Sunday, January 29, 2012

Neighbor Gets It Right....

Our neighbor to the north, Indiana, is on the verge of becoming the 23rd state to enact a Right To Work law. The legislation passed the Indiana House on Wednesday and with a Republican controlled Senate and the strong endorsement of Governor Mitch Daniels, the legislation is on the fast track to becoming law. Indiana would be the first state in ten years to enact such a law and will presumably create more momentum for other states to follow suit.

Under the new law, unions would be banned from collecting mandatory fees from workers. Unions are understandably upset because this will greatly limit their ability to generate campaign dollars for union friendly (read Democrat) politicians. They are waging a mighty battle against it, but it appears at this point that the battle is lost in Indiana.

Unions need to face up to the fact that they, in their current form, are facing functional obsolescence in this country. When we had a relatively closed economy, we could afford the luxury of unions. There was a time when almost all products were made in the United States and workers could negotiate higher wages because they had little competition. Management was forced to meet many of their demands. Unfortunately for the unions, we now live in a global economy where capital and wages can quickly flow to cheaper labor markets. Union members that make $30 an hour do not understand that they are not competing anymore against American non-union workers making $20 an hour, they are competing against Asian and Indian workers making $5 an hour. Their alternatives are no longer between high union wages and lower non-union wages, they are between non-union wages and unemployment, as so many have painfully learned.

Unions are not intrinsically bad and they have done positive and beneficial things for many workers over the years. The reality though is that things change and that they are no longer viable, in their current American form, in the global economy. One would hope that smart and progressive union leaders could see this reality and proactively make changes to make unions more competitive and relevant, but this does not seem likely. In the meantime, progressive states like Indiana and 22 others will reap the benefits of increased business and investment from non-union companies.

Indiana has strong, forward looking political leadership that is looking out for the best interests of a majority of its citizens. One can only hope that Kentucky could be so lucky.

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