The lack of a right-to-work law is a drag on Michigan's economy.
Michigan's image as a place to do business has improved in recent years as
the state has reduced burdensome regulatory costs and taxes. But one major
roadblock to consolidating and expanding those improvements remains: an
unfriendly labor climate. Sometimes unfairly, but often with good reason,
Michigan is perceived in other parts of the country as a place where labor
unions wield inordinate and harmful influence. And improving the labor climate
in Michigan is more than a positive economic policy approach: It is necessary to
thwart abuse of the rights of Michigan workers. The following recommendations
will help enforce Michigan workers' moral and legal rights as well as have a
positive impact on the state's economic climate. See Chart 6.
17. Enforce the Beck rights of Michigan workers and enact "paycheck
Under the 1988 ruling of the U.S. Supreme Court in Communication Workers of
America v. Beck, workers are entitled to a refund of any union dues that are
used for purposes unrelated to collective bargaining activities, contract
administration, or grievance processing. Unfortunately, these Beck rights
have gone largely unrealized because workers are unaware of them and governments
have shown virtually no desire to enforce them. The result is that labor unions
routinely spend half or more of their members' dues on causes and candidates
that many of those members oppose.
Michigan took a limited step in this area by enacting Public Act 117 in 1994.
Under this legislation, individual workers must give their consent each year
before payroll deductions can be used for political action committee
contributions. Full protection of Beck rights, however, would require
worker approval for all noncollective bargaining-related dues expenditures.
Either by act of the Legislature or by executive order of the governor, Michigan
should act to protect workers' freedoms of speech and association by enforcing
the Beck decision. Requiring the posting of Beck information notices in all
private-sector firms that contract with the state would be a step in the right
direction. An April 1996 survey of 1,000 union members nationwide revealed that
78 percent were not aware of their right to have an independent accounting of
how their unions spend their dues money and to secure a refund for that portion
spent for noncollective bargaining activities.
"Paycheck protection" for all Michigan workers would put real teeth in the
effort to enforce Beck rights by requiring that unions which compel dues
and fees secure from each worker a prior, annual, voluntary, written
authorization to use any dues for noncollective bargaining activities. Workers
could automatically shield their money from noncollective bargaining activities
upfront when dues are collected, instead of having to jump through hoops to
recover those dues after they have been extracted.
Details about the Beck decision and suggestions for specific wording of
an order to enforce it in Michigan are provided in the Mackinac Center for
Public Policy study, "Compulsory Union Dues in Michigan." Information about
paycheck protection is provided in the Mackinac Center report, "Paycheck
Protection in Michigan."
For further information, please see
18. Enact a right-to-work law.
With the September 2001 passage of a "right-to-work" law in Oklahoma, 22 states
now protect the right of every worker to abstain from union membership without
fear of losing his or her job. Michigan, unfortunately, is not one of those
The lack of a right-to-work law is a drag on Michigan's economy. While
right-to-work states have a solid record of economic growth, new jobs and rising
wages, Michigan's economic performance has been lackluster by comparison.
According to economist and Mackinac Center adjunct scholar William Wilson, for
the period 1977-99, Michigan's economy grew an average of 1.8 percent
annually-well below the 3.4 percent annual growth registered in right-to-work
states (see Chart 3). Only three
states (Montana, West Virginia, and Louisiana) had slower growth than Michigan
during this period.4
A comprehensive study in the early 1990s by George Mason University economist
James Bennett demonstrated that adjusting for the cost of living, including
taxes, families in the 21 (pre-Oklahoma) right-to-work states earned $2,852 more
in real income per year than did their counterparts in Michigan and the other 29
states that lacked right-to-work laws.5 Between 1970 and 2000, the 21
right-to-work states created 1.4 million manufacturing jobs, while Michigan and
the other states without right-to-work laws lost 2.3 million manufacturing jobs.
This, in turn, led to an unemployment rate that in Michigan was 2.3 percent
higher on average than in states with a right-to-work law.6 The evidence is
clear and compelling: Right-to-work really means the right to work for more-more
individual freedom, more jobs, and more income in real terms.
Nothing could do more for worker rights and Michigan's image and economic
development than a right-to-work law. The only thing union officials have to
fear from right-to-work is the free choice of the very workers they purport to
For further information, please see
19. Pass a "Union Accountability Act."
The Michigan Public Employment Relations Act allows for the collection of
mandatory union dues as a condition of employment. But government employee
unions are not required to account — either to the state or to their members — for
how that dues money is spent. This leaves the door wide open for corruption, as
well as political spending of dues that are contrary to the interests of workers
themselves. Just as publicly held corporations are required to report their
financial condition, unions should be required to account for how they spend
their members' money.
