The MC: The Mackinac Center Blog

Is VW the First Model for 21st Century Unionism?

New policy echoes Mackinac Center recommendations

On Tuesday, the human resources department at the Volkswagen plant in Chattanooga, Tenn., released a new policy allowing for voluntary recognition of multiple unions at their plant.

The company said it would recognize any union that can show it represents at least 15 percent of the employees in the plant. As detailed below, the company will bestow greater privileges upon organizations that prove they represent more workers. These include use of company facilities and meetings with VW’s human resources department and executive committee.

On Monday, USA Today reported that UAW hailed the policy “as a vehicle to soon gain representation of workers at its first foreign auto plant in the South.”

The UAW’s dual claims on what they would like to see in Chattanooga may be at odds. On one hand they claim that their work with VW, specifically the establishment of a “works council,” would be a “new model for collaboration,” and on the other hand their goal is to be the exclusive representative of all employees at the plant.

VW’s new policy is a good test case for the type of voluntary and collaborative unionism that the Mackinac Center espouses in our new study, “Unionization for the 21st Century: Solutions for the Ailing Labor Movement,” and one that seems to comport with the UAW’s public organizing strategy of the Tennessee plant (although not with their actual goal of becoming the only union at the plant to represent all employees, gaining “exclusive representation”).

So far the UAW has been unable to garner the needed support from a majority of the employees to be recognized as the exclusive representative. The UAW was defeated 712-626 in February when it tried to become the monopoly bargaining agent.

Soon after the union formed Local 42, which was not recognized by VW but would serve as a launching pad for future organizing attempts. The new policy would allow Local 42 to be recognized but not have the same powers as if the union had achieved a majority election through the National Labor Relation Act — something the UAW may again attempt despite the new policy.

The biggest winner of the policy could be a rival union known as the American Council of Employees, which is a local union that is an alternative to the UAW. According to its website, ACE is “not a national organization” but “an independent employee council created to ensure that all VW Chattanooga employees have a voice on the Volkswagen Global Works Council.”

The site, geared toward VW workers at the plant, further explains that ACE only wants to represent the interests of fellow employees and has no political agenda: “With ACE, we — the employees of VW Chattanooga — get to represent ourselves with a unified voice and a direct line of communication to corporate leadership.”

As the Detroit Free Press reported earlier today:  

Maury Nicely, a labor lawyer who works with anti-UAW workers, said Volkswagen's new policy could be viewed as a win for both the UAW and the American Council of Employees.

"As I understand it, the policy is going to offer the opportunity for any group that gets 15% of support to get a seat at the table with Volkswagen," Nicely said. "It actually is going to open the door to groups in addition to the UAW."

If the UAW is serious about embracing a new form of unionism, it will adopt VW’s new policy. If, however, they push to be the exclusive representative for all employees at the Chattooga plant, all of its past overtures will prove untrue and tragically VW’s innovative policy will be rendered moot.

Volkswagen’s new policy of voluntary representation is the type of new unionism needed for the 21st century. Allowing competition without compulsion in representation by multiple unions will be best for both the workers and the carmaker.


Here is the breakdown of the VW’s new policy:


Consistent with Volkswagen’s Open Door (HR-C08) and Solicitation (HR-C02) policies, individual (or groups of) employees are free to:

-       Discuss and/or promote their interests / group in non-work areas on non-work time

-       Wear promotional clothing (hat, t-shirt) in non-work areas on non-work time

-       Display/use promotional items (water bottles, cups) that comply with material specifications (i.e. no silicone)

-       Raise questions, ideas, or concerns directly to Volkswagen management at any time

Level 1 membership – with greater than 15% support

In addition to the normal rights and opportunities discussed above, employees are free      to:

-       Reserve and utilize space in the Conference Center for internal employee meetings on non-work time once per month

-       Post announcements and information in company-designated locations

Organization representatives (employees only) may:

-       Meet monthly with Volkswagen Human Resources to present topics that are of general interest to their membership



Level 2 membership – with greater than 30% support

In addition to the Level 1 opportunities noted above, employees may:

-       Reserve and utilize space in the Conference Center for meetings on non-work time once per week

-       Invite external representatives of their organization for Conference Center meetings once per month

-       Post materials on a dedicated/branded posting board

-       Meet quarterly with a member of the Volkswagen Chattanooga Executive Committee


Level 3 membership – with greater than 45% support

In addition to the Level 2 opportunities noted above, organization representatives (internal or external) may:

-       Reserve and utilize on-site locations for meetings on non-work time (with staff and/or employees) as reasonably needed

-       Meet bi-weekly with Volkswagen Human Resources and monthly with the Volkswagen Chattanooga Executive Committee 

Sound Road Funding

Michigan House headed in right direction

Photo via Danielle Scott at Flickr.

