On Feb. 1, Indiana became the first state in the Midwest to adopt "right-to-work" legislation, which prohibits companies from negotiating a contract with non-union members to pay fees for representation. Critics argue such legislation depresses wages and reduces benefits, while proponents say it creates a business-friendly environment.
Labor and law professor Michael LeRoy is an expert in collective bargaining and labor disputes. In an interview with News Bureau business and law Editor Phil Ciciora, LeRoy discusses the impact of the controversial legislation.
Will this legislation bring new businesses and jobs to Indiana, as Gov. Mitch Daniels has predicted?
That's a very doubtful proposition, as firms usually consider a wide variety of factors when establishing a plant or a facility. Labor law is certainly a consideration, but there are so many other factors that are more important, including the tax environment, the logistics of the actual site itself and the overall business climate. This type of legislation is just one indicator of the business climate of a state.
How big of a blow is this to organized labor? Will this lower the wages of unionized workers in Indiana?
It's a real dent in labor's ability to make an impact for workers. It certainly will make funding for union organizing and policing of contracts much more tenuous. I do think that this sets the table for a reduction in the enforcement of worker rights, and it also creates a climate for downward pressure on wages in Indiana.
Do you foresee this legislation driving businesses now in neighboring states - in particular, Illinois - to Indiana?
There might be a few outliers - an anecdote or two about a certain employer for whom this is the tipping point and they move across the border to Indiana and herald the relocation and claim that it's because of this right-to-work law. But it is not going to lead to a mass exodus of jobs from Illinois to Indiana.
Will Indiana's actions embolden other states to adopt similar legislation?
It will certainly embolden supporters of right-to-work legislation, and there are similar bills pending in other states in the Midwest. This will encourage that movement, but I would note that, in the 1960s, Indiana was a right-to-work state. So it's gone back-and-forth on this issue.
In these labor-management legislative contests, there is always an action and a reaction, and sometimes the reaction is stronger than the action. So these laws have the somewhat ironic effect of energizing and mobilizing union members, their families and their supporters. Just look at the backlash that has occurred in Wisconsin as a result of Gov. (Scott) Walker's anti-union tactics.
Today, it's a victory for employers. An interesting question is, does this put Indiana back in play for Obama in November? The conditions are ripe for union voters to make it to the polls and have their voices heard.