FDR Portrait

The Michigan Education Association, the state’s largest public school employee organization, has claimed that a recent email from Mackinac Center Senior Legislative Analyst Jack McHugh is “exposing the (Center) for what it really is,” because McHugh briefly stated, “Our goal is (to) outlaw government collective bargaining in Michigan. …”

The idea that this is “exposing” anything hidden is bizarre; the Center has long questioned collective bargaining in government and has publicly recommended its repeal. Significantly, however, the MEA is mounting the attack at the very time when policymakers are finally beginning to address the worst excesses of collective bargaining for government employees. In short, the union is hoping to change the subject.

But why have Mackinac Center analysts challenged the legitimacy of collective bargaining in government? The answer is straightforward. The record shows that public-sector collective bargaining hurts the public by driving up the cost of government services, reducing government officials’ options for reform, stressing state and local government budgets, and leaving taxpayers with less money for themselves and their families — hard things in a tough economy.

Fundamentally, this is the risk of government unionization. Government employee unions are not organizing against businesses (a dubious power to begin with); they are organizing against government — and by extension, the public itself. As President Franklin Delano Roosevelt, a strong supporter of private-sector unions, wrote in 1937:

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

The Mackinac Center has probed these same concerns and the history of public-sector unions’ interactions with government in two recent studies: “Reconsidering Michigan’s Public Employment Relations Act: Restoring Balance to Public-Sector Labor Relations” (February 2011) and “Michigan’s Public Employment Relations Act: Public-Sector Labor Law and Its Consequences” (September 2009). As the 2011 study concluded, “Ideally, local government collective bargaining should be prohibited outright.”

The Center has written about the costs of public-sector collective bargaining from a variety of angles. Several of these are summarized below, in a list compiled with the help of Mackinac Center Communications Associate Ted O'Neil, Director of Labor Policy Paul Kersey, Senior Legislative Analyst Jack McHugh and Director of Education Policy Michael Van Beek:

  • Before passage of a 2011 bill on government employee health care, government employee benefits in Michigan were an estimated $5.7 billion higher than those of workers in Michigan’s private sector. As Mackinac Center Assistant Director of Fiscal Policy James Hohman wrote in “Bringing Balance to Public Benefits”:

    “There’s a way to save Michigan taxpayers $5.7 billion without cutting a single program, eliminating any government job or touching public wages[:] … through government employee [benefits] parity. 

    “Compensation comes from wages and benefits like paid leave, employer-paid retirement contributions, health insurance and other benefits. In recent years, the cost of these benefits in the public sector has exploded while the private sector has been getting them under control. The average amount paid for government employees’ wages and benefits in Michigan surpassed the private sector in 2005.”
  • A government employee health care bill, fought by government-sector unions, finally began to reduce some of the estimated $5.7 billion disparity. As James Hohman wrote in “Michigan $1 Billion Closer to ‘Benefits in Balance’”:

    “Michigan recently took a big step toward bringing government employee benefits into balance when Gov. Rick Snyder signed Senate Bill 7, which restricts local governments and school districts from offering health insurance benefits that are more generous than those provided to most private-sector employees.

    “Typically, residents of financially strapped communities are told they have just two options: accept higher taxes or fewer services. The new law makes it clear that a third way exists, which is lowering the cost of existing government services — in this case, by up to $1 billion annually if the new law is implemented appropriately[,] … although the caps are still well above private-sector averages.”
  • Despite the recessions of 2001 and 2008 and Michigan’s decade-long economic malaise, total state public-sector compensation rose handsomely. By fiscal 2008, as James Hohman wrote in “State Employee Pay Grows 25 Percent Above Inflation Since 1999”:

    “The average state employee compensation package costs approximately $93,039. Inflation-adjusted wages and benefits have increased 25 percent since fiscal 1999. The figures include the value of all benefits from state-paid retirement contributions to dry cleaning allowances. …

