If you want to understand what’s going on in Michigan, you need to know about PERA.  Here’s a great example of why. 

Yesterday, Detroit Mayor Dave Bing announced that he would be terminating contracts for city employees unless union officials agreed to major concessions, including 10 percent wage cuts.  Although some unions have agreed to concessions, AFSCME in particular has refused. 

Now, ordinarily, the mayor cannot dissolve a contract unilaterally.  Nor could an emergency financial manager if the governor were to appoint one. The state’s Public Employment Relations Act (PERA) governs labor relations for local governments, and it makes no allowances for fiscal emergencies.  

The important fact, not made clear in many of the news accounts, is that the city’s contracts with many of the unions that represent its employees have expired.  The unions and the city are continuing under the terms of the old contracts while negotiations on new ones continue, but this is a temporary arrangement.  This changes the rules tremendously.  Under PERA, Mayor Bing can declare an impasse in negotiations, refuse to extend the old contracts and implement the terms of his last, best offer. 

The unions can accuse the mayor of failing to bargain in good faith and have the Michigan Employment Relations Commission rule, but their claim would be undercut by the fact that several city unions have agreed to deep concessions. 

(There is some educated guesswork involved here, but Bing is calling for some pretty stiff concessions.  I suspect that because some union officials were willing to go along with them, the labor board will see Bing’s position as less radical than it otherwise might.) 

It needs to be said that ordinarily, PERA would have tied Bing’s hands.  Bing has a decent chance of forcing needed concessions only because the city’s contracts with the unions are already expired, and because some union officials have acknowledged economic reality.  If the contracts were current, the unions would be under no obligation to reopen them, and if the unions held a firmer line, MERC would be more likely to side with them. 

The bottom line is if things had been a little different, Bing would be in a much tougher spot.  PERA empowers union officials to block government restructuring without making any provision for economic emergencies.

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