Michigan Initiative Would Give Public Employee Unions Veto Power Over Legislation

It’s known formally as ‘Proposal 2′ and informally as the ‘Protect Our Jobs Amendment,’ or POJA. However phrased, it describes a Michigan voter initiative this November that would trigger a union power grab that is unprecedented in any state. The measure seeks to amend the state constitution to grant government employee unions the authority, with few exceptions, to invalidate existing and future laws that “abridge, impair or limit” collective bargaining rights. Organized labor effectively would obtain pocket veto authority, via the courts, over elected state and local representatives.  The Protect Our Jobs Amendment, in practice, would “protect” only one category of jobs: union jobs. Labor leaders see a model for other states. If they succeed, reining in soaring public-sector budgets nationwide will become that much more difficult.

Michigan long has been one of the nation’s most heavily unionized states, both in private industry and government. In 2011, 17.5 percent of its employed wage and salary employees belonged to a union. Only Alaska, Hawaii, New York and Washington State registered higher shares. And in the public sector, 52 percent of Michigan government employees belonged to a union, putting it in an eleventh-place tie with Illinois. If unions “create jobs,” the evidence doesn’t support such a claim. A report issued by the U.S. Chamber of Commerce last year, “The Impact of State Employment Policies on Job Growth” (see pdf), rated Michigan as one of 15 states with a “poor” business climate, as defined by a high degree of union-oriented economic regulation. The unemployment rate in Michigan this September was 9.3 percent, compared to the national average of 7.8 percent; over the last several years it has averaged about two to three percentage points above the U.S. rate. Most tellingly, cumulative real personal income growth in Michigan during 2000-10 declined by 7.5 percent. By contrast, the overall change for Michigan and the six other most populous non-Right to Work states – California, New York, Illinois, Pennsylvania, Ohio and New Jersey – was a 7.8 percent gain (the seven most populous Right to Work states registered an average increase of 24.9 percent).

There are various explanations for Michigan’s condition. Growing foreign manufacturing competition and a large, destructive black underclass in Detroit and other cities surely rank among them. But the role of unions can’t be ignored. This is especially true in the public sector, which offers far fewer service provision substitutes than the private sector. Unions accordingly have used their monopoly status to negotiate what have amounted to unsustainable contracts. As United Auto Workers wage and benefit demands (especially the latter) played a central role in driving General Motors and Chrysler into bankruptcy several years ago, the American Federation of State, County and Municipal Employees (AFSCME), along with the two main teacher unions, the American Federation of Teachers and the National Education Association, have been catalysts for the state’s current fiscal crisis. Annual retirement benefits per state employee, for example, now average $11,725 higher than in the private sector. Not surprisingly, the state pension fund, although closed to new enrollees since 1997, is severely underfunded. At the close of 2011, liabilities had grown to $15.6 billion, whereas assets were only $10.2 billion, a drop from the 2010 figure of $10.8 billion. The fund, in other words, has slightly less than two-thirds of the cash needed to pay out benefits over the long term.

State and local officials in Michigan understand the situation, even if they can’t do too much about it. They are, however, buoyed by recent developments in neighboring Wisconsin and Indiana under Republican governors. Each state, facing high fiscal stress, last year enacted legislation to restrain public-sector union bargaining power. This has infuriated public-sector unions. In Wisconsin, they have launched a protracted war against Governor Scott Walker, as Union Corruption Update has described in detail several times. The current Republican governor of Michigan, Rick Snyder, also is feeling union heat, especially over legislation enacted in 2011, and which took effect at the start of this year, requiring public-sector workers to choose between a fixed-dollar “hard cap” and a 20 percent floor when making health plan contributions (i.e., the “80/20” law). Unions see this and other ostensibly anti-union legislation as a threat to their interests. The presence of Proposal 2 on the ballot – which generated nearly 700,000 petition signatures – is by far the most potent manifestation of its campaign. The unions already have spent millions of dollars promoting it.

Proposal 2 would add a new section to the Michigan Constitution. Couched in language intended to appeal to one’s sense of fair play, the description of the amendment, as it will appear on the ballot, reads as follows:

This proposal would:

Grant public and private employees the constitutional right to organize and bargain collectively through labor unions.

