FOR IMMEDIATE RELEASE
February 24, 2015
Contact: Scott Fitzgerald, (608)-266-5660
Senator Fitzgerald Testimony to Senate Committee on Labor and Government Reform
[Madison, WI] Earlier this week, the Senate Committee on Organization introduced Senate Bill 44, creating a state “right to work” law, at the request of Senator Scott Fitzgerald (R-Juneau). Senator Fitzgerald provided the following testimony before the Senate Committee on Labor and Government Reform:
Thank you for the opportunity to testify today on Senate Bill 44 (SB 44), establishing for the first time true workplace freedom here in Wisconsin. As you know, such freedom has been available to most public sector workers since the passage of Act 10 in 2011, and this bill extends that freedom to workers in the private sector. In my testimony today I will briefly outline federal labor law, explain what exactly SB 44 does and, importantly, what it does not do, and then outline for you why this bill is critical for the future of our great state. I look forward to listening to the significant public input at today’s hearing.
I. What is “Right to Work”?
Before getting into anything regarding this bill, it’s important that we all have some background regarding federal labor law, and specifically the National Labor Relations Act (NLRA). Most all labor law has been implemented at the federal level, leaving a very limited area where states are free to act on their own.
Since implementation, the NLRA has gone through a number of important changes. Understanding those changes is important to understanding why we are here today. In 1935, Congress passed and President Roosevelt signed the NLRA. Also known as the Wagner Act, this piece of legislation created the National Labor Relations Board, guaranteed the right of employees to form unions—including “closed shop” workplaces—and banned a number of unfair labor practices.
The “closed shop” is essentially a contract between a union and an employer whereby the employer will only hire union members. This is different than a “union shop” or “agency shop” where the employer can hire any employee they want, so long as those employees agree to join the union within a certain time period. The powers that came with a “closed shop” took away worker rights and freedoms and made them completely subservient to their unions.
Just over a decade after implementation of the NLRA, a bipartisan Congress amended it through the passage of the Labor Management Relations Act, commonly referred to as the Taft-Hartley Act in 1947. Notably, President Truman initially vetoed Taft-Hartley, and his veto was over-ridden by a bipartisan supermajority in Congress. As the Seventh Circuit Court of Appeals recently noted, in upholding Indiana’s right to work law last fall, “[t]he Taft-Hartley Act included several provisions intended to ameliorate perceived imbalances in the NLRA” (See Sweeney v. Daniels, 7th Cir., 2014). Among the most significant changes made to the NLRA was the outlawing of the “closed shop.”
This brings us to why we are here today. In passing Taft-Hartley, Congress made it clear that employers were free to enter into agreements with labor organizations which “require as a condition of employment membership therein…” (29 USC 158(a)(3)). However, Congress also created an important exception, stating: “[n]othing in this subchapter shall be construed as authorizing the execution of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial Law” (29 USC 164(b)). The state laws exercising authority under this exception are commonly referred to as “Right to Work” laws, and so far, twenty-four states have passed some version of this type of law.
The operative language in the bill in front of you today closely mirrors the language of the Indiana and Michigan laws which were signed into law in the last few years.
II. What SB 44 Does
SB 44 is a simple piece of legislation. It is only three-and-a-half pages long. The bill affirms the right to join and support any labor organization, and creates new provisions in law that give employees the right not to join or support any labor organization. The bill creates the following provisions in state statute:
A. Prohibiting Forced Union Membership
Section 5 of the bill creates § 111.04(3)(a)(1) and (2) of the statutes, stating that no person may require an employee, in order to obtain or keep their job, to either quit or stop supporting their labor organization or be forced to join or support an organization. This leaves it up to the individual worker to decide if they want to join their union or not.
B. Prohibiting Forced Payments
Section 5 of the bill also creates § 111.04(3)(a)(3) and (4) of the statutes, stating that no person can require any employee to make payments to a labor organization or to any third party in lieu of such payments to a labor organization.
III. What SB 44 Does Not Do
This legislation is extremely limited. As I said earlier, federal law dictates the majority of labor law. This legislation simply exercises Wisconsin’s right to prohibit mandatory union membership under title 29 of U.S. Code 164(b), also known as Section 14(b) of the NLRA. SB 44 does not inhibit the ability of a union to organize, nor does it change an employer’s obligation to collectively bargain with unions. Furthermore, SB 44 does not make any changes to existing contracts or union security clauses. Contracts that are in place now will continue to be in place should SB 44 be signed into law.
I have heard a few questions and concerns as this legislation has been discussed over the past few months, and I would like to take the opportunity to address some of these concerns now.
A. The “Free Rider” Issue
Many have expressed concerns that this legislation will create a “free rider” problem, allowing employees to take advantage of the benefits of union representation without paying dues. This is a choice made by the unions themselves. Many labor organizations currently implement what are known as "exclusive representation" clauses which are, essentially, agreements that require them to represent all employees in exchange for the right to be the sole bargaining entity for those workers—this not only blocks other unions from representing workers in that shop, but also bars the non-union workers from acting as their own representatives.
These agreements are simply a trade-off that many labor organizations choose to make: in exchange for the exclusive right to represent an entire class of employees, they in turn agree to represent both union and non-union employees in that class. In fact, federal law prohibits these employers from negotiating with non-union employees in the class: those employees are entirely reliant on unions to negotiate for them, even if they do not wish to accept this representation. These clauses are not mandatory, and nothing in SB 44 requires unions to include such a provision. A union may choose not to implement these clauses, freeing them of any obligation to represent non-dues paying employees and allowing those members to represent themselves.
