SANTA FE – With New Mexico lawmakers poised to take up politically charged right-to-work legislation in a 60-day session that begins Tuesday, debate is already in full swing over what the change in labor laws would mean to New Mexico’s sluggish economy.
While juries are still out in some states that have adopted right-to-work laws, many business leaders and business-friendly lawmakers maintain they are key incentives to drawing new industry to job-hungry states.
Both sides of the debate roll out statistics.
The AFL-CIO and other opponents cite studies that employee wages in non-right-to-work states are higher than wages in right-to-work states – by more than $1,500 per year. Supporters have studies that show compensation and employment rates are higher in right-to-work states.
An analysis by the National Right to Work Committee found employment levels had gone up by 2.4 percent from 2001 through 2011 in right-to-work states, while non-right-to-work states had seen their employment levels dip by more than 3 percent.
Results are not uniform. Former Oklahoma Gov. Frank Keating, speaking at the Domenici Public Policy Conference in Las Cruces last year, cited passage of a right-to-work law as a factor in helping his state move up the per capita income ladder.
But the number of new manufacturing jobs in Oklahoma actually decreased in the years after the 2001 law took effect, according to a report from the left-leaning Economic Policy Institute.
Then there is Indiana.
When Indiana became the nation’s 23rd state to enact a right-to-work law in 2012, the state’s leaders vowed the new labor law would lead to a flood of companies relocating or expanding there.
Now, nearly three years later, backers of the law say it’s working as intended.
As of last year, more than 80 companies that had factored Indiana’s right-to-work law into their decision-making calculus – and could create more than 9,000 new jobs in all – were in the state’s pipeline, Republican Gov. Mike Pence said.
Gary Tonjes, president of Albuquerque Economic Development Inc., said his counterparts in Indiana report they have seen a wave of “expanded client activity” since the state enacted its right-to-work law.
However, the only business initially cited by state officials as a direct result of Indiana’s right-to-work law – a manufacturer of packaged and printed materials – disputed an assertion the legislation had factored into its decision to expand.
While Indiana’s manufacturing job growth led the nation during a recent yearlong period, housing construction and other economic sectors have lagged behind.
“People have really unrealistic expectations about these laws,” said Kenneth Dau-Schmidt, an Indiana University law school professor who has studied the issue.
“Whether companies really make decisions based on (right-to-work status) has yet to be proven,” he said.
In New Mexico, several right-to-work bills have been pre-filed by lawmakers – all Republicans – in the lead-up to this year’s session.
Details vary, with one version applying to employees in both the private and public sectors, and another affecting only private-sector workers. Another proposal would end state government’s practice of deducting union dues, or fees, from employee paychecks on behalf of unions.
Gov. Susana Martinez, a Republican who has just begun her second term in office, threw her support behind the right-to-work push earlier this month, calling a change to the state’s labor laws “common sense” and long overdue.
Labor union leaders and some top-ranking Democratic lawmakers have pushed back and vowed to fight such efforts, with one arguing right-to-work laws should actually be called “right to work for less.”
Jon Hendry, president of the executive board of the New Mexico Federation of Labor, has argued right-to-work laws are more about weakening unions than job creation, saying, “For us to be able to take part in the political process, we have to be able to collect the money.”
When boiled down, the arguments for and against right-to-work laws follow a similar script across state lines: Are right-to-work laws a critical economic development tool in an ever-shifting economy or an over-hyped union-busting ploy with little economic payoff?
The laws were in response to the federal Taft-Hartley Act, which restricted the activities of labor unions and allowed states to enact laws aimed at barring the practice of employees having to join unions or pay union dues as a condition of having a job.
Congress approved the 1947 act over a veto by then-President Harry Truman, who called it “bad for labor, bad for management and bad for the country.”
Currently, there are 24 right-to-work states, with Indiana and Michigan being the latest to enact such laws.
Before those two states, just one other state – Oklahoma – had approved a right-to-work law since 1993.
But there’s been recent resurgence in right-to-work interest. In addition to New Mexico, right-to-work legislation has prompted fierce debate in recent weeks in Kentucky.
The renewed push for right-to-work legislation in New Mexico was prompted by a Republican takeover of the House in the November general election and Martinez’s decisive re-election win, though Democrats still hold a majority in the Senate.
