Clark's Cone of Silence

A unique look at economic development in the region

Colorado has the best labor law in the nation

For many companies seeking a new location, a right-to-work state is often in the top-criteria. This is increasingly common among foreign companies, who, saddled with often onerous work rules in their countries, are seeking a labor environment where the companies have greater flexibility in job descriptions and duties.

Right-to-work laws do not require an employee to join a unionized company or to pay dues for representation, while union shops do. Right-to-work does not keep workers from unionizing the shop floor, but the workers are not compelled to join the union or pay dues. Organized labor has often criticized right-to-work, since the union still represents those workers who have chosen not to join the union, but still get union benefits.

Recent conversations with national site selection consultants 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 “vote-to-have-a-vote” 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 75 percent plurality. If the vote is successful, all employees must pay union dues and belong to the union. I’ve always thought that if 75 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, we examined the economic performance of Colorado, right-to-work and union states through three recessions. 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!

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—significantly higher than right-to-work states—and somewhat higher than Colorado’s 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. 

We performed the same analysis recently, examining Colorado’s job growth and wages during the Great Recession. Once again the data did not disappoint. Colorado’s job growth was nearly six times that of unionized states and double that of right-to-work states.

Still, the national site selection consultants and company executives might believe that Colorado is a union shop state. Why? Because business magazines portray union shop versus right-to-work states as the only two options—you 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 should shout it from the mountain tops.

Significant changes are brewing in traditional labor union states. Wisconsin and Michigan have recently become right-to-work states. Poor Illinois, a state where I spent my early years in economic development. The Land of Lincoln is now surrounded on three sides by right-to-work states – Wisconsin, Michigan, and Indiana. We shall watch the changes in these four states in the coming years. We’re pretty certain of what we will see.

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About Tom Clark

Tom has over 30 years of economic development experience at the state, regional, and local levels, spanning from Illinois to Colorado. He is known both for his quips and his candor. Often quoted in the local and national press on Metro Denver’s economy, his iPhone is his most valued possession next to his Les Paul guitar. He is also famous for writing parody songs, maintaining an orderly office, and funding the office swear jar. Tom says that if wasn’t an economic developer, his dream would be to work in a chocolate factory.

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About The Cone of Silence

Invented by Professor Cone from TV’s "Get Smart," the Cone of Silence was designed to protect the most secret of conversations by enshrouding its users within a transparent sound-proof shield. Unfortunately, from experience, we have also learned that it never works properly. This blog offers those outside our “Cone of Silence” a unique look at economic development in the region.

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