Mackinac Center’s Labor Trilogy

Michigan is long-overdue for a reassessment of its labor law. To lead the way, the Mackinac Center for Public Policy recently released three important reports on prevailing wage and right-to-work. In celebration of Labor Day, here is a summary of each.

On Aug. 27, the Mackinac Center released "The Effects of Michigan’s Prevailing Wage Law," written by Senior Labor Policy Researcher Paul Kersey. Kersey found that the law, which requires the payment of union wages on all state funded construction, added 10 to 15 percent to the cost of construction, resulting in an additional cost to taxpayers of $250 million annually. Kersey found little evidence that the law improved the quality of construction, but did find that it depressed employment in the construction industry. The main beneficiary of the law appeared to be highly paid workers in the construction industry: According to the Bureau of Labor Statistics, the median construction worker in Michigan receives an hourly wage that is 28.1 percent higher than the median for all workers in Michigan. The prevailing wage law boosts this above-average hourly wage even higher, by 40 to 60 percent.

On Aug. 28, the Mackinac Center released another paper from Kersey, "The Economic Effects of Right-to-Work Laws: 2007." This paper was an update of a 2002 study by economist William T. Wilson that used basic economic measurements such as gross state product, job growth and disposable income to compare right-to-work and non-right-to-work states. As was the case with Wilson’s earlier study, right-to-work states experienced faster growth in GSP and created more jobs. While disposable income was lower in right-to-work states, the gap continues to shrink — so much so that most right-to-work states are likely to have higher disposable incomes than Michigan by 2010.

On Aug. 29, Patrick Wright’s "A Model Right-to-Work Amendment to the Michigan Constitution" was released to the public. Wright, who serves as the Mackinac Center’s senior legal analyst, explains the principles of the National Labor Relations Act and the nuances of state right-to-work laws. The amendment would ensure that workers would not be forced to join a union or pay union dues as a condition of employment, but would leave workers with the freedom to bargain collectively. Wright’s recommended amendment would provide the maximum protection for workers’ freedom, prohibiting discrimination against union members and non-members, while avoiding legal issues that might lead to time-consuming litigation.

Taken together, the three papers point the way toward a better balance in labor relations, leaving unions with the power to represent workers effectively while removing an unnecessary burden from state taxpayers and freeing workers from compulsory union membership.