Recent attempts to pass right-to-work bills have been stymied in the Democratic-controlled Legislature. When right-to-work bills were last approved by New Mexico lawmakers, the legislation was vetoed by Democratic Gov. Bruce King in 1979 and again in 1981. King, who served three terms, was strongly supported by organized labor.
Since 1981, 19 right-to-work bills have been introduced in the New Mexico Legislature, but none has made it to the governor’s desk.
Most of New Mexico’s neighbors – Arizona, Texas, Oklahoma and Utah – are right-to-work states that have seen recent economic growth, to varying degrees. Texas, in particular, has added more than twice as many new jobs since 2000 than any other state.
However, Colorado, which is not a right-to-work state, also has seen its economy grow as a spike in construction and oil and gas industry hiring gave the state a job growth rate of nearly double the national average in 2013.
In addition, Colorado had a higher average worker salary – about $48,950 annually – than Texas, Arizona, Oklahoma, New Mexico or Utah as of May 2013, according to U.S. Bureau of Labor Statistics data.
Right-to-work states have landed some sizable economic fish in recent years.
In 2011, the aerospace giant Boeing opened a $750 million factory for its Dreamliner aircraft in South Carolina, a right-to-work state, after union strikes at its main manufacturing base in Washington, which is not a right-to-work state.
The situation ignited a political firestorm, with the federal National Labor Relations Board filing – and later dropping – an unfair labor practice case against the aircraft-maker for putting its new plant in South Carolina.
Bill Luttrell, a senior locations specialist with Werner Enterprises in Omaha, Neb., who originally hails from New Mexico, said right-to-work laws are not usually as important as other factors like availability and cost of labor.
But right-to-work status can be critical upfront when companies are considering what states to do business in, Luttrell said.
Other site selectors agree.
Tracey Hyatt Bosman, the managing director of BLS & Co., a Chicago-based corporate relocation and expansion advisory firm, said about one-third of her manufacturing clients screen out non-right-to-work states.
“They will not even look at a state that is not right-to-work,” she said in a recent interview. “Our clients are looking at it and using it as a bellwether for the business-friendliness of a location.”
States that don’t adopt right-to-work laws will increasingly be at a disadvantage as more states adopt such laws, said Hyatt Bosman, whose firm’s clients have included Fortune 500 companies like Campbell Soup Co., JP Morgan Chase and Verizon.
Attempting to gauge the impact of right-to-work laws is difficult, because states have different regulatory climates, tax rates and other factors that can influence business decisions and economic growth.
Indiana University law professor Dau-Schmidt said businesses typically look at states’ tax climate and workforce makeup before considering their right-to-work status, adding, “There’s dozens of things on the list that are more important than that.”
The impact a right-to-work law would have in New Mexico, which is not a heavily unionized state, remains unclear.
Tonjes of AED said New Mexico would immediately become a possible site for an increased number of job-creation projects.
“We believe New Mexico would see increased client activity that would lead to a greater number of announcements from new employers in the private sector expanding into the state,” Tonjes told the Journal in response to a question about such a law’s potential impact. “New Mexico would benefit from a more diversified economy.”
Rep. Antonio “Moe” Maestas, D-Albuquerque, questioned whether the New Mexico economy would benefit as a whole from right-to-work legislation, saying the business community has overlooked a key point.
While there’s a dispute over whether such laws actually spark job creation, he claimed other states’ experiences show any such jobs would likely be lower paying.
“Hopefully, in the Legislature we can look at this bill from a practical standpoint and not from an ideological standpoint,” Maestas told the Journal.
Of roughly 751,000 total workers, New Mexico had about 46,000 union members in the private and public sectors in 2013, according to the U.S. Bureau of Labor Statistics. That 6.2 percent union membership rate was far lower than the national average of 11.3 percent.
In all, about 55,000 workers were represented by unions in the state in 2013, meaning roughly 9,000 employees paid union dues but were not union members. Many of New Mexico’s union members are government employees, though private-sector industries like carpentry, film industry, plumbing and communications jobs are also frequently unionized.
Journal staff writer Rosalie Rayburn contributed to this report.