(Author’s Note: In last week’s Detroit News editorial, “Second term agenda focused on right priorities,” Gov. Snyder noted that a road funding package “was pretty much done.” We hope some of the sound ideas below are contained therein.)

Last May, the Michigan House of Representatives passed a legislative package that would permanently increase annual road funding by around $462 million without a significant tax increase. Some of the measures could theoretically lead to modest restraints on other state spending. The Senate should adopt this or a similar package to move the ball forward on road funding.

Several components passed by the House are worthy of applause, such as dedicating $130 million in sales tax levies currently imposed on fuel purchases to roads. This revenue currently goes to other state spending, but most drivers would probably agree that taxes levied on fuel should be used to maintain roads.

A key bill in the package would redirect one-sixth of the 6 percent use tax levied on gas to roads. This would make around $239 million available for road repairs and construction with no tax increase.

Another bill would require more competitive bidding on road projects, while others would impose performance standards on contractors and require warranties on pavement projects costing more than $1 million. (A 2002 essay by registered professional engineer and current Mackinac Center President Joseph G. Lehman explained why road warranties are “an idea whose time has come.”)

Potential savings from those reforms may be sufficient to roll-back some modest tax hikes that are also included in the package, including $35 million worth of higher vehicle registration fees, and between $8.6 million and $11 million in added fees and fines on oversized and overweight vehicles.

That last item engages a longstanding debate regarding the impact of very heavy trucks on Michigan’s roads. Evidence suggests that heavy trucks may do less damage than people realize because the weight is spread out over more axles and thus, current limits are sufficient.

To the extent some of these levies represent legitimate user fees or reimbursements, they are unobjectionable and may simply be covering costs for services rendered (or road damage inflicted).

If the increase in the revenue from these fee hikes seem all too large, consider that lawmakers have called for between $1.2 billion and $1.5 billion in net new taxes and fees in the past couple of years alone. The Mackinac Center has long said the state should make good roads a higher priority and we believe these ideas provide a path forward. The Legislature has demonstrated a willingness to tackle tough fiscal issues (Michigan Business Tax, Personal Property Tax) in ways that improve the system without unduly burdening taxpayers on net balance.

Now that the election has passed, attention is being drawn again to Michigan roads. The House package passed last May represents a good starting point for translating those demands into action, and in a manner that does not jeopardize the state’s economic recovery. Reprioritizing current state spending to free up more resources for roads could readily complete this project.

For an exhaustive treatment of Michigan’s transportation system and related funding, see the 2007 Mackinac Center study, “Road Funding: Time for a Change.” For a list of 35 major budget reform ideas see the essay “$2.1 in Michigan Budget Reforms.” 

Detroit bankruptcy Judge Steven Rhodes called on the state to address the underfunding of local government pension benefits in his oral opinion. He stated that the state has a “constitutional, legal and moral obligation to assure that the municipalities in this state adequately fund their pension obligation.”

A government’s own employees should not be its largest creditors, nor should retirement benefits they have earned be placed at risk, as happened in Detroit.

There are a number of current bills that would help local governments avoid underfunding, and the Legislature should consider passing them.

When an employee earns pension benefits, the government creates a long-term liability. If the employer puts aside enough money to cover that liability, pension benefits will not be a problem. But if governments underestimate the costs, then there is a problem. This effect is more pronounced if the community has become less prosperous since the employee earned his or her pension.

Unfortunately, most Michigan cities find themselves in this situation. There are $3.1 billion in underfunded pension benefits in Michigan’s largest cities. The worst offenders have less than 50 cents saved for every dollar of pension benefits earned.

The easiest way for governments to ensure they can pay employees what was promised is to get out of the defined benefit pension business by closing the systems to newly hired employees. They can instead provide defined-contribution plans that offer generous retirement savings without generating long-term liabilities on taxpayers.

This can also help governments to catch up on the underfunding of promises made to employees in the closed system, while offering benefits to new employees that will be there when they retire.

Local governments, however, have been hindered in offering these plans because retirement benefits are a mandatory subject of collective bargaining when employees are unionized. Unions have been ideologically inclined toward defined-benefit pension systems. For example, Detroit unions fought to keep a defined benefit system around for new employees even as benefits were being cut for current retirees.

