‘Right-to-Work’ Raises a Ruckus in Indiana

INDIANAPOLIS — Remy International’s Indiana roots go back more than 120 years. The manufacturing company is headquartered in the small town of Pendleton, with 500 employees in Indiana, more than 6,000 scattered over the globe, and plans to add a new factory somewhere in the United States by 2013.

Still, unless a controversial “right-to-work” bill passes the Indiana legislature soon, Remy Vice President Jay Pittas believes that the company will have to open the new factory, which will build hybrid motors and employ at least 250 people, in another state. “Right now, without it, the factory will not be in Indiana,” he says. “With it, I would like it to be.”

Remy and other Indiana companies want right-to-work because the bill would make it illegal for businesses and unions to negotiate contracts that require all employees — even those who do not wish to be union members — to pay union fees as a condition of their employment. Supporters believe that the bill would draw new companies to Indiana, while opponents call it “right-to-work for less” because they believe it would weaken unions and ultimately drive down average wages. House Democratic Leader Patrick Bauer says that it would drive high-skilled, Indiana-trained workers out of the state in search of better working conditions. “Once they get that skill, they’ll move somewhere else where they can get a decent job, “ he says.

Indiana Republicans believe the change would drive down unemployment almost immediately by bolstering the state’s reputation as a good place to do business. “We’re already attracting employers from Illinois and Ohio and Michigan,” says House Speaker Brian Bosma. “With this additional change, we’re going to have more folks who are taking a look at Indiana right now saying, ‘You guys are serious about having an employment environment that’s conducive to business’.”

Republicans believe, based on the input of site selection experts, that a quarter to a half of those companies looking for a place to move or expand their operations rule out states without right-to-work laws. But real-life examples of companies such as Remy using right-to-work as a decision-making factor are elusive, and many Democrats doubt the credibility of those statistics.

Tim Monger, who served as executive director of the Indiana Department of Commerce under Democratic Governor Joe Kernan and is now a site selection expert at the commercial real estate firm Cassidy Turley, says right-to-work may in fact draw some employers to the state. He says some of his manufacturing and distribution clients do rule out Indiana as a possible location because it does not have right-to-work. Still, he emphasizes that it is only one piece of a very large puzzle. “It’s just one of a number of factors that companies will consider,” he says. “Where it ranks, I’m not really sure.”

Many of the measure’s supporters also see an advantage in Indiana’s geography: It borders only non-right-to-work states and would be the only Midwestern industrial state to have such a law. “I think whichever of the Midwest states does it first will have an edge in terms of job growth and bringing new employment,” says Republican Representative Jerry Torr, the bill’s House sponsor. “Michigan and Ohio would probably fall like dominoes shortly after because they would have to in order to compete.”

Top priority

For the past few weeks, the Indiana Statehouse has faced the frequent absence of enough Democratic representatives to conduct business as the legislature turns its attention to the right-to-work issue. Last year, Indiana House Democrats staged an ultimately unsuccessful five-week walkout to protest other Republican legislative initiatives. Governor Mitch Daniels persuaded legislators to shelve right-to-work last year to focus on educational issues, but Daniels has thrown his full support behind the right-to-work bill this year. The Republican majority has made the measure its top priority and hopes to pass it before the Super Bowl comes to Indianapolis on February 5.

In the nation as a whole, 22 states have a similar law in place, mostly in the South and West; a New Hampshire right-to-work bill was vetoed by Democratic Governor John Lynch last year.

Indiana passed a right-to-work law in 1957 only to repeal it in 1965, after public outrage over the measure helped fuel a shift in party control to Democrats. The AFL-CIO has resurrected language from signs used in demonstrations in that era, including “Hoosiers want life lines not bread lines,” as a way to emphasize that this policy has already been tried and failed.

Indiana Republican Chairman Eric Holcomb says the political risks for his party aren’t the same today because less than 9 percent of the state’s private workforce belongs to a union, compared to more than 30 percent in the 1950s. He expects the issue to play to Republicans’ favor in 2012. But despite the precipitous drop in union membership, blue-collar emotional sentiments still run deep in Indiana. Oklahoma, the only other state to pass a right-to-work law in the past decade, was never as heavily unionized as Indiana to begin with. 

The bill’s eventual passage appears likely in the House, and is virtually guaranteed in the Senate, but Democrats are hoping that slowing the process down will allow them to educate the public about the complexities of the issue and possibly convert the bill into a referendum to be put before voters in November. According to a recent Ball State University poll, almost half of Indiana voters remain undecided on the issue. There are questions about whether such a referendum would meet constitutional muster, but House Republicans have agreed to allow consideration of a referendum in exchange for Democrats’ participation in day-to-day legislative proceedings.

Free riders

A central disagreement in the debate involves just how much of a burden right-to-work would be for unions in the state. The Wall Street Journal editorialized January 10   that “Big Labor portrays right-to-work as a radical change, but it merely lets individual workers decide if they want to join a union.” Many Republicans argue that unions are exaggerating the impact it would have and that, as long as unions are providing a good product for their workers, they will continue largely unscathed.

But many Democrats argue that a right-to-work law would create a serious free-rider injustice. Spared the obligation to pay union fees, they say, many workers would skip the payments while continuing to enjoy the benefits that fee-paying workers negotiate for them. Right-to-work, says Democratic Leader Patrick Bauer, would enable so many “freeloaders” that it would lead to unions’ gradual decline if not certain demise. “The evidence is that most union members like their unions and want to be in a union,” says Nancy Guyott, president of the Indiana AFL-CIO. “That’s not really the issue. But there’s always going to be a certain amount of the population that will take something for free if they can get it for free.” 

Robert Warnock, president of Teamsters Local 364 in South Bend, worries about the divisions and resentment the change might cause in his unit. “You’re on this assembly line working, or you’re a flight attendant, and nine of you are in but one of you is not,” he says. “That one is getting that exact same health and welfare, pension, wages, holidays that you are, and has the same complaint process. It’s human nature that it creates division.”

Warnock knows that if the bill passes he will have to be careful to represent non-union members in the grievance process at least as aggressively as members or risk punitive action from the National Labor Relations Board. “People start saying, is it worth it or not? We’re going into negotiations, and of 100 people we only have 50 signed up and the company knows that, so what kind of clout do we really have?”

Flexibility

At Remy International in Pendleton, Jay Pittas doesn’t consider himself to be anti-union. In many ways, he says, he prefers working with unions to managing non-organized plants. In any case, Pittas says that compensation is determined based on going rates in a particular location and would be unlikely to fluctuate because of right-to-work.

Still, Pittas says the issue is likely to make the difference in site selection for the company’s new plant, both because of the business-friendly orientation that being a “right-to-work state” signifies and the practical implications for collective bargaining negotiation. Pittas’ experience in overseeing factories in right-to-work states such as Oklahoma and Virginia leads him to believe that giving people the ability to opt out of paying union fees would allow him to build the kind of plant he wants to run in ways that wouldn’t be possible without a right-to-work law.

For example, he believes he would have an easier time negotiating more flexible work rules if a right-to-work law is in place. If members have the ability to opt in or out of paying fees, Pittas argues that unions will be more willing to agree to a more merit-based system instead of requiring seniority to dictate everything from whom he has to use for overtime to whom he has to lay off first if the economy tanks.

“In a right-to-work state, you have the right to opt out, so the union is going to fight for a contract that’s going to meet the whole goals of the facility better than they would in a non-right-to-work state,” he says. “In order to keep you satisfied with the union, they’re going to make sure that your needs are met.”