2015 Regional Report: The Midwest

A generation ago, business leaders in America’s old-line manufacturing centers faced a quandary: stay in what was increasingly derided as the “Rust Belt,” or depart for sunnier—and more business-friendly—climates down south. Many employers envied the lower tax rates and cheaper labor costs that prevailed in the Sun Belt, calculating they could run their businesses more efficiently south of the Mason-Dixon Line. That began a southbound exodus that continues to this day.

A big factor inflating labor costs was—and is—mandatory unionization, or state laws that force all hourly employees to pay union fees. Although common sense suggested that compulsory
unionization inflated costs, firm data was lacking.

All that changed in 2010. That year, an Ohio State economist by the name of Richard Vedder released a landmark comparison study equating freedom from mandatory unionism alongside such birthrights of American citizenship as freedom of expression, freedom of association and freedom of belief. Included as well was empirical evidence equating mandatory unionization with economic stagnation.

Right-to-work states, the study reported, grew 6% in per capita income over those without it.

Prof. Vedder’s report provided ballast for the burgeoning right-to-work movement. After two decades in which the only state to pass right-to-work legislation was Oklahoma, in 2012, Indiana and Michigan became the 23rd and 24th states respectively to enact right-to-work legislation. In Wisconsin, Gov. Scott Walker signed a bill this spring making the Badger State the 25th state—exactly half the country—to pass right-to-work legislation.

Dick Resch, CEO of KI Furniture in Green Bay, counts himself as a Gov. Walker supporter—and believes the new labor rules will boost job creation. “The law is sensible,” he says. “It will allow our workers to keep more of their wages.”

The campaign in the Midwest is far from over. Illinois remains a union stronghold, as does Prof. Vedder’s home state of Ohio. In June, Missouri’s Gov. Jay Nixon vetoed a bill that would have added the Show Me State to the fold. Despite facing unerringly emotional and loud opposition, Midwest business leaders are too aware of economic growth across state lines to abandon the fight. The next round of right-to-work bills comes next year, the following year and likely for years to come. With grassroots supporters increasingly visible and outspoken, the movement against compulsory unionism seems unstoppable.