Judge Rhodes also made an appeal to unions to be pension system hawks, ensuring that these plans do not get underfunded. This would certainly help, but too often unions have argued for pension sweeteners and early retirement incentives that blow further holes in pension finances.

Legislation currently pending in the House Local Government committee would allow local governments to close their pension systems without having to negotiate this benefit with their unions. Under House Bill 4804, locals could simply choose to close these pension systems on their own.

Detroit’s bankruptcy judge does not want to see other governments go through what that city faced. He implored stakeholders to ensure that governments set aside the necessary money to pay for pension benefits. As legislators consider laws in this lame duck and beyond, they should be responsive to Judge Rhodes’ plea.

Lehman Discusses Legislative Priorities

Cut corporate welfare, fix roads

Mackinac Center President Joseph G. Lehman was a guest this morning on “The Tony Conley Show” on WILS-AM1320 in Lansing, discussing his recent commentary titled “What Should the Next Legislature Do?

Lehman noted that Fiscal Policy Director Michael LaFaive recent put together $2.1 billion worth of budget reforms, which he submitted to legislators.

“I would encourage everybody in the Legislature to look at that list and see if there’s anything on the list that is less important than roads,” Lehman said. “There’s a lot of corporate welfare on that list that can be cut.”

Lehman also touched on government transparency and bringing government employee benefits in line with what is offered in the private sector, which could save taxpayers $5.8 billion annually.

Reitz Cited on Criminal Sentencing Reform

Legislative overhaul could save taxpayers money

Mackinac Center Executive Vice President Michael J. Reitz told MLive that a legislative package on criminal sentencing reform is a good stop forward, including a proposal that would create a Justice Policy Commission to review sentencing guidelines.

“It is a valuable component of the proposals,” Reitz said. “These issues tend to fade to the background if there isn’t someone, or a group or entity, that’s continually looking at it.”

The recommendation came out of the Michigan Law Revision Commission’s meeting earlier this week, which Reitz attended. The MLRC also discussed modernizing the state’s Open Meetings Act.

Reitz recently co-authored a study with the Manhattan Institute on Michigan’s criminal code.

November 7, 2014, MichiganVotes Weekly Vote Report

New legislative leaders; facilitating medical innovation

The House and Senate met one day this week, primarily so that returning members and newly elected freshmen could select legislative leaders for the 2015-2016 session.

House Republicans chose Rep. Kevin Cotter to be the next Speaker of the House, and Senate Republicans chose Sen. Arlan Meekhof as the next Senate Majority Leader. These selections will be confirmed in official votes when the 98th Michigan Legislature convenes on Jan. 7.

House Democrats chose Rep. Tim Greimel to be their next minority leader, and Senate Democrats selected Sen. Jim Ananich for that role.

Senate Bill 1033, Don't subject “direct primary care” and “concierge medicine” to extensive insurance regulation: Passed 26 to 11 in the Senate

To establish that fixed-fee medical retainer agreements between a physician and a potential patient covering routine health care services are not considered “insurance” subject to the extensive regulatory regime imposed on conventional health insurance policies. This could presumably apply to “direct primary care” agreements, “concierge medicine” and similar innovations.

Who Voted “Yes” and Who Voted “No”

Senate Bill 637, Establish drunk driver vehicle interlock device regulatory regime: Passed 37 to 0 in the Senate

To establish regulations, procedures and fees for drunk driver vehicle interlock device installers, and give the Secretary of State the authority to oversee these programs. Current law regulates manufacturers and vendors of these devices but not installation.

Who Voted “Yes” and Who Voted “No”

Senate Bill 1055, Repeal mandate that state printing be done in Michigan print shops: Passed 24 to 13 in the Senate

To repeal a requirement that all state-funded printing must be done by Michigan print shops. to repeal a requirement that all state-funded printing must be done by Michigan print shops. The bill appears to leave in effect a “prevailing wage” mandate on state-funded printing, which prohibits granting the lowest bid to a shop unless its employees are paid the equivalent of local union wages.

Who Voted “Yes” and Who Voted “No”

SOURCE:, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit

Vernuccio on Unions' Election Day Failure

Fox News, The Week cite labor policy expert

Labor Policy Director F. Vincent Vernuccio was cited by Fox News and in The Week regarding the failure of Big Labor to accomplish the political retribution on Election Day against elected officials who embraced labor reforms.

