More to labor issue than basic economics

previously published in the Terre Haute Tribune Star (1/22/2012)

Right-to-work (RTW) is another of Gov. Daniels’ crises of the season. From daylight-savings time to leasing the Indiana Toll Road, to privatizing (and substituting computers for people) welfare offices, overseeing significant rollbacks in governmental services (BMV), property tax caps, and school reforms, Gov. Daniels isn’t afraid to lead the state into political turmoil.

To be fair, Gov. Daniels didn’t want the RTW fight. But he couldn’t find any traction among Republicans for his reform agenda (sentencing reform and local government reorganization), so he’s following the Republican lawmakers instead. Nevertheless, he has made RTW his number one issue and will no doubt take credit for this dubious “job-creating” policy. Indeed, almost everything Gov. Daniels has done has been justified as economic development. How is that going anyway?

For the record, I have made public statements at academic conferences that I do not favor “closed shops.” I understand the free-rider problem (non-members receive the benefits of collective bargaining without having to financially support the costs of achieving those efforts). I’d think Republicans would understand that, too, as they are quick to point out free-riders all the time (welfare recipients). I think closed shops lead unions away from continually making their case. Never underestimate the power of peer pressure.

I’m disappointed in both the unions’ and Democratic Party’s response to RTW. By focusing so narrowly on pay, they miss so much more about the impact of unions on the Indiana workplace. I’d like to see them reframe the question from right-to-work to “rights-at-work.”

Indiana, as most states, is an “employment-at-will” state. This legal doctrine essentially states: a person employed for an indefinite period is employed “at-will” and either the employee or the employer may terminate the employment relationship at any time for any reason or no reason and without notice. Those who work under a contract are not subject to “employment-at-will.”

There is not enough room here to go into the intricacies of how the law has evolved around employment-at-will, but think of it this way: the legislature (or Congress) and the courts can make public policy exceptions (law) to the doctrine. The broadest exceptions are in the area of demographic discrimination and for when an employee refuses to do something that is illegal (perhaps immoral). Indiana is known as one of the least fettered by public policy exceptions employment-at-will state. Stated another way, Indiana is a state where an employer is the freest to fire employees “at-will;” or, a state where employees have the fewest rights at work.

Over time, the Indiana Supreme Court (ICS) has preserved the employer’s right to fire in cases that, in my experience, really open the eyes of lay people. For instance, the ICS ruled that an employer was free to fire an employee for marrying someone the employer did not approve of. Unless a whistleblower is protected by a very narrow statute, even an employer engaged in illegal activities can legally fire a worker for informing authorities about it. One exception to “employment-at-will” is for an employee exercising their constitutional rights, such as filing a lawsuit against their employer. Indeed, the ICS reinstated an employee who was fired for filing in small claims court over travel expenses. The employee prevailed in the suit but was fired again when he tried to collect his claim.

Back to the ICS. It found that while the employee had the right to sue, he had no right to collect. It is safe to say that suing an Indiana employer for wrongful termination is very, very hard.

Hence, I wish the opposition to RTW would point out how union workers are not subject to the capricious will of employers. And this is becoming a bigger issue as employers mine deeper into their employees’ off-work activities, especially as it relates to health care. Employers are firing employees who they deem too expensive for their health-care plans or who engage in otherwise private behavior they disagree with. Should an employer be able to dictate an employee’s diet, their preferred form of recreation, their political affiliations?

More than just higher pay, union employees can’t be fired for such nonsense. Why? Because their union negotiates a contract on their behalf to protect them from such things. RTW is about undermining collective bargaining and thus those protections.

It may be that most employers respect “boundaries” and would never fire an employee for such ridiculous reasons as not liking who they married. But unless you are working under contract, they can.