GHEI: Right-to-work advances

OPINION:

It looks like the Hoosier State may no longer force employees to pay tribute to union bosses if they want to keep their jobs. The Indiana House adopted a landmark right-to-work bill Tuesday that’s on track to breeze through a GOP-dominated Senate toward the willing signature of Republican Gov. Mitch Daniels.

Twenty-three other states have similar statutes that say employees cannot be forced to join a union or pay union dues as a precondition of employment. It’s no coincidence that the states playing by these rules are some of the economy’s best performers, such as Texas, Tennessee and even Alabama. These locations boast the highest job-creation rates, a vital factor for suffering Americans in these days of 8.5 percent unemployment. Even the Federal Reserve doesn’t expect that dire figure to budge more than a few tenths before the end of the year.

So it is up to states to create a regulatory environment conducive to private investment. They must do so not by picking winners and losers but by reducing the regulatory burden and lowering the cost of hiring and doing business. One way to accomplish this is to put a right-to-work law in place, just as Indiana is doing.

Union bosses hate giving workers choices because it reduces the power of the labor goons. They claim union membership protects workers by securing higher wages and better working conditions. There is some truth to that because the insiders - union members - can often be seen cashing fatter paychecks.

What is not seen are the negative side effects: the jobs that are not created and the people who are left unemployed because workers are too expensive to hire. The ones left out in the cold are the most vulnerable, the least skilled, the ones without connections or a network - in short, the outsiders. They don’t get hired because the unions have negotiated a wage that is high enough that an employer can no longer afford to hire and train them.

Without unions standing in the way, these unskilled workers have a shot at getting hired, even if at a lower wage. They would then have a shot at acquiring skills and moving up. The other benefit of a right-to-work law is those who have jobs now will no longer be coerced into forking over some part of their wages as dues if they choose not to join the union.

Freeing up markets is the key to delivering such benefits. As Nobel economics laureate Vernon Smith has shown, markets work well when it comes to making sense out of fragmented information. That’s the exact skill - aggregation of information - that governments lack. That’s why the best policies are broad-based ones like Indiana’s right-to-work law, not ones that attempt to select winners and losers. This is in sharp contrast to the way the federal government currently operates, attempting to target industries from automobiles to renewable energy to aircraft with less than stellar results.

By not picking winners and losers, Indiana is well on the way to leading the Midwest in job creation.

Nita Ghei is a contributing Opinion writer for The Washington Times.