(This is a revised version of an essay that originally appeared in The Detroit News on January 30, 2005.)
Michigan is suffering from a sluggish economy – and it’s about to get worse if labor unions and Democratic lawmakers in Lansing have their way.
The AFL-CIO and Service Employees International Union are pushing state lawmakers to pass legislation that would raise the state’s minimum wage rate 40 percent over the next two years. Their claim is that a minimum wage increase will help the poor and disadvantaged — but nothing could be further from the truth.
Regardless of the rhetoric concerning the minimum wage, its economic history is crystal-clear: minimum wage laws hurt the poor and raise unemployment among the most unskilled members of society. By setting an artificial minimum on wages, lawmakers inadvertently raise the unemployment of the most disadvantaged and make it much more difficult for teenagers and other unskilled citizens to enter the labor pool.
But don’t let the labor unions fool you. That’s exactly why they want a higher minimum wage. It helps eliminate market competition for their much higher paid members. Well-meaning politicians get tricked by union bosses into believing that raising the minimum wage will help the destitute. Lawmakers inadvertently hurt the very people they are trying to help by tinkering with market prices. They’d be wise to recognize that supply and demand determine wages, not government edicts.
Fortunately, there’s a simple solution for lawmakers who are looking for a way to dramatically improve Michigan’s economy and to help the poor. They can end compulsory union dues and make Michigan a "Right to Work" state.
Right to Work means that every worker can choose to pay — or not pay — union dues in order to get or keep their job. It sounds simple, but the positive effect it has on workers is truly amazing.
According to the National Institute for Labor Relations Research of Springfield, Virginia, employees working in Right to Work states enjoyed a 42 percent higher increase in their real personal income from 1993 to 2003 than workers in forced-unionism states (37 percent, as opposed to 26 percent). Growth in non-farm employment is a whopping 69 percent higher (24.1 percent compared to 14.2 percent).
In the manufacturing sector, Right to Work states have enjoyed a 7 percent increase in plant growth from 1982 to 2001, while forced-unionism states have suffered a net loss. People are simply choosing to live, work and invest in states that allow them to keep more of their earnings. Forced-unionism states like Michigan are losing jobs to states that are providing people with the right economic incentives. Twenty-two states now have Right to Work laws.
Michigan’s economic and labor policies benefit the few at the expense of the many. Lansing’s attempts to subsidize businesses to invest in Michigan have actually caused other businesses to leave or avoid our state. Forced-unionism has made it even less desirable for entrepreneurs and workers to risk their capital here. Bad government policy is slowly killing what once was the most vibrant economy in the world.
It’s important to realize that labor unions are not the solution to lower income; they are the problem. Each year, they siphon hundreds of millions of dollars out of the pockets of workers and then spend it on manipulating the political process. Unless proper steps are taken, labor unions will continue to cause serious damage to Michigan’s economy.
If union bosses really cared about the wages of all workers, they wouldn’t be pushing for an increase in the minimum wage; they’d end their practice of forced-dues collection and stop playing politics.
Michigan’s unemployment is already far too high. Raising the minimum wage will only make it worse. It’s time to let workers keep more of what they earn and free them from the shackles of organized labor. State lawmakers should do something that will truly help workers: Scrap the notion of raising the minimum wage and make Michigan a Right to Work state.
Mr. Thomas is a Detroit businessman and freelance writer.