“The voters are siding with taxpayers and the workers,” he told Fox News. “This [election] was less a referendum and more of a reaffirmation. Unions are going to have to adapt.”

Modernizing the Open Meetings Act

Michigan Law Revision Commission takes step forward

The Michigan Law Revision Commission, which evaluates comprehensive changes and updates to state statutes, met Nov. 5 to discuss the need to modernize the state’s Open Meetings Act. The OMA requires public bodies (school boards, city councils, etc.) to deliberate, make decisions and take action in a public meeting, with the goal of keeping the public fully informed about the actions of public bodies.

Communications technology has changed since the law was adopted in 1976 and the Michigan Law Revision Commission rightly seeks to address shortcomings in the way the law is written, particularly where the OMA drafters of 1976 simply couldn’t have anticipated e-mail, the Internet, cloud storage and other advances. MLRC reviewed six specific recommendations to amend the OMA:

  • Allow members of the public to record public meetings with any non-disruptive devices. Currently the law allows individuals to tape record, videotape and broadcast meetings live on radio and television. This amendment would allow members of the public to record meetings with any non-disruptive device and to live stream meetings online.
  • Post meeting notices on the public body’s website. Public bodies are required to notify the public of upcoming meetings. For regularly scheduled meetings, the law requires meeting notices to be posted at the agency’s principle office and other “appropriate” locations. This recommendation would mandate that the meeting notice also to be posted on the public body’s website if it maintains an official website.
  • Post minutes of public meetings on the public body’s website. Currently the law merely requires public bodies to maintain meeting minutes, keep them open to public inspection, and provide the minutes upon request. This amendment would mandate that public bodies also post minutes online on the body’s official website. (Public bodies that aren’t doing this already are missing a good opportunity to convey their commitment to transparency.)
  • Post other documents online. Similar to the recommendation to post meeting minutes online, this recommendation would require the posting of any documents that are the subject of an agenda item.
  • Consider circumstances in which a public body may conduct a meeting by videoconferencing, teleconferencing and webcasting. This is a good idea so long as the virtual meetings are fully accessible to members of the public, particularly elderly individuals.
  • Increase penalties for officials who violate the OMA. According to the MLRC report, the penalties for violating the law haven’t been adjusted since its adoption; the report recommends increasing the penalties to provide a stronger deterrent. 

The MLRC voted to pass these recommendations on the Legislature for consideration. This is an encouraging development and should garner bi-partisan support.

The Legislature should consider additional ways to embrace technology to improve civic engagement. For example, meeting notices should also be posted on a public body’s social media accounts and distributed to an e-mail listserv for residents and news media who request notification. Public bodies are allowed to take some sensitive topics behind closed doors, but too often those closed session conversations veer into topics that should be discussed in open session. A taxpayer who suspects a violation of this rule usually cannot prove the violation, so the violation goes unpunished. A sensible solution would be to require public bodies to audio tape all closed sessions. Those recordings would remain exempt from disclosure, but if litigation occurs over an alleged OMA violation a judge could review the audio in private to evaluate whether a violation occurred. 

The Mackinac Center has been calling for modernizing the OMA and its companion statute, the Freedom of Information Act. Yesterday’s action was a meaningful step forward.  

Hey, Tim Skubick!

Where is that 'tax cut fever' you promised?

The IRS (via Joshua Doubek at Wikicommons).

Nearly a year ago, popular Michigan pundit Tim Skubick opined on that “another disease is starting to make the rounds in this town (Lansing): Tax Cut Fever.”

Personally, this observer welcomed the prospect of a bipartisan frenzy to convert a projected state budget surplus into tax cuts, even if the politicians’ motives included wanting to “help cement their 2014 re-election bid …”

The promise was especially welcome given that Lansing then looked more ready to raise taxes than cut them. I pointed out some examples in an article published last January. Among them:

The Legislature had recently enacted $82.6 million in fee hikes. It had also granted certain local “Business Improvement Zone” authorities the power to levy additional property taxes. And there was plenty of chatter about imposing taxes on Internet transactions (an Amazon tax) and other new extractions.

Moreover, a 2007 promise that Gov. Granholm’s big income tax hike of that year would be rolled back to 3.9 percent beginning after she left office never happened. Instead, we got a 0.1 percent rate cut, from 4.35 percent to 4.25 percent, with further baked-in reductions repealed. Some fever!

