Do Government Unions Really Need All That Money?

We're a lot closer to finding out

House Bill 4929 was a decent bill that got turned into a great bill, and it now sits on Gov. Snyder's desk.

It started out life as a proposal to prohibit school districts from collecting union dues on behalf of unions, and that remains in place. This was a pretty good idea in its own right; school employees will still owe unions dues and unions could threaten to have them fired if they refused to pay up, but the unions will have to do their own collections work.

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The basic principle is very sound: government employee unions are essentially partisan political institutions, and government should not go out of its way to aid political partisans.

But in the process of debating the bill the Senate added what may prove to be an even more valuable section, one that requires government unions have their books audited, and then submit the results of those audits to the Michigan Employment Relations Commission, which will then make them available to the general public. The audits are supposed to focus specifically on the costs of collective bargaining, contract administration and grievances. This is something that Mackinac Center analysts have advocated for many years, and it is gratifying to see the Legislature take this step.

This is incredibly valuable for three reasons.

First, the audits will shine light on how unions approach their core function — representing workers in the workplace. Union members in particular will benefit from knowing what resources the unions spend on negotiating and enforcing contracts.

Second, the audits will be incredibly valuable to workers who invoke their Beck rights, resigning formal union membership and reducing their payments to the union to a share of the costs of representation.* There is much debate over how much these fees should be, and good reason to believe that unions have overstated how much they spend on representing workers.

Our review of union financial statements showed that only half to one-third of union spending was connected to representation, while most unions charged Beck objectors significantly more. The audit process should provide useful information that should help to resolve this controversy.

Finally, as the right-to-work issue gains steam in Michigan, the audits should help Michigan voters to decide whether or not government unions really need the dues they force workers to pay as a condition of holding a job. In a right-to-work state, workers cannot be forced to pay any union dues or fees.

The entire argument against right-to-work laws eventually boils down to the fear that unions will be unable to collect the funds they need to represent workers if workers are not forced to pay dues and agency fees. If it turns out that representation is actually a modest portion of government union spending, then Michiganders will know that the unions really do not need most of the money that employers — including government agencies — hand over to them, and the main argument against worker freedom will vanish.

The audits will not automatically resolve this issue. The audits themselves will have to be read carefully, but the examination of union books by experienced accountants should shed new light on how government unions make use of dues and agency fees.

For too long governments in Michigan have effectively guaranteed that unions will receive hundreds of dollars for every worker they represent, with hardly any questions asked about what they do with the money.

The amounts are immense; the MEA alone typically takes in more than $60 million per year in mandatory union dues and agency fees. The result has been the creation of a permanent, taxpayer-funded lobby for big government. While workers are still obligated to fund unions they may not support, legislators are at least stepping up to follow where all this money is going. "Trust but verify" is sound advice, and the Legislature is finally applying that rule. Unquestioning trust in unions is giving way to long-overdue demand for straight answers to important questions. This could prove to be a tipping point in Michigan's politics.

*It should be noted that most workers who resign formal union membership do not invoke their Beck rights, and their agency fees are the same amount as regular union dues.