Economic Development, Government, and Human Resources

Indiana’s claims of RTW success disputed

Snyder used those reports to endorse Michigan’s right-to-work legislation.

December 22, 2012
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A heavily documented analysis by a liberal-leaning, economic think tank has concluded the principal reason Gov. Rick Snyder supported right-to-work legislation is pure bunk.

Snyder, who once considered the issue too divisive for the state, said he primarily backed the legislation because Indiana had showed incredible economic investment and job gains since it instituted Right to Work. Because of that news, the governor said he didn’t want Michigan to fall behind so he signed the bills that gave the state a RTW designation.

But the Economic Policy Institute in Washington, D.C., reported the job gains and new investments Indiana officials cited as being due to RTW actually came before the legislation took effect. The report said Indiana’s RTW law was signed last Feb. 1 and applied to labor contracts enacted after March 15. The Indiana Economic Development Corp., however, began claiming on Feb. 29 that jobs had come to the state because of RTW.

“The rules for enforcing Indiana’s right-to-work statute were only published on Aug. 29, 2012, and became effective on Sept. 12, 2012. Furthermore, the law is currently being challenged in both state and federal courts. On Oct. 16, 2012, a circuit court judge denied the (Gov. Mitch) Daniels administration’s motion to quash the suit, ruling instead that ‘it cannot be categorically said at this time that IC 22-6-6 does not violate Article 1, Section 21 of the Indiana Constitution,’” read the report.

EPI added that having RTW in the courts would cast uncertainty on its future, and most business executives would likely wait until the law’s legal status is resolved before investing in the state.

The report cited Gov. Mitch Daniels as saying in March that the MBC Group was creating jobs in his state because of RTW. The firm denied that was the case. An MBC executive said, “RTW wasn’t going to affect our decision one way or another,” and that the company’s plan to expand its operations in Brookville was made before the legislation became law.

More claims — but this time from the IEDC — were also disputed by the EPI analysis. The IEDC said Busche, Steel Dynamics, SealCorp USA and Whayne Supply were attracted to Indiana by RTW. However, the EPI report said all four were already operating in the state years before RTW — as early as 1997, in one case — and had received incentives from the IEDC for expansions before the law came about. In addition, the report said Whayne Supply is building two new operations, but both are going to Kentucky, a non-RTW state.

“That Indiana officials count each of these companies as firms whose facilities were drawn to the state because of RTW raises serious concerns regarding the reliability of IEDC claims as to the law’s impact,” read the report.

EPI said IEDC’s Legislative Update did not identify one company that came to the state because of RTW.

Four companies have left Indiana, or are planning to, since RTW became law there.

The full analysis, called “Indiana Experience Offers Little Hope for Michigan Right-to-Work Law,” is available at epi.org. One of the report’s three authors is Nancy Guyott, current president of the Indiana AFL-CIO and a former Indiana labor commissioner.

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