To understand the workings of PERA and its implications for the state of Michigan, it is useful to review the federal law on which it is based: the National Labor Relations Act. Congress passed the NLRA in 1935, in the midst of the Great Depression. The motivation behind the NLRA was one of "evening up" a labor market in which employers were seen as wielding too much power. According to Sen. Robert Wagner of New York, a prime sponsor of the legislation, "Genuine collective bargaining is the only way to attain equality of bargaining power between management and labor." Initially the NLRA's provisions were directed almost entirely at restraining companies. The law prohibited numerous unfair labor practices that applied to employers, but none that applied to unions. The 1947 Taft-Hartley Act added prohibitions on unfair labor practices by unions and also established the validity of state "right-to-work" laws.

PERA followed the NLRA in many respects. Under both the NLRA and PERA, a work force may be divided into bargaining units. Both laws establish that when a union has the support of a majority of unit members, that union will be the legally designated representative for all workers in the unit. Both laws also establish essentially the same process for determining whether a union has unit members' support: the collection of signatures for bargaining unit members, followed by a secret-ballot vote.

In addition, PERA and the NLRA both require union and employer to meet the same standard of good-faith bargaining. Under both laws, the terms of a collective bargaining agreement cover all the bargaining unit's workers, both union supporters and opponents. The process for removing a union that has lost majority support is largely the same under both laws as well - again, the collection of signatures on a petition, followed by a secret-ballot vote. Both systems place similar restrictions on when such a petition to "decertify" a union may be filed, though the rules vary a bit for public school employees.

There is one important divergence between the NLRA and PERA. Under both laws, negotiations continue until either an agreement is reached and ratified or the parties reach a point where agreement is not possible, a situation known as an "impasse." At that stage, the NLRA gives both sides "economic weapons": The union may call for a strike, and the employer may lock workers out. Under PERA, strikes and lockouts are prohibited. But with the exception of how impasses are handled, PERA follows the pattern set by the NLRA very closely.

Even in the realm of private, for-profit enterprises, where the NLRA was designed to function, the law leaves much to be desired. The NLRA allows for collective bargaining agreements that require all workers, including union opponents, to pay dues or fees to the union, ostensibly to defray the cost of representation. These agency-fee clauses have the effect of making union officials less accountable to the workers they represent. Union accountability is further weakened by the difficulty of removing a union from a larger bargaining unit — the result of a large petition requirement and arbitrary restrictions on when such a petition might be filed.

This detachment has two consequences. First, unions operate on an extremely inefficient basis. Mackinac Center for Public Policy research on labor unions has found tremendous waste, with less than half of union spending going toward worker representation. Union spending is misdirected into political activism and inflated overhead instead.[1] Second, union officials are prone to act recklessly. Unsustainable union benefit programs and work rules added as much as $1,000 to the labor cost of producing a car, contributing to the eventual bankruptcies of Chrysler and General Motors.[2]