B. Training Functions
One of our major concerns in implementing this legislation is the important training function that labor organizations provide in Wisconsin. Some have expressed concerns that if enough current union members opt out of paying dues, unions will no longer have the funding to provide worker training. However, according to tax forms filed by several major Wisconsin labor organizations with the IRS, businesses—not unions—foot the bill for about 95 percent of the operating cost for union training programs.
In fact, the labor organizations that actually conduct worker trainings are completely separate legal entities from the 501(c)(5) corporations that actually collect dues and conduct collective bargaining. These separate 501(c)(3) corporations exist with an entirely different mission statement focused on training, and generally obtain nearly all of their revenue from employer contributions—not membership dues. Employers need well trained, skilled workers, and nothing in SB 44 requires this training relationship to change in any way.
C. Unfunded Pension Liabilities
I have heard from some that claim becoming our nation’s twenty-fifth right to work state will harm Wisconsin businesses due to some large unfunded pension liabilities that are out there. This is an issue that exists completely separate from the right to work debate. Regardless of what happens with SB 44, unfunded pension liability is and will remain a significant issue not just in Wisconsin, but nationwide. In fact, Congress weighed in on the issue last December with the passage of the Multiemployer Pension Reform Act in an attempt to begin addressing this issue. These liabilities will continue to exist and this issue will need to continue to be addressed at the federal level.
D. Undermines Existing Union-Employer Relationships
There have been concerns raised that SB 44 is an attempt to undermine the union-employer relationship that exists in our state. Let me be clear that this bill makes no changes to existing contracts, and in no way prohibits collective bargaining from continuing between unions and employers. Those collective bargaining rights are guaranteed under federal law, and SB 44 makes no attempt to change them. For employers and unions who want to continue their existing relationship, absolutely nothing in SB 44 requires that to change. Additionally, this bill continues to safeguard every individual employee’s right to join and support a labor organization: the penalty for requiring someone to quit their union is identical to the penalty for requiring someone to join a union.
E. Freedom in the Workplace
Many opponents of this proposal have argued that this legislation is not necessary because Wisconsin workers currently have the choice of whether to seek employment with a union or non-union shop. These arguments ignore several very important realities that only underscore why this law is so important.
This argument assumes that there is always both a union job and a non-union job available to prospective employees; this is simply not a reality in either the skilled trades or in industries like hospitality, where workers may have little opportunity to seek out alternative employment in their area. No worker should have to make the choice to uproot their family, or be forced to work in their local union shop. This issue, at its heart, is about worker freedom, and that means ensuring that no employer can discriminate against any employee due to their refusal to join or support a labor organization.
IV. Workplace Freedom is Right for Wisconsin
Finally, I would like to briefly address why I believe that Workplace Freedom is right for Wisconsin. First among these reasons is the widespread support from Wisconsin voters that we have seen in recent months. Multiple polls from widely respected independent groups have shown that well over sixty percent of Wisconsin voters support allowing workers the freedom to decide whether to join a union. Even fifty-one percent of union households support such a law.
Over the past several legislative sessions we have stressed that a focus on job creation would remain a top priority. Workplace freedom legislation is a major tool in continuing to work towards that goal. According to a 2012 survey of U.S. corporate executives by Area Development Magazine, 72 percent said it was important or very important that a state has implemented right-to-work laws in considering where to expand or relocate.
These findings have been reiterated by multiple other surveys, including a letter issued only yesterday from McCallum Sweeney Consulting, a Kentucky site selection firm, which stated that approximately 75 percent of the firm’s clients express an interest in considering only Right to Work states. This not only means that out of state businesses looking to move or expand will view Wisconsin more favorably, but also that current Wisconsin employers will be more likely to keep their jobs here and even expand here in the future, rather than another state. This is particularly true for the manufacturing industry, which was hard hit during the most recent recession. I know that many of the expert witnesses here today will provide further anecdotal evidence of the value of right to work laws to their businesses and organizations.
The bottom line is that to move our state forward Wisconsin needs a modern economy. The status quo has served us well in the past, but in order to see our economy continue to compete at a global level, we cannot remain mired in an antiquated system. In particular, as we enter into the difficult process of crafting the biennial state budget, I believe that we have a duty to the taxpayers to explore any opportunity to make Wisconsin more competitive and eliminate any measure that artificially increases the costs of taxpayer funded projects. Right to work legislation is just one piece of the larger fix to this solution that ultimately may include additional reforms such as changes to our state’s outdated prevailing wage laws and prohibiting the use of project labor agreements for public projects, which do little more than drive up costs, while once again mandating union membership.
Proof of the potential benefit of workplace freedom legislation to the state is in the numbers. Over the last decade:
· 24 Right to Work states experienced an average job growth rate of 5.3 percent, adding 3.6 million jobs while 26 forced-union states added only 1.5 million jobs—a job growth rate of just 2.1 percent.
· Right to work states experienced an average wage growth of almost double the rate of forced union states.
· Right to work states grew manufacturing GDP at nearly double the rate of forced union states.
Finally, giving workers the ability to keep more of what they earn will have the greatest positive impact on some of Wisconsin’s low wage earners. While many of us think of union employees as skilled craftsmen in the manufacturing sector, this law may actually provide the largest benefit to the clerk at our local grocery store who earns an entry level wage and is still required to contribute a substantial portion of his or her paycheck towards union dues without being able to decide whether that union provides them with a measurable benefit.
Aside from all of the potential benefits to the state, at issue here is a simple matter of individual freedom: this legislation will provide Wisconsin’s workers the sole power to determine whether they wish to belong to or support a labor organization, and ensure that they cannot be penalized for that decision. Thank you again to the Chair for the opportunity to testify this morning.
Senate Majority Leader Scott Fitzgerald (R-Juneau) represents the 13th Senate District, which covers portions of Dodge, Jefferson, Waukesha, Washington, Dane, and Columbia counties.