The decline of Maine’s manufacturing sector, whose workforce has shrunk by nearly half since the early 1990s, can seem inexorable, the unavoidable consequence of automation and globalization. In some ways, state policymakers can do little to resist these broader trends. Yet there are policies Maine could implement to re-invigorate our manufacturing industry. Perhaps the most important: Right-to-work legislation.
Right-to-work laws prevent private-sector unions from forcing employees who choose not to join the union to pay union dues. In the absence of right-to-work protections, employees at a unionized workplace must financially support the union or lose their jobs. In Maine, the Bureau of Labor Statistics estimates that 16,000 private-sector employees are represented by unions, though only 14,000 are actually union members. The other 2,000 haven’t joined a union, but are still compelled to give up a portion of their paycheck to fund union operations.
For many workers, unionization makes sense. Collective bargaining gives unions market power and the ability to negotiate compensation above competitive levels. Unions secure higher wages, more generous benefits, and better working conditions for their members. For example, last year nonunion American workers had median weekly earnings that were only 82 percent of what union members earned ($860 versus $1,051). And that doesn’t capture the job security, mandatory promotions, and other perks that are often included in labor contracts.
But the law of demand can’t be avoided. By raising the price of labor, unions reduce the number of employees unionized companies are willing to hire. Union members’ gains come at the expense of consumers, nonunion workers, the jobless, taxpayers, and the shareholders of corporations. On balance, unions typically hurt the economy.
To the extent that unions’ control over the labor supply is weakened, competitive forces will tend to equalize compensation between union and nonunion workers and expand job opportunities for everyone. By giving workers in unionized workplaces the freedom to opt-out of paying union dues, right-to-work laws end a lucrative source of union revenue.
In the heavily-unionized manufacturing sector, right-to-work laws have a big impact. In 1998, an economist found that right-to-work states have much higher levels and growth in manufacturing activity. In the three decades from 1986 to 2016, the share of total U.S. manufacturing output coming from right-to-work states jumped from 29 percent to 50 percent — an astonishing shift of industrial production. And research by the Hoover Institution in 2018 found that right-to-work states have a significantly larger manufacturing base than other states.
When the Chamber of Commerce compared the economic performance of right-to-work states with the rest of the country, it found a substantial gap in manufacturing output: Real manufacturing output rose by over 30 percent in right-to-work states between 2001 and 2016 compared to 21 percent in non-right-to-work states.
Twenty-eight states have right-to-work laws on the books, but not one is located in New England or even the northeast. By passing right-to-work protections, Maine could seize the opportunity to emerge as a regional magnet for manufacturers and other businesses. Workers would benefit, too, as demand for labor grew and average wages rose.
Will politicians in Augusta sit by and watch Maine’s manufacturing industry eviscerated, or will they enact a policy that could actually do some good?