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While most of the nation focused on the Wisconsin government union fight in recent weeks, Michigan has been pushing major labor reforms in both the private and government sectors. The goal is to ease budget woes and make the state more economically competitive. Elected officials in Michigan face painful decisions about how to bring the state back from the brink.
Michigan’s economy has been in free fall for years. Republican Gov. Rick Snyder is battling a $1.4-billion budget shortfall. And to make matters worse, in 2009 the state had the worst domestic product decline in the nation and its population dropped below 10 million for the first time in a decade.
Everyone may need to share in the sacrifice, but, as in Wisconsin, organized labor is protesting loudly against any attempts to curb their privileges. On Wednesday, March 16, thousands of union members converged in Lansing to protest cuts for state workers and an “Emergency Manager’s Amendment,” which would allow the state to take over unwieldy government union contracts. The protest resulted in over a dozen arrests for trespassing and “obstructing a police officer.”
Several of those arrested were not union members but college students, whose boosting of protesters’ numbers the unions may actually need. The poor state of Michigan’s economy has dragged down union membership in the once-solid labor stronghold. The Department of Labor (DOL) reported in January that Michigan lost 11.7 percent of its union members in 2010. The state now has 627,000 members, the lowest number since DOL started tracking state membership in 1989. Only 16.5 percent of the state is now unionized — still higher than the 11.9 percent national average but far less than its high of 26 percent in 1989.
Gov. Snyder is asking government employees for $180 million in concessions to help fix the state’s budget gap. This could include wage concessions and increased contributions to state employee’s health insurance and pension plans.
A proposed bill would take away mandatory binding arbitration privileges from police and firefighters. In exchange for a third party settling contract disputes, public safety personnel agree to give up their right to strike. Unions favor this type of negotiation arguing that it levels the playing field. Supporters of the bill maintain the current process reduces the flexibility of local governments and drives up labor costs through mandated compensation increases.
Snyder is also taking small steps to increase privatization and rules that classify independent contractors as government employees. His administration stopped the controversial unionization of home daycare providers. Former Democratic Gov. Jennifer Grandholm classified 16,500 private providers as state workers because they receive state subsidies for caring for children from low income families. The United Auto Workers and American Federation of State, County & Municipal Employees then held a unionization election. The unions won with 92 percent of the vote — but only 15 percent of the providers voted. Several of the providers felt the vote was not clear and resented the forced dues deduction — around $100 a year.
Chief of Human Services Maura Corrigan reversed the policy, saying the providers were in fact independent contractors and small business owners. She said in a statement: “The council has not delivered on its original goals to enhance and improve the delivery of quality care for children whose parents receive assistance from the department … That’s why we will stop all funding and, because these providers are not state employees, will also cease collecting union dues.”
As the governor attempts to balance the budget, Republican state legislators have proposed labor reform bills to make Michigan more business friendly. On February 9, state Sens. John Proos, IV and Arlan Meekhof introduced two similar bills that would allow “right to work zones”— local areas where workers could not be required to join a union as a condition of employment. The hope for the zones is to attract businesses that are leery of big labor’s power in the state. The Lansing State Journal reports that union strikes in Michigan harm the state and employers would rather open business in areas where the chances of labor unrest are lower.
Right to work generally refers to section 14b of the 1947 Taft-Hartley Act, which allows states to bar union shop collective bargaining agreements where union membership is a condition of employment. In non-right to work states such as Michigan, workers can be required to join a union or pay dues in order to keep their jobs.
Backers of the right to work effort see it as one of the key ways to bring jobs back to Michigan. For years, Michigan has had one of the highest unemployment rates in the country. DOL reported Michigan’s unemployment rate at 10.7 percent in February, greater than the 9 percent national average.
Republicans control both houses of the Michigan legislature and the governor’s mansion, but passage of any right to work bill is far from certain. Gov. Rick Snyder is lukewarm on his support. He has called right to work “a divisive, polarizing issue” and says it is “not part of [his] agenda.” While Snyder is not actively pushing right to work, he does say he will sign the bill if it comes to his desk. State Senate Majority Leader Randy Richardville is more adverse to the concept and has clearly stated his opposition. Shortly after taking office, state Republican House Speaker Jase Bolger voiced his support, telling both houses of the Michigan legislature that right to work would be “on the table.”
Other proposed labor reform legislation includes the repeal of prevailing wage laws and project labor agreements (PLAs) that tilt the state contracting process to unionized contractors. PLAs are essentially union-only clauses in state construction contracts. Under a PLA, a contractor can be required to hire workers from union hiring halls, acquire apprentices from union apprentice programs, and require employees to pay union dues, thus driving up infrastructure construction costs. Paul Bachman, an economist from Suffolk University in Boston, testified at a state Senate hearing in early March that PLAs can increase the cost of construction projects by over 15 percent.
A contractor working under a PLA can also be required to pay a “prevailing wage,” which the Michigan Department of Energy, Labor & Economic Growth determines by “studying collectively bargained wage agreements in a particular region. The prevailing wage is an hourly pay rate, including wages, overtime and fringe benefit totals.”
Supporters of repealing prevailing wage and PLAs say the requirement gives union construction firms an unfair advantage and wastes taxpayer dollars. Mackinac Center Director of Labor Policy Paul Kersey says increased competition will save the state up to $250 million a year. Associated Builders and Contractors Saginaw Valley Chapter President Jimmy Greene told The Saginaw News that prevailing wages are “not designed for the worker but to maintain the bureaucracy of the union shops.”
Union officials are vowing to fight the repeal. Robert C. Anderson, business manager for Journeymen & Apprentices of the Pipefitting and Plumbing Industry United Association Local 85, told The Saginaw News, “It’s an attack on construction trades; it’s an attack on the middle class.” However, only about 13.1 percent of construction workers are unionized nationally.
Both government and private sector unions may see significant rollbacks to their privileges. Supporters of budget cuts and of giving workers a choice on whether to join a union see these changes as the only way to return Michigan to prosperity.