Right to Work and the Michigan Economy Presented to: Mid-Michigan LERA October 8, 2013 Charles L. Ballard Department of Economics Michigan State University.

Right to Work and the Michigan Economy

Presented to:Mid-Michigan LERA

October 8, 2013

Charles L. BallardDepartment of EconomicsMichigan State University

East Lansing, [email protected]

First, some facts about the percentage of workers who are union members in the United States (data for 2011):

% of Private % of Public % of Total

State Rank Employees Employees Employees

New York 1 13.572.2 24.1

Alaska 2 11.053.2 22.1

Hawaii 3 14.150.7 21.5

Washington 4 11.152.4 18.9

Michigan 5 11.9 52.0 17.5

California 7 9.056.9 17.1

Illinois 10 10.652.0 16.2

Ohio 17 8.642.6 13.4

Indiana 23 8.928.3 11.2

Florida 37 2.826.4 6.3

Texas 41 3.017.1 5.2

Mississippi 44 3.410.4 5.0

N. Carolina 51 1.6 9.1 2.9

Across the country, the rates of unionization have fallen over the years.

Percent of Workers Who Are Union Members, for Selected States, 1964 and 2011

1964 2011 Change

New York 35.5 24.1-11.4

Alaska 39.7 22.1-17.6

Washington 44.5 18.9-25.6

Michigan 44.8 17.5 -27.3

California 33.0 17.1-15.9

Illinois 35.6 16.2-19.4

Ohio 37.6 13.4-24.2

United States 29.3 11.9 -17.4

Indiana 40.9 11.2-29.7

Florida 14.0 6.3- 7.7

Texas 13.5 5.2- 8.3

N. Carolina 8.4 2.9- 5.5

20112008

20052002

19991996

19931990

19871984

19811978

19751972

19691966

0

5

10

15

20

25

30

35

40

45

50

Union Members as a Percent of the Labor Force, 1964-2011

Michigan

Louisiana

United States

Year

In Michigan, as in many other parts of the country, the union losses of recent decades have been relatively larger in the private sector.

Union Members as Percent of Workers in Michigan, 1983 and 2011

19832011 Change

Private Sector 25.311.9 - 13.4

Manufacturing 46.220.1 - 26.1

Public Sector 56.852.0 - 4.8

Manufacturing’s Share of the Economy Has Shrunk Dramatically

19631965

19671969

19711973

19751977

19791981

19831985

19871989

19911993

19951997

19992001

20032005

20072009

20110

10

20

30

40

50

60

Manufacturing as a Percent of Gross Product,In Michigan and the United States, 1963-2011

Michigan

United States

Year

Perc

ent

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

0

100

200

300

400

500

600

700

800

900

1000

Manufacturing Employment in Michigan, 1990-2013(Seasonally Adjusted Data for July of Each Year)

Year

Man

ufac

turi

ng E

mpl

oym

ent,

in T

hous

ands

Tax Effort Has Reduced Substantially

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

7

9

11

13

15

17

19

State and Local Taxes as Percent of Personal Income, 1972-2010

New York

Michigan

United States

Texas

Year

Per

cen

t

My Assessment:

Right to Work is unlikely to make much difference.

For better or worse, the strength of labor unions has already diminished greatly.

What Does the Michigan Public Think?

State of the State Survey Round 64

1,013 Interviews CompletedJanuary 14, 2013 – March 4, 2013

• 42.7% of Michigan Residents Said They Believe the Right-to-Work Law Will Help the Economy.

• 41% Said It Will Hurt.

• That’s a Statistical Tie.

