Phil's Thoughts

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Economic Development and Right-to-Work Laws

For many companies seeking a new location, a right-to-work state is often in the top ten criteria, while union shop states can be less attractive. This is increasingly common amongst foreign companies. Right-to-work laws do not require an employee to join a unionized company or to pay dues for representation, while union shops do.

In a recent conversation with national site selection consultants, they confirmed that a right-to-work state is frequently a must have requirement of their relocating or expanding corporate clients. What the consultants didn’t know is that Colorado is neither a right-to-work state nor a union shop state. And we have proof that Colorado has the best union/labor law in the nation.

In 1943, the Colorado legislature, seeing the rise of protracted union-initiated strikes, set about developing a Colorado law that would assure the right of employees to operate under union rules if they chose to, but also required a high bar for labor unions to create union shop companies. This resulted in the Colorado Labor Peace Act.

Unlike union shop states where a single election or more than 50 percent signatures are required to create a union, the Colorado Labor Peace Act requires two votes. The first is a ‚Äúvote-to-have-a-vote‚ÄĚ and requires an affirmative vote from 50 percent, plus one of the employees within the company. If the required votes are attained, the second vote (to have union representation) requires a 70 percent plurality. If the vote is successful, all employees must pay union dues and belong to the union. I‚Äôve always thought that if 70 percent of your workers want a union, you probably deserve one.¬†

When a Democrat-controlled Colorado House and Senate delivered a union shop bill to Governor Bill Ritter’s desk in 2007, our research indicated that the proposed law was not in Colorado’s best economic interest. But there was a surprise, neither was a right-to-work law!

The underlying goal of economic development is to ‚Äúgive greater and greater numbers of people, greater access to wealth through well-paying job opportunities.¬†‚ÄĚWith that goal in mind, we examined three recent recessions to see how the Colorado Labor Peace Act performed against union shop and right-to-work states.

Our analysis found that right-to-work states enter into recessions sooner than both the state of Colorado and union shop states, however; they also exit recessions sooner. But union shop states remain in recessions much longer than either right-to-work states or Colorado. Lastly, union shop states have higher hourly wages‚ÄĒsignificantly higher than right-to-work states‚ÄĒand somewhat higher than Colorado‚Äôs wages.¬†

Our conclusion is that the Colorado Labor Peace Act is the best union labor law in the nation. Right-to-work states pay lower wages; union shop states stay in recessions much longer while prolonging economic loss. Colorado is at a sweet spot right between the two more common options. 

Gov. Ritter ultimately vetoed the proposed statute; a right-to-work initiative was subsequently placed on the ballot, but failed. 

Still, the national site selection consultants might have believed that Colorado is a union shop state. Why? Because business magazines portray union shop versus right-to-work states as the only two options‚ÄĒyou either are or are not. Whenever there is a two-color map illustrating union status, Colorado is shown as a union shop state.

The consultants were surprised to learn of the Colorado Labor Peace Act. Colorado has a showpiece labor relations law; they suggest it’s time that we promote it proudly.

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About Phil Kalin

Phil Kalin joined Pinnacol Assurance as CEO in 2013. He has served as the chief executive of both public and privately-backed companies, including large hospital systems, as well as organizations focused on health care data, technology and education. He has been active nationally on health care topics related to insurance, data analytics, technology innovation, cost improvement and risk mitigation. Phil is providing an informed opinion on what we see in the Monthly Economic Indicators.

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About Pinnacol

Pinnacol Assurance is the Metro Denver EDC's Research Sponsor. Pinnacol is Colorado’s leading provider of workers’ compensation insurance. Pinnacol provides comprehensive, competitively priced coverage; immediate attention to claims; a highly qualified network of medical providers; and proactive safety programs to more than 55,000 Colorado businesses. Annually, Pinnacol supports nearly $500 million of Colorado’s economic activity, spends over 35,000 hours keeping Colorado worksites safe and provides compassionate care to over 40,000 Coloradans injured on the job.

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