Wednesday, October 10, 2012

Michigan Voters ... Will They Take Their State Further Down the Road to Nowhere?

Michigan has long been the home of the "Big Three" U.S. auto companies and the United Auto Workers union (UAW), too.

And the auto industry's labor negotiations over the years have served as the example for spreading similar employee benefits to other employees, including public sector workers. These widespread benefits include costly and now largely unaffordable provisions such as the "30 and out" pension benefit and automatic COLA (cost of living adjustment) adjustments for annual pay increases.

Largely as a result of all this, the Big Three ain't so big any longer. Global competition has done serious damage to their market shares, profitability, employment levels and their overall ability to compete.

In sum, the U.S. auto industry, Michigan and Detroit aren't even close to what they used to be. Neither is the UAW, for that matter. But they've sure left their mark on America, many of its industries, companies and even the public sector. And it's not a good mark they've left.

To repeat, Michigan is now a full scale economic basket case, as is the city of Detroit and the U.S. auto industry as well. Yet it could get worse. Much worse. Throw in the towel worse, in fact.

In that regard, the Michigan voters will decide in a few weeks whether to gut up to their state's competitive and financial problems or give up completely on ever getting the state back in the global or even U.S. competitive game.

That's because they're going to vote to either let the Unions run the state completely into the ground or choose instead to stay in the game and join the world of free market based competition.

How serious is all this for the good people of Michigan? Well, read on.

The Next Battleground in the State Labor Wars is subtitled 'In Michigan, unions have put a measure on the November ballot that would make collective bargaining a constitutional right.'  Here's what the editorial says to all of us:

"We've seen Gov. Scott Walker's battle in Wisconsin and the Chicago Teachers Union strike next door. Now in Michigan comes another Midwestern political showdown that will carry enormous implications for the role of unions in American life.

The Michigan Supreme Court recently approved the placement of a proposed constitutional amendment on the November ballot. If passed by voters, the so-called Protect Our Jobs amendment would give public-employee unions a potent new tool to challenge any laws—past, present or future—that limit their benefits or collective-bargaining powers. It would also bar Michigan from becoming a right-to-work state in which mandatory union dues are not a condition of employment. 

The budget implications are dire.

Michigan public unions began pushing the initiative last year, shortly after Michigan Gov. Rick Snyder—facing a $2 billion fiscal hole—capped public spending on public-employee health benefits at 80% of total costs. This spring, national labor unions joined the amendment effort after failing to prevent Indiana from becoming a right-to-work state.

Bob King of the United Auto Workers said that Michigan's initiative would "send a message" to other states tempted to follow Indiana's example. The UAW, along with allies in the AFL-CIO and the Teamsters, poured $8 million into gathering 554,000 signatures—some 200,000 more than needed—to put Protect Our Jobs on the Michigan ballot.

The amendment says that no "existing or future laws shall abridge, impair or limit" the collective-bargaining rights of Michigan workers. That may sound innocuous, but according to Patrick Wright of the Mackinac Center for Public Policy, the amendment would hand a broad mandate to unions to challenge virtually any law they don't like.

Mr. Wright says that passage would almost certainly mean the end of Michigan's Public Act 112, which made the privatization of schools' food, busing and custodial services off-limits in collective-bargaining negotiations. More than 60% of Michigan school districts have privatized these services over the past two decades, resulting in annual savings of about $300 million.

Also unlikely to withstand legal challenge would be last year's Public Act 4, which gave state-appointed emergency managers broad powers to turn around fiscally distressed local entities by, among other things, rewriting union contracts. The act has already been applied to four cities and three school districts that otherwise by now would have had to file for bankruptcy.

Even if unions didn't prevail in court in every instance, notes Mr. Wright, the sweeping scope of the initiative would allow them to mount endless challenges to local governments' personnel and pay decisions, making it prohibitively expensive to risk crossing union wishes.

Thanks to media leaks, we know that already the Michigan Education Association has drawn up an internal wish list of all the laws it will challenge if the initiative passes. The targets include a cap on the health-care benefits of teachers, and reforms to teacher tenure that recently enabled schools to promote teachers based on merit rather than seniority alone. But what's really exciting the teachers union is the prospect of killing "interdistrict or intradistrict open enrollment opportunities"—which would otherwise promote some competition in education by letting parents vote with their feet and send their kids to better schools.

The Michigan amendment could also mean the blocking of future laws challenging union privileges. So Michigan's legislature would never be able to, say, pull a Scott Walker and stop doing unions the favor of withholding dues from public-employee paychecks.

It gets worse. The ballot initiative states that it would "override state laws that regulate hours and conditions of employment to the extent that those laws conflict with collective bargaining agreements." In other words, collective-bargaining agreements negotiated behind closed doors would trump the legislature—a breathtaking power grab that would turn unions into a super legislature.

Perhaps the biggest upside for unions is that the proposal would prohibit Michigan from becoming a right-to-work state. Regaining its competitive position with respect to the 23 right-to-work states that have become attractive to manufacturers, even auto makers, would be unlikely. Rather, labor would get a field-tested strategy for scrapping those states' right-to-work laws with ballot referendums. . . .

So Michigan is the new battleground for labor politics. Either its unions' daring scheme will succeed, handing labor a blueprint to reclaim lost ground elsewhere. Or it will fail, with labor's influence continuing to wane nationwide. The stakes couldn't be higher."

Summing Up

So will Michigan's citizens turn over control of their state's financial condition to the unions or leave it in the hands of the Michigan legislature? And what will this vote, however it goes, mean for the rest of America?

While even asking the question of whether to cede practical control of much of the state's legislative authority to unions should be an exercise in silliness, in Michigan it's become a very serious question which will be put to a vote in November.

The fact that after decades of union "rules" the "Big 3" auto makers are no longer big, and the fact that the federal government has spent billions of dollars to bail out GM doesn't seem to matter much, if at all. Even the fact that Toyota and others have established non-union facilities in right-to-work states like Tennessee, Indiana and elsewhere evidently hasn't caught their attention.

If the proposed constitutional amendment does pass and unions become the real bosses in Michigan, perhaps the Canadians would be interested in swapping some of their oil for one of our states. Sounds like a good deal for the citizens of the remaining 49 American states.

But seriously, American citizens who live in states other than Michigan shouldn't have to keep paying and paying just to keep Michigan alive and their unions in control, both private and public sector unions alike.

And if the good folks in Michigan haven't learned their lesson about giving too much power to the unions by now, they'll probably never learn.

It's a crazy world for sure, but it may be getting even crazier in Michigan. Soon we'll know.

Thanks. Bob.

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