Could US Right-to-Work Laws Drive Canadian Jobs to the New South of the Border?

An interesting piece from Michael Babad of the Toronto Globe and Mail looks into whether Canadian unions are being negatively affected by American “Right-to-Work” (RTW) states. While RTW legislation has traditionally been the norm in the American south, the decision by the Michigan legislature to adopt the anti-union legislation has placed the issue on Canada’s doorstep.

Taking a deeper look at the work of economists Avery Shenfeld and Emanuella Enenajor, Babad suggests that the wanes in union representation in Canada may have something to do with Michigan’s shift:

According to Employment and Social Development Canada, the number of workers covered by collective agreements rose through 2011, the latest year for which numbers are available, to almost 4.7 million people.

That gain of about 37,600, however, meant that the “coverage rate” for workers outside of the agriculture sector dipped by January of 2012 to 29.9 per cent from 30.2 per cent a year earlier.

Important here is that it marked the first time below the 30-per-cent mark since 1965.

Even if the legislation has not created an exodus of jobs among unionized Canadian workers, it may be limiting their power to collectively bargain for higher wages, with the possibility of companies moving their operations across the border now a logistic reality. Recent data shows that “pay hikes averaged 1.5 per cent in the major contracts reached in August of this year, down from 2.3 per cent in the previous labour pacts among the same groups, though still better than the rate of inflation.”  According to CIBC economists:

Notable, too, is that wage hikes in collective agreements sank to a 14-month low of 1.7 per cent last year, well down from 3.3 per cent in 2007 and the slowest pace since 1998. Still, that 1.7 per cent slightly topped inflation of 1.6 per cent.

“Challenging economic conditions in 2012 influenced the climate of negotiations and consequently affected collective bargaining outcomes and the magnitude of wage increases in particular,” the government said in its latest report, in May.

“Public-sector wage restraint and a fragile economic recovery were key factors in the continuing trend toward wage moderation in 2012 major settlements,” it added.

Economists Shenfeld and Enenajor touch on this briefly in their report stating:

“Declining unionization coverage could also be a modest factor, reducing worker bargaining power, particularly as Canadian workers now compete with ‘right to work’ states south of the border,” said Mr. Shenfeld and Ms. Enenajor.

“That could reduce the wage inflation pace at any given level of unemployment.”

Lowering wages by limiting union ability to bargain is a main goal — albeit shrouded — of “Right-to-Work” legislation. A “Right-to-Work” victory in one state is a victory for all anti-worker capitalists because threats to move operations where labor representation is suppressed gain power. Given the global nature of the economy, it is inevitable that the limitations such laws impose in the U.S. will eventually affect workers in Canada and beyond.  

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