    “The wages and benefits of Michigan’s over 50,000 state employees cost taxpayers $4.7 billion in fiscal 2008. This is up from $3.2 billion in fiscal 1999, despite the state now employing 15 percent fewer workers.”
  • Unfunded liabilities for the generous government employee retirement benefits are rising and represent heavy burdens for current taxpayers and their children. As James Hohman explained in “State Pension Underfunding Liability Jumps $6.6 Billion, Confirming Need for Reform”:

    “Last year alone, Michigan racked up $6.6 billion in new unfunded liability in the school and state employee pension systems, the equivalent of nearly $700 per resident. … The latest actuarial reports show a $21.7 billion gap between how much the state has set aside to cover its pension promises and the amount it will likely need to fulfill them. … Next year, school districts may have to kick in more than 12.5 percent of every covered employee’s pay just to make up the shortfall.”
  • Collective bargaining in Michigan schools threatens to raise teacher compensation to unsustainable levels. As explained in a 2010 Mackinac Center news release:

    “Recent data compiled by the National Education Association shows that average salaries for Michigan public school teachers from 2003 to 2009 outpaced those of teachers in all other states when factoring in states’ per capita personal income levels, according to analysis by Mackinac Center Education Policy Director Michael Van Beek.

    “‘Considering this state’s economic performance over the last decade, it’s rather surprising that average teacher salaries in Michigan continue to lead the nation,’ said Van Beek. ‘With employee compensation consuming nearly 80 percent of most school districts’ operating budgets, education policymakers will have to consider whether this continued disparity is justifiable.’”
  • One reason for compensation problems in Michigan schools is that collective bargaining frontloads future pay raises into teachers’ contacts regardless of school districts’ financial conditions or the economy. As Michael Van Beek wrote in “What a Teacher Pay Freeze Really Means”:

    “But salary freezes for teachers are sometimes not salary freezes at all. … Nearly all collective bargaining agreements contain a ‘single salary schedule’ for teacher compensation. This schedule builds in ‘steps’ for automatic pay raises for all teachers based on their years of experience and earned graduate degrees or academic credits. Essentially, this means that teachers would receive a pay increase for every year they remain employed by the district, regardless of their students’ performance, the district’s financial situation, or the conditions of the state’s economy.”
  • In government, it is legally and philosophically wrong to speak of “collective bargaining rights.” As Senior Legal Analyst Patrick Wright detailed in “Public-Sector Bargaining Privileges Are Not Inalienable Rights”:

    “Public-sector bargaining proposals in Wisconsin, Ohio and Idaho have prompted impassioned claims about ‘collective bargaining rights.’ This reference to ‘rights’ is commonplace, but it’s misleading. As the U.S. Supreme Court has observed, collective bargaining with government is not a fundamental right, but rather a statutory privilege — a privilege that gives government unions systemic leverage that private unions do not have.”
  • Collective bargaining in government, like crony capitalism, can lead to a political cycle that is inherently corrupt and detrimental to self-government. As Jack McHugh wrote in “Government Collective Bargaining Inherently Corrupting, Should Be Outlawed”:

    “The legitimate form is collective bargaining in the private sector. … In contrast, collective bargaining for government employees is inherently corrupting, because the politicians representing ‘management‘ are chosen by a political process in which the unions on the other side of the negotiating table exercise tremendous influence. They get this largely through benefits granted at the bargaining table by the very politicians they help elect, creating a vicious circle that has contributed greatly to the unsustainable fiscal mess that is bankrupting many states and municipalities.”

Government employee unions will continue to exist even if they lose their collective bargaining monopoly and their ability to compel contributions from nonmembers. The unions will simply become private, voluntary professional organizations. As such, they will be more likely to be responsive to their members’ concerns, less likely to obstruct new approaches and less likely to drive the cost of government to unsustainable levels. 

There would be nothing degrading in this transition to professional cooperation and voluntary association. In fact, it’s a noble calling the MEA once fulfilled.

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Thomas Shull is senior editor at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.