CHATTANOOGA, TENNESSEE - MARCH 20: Employees are seen outside the entrance to a Volkswagen ... [+]
As workers at the Volkswagen plant in Chattanooga begin making their decision on whether to unionize in affiliation with the United Automobile Workers (UAW), state and community leaders across Tennessee and the region are weighing in. In addition to addressing the merits and potential pitfalls of unionization, prominent voices are making the case that unionization of the Volkswagen plant could have a broader effect on the state’s economy, as well as its tax and regulatory climate.
Bradley Jackson, president of the Tennessee Chamber of Commerce and the Tennessee Manufacturers Association, wrote in the March 21 edition of the Chattanooga Times Free Press that “the community should know the dangers that come with joining up with the UAW.”
“Watch what they did in Michigan,” Jackson warned about the UAW. “Celebrated as a big win against the Big Three automakers, last year’s strike actually led to the laying off of 5,000 workers and calcified the economic environment to the degree that industry growth in that state is near impossible for the foreseeable future.”
As a result of that strike, Ford CEO Jim Farley said the company will now have to “think carefully” about where it makes cars in the future. “Our reliance on the UAW turned out to be we were the first truck plant to be shut down,” Farley said in remarks made during the Wolfe Research Global Auto Conference in February.
“Really our relationship has changed. It’s been a watershed moment for the company,” Farley added about the effect of the UAW strike. “Does this have business impact? Yes.”
Public and private sectors leaders in Tennessee are concerned that the UAW’s entry into the state could ultimately make Tennessee a less hospitable place for economic growth-boosting, job-creating investment. Opponents of the UAW’s campaign are concerned this would be the case not only for automobile manufacturing, but for all types businesses.
“The UAW’s expanded presence in Tennessee’s automotive sector could pose significant challenges, restricting worker freedoms and constricting economic growth and opportunity in the state,” Ryan Egly, head of the Lawrence County Chamber of Commerce, wrote in the April 7 edition of the Columbia Daily Herald. Egly added that “the UAW’s influence could hinder Tennessee’s economy by deterring investment and job creation.”
Resistance to the UAW’s efforts in Chattanooga is not limited to Tennessee government and business leaders. On April 16, Governor Bill Lee (R-Tenn.) in conjunction with Governors Kay Ivey (R-Ala.), Brian Kemp (R-Ga.), Tate Reeves (R-Miss.), Henry McMaster (R-S.C.), and Greg Abbott (R-Texas), issued a joint statement expressing opposition to the UAW’s efforts to unionize their constituents.
“We the Governors of Alabama, Georgia, Mississippi, South Carolina, Tennessee, and Texas are highly concerned about the unionization campaign driven by misinformation and scare tactics that the UAW has brought into our states,” the joint statement noted, adding that the reality in 2024 “is companies have choices when it comes to where to invest and bring jobs and opportunity. We have worked tirelessly on behalf of our constituents to bring good-paying jobs to our states. These jobs have become part of the fabric of the automotive manufacturing industry. Unionization would certainly put our states’ jobs in jeopardy – in fact, in this year already, all of the UAW automakers have announced layoffs. In America, we respect our workforce and we do not need to pay a third party to tell us who can pick up a box or flip a switch. No one wants to hear this, but it’s the ugly reality. We’ve seen it play out this way every single time a foreign automaker plant has been unionized; not one of those plants remains in operation.”
The concerns held by Tennessee business and community leaders regarding the effect that the UAW’s entry into their state could have on Tennessee’s tax and regulatory climate over time are well founded. They need only look to the policies favored by the UAW in Michigan, where the union is headquartered, and how they are diametrically opposed to the policies in Tennessee that are viewed as pillars of the Volunteer State’s economic competitiveness and success.
Governor Bill Lee said earlier this month that unionization of the Chattanooga Volkswagen plant under UAW would be a “big mistake.” In contrast, Governor Gretchen Whitmer (D-Mich.) spoke at a UAW rally to kick off the aforementioned strike. Whitmer touted her repeal of Michigan’s Right-to-Work law during that speech, which was met with cheers from the UAW crowd. In a statement touting a May 1 celebration of Whitmer’s repeal of Right-to-Work, the UAW noted how it made Michigan “the first state to repeal Right to Work since Indiana did so in 1965.”
Tennessee stands in stark contrast to Michigan on Right-to-Work. Whereas Governor Whitmer repealed Michigan’s Right-to-Work law after Democrats took control of the legislature in 2023, worker freedom is enshrined in the Tennessee constitution. Tennessee has had a Right-to-Work law, which protects workers from being forced to join a union as a condition of employment, for decades as statute. But in 2022, 69% of Tennessee voters decided to put those worker protections in the state constitution, making them harder to repeal. Governor Lee championed the 2022 ballot measure that provided state constitutional protection for Right-to-Work in Tennessee.
Eight years before they constitutionally protected worker freedom, nearly 66% of Tennessee voters approved 2014’s Amendment 3. While Tennessee has long had the advantage of not imposing a state income tax, the approval of Amendment 3 constitutionally prohibits the taxation of income in Tennessee. Should a future legislature wish to impose an income tax, they’ll need to put it to voters.
While Governor Lee touts his state’s constitutional income tax ban, Governor Whitmer, with the support of the UAW, used a novel legal theory to undo an income tax cut enacted by her predecessor. In 2015, then-Governor Rick Snyder (R) and Michigan lawmakers enacted an income tax relief package that scheduled rate reductions for future years based on revenue triggers.
After an income tax rate cut was triggered for 2023, Governor Whitmer and her state’s Attorney General argued that it was temporary. Nowhere in the enacted law, however, did it say the income tax was to be temporary, nor was that the intention of lawmakers at the time.
Governor Whitmer’s decision to make the income tax cut temporary is being challenged in court by the Mackinac Center for Public Policy. Should Whitmer lose that case, which will ultimately be decided by the Michigan Supreme Court, Michigan’s income tax rate would fall from 4.25% back to 4.05%.
Michigan’s House Fiscal Agency has expressed opposition to Governor Whitmer’s position, with the non-partisan body’s analysis deeming the tax cut to be permanent. Former Governor Snyder called Whitmer and the Attorney General’s decision “unreasonable overreach.” The three-judge state Court of Appeals issued a March ruling siding with Whitmer, a decision that is now being appealed to the Michigan Supreme Court. A final decision is expected later this year.
Should the UAW establish a foothold in east Tennessee, some believe it could lead to a shift in the state’s political landscape and a subsequent change in policies that would have the Tennessee of the future look more like the Michigan of today. Given Michigan has been losing population for years while Tennessee has seen its population boom with transplants, many of them escaping Michigan and other blue states that lack Right-to-Work protections and impose higher tax burdens, the concern about such a political and policy shift is understandable.
Workers at the Volkwagen plant in Chattanooga will vote on whether to unionize in affiliation with the UAW this week. Voting on the matter begins on April 17 and concludes at 8:00 pm on April 20.
The UAW’s efforts aren’t stopping with Tennessee. On April 5, workers at the 5,000-emploiyee Mercedes-Benz plant in Alabama filed to hold a National Labor Relations Board-supervised election to determine whether to unionize in affiliation with the UAW. “The Mercedes workers hope to be voting in their union election by early May,” the UAW said in a statement, adding that the “NLRB is expected to quickly set the date for the election.”
