to-work law. That number will no doubt be even higher now. If Michigan goes that route, it will become difficult for non-right-to-work states to resist and remain competitive.
(Shikha Dalmia is a senior analyst at the Reason Foundation and a contributor to Bloomberg View.)
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