By Charles Lammam
and Hugh MacIntyre
The Fraser Institute
It’s time to seriously reflect on ways to improve our country’s labour relations laws, which govern the interaction between workers, unions, and employers.
Currently, workers in Canada’s private sector can be required to join a union and pay full union dues as a condition of employment. If governments were to reform the laws to ensure workers have a choice about joining and financially supporting a union, this would empower workers, encourage unions to be more accountable, and contribute to a stronger labour market and economy.
Union accountability has traditionally been lacking in Canada, especially when it comes to the disclosure of union finances. The recent passing of Bill C-377 is a step forward as this new federal law will require unions to publicly disclose key financial information (such as expenditures, revenue, and their financial position) and details on how much money and time is spent on activities not related to representation (such as political and social causes).
And yet, while the new law makes it easier for workers and interested third parties to learn how unions spend union dues, Canadian workers can still be forced to join a union and pay full dues, even if they disagree with the causes unions support financially. This can put workers in the very difficult position of choosing between financially supporting a cause they disagree with and leaving their job.
By contrast, the minimum standard in the U.S. is that workers are only required to pay partial dues and can opt-out of dues allocated to non-labour representation activities including political lobbying. Twenty five states have expanded on federal law, allowing workers to opt-out of full union dues (the so-called Right-to-Work states). The roster of Right-to-Work states is growing, with traditional union strongholds like the state of Michigan recently enacting legislation. In all U.S. states, workers can opt out of union membership.
Notably, unionization rates tend to be lower when workers have more choice. In Right-to-Work states, the private-sector unionization rate is 4.7 percent – about half the rate in non-Right-to-Work states (9.6 percent) and around a quarter of the Canadian rate (16.8 percent).
Worker choice laws don’t prevent unionization. They empower workers with choice. And the experience in the U.S. suggests that union leaders become more accountable and responsive to their members when workers have more choice.
With worker choice, union leaders must convince workers the union provides value that justifies the cost of paying dues. In other words, union leaders can’t take the financial support of workers for granted and have a stronger incentive to be more accountable and responsive to dues-paying workers.
Interestingly, a recent American study found that union workers in Right-to-Work states pay dues that are, on average, 14 to 15 percent less than union members in states with less worker choice. The study also found that salaries of union executives tend to be lower in Right-to-Work states.
A growing body of research also points to worker choice laws leading to a stronger labour market and economy. One recent study found that, from 1977 to 2010, worker choice laws were associated with a 1.8 percent spike in state-level economic growth and a 1 percent jump in employment levels.
The economic advantage that comes with increasing worker choice is particularly important for provinces like Ontario because an increasing number of nearby American states (Michigan, Indiana and Wisconsin) have recently enacted Right-to-Work laws. While there aren’t any quick fixes to Ontario’s economic woes, giving workers more choice would be a good start. The same goes for other provinces.
A good place to start to improve our country’s labour relations laws is ensure worker choice.
Charles Lammam is director of fiscal studies and Hugh MacIntyre is a policy analyst at the Fraser Institute. They are co-authors of Improving Union Accountability with Worker Choice.