If It Ain't Broke, Don't Fix It

This November, Michigan voters will be asked whether binding arbitration should be extended to all 61,000 employees of the state. In voting up or down on Proposal 3, voters will decide whether a public-sector labor bargaining system with a strong track record should be overturned.

State employees already have collective bargaining, through rules established by the state Civil Service Commission (CSC). But the most important issue is binding arbitration. Should state employee unions, when a dispute over their employment contract comes to an impasse, be able to submit the matter to an unelected, “neutral” third party to decide?

Up to now, terms and conditions of state employment have been supervised by the bipartisan, four-member CSC, whose members are appointed by the governor. In other words, if Proposal 3 passes, an established, working system accountable to the voters will be displaced, while unions, elected officials, state personnel officers, the Civil Service Commission, and the courts remake personnel and bargaining policy on the fly.

There are many reasons to believe that the system that emerges, after much litigation and avoidable conflict, would be less fair and efficient, and no reason to believe it would work any better than the system currently in place. It is also very likely to be more expensive for taxpayers.

The language of Proposal 3 is vague on the respective powers of both arbitrators and the CSC. State courts will need to settle these matters in lengthy litigation, with little guidance from the amendment. At the same time, the Proposal’s language is precise with regard to union rights. For example, if negotiations are going poorly, union officials may call for arbitration, but the state cannot. And while the state is required to “bargain in good faith,” the unions are not.

What bothers public-sector union officials about the current system is that the CSC has final say over provisions in contracts negotiated between the unions and the administration’s Office of the State Employer. The fact that CSC revisions of negotiated contracts are extremely rare and usually technical seems not to weigh in the balance when considering whether the current system works well on behalf of state employees.

Neither does the fact that CSC rules regarding contract negotiation and approval provide for prompt resolution of collective bargaining disputes. CSC rules specify that a contract must be in place at the beginning of the contract term, an event that will be far less likely should Proposal 3 pass. So far, under CSC rules, all such deadlines have been met.

Because they have been met, the Legislature knows, from the beginning of the budget process, how much money to allocate for the salaries of state employees. This also allows employees to receive raises or benefits on time. But binding arbitration awards are frequently late, coming sometimes years after the expiration of a contract. This forces workers to go on without a contract in place, and forces elected officials to deal with multi-million-dollar back-pay awards.

Has the current process disserved Michigan employees? Surveys from both the Office of the State Employer and the American Federation of Teachers show that in most employment categories, Michigan employees are paid more than the nationwide average for state workers and more than the average for private-sector Michigan workers.

We already have experience with binding arbitration, which has been in effect for local police and firefighters since 1969, and for the state police since 1978. In that year, arbitrators disregarded Detroit’s budget woes, granting police and firefighters large pay increases. This forced the city to lay off hundreds of police officers. Crime rates, which had been declining, took off shortly thereafter, foreclosing the restoration of the city’s economic and cultural vitality.

There is no reason to believe something similar couldn’t happen at the state level. Both the House and Senate fiscal agencies have extrapolated $500 million back-pay scenarios as a result of Proposal 3.

Proposal 3 would impose a slow, expensive labor negotiation process on the state of Michigan, while uprooting a civil service system that has worked well for both the state and its employees. When Michigan voters consider Proposal 3, they should remember the old saying, “If it ain’t broke, don’t fix it.”

(Paul Kersey, J.D., is a labor research associate with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. More information is available at www.mackinac.org. Permission to reprint in whole or in part is hereby granted, provide the author and his affiliation are cited.)