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Division of labor: the debate over how to create jobs and support workers continues to split along party lines.

The U.S. economy's less-than-robust recovery from the Great Recession has ignited a scramble among states over how best to create jobs and boost workers' sagging wages. The competition among states has played out in legislatures across the nation. Politics have amplified the situation.

Republicans control both houses of the legislature and the governor's mansion in 22 states. Democrats control them in seven. That split is reflected in debates over right-to-work laws and the minimum wage. Most experts say it's too soon to know how the changes will affect average incomes, productivity, working conditions, state budgets and state economies.

But the politics are clear.

"What we're seeing is a distinction at the state level in state policies," says Steven Malanga, a senior fellow at the Manhattan Institute and senior editor at the think tank's City Journal, with the Republican and Democratic approaches to labor issues "heading in different directions."

"We're in a period of intense competition for jobs among states because there hasn't been the kind of recovery that provides effusive jobs and tax revenues for everybody," says Malanga. "The Republican states have responded by passing right-to-work laws and the Democratic states have responded by raising the minimum wage."

Recovery from the recession has been slow for the states. "None of the recessions in the past half-century have shown such a slow recovery in overall state tax revenues," a report last June from the Nelson A. Rockefeller Institute of Government stated.

"At this point in four previous recoveries, state taxes, adjusted for inflation, were at least 10 percentage points higher relative to the prior peak than they are in this recovery," it said, adding that corporate income taxes remain stuck at 15 percent below the levels before the recession.


The average American's median income has struggled to recapture the ground it lost since the start of the recession as well. According to Sentier Research, an Annapolis, Md., firm, the median annual household income didn't reach pre-recession levels until November 2015, when it was calculated at $56,746, just $32 over the December 2007 figure.

"The states are really pinched at this point," says Malanga. "There's a very competitive environment for jobs. The Republican states see these labor issues as one way to differentiate themselves from the rest of the country and to lure jobs."

Competing for Jobs

At the center of much of the debate is the role unions play in the job marketplace. Twenty-six states and Guam have passed right-to-work laws that give workers a choice when it comes to union membership--a move that labor leaders charge has zapped the power out of organized labor. Unions can still operate in states with these laws, but workers can no longer be compelled to join as a requirement of their job.

West Virginia became the latest right-to-work state in February, after the Republican-controlled Legislature overrode a veto by Democratic Governor Earl Ray Tomblin. Most of the recent action on right-to-work legislation, however, has focused on the Midwest. Indiana, Michigan and Wisconsin have approved right-to-work laws in recent years, even though all three had resisted similar bills in the past. GOP election victories in 2010 made the difference.

In Wisconsin, in 2011, newly elected Governor Scott Walker (R), with Republicans in the majority of both chambers, set the stage for labor law changes by signing a bill that dramatically curtailed collective bargaining for public-sector workers. In 2015, the Legislature passed the nation's 25th state right-to-work law.

"We have been the epicenter for changes related to unions," Wisconsin Senator Scott Fitzgerald (R) says. The Republican majority leader spearheaded passage of the right-to-work law, arguing it would help the state's struggling economy by creating jobs, boosting manufacturing and improving the state's business climate.


"It puts us in a good place," he says. "We're going to have a different profile as far as the state and as far as labor go. We had a heavily unionized state for so many years. We just became less and less competitive. And that's what the Legislature has been focused on."

Job Growth or Wage Growth

Gary Chaison, professor of industrial relations at Clark University's Graduate School of Management, calls right-to-work laws "a barometer of union influence." States that pass them believe they can attract more new businesses if the state isn't "considered a union-friendly state," he says.

And that may be true.

Although it is difficult to measure the effects one specific policy has on a state economy, plenty of studies have tried. A 2015 study by the West Virginia University College of Business and Economics noted that job growth in right-to-work states between 1950 and 2014 was nearly double the rate in other states, while gross domestic product grew by a factor of 7.8 in right-to-work states compared with 5.3 in the other states.


Employment growth in the manufacturing, construction and mining sectors especially has been stronger in right-to-work states over the last five decades.

The study, however, also found that annual wage and salary rates "were significantly lower in right-to-work states compared to non-right-to-work states between 1969 and 2013." Other studies corroborate these findings.

Wages in right-to-work states are 3.1 percent lower than in states without the law, according to a 2015 report by the labor-friendly Economic Policy Institute. That averages out to be about $1,558 less each year for a typical full-time worker.

"Although there has been an extensive amount of research on the effect of [right-to-work] laws on union density, organizing efforts, and industrial development," write the authors of the Economic Policy Institute report, "there has been surprisingly little examination of the perhaps more important issue of right-to-work laws' effect on wages and even less on employer-sponsored benefits."

West Virginia Senator Jeff Kessler (D) says he's "not convinced the newly enacted right-to-work law will do anything to improve West Virginia's economy. It's a freeloader bill. It permits people to get the benefits of union representation without paying for the representation," he says. "It's an attack on labor that will lead to less participation in labor unions."


