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Labor unions hold an extraordinary legal status. Acting as an exclusive bargaining agent and collecting compulsory dues or agency fees should oblige union officials to be good stewards of members’ money with the sole goal of representing their workers effectively. Unions, however, have traditionally been permitted a degree of secrecy denied to similar institutions like corporations and governments, which must disclose detailed financial information to ensure accountability. In order to prevent conflicts of interest or mismanagement, there must be accountability. The federal government has begun applying this logic to unions, introducing new levels of transparency that are exposing practices previously hidden. Yet the state of Michigan maintains no disclosure requirements for powerful public employee unions.
After overhauling the LM-2 form that describes union finances and spending, the federal government recently updated the LM-30 form that union officials must fill out to disclose any potential conflict of interest.
This policy already is bringing results for America’s laborers. Teamsters for a Democratic Union, a group within the Teamsters that supports rank-and-file union activism and works to give members a greater voice in the union, noticed a suspicious item on the LM-30 form of a union official in New York who had taken a "consulting fee" of more than $50,000 from a health insurance company. As TDU argues, "In the old days, vendors made payoffs to officials under the table. Today, they pay ‘consultant fees.’ Does that make it right?" The official has since resigned and TDU continues its investigation.
Most state public employee unions, as creatures of state rather than federal labor law, are exempt from these requirements. Nothing has changed since 2001, when the Mackinac Center for Public Policy reported that Michigan public labor union affiliates "are not required at all to report under any federal or state labor law." This means that corruption or simple failure to efficiently represent members is very difficult to discover. Unions participate heavily in politics, and, theoretically, refunds of political spending are available to workers under the Supreme Court’s decision in Communication Workers v. Beck. Workers, however, often experience great difficulty in obtaining these refunds and getting adequate information about the extent of unions’ political activities.
Because union members and the general public have an interest in knowing what is going on, Michigan should bring transparency to its public employee unions. After all, these unions, whose political force is a creature of public policy, have an institutional interest in growing government to expand their own power, regardless of whether such growth benefits their own members or the common good. Unlike other interest groups, unions derive their political power not from freedom of association but from hindering members’ exercise of their legal right to disassociate.
Passage of the Michigan Union Accountability Act, drafted by the Mackinac Center in 2001, would help alleviate these problems. As the report noted, "Public-sector unions could be required to detail their spending according to functional spending categories... . Reports could be audited by an independent accounting organization to assure accuracy and consistency." Greater transparency would make it easier for government workers to ensure that their unions truly represent them, to work for change when necessary and to opt out of political activities they do not believe are in their interests.
Because unions have accomplished so much for workers in Michigan and in America, people are naturally grateful and appreciative. Yet memories of World War II and the lunar landing did not blind us to corruption in government during Watergate. The importance of businesses to the industrialization and prosperity of America did not prevent the Securities and Exchange Commission from requiring detailed financial disclosure from publicly traded companies. Appreciation for the accomplishments of unions in Michigan’s history should not prevent the Legislature from taking action to better protect and ensure effective representation for government employees.
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Aaron C. Mead is a senior studying political economy at Hillsdale College and a summer intern 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.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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