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Bill George

Harvard Business School Professor, former Medtronic CEO

Making Michigan Workers Competitive Once Again

Why all the fuss over Michigan’s new law to give workers the right to choose whether to join a labor union?

The Michigan legislature has voted decisively to give workers the freedom to choose. Governor Rick Snyder signed them both within hours, calling them “pro-worker and pro-Michigan.” This makes Michigan the 23rd state to pass right-to-work legislation. House Speaker Jase Bolger said, “This is about freedom, fairness and equality. These are basic American rights – rights that should unite us.”

The protests by the United Auto Workers (UAW) leadership are not surprising, but why has President Obama jumped into the controversy by flying into Michigan to speak out against the legislation? Last time I checked, this is a state issue, not a federal one, so it is not the President’s or Congress’s issue to decide. To the contrary, since this law extends a vital freedom to workers and removes the prohibition to work at a unionized facility if they don’t pay dues to the union, President Obama should support it.

As a native of Michigan, I have witnessed the fifty-year decline of a once-great American industry as the UAW-demanded work rules, pensions and healthcare plans cost Michigan hundreds of thousands of jobs as the Big 3 steadily lost market share to foreign competitors. This handicapped Michigan workers and their employers in competing with Japanese, German and Korean automobile manufacturers, most of whom located major plants in right-to-work states like North and South Carolina, Georgia, Tennessee and Alabama.

These restrictions rendered General Motors, Ford and Chrysler non-competitive, forcing them to relocate their factories to Mexico and China. Whereas the companies can locate their factories wherever they choose, their employees cannot, so they wind up out of work and dependent on government unemployment compensation. As a consequence, Michigan’s unemployment rate far exceeds those states, and its economy is hurting. USA Today reports that in 2000, Michigan was 19th among U. S. states in per capita income; today it’s 36th

As for the charge that companies in right-to-work states won’t pay their employees fairly, the evidence simply doesn’t support it. The employees of factories owned by Mercedes, BMW, Toyota, Nissan, Kia and Hyundai are well paid and fairly treated. They are voting with their feet by lining up by the thousands whenever new jobs are posted. Their quality is exceptional, as any owner of one of these cars will attest. The new factories have created automobile clusters of suppliers and vital infrastructure, as has been seen in South Carolina. That’s good for the U.S. as it creates jobs, reduces unemployment and enhances our trade balance.

With growing interest in bringing manufacturing back to the U.S., the timing of this legislation is perfect. It gives Michigan the opportunity to be fully competitive once again. It supports the revitalization of a vital U.S. industry and aids the transformations underway at the Big 3 U.S. producers. That’s good news for Michigan workers, and it enhances America’s competitiveness in the global marketplace.

Being a right-to-work state can lead to restoring Michigan’s pre-eminence as “the auto capital of the world,” revitalize a wobbling economy and get people off the unemployment rolls and back to work. Sounds like a win-win solution to me.