Indeed, the string of new right-to-work states comes as union membership continues its decades-long decline. The percent of U.S. wage and salary workers who were union members was 11.1 percent in 2015, or 14.8 million union workers, down sharply from 20.1 percent, or 17.7 million, in 1983, the first year comparable union data are available, according to the U.S. Bureau of Labor Statistics.

Minimum Wage, Maximum Response

As the number of right-to-work states grows, so does the number of states debating the minimum wage--the political flip side of right-to-work laws.

Democrats see increasing wages as a way to put more money into workers' pockets; Republicans tend to say increases only harm businesses, forcing them to lay off workers.

At the start of 2016, 14 states raised their minimum wages, 12 of them through legislation passed in the 2014 or '15 sessions. Two of the 14--Colorado and South Dakota--tie rate increases to the cost of living. Coloradans received an 8 cent raise, South Dakotans a nickel. Nine other states that tie increases to the cost of living did not raise wages.

Maryland, Minnesota and the District of Columbia have minimum wage increases scheduled for later this year. And Nevada will announce in July whether or not there will be a cost of living increase. Other states have enacted increases since the start of the year, and five or six states will have proposals on the ballot in November.

Oregon lawmakers passed a tiered minimum wage law that requires different hourly rates in different parts of the state. The rate increases to $14.75 in Portland, $13.50 in mid-sized counties and $12.50 in rural areas by 2022.

Oregon Governor Kate Brown (D) called the bill a well-crafted compromise between labor groups and businesses.

California lawmakers approved a plan in early April to increase the state minimum wage to $10.50 on Jan. 1. It applies to businesses with 26 or more employees and requires annual hikes until the rate reaches $15 per hour in January 2022. Smaller businesses will have until the end of 2022 to comply.

The New York Legislature followed shortly after with legislation that will increase the minimum wage for New York City workers in businesses with at least 11 employees to $11 at the end of 2016, then by another $2 in each of the next two years. For employees of the city's smaller companies, the hourly minimum will rise to $10.50 by the end of the year, then by another $1.50 annually for three years. The increases are slower for those living in other parts of the state.

Currently, 29 states have hourly minimum wages above the federal rate of $7.25, which hasn't changed since July 24, 2009. Alabama, Louisiana, Mississippi, South Carolina and Tennessee have never adopted a state minimum wage.

Delaware Senator Karen Peterson (D) co-sponsored a bill this year to raise her state's hourly minimum wage by 50 cents over four years, bringing the current $8.25 an hour to $10.50 in 2020. It passed the Senate in January but was held up in the House.


"In Delaware, one in five kids goes to bed hungry every night. These are the kids of the minimum wage earners," says Peterson, a former state Department of Labor official. She disputes arguments suggesting a hike in the minimum wage kills jobs.

She looked at the impact of nine minimum wage hikes since 1990 and found that restaurant employment increased by an average of 1,725 workers after each hike.

"The people at the bottom keep falling farther and farther behind," she says. "At least minimum wage increases lift a lot of people out of poverty."

Nonsense, opponents say. The increases are not enough to pull anyone out of poverty and will only end up hurting the very people they are supposed to help.

"We have a lot of people taking votes and making votes who have never had to look at a payroll," says Delaware Senator Dave Lawson (R). "We should not continue to set upon the entrepreneur and the businesses that provide jobs in this state. You're running them out of the state."


A State-Local Concern

In fact, several states are so sure raising the minimum wage will do more harm than good--especially inconsistently across the state--they have blocked local efforts to pass wage increases.

The Alabama Legislature, for example, approved a bill in February preempting cities and local governments from approving their own minimum wage hikes, scuttling Birmingham's move to raise its minimum wage to $10.10 an hour.

"We want businesses to expand and create more jobs--not cut entry-level jobs because a patchwork of local minimum wages causes operating costs to rise," says Alabama Senator Jabo Waggoner (R). "Our actions today will create predictability and consistency for Alabama's economy, which benefits everyone."



Alabama Senator Linda Coleman-Madison (D) supports increasing the state's minimum wage since the move to increase Birmingham's was blocked. "Somebody has to recognize that we have a working-poor class of people who are not just in Birmingham," she said.


"For once, I'd like for this legislative body to be the leader."

Oklahoma passed a similar ban in 2014, and Michigan did so last year. They join at least 14 other states, according to the Pew Charitable Trusts, that bar municipalities from upping their minimum wages.

Inconclusive Evidence

Lawmakers are divided on what the best solution is to lackluster wages and slow job growth, but so are academics and economists. Depending on what you want to hear, there's probably a study to support your viewpoint.

It's complicated, with too many variables involved to know definitively how right-to-work and minimum wages affect local small businesses and workers' quality of life.

So the debates will continue.

"There has been a continuing trickle of studies claiming that a higher minimum wage may not cause job loss, which has provided fodder to policymakers and others seeking increases," says David Neumark of the University of California, Irvine, who co-authored a study in 2014. "But our new evidence directly addresses this claim and shows that it is simply not true. Higher minimum wages do destroy jobs."

That's just not so, say Dale Belman of Michigan State University and Paul Wolfson of Dartmouth College's Tuck School of Business. Increases in the minimum wage raise the earnings of the lowest paid workers with "very modest or no effects on employment, hours and other labor market outcomes," they wrote in their 2014 book, "What Does the Minimum Wage Do?"

