Michigan Forces Business Owners Into Public-Sector Union

(Editor's note: This is an edited version of an Op-Ed that appeared in The Wall Street Journal on Dec. 25, 2009. A similar commentary appeared in The Weekly Standard on Dec. 28,2009.)

Michelle Berry runs a private day care service from her home on the outskirts of Flint, the birthplace of General Motors. "The Berry Patch," as she calls the service, features overstuffed purple gorillas, giant cartoon murals, and a playroom covered in Astroturf. Her clients are mostly low-income parents who need child care to keep their jobs in a city that now has a 26 percent unemployment rate.

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Berry owns her own business — yet the Michigan Department of Human Services claims she is a government employee and union member. The agency thus withholds union dues from the child care subsidies it sends to her on behalf of her low-income clients. Those dues are funneled to a public-employee union that claims to represent her. The situation is crazy — and it's happening elsewhere in the country.

A year ago in December, Berry and more than 40,000 other home-based day care providers statewide were suddenly informed they were members of Child Care Providers Together Michigan — a union created in 2006 by the United Auto Workers and the American Federation of State, County and Municipal Employees. The union had won a certification election conducted by mail under the auspices of the Michigan Employment Relations Commission. In that election only 6,000 day care providers voted. The pro-labor vote turned out.

Many of the state's other 34,000 day-care providers never even realized what was going on. Berry tells us she was "shocked" to find out she was suddenly in a union. The real dirty work, however, had been done when the state created an "employer" for the union to "organize" against.

Of course, Michigan's independent day care providers don't work for anybody except the parents who are their customers. Nevertheless, because some of these parents qualify for public subsidies, the Child Care Providers "union" claimed the providers were "public employees."

Michigan's Department of Human Services teamed with Flint-based Mott Community College to sign an "interlocal agreement" in 2006 establishing a separate government agency called the Michigan Home Based Child Care Council. This council was directed to recommend good child care practices — and not coincidentally, to serve as a "public employer." Although the council had almost no staff, no control over the state subsidies and no supervision of the providers' daily activities, it became the shell corporation against which the union could organize.

Thus the state created an ersatz employer and an ersatz "bargaining unit" against which what was essentially an ersatz union could organize.

Today the Department of Human Services siphons about $3.7 million in annual dues to the union — from the child care subsidies. The money should be going to home-based day care providers — themselves not on the high end of the income scale. Berry now sees money once paid to her go to a union that does little for her. She says she is "self employed and wants nothing to do with the union."

The union claims it is working for Berry and others like her by pressing the Legislature to increase child care payments. But lobbying is not an activity that requires compulsory unionism.

Sherry Loar, who owns a day care center in Petoskey, is the lead client in a lawsuit brought against the Department of Human Services in state court by the Mackinac Center Legal Foundation. The case is based on the grounds that state law presumes that no one is subject to public-sector bargaining unless state legislation has made them so, and in this case, there is no legislation — only the flimsy interlocal agreement. "I'm not opposed to unions," Loar says, "everything has a place. But when we enter my door, this is my home." (The Michigan Court of Appeals dismissed without explanation the MCLF suit on Dec. 30. Further legal options are under review.)

The larger question, not part of this lawsuit, is whether this sort of unionization violates the U.S. Constitution. The freedom of association clause prevents compulsory unionism except, courts have determined, when it is necessary for "labor peace." But in this case, whom would the day care providers riot against? The parents?

The federal question may be raised soon, as other states have pursued similar unionization schemes over the past decade, primarily at the behest of the American Federation of State, County and Municipal Employees and the Service Employees International Union, better known as the SEIU. Fourteen states have now enabled home-based day care providers to be organized into public-employee unions, affecting about 233,000 people. And nine have done so with home health care providers. The idea to unionize in this way was hatched in California, though ironically Gov. Arnold Schwarzenegger has vetoed legislation to unionize child care providers.

It's telling that in several states that have gone down this road, state and federal subsidies are the source of the union dues. In Michigan, the scheme is essentially throwing a cash lifeline to unions like the UAW, which are hemorrhaging members.

There's another, ironic twist to the story in the Great Lakes state. Recently the Michigan Economic Development Corp. granted a for-profit SEIU subsidiary, the SEIU Member Action Service Center, a $2 million refundable tax credit to locate a new business facility in the state that will provide administrative services for the union and other local labor organizations. The subsidy strikes us as inappropriate because it categorized the SEIU subsidiary as a business and occurred just before the 5,000 member SEIU local 517M granted the state wage concessions. Shamelessly, the SEIU requested the credit because Michigan has high labor costs.

Some states are redefining straightforward terms — a union as a business, an employer as an employee — primarily to aid organized labor. This highlights the need to re-examine public-sector collective bargaining. Shielded from market pressures, public employee unions have driven up taxpayer costs for decades. Now labor leaders are shanghaiing entrepreneurs such as Michelle Berry and Sherry Loar into government unions because their clients receive government aid. Who will be next? Grocers? Landlords? Doctors?


Patrick J. Wright is director of the Mackinac Center Legal Foundation and Michael D. Jahr is senior director of communications at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the authors and the Center are properly cited.