Nevertheless, Skubick predicted that the chair of the Senate Finance Committee, Sen. Jack Brandenburg, R-Harrison Township, would “breeze back into town next month, dust it (an old rate reduction bill) off and get the tax cut ball rolling.”

Alas, the bill he referenced — to restore those canceled future income rate cuts — may have been dusted but it never left committee.

Maybe there was other evidence of the “fever” Skubick expected? None was found in a search of the web site for all the bills in the “tax” category. This revealed 236 bills introduced in 2013 — a non-election year — but just 150 this year. The temperature appeared to be cooling, not heating up.

Most of those tax bills proposed minor regulatory changes or modest “boutique” credits or exemptions. Worse, some proposed substantial tax hikes, not cuts. For example, three 2014 bills proposed new or increased levies on e-cigarettes and certain commercial and industrial property, respectively. That suggests a “fever” all right — but for hikes not cuts.

To be fair, other new tax proposals were both substantial and widely perceived as deeply political, such as bills to expand the homestead property tax credit and exempt certain pension income. Rate cuts are a much better idea than credits and extensions. (Read more about that in the Capitol Confidential article, “Why Tax Rate Cuts Matter More than Increasing Credits and Exemptions.”) And the Legislature did adopt bipartisan cuts to property taxes imposed on business tools — a levy universally regarded as unwise and counter-productive — which voters approved in August. 

But still, none of that suggested an imminent outbreak of across-the-board tax cut fever in Lansing.

Hope springs eternal, however: This taxpayer and millions of others in this state eagerly await the arrival in Lansing of a tax cut epidemic. If anything, sadly, the upcoming lame duck session seems more likely to see the rumored tax cut virus mutate into a real tax hike bug.

2014 Election Aftermath

Unions' bark worse than their bite

Unions protesting over right-to-work in 2012.

Yesterday’s election was not so much a referendum on labor reform as yet another reminder that when elected officials protect freedom and taxpayers they do not need to fear the wrath of the union political juggernaut.

These reformers winning and opponents losing cannot be easily dismissed as “it was a Republican wave which protected the politicians who took on labor reform.” Almost more striking than what was in the Republican wins was what was not in the Democrat losses.

In Michigan for example, the birthplace of the UAW, the state with the 5th highest union membership rate in the country and long considered a labor stronghold, right-to-work was nowhere to be found in the election. Not on the ballot as an initiative or Constitutional Amendment, nor even in the gubernatorial or legislative races.  

During the sole Michigan gubernatorial debate of the season, the only time worker freedom came up was as a subpart of another question and one that neither candidate addressed.

So low was the saliency of right-to-work as a negative issue that even representatives from the Michigan Education Association dismissed it. At a right-to-work panel discussion in October, MEA communications consultant David Crim explicitly stated:

I do not believe that on November 4th when people go to the polls they are going to say ‘you know what I am going to decide who I am going to vote for, for governor, for the legislature, any office on the ballot based on the right-to-work law that was passed…’ See 46:30 on video 

This is a far cry from the violent protests outside the Capitol and a “there will be blood” threat by Rep. Douglas Geiss, D-Taylor, during the passage of Michigan’s right-to-work law in 2012.

In Wisconsin, proxies for Gov. Scott Walker’s reforms have been on the ballot almost too many times to count. In every election that was deemed a ‘must win’ by unions to repeal labor reforms there was a loss. In fact, after the initial flurry of recall attempts, Gov. Walker’s budget repair bill was not a central issue of the Democratic campaigns. 

The same goes for the legislators who voted for right-to-work in Indiana and even for Gov. Kasich in Ohio, whose labor reforms were overturned yet still won re-election handily last night.

Big Labor lost four of the five gubernatorial races the AFL-CIO initially said it would focus on — Michigan, Ohio, Pennsylvania, Wisconsin and Florida — with Pennsylvania being their only win.

As Lee Saunders, chairman of the AFL-CIO’s political committee, told The New York Times in February, ousting Republicans in the industrial battleground states was “about survival.”

Labor lost races that were not even initially on their radar. This shockingly includes Illinois, where Gov.-Elect Bruce Rauner dared to take on forced unionism.

The “survival” lesson from the 2014 election is that labor reform is not the third rail of politics. Despite enduring a lot of noise from Big Labor, reformers need not fear its wrath. Voters will continue to reward those who support freedom and taxpayers.

As for labor’s survival, this election should be a lesson. It is time they give up the compulsion and privileges of the past. In order to not just survive but grow, they need to adapt.