And back and forth it goes.


Although recent action has focused on the Midwest, a majority of right-to-work states passed bans on requiring employees to pay union dues back in the 1940s and '50s.



Around 3 million people--or 3.9 percent of all hourly workers--earned wages that were at or below the federal minimum of $7.25 an hour. The percentages ranged from 6.8 percent in Tennessee to 1 percent in both Oregon and Washington in 2014. Minimum wage workers often are fast-food cooks, dishwashers, manicurists, cashiers and, in some locations, preschool teachers, nursing assistants and bank tellers.


Right-to-Work Origins

The phrase "right to work" originated in the 1889 U.S. Supreme Court ruling Dent v. West Virginia, which stated that Americans had a fundamental right to pursue an occupation of their choice. The court forbade state legislatures from depriving or regulating people's particular occupations. Later, an anti-union Texas newspaper editor, William B. Ruggles, reinterpreted the term to mean the right to work in a unionized business without paying dues.

Right-to-Work Laws Pros vs. Cons

Supporters say right-to-work laws:

* Protect workers' rights to freely associate or not associate with a union.

* Hold unions accountable, because they really are businesses offering a service in exchange for a fee.

* Lead to more competitive bidding and wages.

* Allow states to employ a greater number of workers.

Opponents say right-to-work laws:

* Result in lower wages.

* Produce higher rates of workplace injury and death.

* Result in less money spent on education and training for workers.

* Lead to higher poverty rates and a smaller share of residents with health insurance.

Raising Minimum Wages Pros vs. Cons

Supporters say that increasing the minimum wage will:

* Put more money into the pockets of low-income workers.

* Help shrink the gap between low-and high-wage workers.

* Reduce turnover among low-wage workers.

* Put more money into the economy, because low-wage workers tend to spend their higher wages while higher paid workers tend to save them.

Opponents say an increase will:

* Force businesses to cut jobs to reduce higher labor costs.

* Not address poverty as effectively as offering income tax credits or encouraging savings.

* Force businesses to raise prices on goods and services.

* Lower business profits, decreasing the amount of money available to put back into hiring and operations.

Roger Fillion is a freelance writer based in Evergreen, Colorado.
The Correlations

It is hard to separate the effects of right-to-work laws from other
legislative, economic, social and technological factors that influence
state labor market conditions; these are only comparisons.

Characteristics                  Non-Right-to-Work   Right-to-Work

Median hourly wage                    $18.40            $15.79
Portion of hourly workers              57.7%             55.9%
Portion who are union members          17.5%              7.3%

Note: Figured in 2014 dollars

Source: EPI analysis of the Bureau of Labor Statistics Current
Population Survey Outgoing Rotation Group microdata (various years)

Union Membership Rates
2014 and 15

Nationally, the percentage of wage
and salary workers who were union
members was 11.1 percent in 2015, the
same as in 2014. Across the country,
however, membership rates increased in
24 states and the District of Columbia,
declined in 23 states and were
unchanged in three.

                        2014     2015

Alabama                 10.8     10.2
Alaska                  22.8     19.6
Arizona                 5.3      5.2
Arkansas                4.7      5.1
California              16.3     15.9
Colorado                9.5      8.4
Connecticut             14.8     17.0
Delaware                9.9      9.2
Florida                 5.7      6.8
Georgia                 4.3      4.0
Hawaii                  21.8     20.4
Idaho                   5.3      6.8
Illinois                15.1     15.2
Indiana                 10.7     10.0
Iowa                    10.7     9.6
Kansas                  7.4      8.7
Kentucky                11.0     11.0
Louisiana               5.2      5.8
Maine                   11.0     11.6
Maryland                11.9     10.4
Massachusetts           13.7     12.9
Michigan                14.5     15.2
Minnesota               14.2     14.2
Mississippi             3.7      5.4
Missouri                8.4      8.8
Montana                 12.7     12.2
Nebraska                7.3      7.7
Nevada                  14.4     14.3
New Hampshire           9.9      9.7
New Jersey              16.5     15.4
New Mexico              5.7      6.2
New York                24.6     24.7
North Carolina          1.9      3.0
North Dakota            5.0      5.4
Ohio                    12.4     12.3
Oklahoma                6.0      5.6
Oregon                  15.6     14.8
Pennsylvania            12.7     13.3
Rhode Island            15.1     14.2
South Carolina          2.2      2.1
South Dakota            4.9      5.9
Tennessee               5.0      5.4
Texas                   4.8      4.5
Utah                    3.7      3.9
Vermont                 11.1     12.6
Virginia                4.9      5.4
Washington              16.8     16.8
West Virginia           10.6     12.4
Wisconsin               11.7     8.3
Wyoming                 6.7      7.1
District of Columbia    8.6      10.4

Source: U.S. Bureau of Labor Statistics, Feb.
11, 2016
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Author:Fillion, Roger
Publication:State Legislatures
Geographic Code:1USA
Date:Jun 1, 2016
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