Stagnant middleclass wages – and the resultant decline in our standard of living – have only one way to go, according to Ontario PC leader Tim Hudak: down.
In citing the case of the Electro-Motive Diesel plant in London as a rationale for his proposed right-to-work legislation in Ontario, PC leader Tim Hudak is admitting he wants to see your wages go down.
That company, you may recall, closed up shop in Ontario and moved to Indiana, recently converted to a right-to-work state. U.S. giant Caterpillar, through its subsidiary Progress Rail Services, did away with some 450 jobs in London in favour of employees willing to work for half the pay.
Such is the way with anti-union legislation in the U.S., where such measures have been in use since the 1940s and ‘50s, predominantly in the Southern states, as a way to deter unionism. Under right-to-work provisions, workers aren’t obliged to pay dues even in union shops, essentially creating free riders and strangling the unions economically. Often, those locales also employ measures making it difficult to unionize in the first place.
What Hudak proposed earlier this month would do away with the Rand formula, the result of a 1946 ruling by Supreme Court of Canada Justice Ivan Rand that was designed to ensure an employee could not opt out of a union simply to avoid paying dues while continuing to enjoy the benefits negotiated by the union.
This is a political move by Hudak, couched, as is always the case with politicians selling a bill of goods, as an economic boon. Clearly, he’s decided the public’s distaste for public sector unions is strong enough to warrant such a platform. Equally clear is Hudak’s attempt to move to the right, perhaps believing the party too centrist to budge Dalton McGuinty’s Liberals in last fall’s election.
It’s a risky move, says University of Waterloo economist Mikal Skuterud, who studies labour issues. The bulk of Ontarians may not share Hudak’s mindset. Nor would we likely be happy with the outcome if his policies did come into play.
“I’m not sure what type of support there is for that kind of legislation in Ontario,” says Skuterud, noting it would have some “huge hurdles” to clear.
While it might play to the right-wing base, even employers could be wary, as such changes would fundamentally alter a long-established framework for labour relations in this province.
Proponents of anti-union measures argue they would create an environment for more jobs and growth. The data say otherwise. Skuterud notes there’s no indication unionization has any negative impact on employment. They affect how the pie is divvied up, rather than the size of the pie.
“There’s some evidence what unions are doing is sharing rents (profits). There’s no impact on job rates.
“Clearly this is political more than economic,” he says of Hudak’s proposal.
From an economic perspective, the malaise has almost nothing to do with unions, particularly in the private sector. Instead, globalization and trade agreements, the hollowing out of the manufacturing sector and high Canadian dollar, and the ascension of low-paying. part-time service sector jobs have all done far more damage to our economy.
While we can’t call it causation, it’s not surprising that the postwar middleclass boom came as unionized jobs, principally in manufacturing, were at their zenith. Equally, falling union participation rates came during the neoliberal attack on the middleclass that we’ve seen over the last three decades in particular.
Massive job losses in the manufacturing sector, the largest victim of globalization, have taken a toll on private-sector unions in North America. From representing more than a third of workers in the U.S. during the 1950s, unions now include less than eight per cent of private sector employees today.
According to 2010 figures from the U.S. Bureau of Labor Statistics, 18 of the 20 states with the lowest rate of unionization – from about nine per cent in North Dakota and falling to five per cent in North Carolina – are right-to-work states. The highest percentage of workers covered by collective agreements is found in New York, with 26.
In Canada, the decline has been less pronounced, falling to about 30 per cent by 2005, from almost 40 per cent two decades earlier. Blue collar workers experienced the largest declines in union membership, consistent with falling numbers in the goods-producing and distribution sectors, Statistics Canada reports. Private-sector unionization has declined by 5 points in Canada over the last 15 years, to 17 per cent in 2011. Despite being the center of Canada’s automotive industry, Ontario’s unionization rate is the second-lowest in Canada (after Alberta): under 28 per cent in 2011, and under 15 per cent in the private sector.
Right-to-work legislation would undoubtedly see those numbers fall still lower. Making union dues voluntary would be akin to making taxes voluntary: everybody would be happy to opt out … as long as others continued to pay so that we would continue to enjoy the same level of services.
Unionized employees, says Skuterud, enjoy incomes about 15 per cent higher than others in a given sector. There’s spillover effect in each sector – for instance, non-unionized Toyota offers wages in line with CAW employers, largely in order to prevent unionization – but it’s unclear just how much of an impact that has on the wider economy.
One thing is certain, however: right-to-work measures aren’t likely to push our already-stagnant incomes in the right direction.
“Wages aren’t going to go up. The only question is how far down will they go?”