Help A Lot Help A Little No Effect Hurt A Little Hurt A Lot0

5

10

15

20

25

30

17.2

25.5

16.318.5

22.5

Michigan Residents' Views of Whether the Right-to-Work Law Will Help or Hurt the Economy

Perc

ent

Statewide Not Union Member Union Member0

10

20

30

40

50

60

70

80

42.746.4

12.3

41.037.1

73.7

Michigan Residents' Views of Whether the Right-to-Work Law Will Help or Hurt the Economy, By Union Membership

HelpHurt

Perc

ent

Views of Michigan Residentsby Race and Sex

State of Michigan Men Women Whites Blacks

Right-to-Work Law Will Help the Economy 42.7% 49.6% 36.1% 45.4% 24.9%

Views of MichiganResidents

by Political Party

State of Michigan Republican Independent Democrat

Right-to-Work Law Will Help the Economy

42.7% 74.2% 42.3% 24.8%

Views of Michigan Residentsby Support for Gov. Snyder

State of Michigan

Snyder “Excellent”

Snyder “Good”

Snyder “Fair”

Snyder “Poor”

Right-to-Work Law Will Help the Economy

42.7% 74.0% 64.2% 41.7% 18.2%

Views of Michigan Residentsby Ideology

State of Michigan

VeryLiberal Liberal Moderate Conservative Very

Conservative

Right-to-Work Law Will Help The Economy

42.7% 10.9% 20.9% 42.3% 57.8% 62.6%

Advocates of right-to-work laws say they will bring prosperity.

At best, the evidence for this is mixed.

Per-Capita Personal Income, 2011:

• Right-to-Work States:$38,046

• Non-RTW States:$44,515

0 5 10 15 20 25 3025,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

41560

34880

45665

3506233740

4364744053

57902

4144939636

35979

42925

32881

43721

35689

4115640883

33989

38549 38299

50656

53471

MI

44560

32000

37969

36016

42450

36964

45881

52430

34133

51126

36028

47236

3783637679 37527

42291

43875

33388

44217

36567

40147

33509

41572

46107

43878

33403

39575

47898

Per-Capita Personal Income and Union Membership, For the 50 States, 2011

Union Members as Percent of the Labor Force

Per-

Capi

ta P

erso

nal I

ncom

e

Many of the states with the highest incomes have high levels of educational attainment.

19501953

19561959

19621965

19681971

19741977

19801983

19861989

19921995

19982001

20042007

201085

90

95

100

105

110

115

120

125

130

Per-Capita Personal Income in Massachusetts and Michigan, As a Percent of the U.S. Average, 1950-2012

Massachusetts

Michigan

Year

Perc

ent

15 20 25 30 35 4025,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

39791

33710

43749

3377332373

4189342107

55427

3942538345

34531

40952

31556

42025

34028

37882 38545

32504

3711636629

48621

51143

34326

42528

30841

3640634405

39445

35777

43968

50428

32940

49119

34604

42462

3593135535 35906

4044442001

32193

39558

35103

38222

32121

39736

44134

42024

31806

38010

45353

Per-Capita Personal Income and College Attainment For the 50 States, 2010

Percent of Population Aged 25 and Over With At Least a Bachelor's Degree

Per-

Capi

ta P

erso

nal I

ncom

e

This slide is brought to you by the letter “M”:

EducationIncome

State Rank 2010Rank 2010

Massachusetts 1 2

Minnesota 1010

Michigan 3439

Mississippi 4950

Income inequality in the United States has increased to levels not seen since 100 years ago. This is because:

1. The supply of highly skilled workers has increased less than the demand.

2. Deregulation of financial services.

3. Weaker labor unions.

4. Less progressive taxation.

19131917

19211925

19291933

19371941

19451949

19531957

19611965

19691973

19771981

19851989

19931997

20012005

20090

5

10

15

20

25

Percentage of Income in the United States Received by the Top One Percent of Households, 1913-2010

(Source: Thomas Piketty and Emmanuel Saez)

Year

Perc

ent

Michigan, My Michigan

A song to thee, fair State of mine,Michigan, my Michigan.

But greater song than this is thine,Michigan, my Michigan.

The whisper of the forest tree,The thunder of the inland sea,Unite in one grand symphony

Of Michigan, my Michigan.