Invalidate existing or future state or local laws that limit the ability to join unions and bargain collectively, and to negotiate and enforce collective bargaining agreements, including employees’ financial support of their labor unions. Laws may be enacted to prohibit public employees from striking.

Override state laws that regulate hours and conditions of employment to the extent that those laws conflict with collective bargaining agreements.

Define “employer” as a person or entity employing one or more employees.

Such goals seem benign. Yet in fact, they are anything but that. In asserting protection of union collective bargaining “rights,” the amendment knocks down a straw man. In the private sector, the National Labor Relations Act already protects an individual’s right to form, join or assist a union. And in the public sector, where federal authority is far less defined, the State of Michigan already protects collective bargaining. Its Public Employment Relations Act (PERA) does this on behalf of local government employees, while the Michigan Civil Service Commission does this for state employees. As very little of Michigan’s basic collective bargaining statute, the Labor Relations and Mediation Act, applies to the private sector, Proposal 2 would operate as a public-sector bargaining law all but in name.

Thus, Proposal 2 doesn’t simply reiterate the law, it overturns it. It functions as a stalking-horse for a genuinely radical principle not found in any state constitution: unions should have the authority to veto the legislative branch. Specifically, it would enable unions to file a legal challenge against any state or local law, existing or proposed, dealing with “wages, hours and other terms and conditions of employment” or the “financial support” of unions. Such phrases leave substantial room for judicial creativity. A union or group of unions opposing a particular law could file a court challenge to render the law (or part of it) null and void.

State courts will be clogged. According to Fred Wszolek, spokesman for the Washington, D.C.-based nonprofit group, the Workforce Fairness Institute, Proposal 2 would be a bonanza for union lawyers and their clients. He quotes an unnamed union attorney who admitted in a legal filing: “If POJ passes, its interaction with existing constitutional provisions, laws and ordinances will be determined by the courts on a case-by-case basis.” The main teachers union in the state, the Michigan Education Association (MEA), an affiliate of the National Education Association, Wszolek notes, already has drawn up a list of laws it would like to see overturned. This hit list, among other things, includes a state law allowing school districts to promote teachers on the basis of merit. It also includes a state law allowing parents to enroll their students in public schools outside their district. Citing a conclusion of Michigan Attorney General Bill Schuette, Wszolek notes the Protect Our Jobs measure could wind up repealing, in part or in whole, more than 170 existing state laws.

A recent briefing paper by a Midland, Mich.-based state issues think tank, the Mackinac Center for Public Policy, “Proposal 2 of 2012: An Assessment” (see pdf), provides strong justification for such concerns. Authors Patrick Wright, F. Vincent Vernuccio, Paul Kersey, Michael Reitz and James Hohman note that the Protect Our Jobs Amendment doesn’t just assert the right of public-sector employees to engage in collective bargaining – itself a highly dubious proposition in light of any number of U.S. Supreme Court rulings. More to the point, it would give unions the power to override legislation they don’t like. Article I, Section 28(3), for example, would authorize a union the authority to override established state law during contract negotiations. And Article I, Section 28(4) would invalidate state or local laws that “impair, restrict or limit” collective bargaining agreements (CBAs) that spell out terms of employee financial support of a union. The authors write of the proposal: “Its effect is extremely broad, as unions would be given the power to negotiate contracts with greater legal power than acts of the Legislature. Any laws on the books – and any laws adopted in the future – that impair or limit collective bargaining would be void.”

Unions would have a target-rich environment. Proposal 2, if passed, could trigger efforts to nullify numerous amendments to the PERA law that restrict the basis for collective bargaining. Currently, notes the Mackinac Center report, nearly 1,700 union contracts in force apply to Michigan public schools alone. Conceivably, any of them could be challenged in court. They include : “establishment of the starting day for the school year and the amount of pupil contact time required to receive full state school aid”; “policies regarding personnel decisions when conducting a staffing or program reduction”; and “decisions about how an employee performance evaluation is used to determine performance-based compensation.”

