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 “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 70 percent plurality. If the vote is successful, all employees must pay union dues and belong to the union. I’ve 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 “give greater and greater numbers of people, greater access to wealth through well-paying job opportunities. ”With 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—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. 

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—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 we promote it proudly.