Labour Contests Fraser Institute Report

labour | BCBusiness

B.C. Federation of Labour and conservative think tank draw opposing conclusions about economic impact of union membership

A Fraser Institute report claiming B.C. would see an economic boost if its workers were allowed to opt out of unions is being labelled as shortsighted by the province’s leading labour organization.
 
B.C. Federation of Labour president Jim Sinclair says the report, which applies the results of so-called U.S.-style “right-to-work” laws to B.C., ignores the impact of higher-paid unionized employees on the provincial economy.
 
“When a union movement is strong and vibrant, the economy is stronger and vibrant,” says Sinclair.
 
The Fraser Institute study says B.C.’s economic output would increase by $3.9 billion or about $844 per capita and 19,000 additional jobs would be created if the province enacted right-to-work laws similar to those now in place in 24 U.S. states.
 
The laws allow workers to opt out of paying union dues, which the Fraser Institute says results in lower union membership “while increasing economic and employment growth.”
 
The report claims the laws helped to increase employment in those states by one per cent and to increase economic growth by 1.8 per cent.
 
“Worker choice laws don’t prevent unionization but they give workers a choice. And when workers have a choice, they choose unions less often,” says Jason Clemens, Fraser Institute executive vice-president and co-author of the report. The report was released after the Labour Day holiday, which is considered a time to celebrate the union movement in Canada.
 
In U.S. states with the laws, union membership in the private sector is 3.9 per cent, compared to 10 per cent for those states without the laws, the report says. Private-sector unionization was 18.1 per cent in B.C. in 2012, according to the report.
 
Canada follows what’s known as “the Rand formula,” which makes the payment of union dues mandatory, based on the argument that they receive other benefits from being a member. The Rand formula was introduced by Supreme Court of Canada Justice Ivan Rand in the mid-1940s following a labour dispute at Ford in Windsor, Ont.
 
The Fraser Institute study uses the example of Oklahoma, which became a right-to-work state in 2001. Citing what it calls a “conservative application” of its findings, it claims a right-to-work policy would increase manufacturing output in B.C. by about $200 million and that manufacturing output would increase by more than 5 per cent over 25 years.
 
Previous studies in the U.S. have shown right-to-work laws have had no impact on the performance of state economies. In 2011, a report from the Washington, D.C.-based Economic Policy Institute said 7 of the 10 highest unemployment states had the laws, and that they contribute to lower wages for both union and nonunion workers by an average of $1,500 per year. It also said the laws reduce chances of workers receiving health care insurance or pension benefits.
 
Unionized workers in B.C. earned an average of $5.12 more an hour than non-unionized employees in the province last year, or $27.10, according to the Canadian Labour Congress.
 
The B.C. Federation of Labour’s Jim Sinclair points to that wage disparity as a significant economic stimulus: “The backbone of many communities are the union wages from the mill or the mine, or the hospital or the school board,” Sinclair says. “If people aren’t getting paid well they aren’t spending money, they aren’t paying taxes to support the local school, they aren’t buying a new car.”