What else would Proposal 2 do? For starters, it would enable unions to bargain away the 1994 Michigan “paycheck protection” law, which allows dissenting union employees to withhold the portion of their dues payments going for political purposes they might find objectionable. It would enable unions to overturn the state’s new “Public Act 53,” a law which ends the practice of automatic payroll deductions for union dues from public school employee paychecks. It would facilitate the repeal of the binding arbitration section of Public Act 312 of 1969, which provides for state mediators to resolve labor disputes involving public safety officers such as police and fire fighters. And it would render null and void the “Emergency Manager” law of 2011, which authorizes state appointment of managers to take control of local governments and school districts during fiscal emergencies. Attorney General Schuette summarizes Proposal 2: “(It) represents breathtaking changes to governmental branches’ and units’ prerogative to perform their constitutional function, establish their goals and objectives, determine budgets, compensation, retirement, medical or other benefits, and control terms and conditions of public employment.”

Union officials and their allies don’t see the issue this way. In a recent guest editorial for the Detroit News, Karla Swift, president of the Michigan chapter of the AFL-CIO, wrote: “Voting yes on Proposal 2 is the first and most obvious thing that each of us can do to protect collective bargaining rights in Michigan. This amendment to the state constitution will ensure that future generations maintain the fundamental right to negotiation over wages, benefits and working conditions with their employers.” The state’s economic doldrums, she added, are the result of a lack of union influence rather than an excess of it. She cited a new report by the Washington, D.C.-based the Economic Policy Institute (EPI), “The Decline of Collective Bargaining and the Erosion of Middle-Class Incomes in Michigan” (see pdf) whose author, EPI President Lawrence Mishel, concludes that a smaller union share of the work force has widened income disparities and increased poverty. Bringing wages in line with productivity gains, he argues, requires “strengthening collective bargaining.”

The Michigan Education Association, meanwhile, has denounced critics of Proposal 2 for placing “fear-mongering ads” funded by “shadowy corporate front groups.” The MEA website states: “(T)he Governor and these so-called citizen-protection groups obviously don’t really care about Michigan’s future. If they did, they would realize that collective bargaining provides decent wages for Michigan workers so they can keep citizens safe, students educated and the economy growing. Everyone benefits from collective bargaining.” Former Michigan Democratic Governor Jennifer Granholm, now a commentator on Current TV and a professor of law and public policy at the University of California, Berkeley, also has weighed in. She called the opposition to Proposal 2 “below the belt fear-mongering,” dismissing concerns that the amendment would enable unions to challenge a 2005 law she signed requiring background checks for public school employees. Yet given the broadness of the proposed amendment’s wording, there is no reason why unions couldn’t challenge this law as readily as they could any other.

None of these supporters, however, deny the central reality: Proposal 2 would give unions carte blanche to negate workplace-related laws. Nor do they address the strong possibility of adverse consequences. Mackinac Institute data suggest that undoing certain fiscal reforms in place will put taxpayers in harm’s way. Proposal 2 would allow unions to override the 80/20 health insurance contribution law, thus costing public-sector employers – that is to say, taxpayers – about $1 billion annually. The amendment also would open the possibility of union preemption of a law requiring public school employees to contribute more toward their pensions, thus erasing a first-year cost-savings of $312 million. It would allow unions to prevent school districts from contracting with private vendors to provide food, custodial and transportation services, thus likely costing another $300 million a year. And it could undo pension reforms that collectively have reduced Michigan taxpayer liability by $4.3 billion since 1996 – not that underfunding doesn’t remain an issue.

The Protect Our Jobs Amendment, in essence, is another case of a disingenuous use of language by labor leaders for political gain. A half-decade ago, unions launched a full-scale effort to persuade Congress to pass the Employee Free Choice Act, which would have forced private-sector employers at nonunion sites to recognize union-initiated “card checks” that generate a simple majority of signatures of affected workers. Senate Republicans successfully blocked the bill via filibuster, and with good reason. The measure was the antithesis of free choice for workers in the face of an onsite union organizing campaign. It would have all but ended the secret ballot on matters of union representation. ‘Protect Our Jobs’ likewise manipulates language to seize high moral ground. It would establish unions in Michigan as a virtual separate branch of government. That’s not the purpose of unions – in Michigan or elsewhere.


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