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.
#####
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.
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