A "Union Accountability Act" would require unions that represent state and local
government employees to file annual reports outlining their financial condition
and showing the extent of their political spending. These reports would be
audited by certified public accountants, using the same standards that apply to
businesses. Unions that do not file accurate reports would be required to refund
dues money and after a second offense would face an automatic decertification
A Union Accountability Act would not prevent workers from exercising their First
Amendment right to support their union's political agenda, but would help
citizens to "follow the money" and make it easier for those workers who oppose
the union to enforce their right to not support union politics. As a
consequence, workers would have the accurate and verifiable information they
need to determine whether or not their money was being used wisely and to root
out waste, fraud, and corruption by union officials.
The Mackinac Center estimates that government employee unions in Michigan take
in over $95 million of membership dues annually. Much of this money is used for
political initiatives, giving the unions tremendous clout in Lansing and
Washington. Loopholes in campaign finance laws allow union officials to hide the
extent of their spending.
The state of Michigan gives unions a wide range of powers, including the ability
to extract forced dues. But with power comes responsibility. Officials of
government employee unions should be willing to bear the burden of accounting
for their expenditures as a legitimate cost of business and a natural
consequence of the favorable treatment they receive under current law.
For further information, please see
20. Create a "Teacher Bill of Rights."
Gov. Engler, in a major address to the Legislature in October 1993, stated that
no teacher in Michigan should be coerced into joining and paying dues to a
union. Unfortunately, a coercive employment situation persists for most Michigan
public school teachers. Therefore, it's high time for the Legislature to pass,
and the governor to sign, a "Teacher Bill of Rights" that would make exclusive
representation optional for each individual teacher in Michigan and remove
unions' duty of fair representation toward any teacher who opts out of his or
her workplace union.
The monopoly bargaining privilege of the Michigan Education Association (MEA)
and the Michigan Federation of Teachers (MFT)-afforded by Michigan's existing
Public Employment Relations Act (PERA)-is the basis of the power of these two
labor organizations to prevent teachers from negotiating their own terms of
employment. As the exclusive representative, school employee unions inevitably
end up bargaining education policy with local school boards and state
government. The interests and objectives of individual teachers are often
subordinated to the "collective whole" even when the individual teacher's
employment opportunities may suffer as a result.
Accordingly, current legal requirements that force teachers to accept union
membership or pay dues or fees as a condition of employment should be repealed.
PERA should be further amended to permit unions to represent only those teachers
who affirmatively elect such representation in writing. Employees who do not
agree to such representation should be permitted to negotiate for themselves.
Under a Teacher Bill of Rights, teachers would be allowed to opt out of the
bargaining unit and negotiate their own wages, benefits, hours, and other terms
of employment. Unions would owe no duty of fair representation to any teacher
who elects independent (non-collective bargaining) status, but would be
prevented from discriminating or retaliating against any teacher on the basis
that he or she has elected not to join or be represented by a union.
Relieving unions of any legal duty toward non-members eliminates their claim
that they are forced to represent all without being compensated for their
services-the so-called "free rider" argument. Forced dues would neither be
needed nor allowed.
A Teacher Bill of Rights would allow teachers to act autonomously, getting the
best deal for their services as independent professionals or joining a union
when they believe it is in their best interest to do so. This freedom will bring
new dignity to the teaching profession in Michigan and appropriately reward the
skilled teachers who should be free to negotiate for the value of their
For further information, please see
21. Remove the state government's ability to act as a union collection
agent for union political funds.
If workers' wages are the source of union funding, then employers are the pipes
that convey the flow of dues to labor organizations. Payroll deduction is a
convenient and popular method of funds collection that springs from a
contractual provision between the union and the employer. Without such an
agreement, unions would bear the burden of collecting funds from their
memberships after the money has made its way into workers' pockets. This would
require union collection agents to persuade members to consciously and
voluntarily part with their hard-earned money.
The state has a compelling interest to remove partisan politics from government
workplaces. One solution, the banning of "wage check-offs" for political
purposes, has withstood judicial scrutiny. Political action committee (PAC)
funding is already regulated in Michigan: Public Act 117 of 1994's ban of
"reverse check-offs" (which stipulate that a worker must take action if he does
not want political contributions deducted from his paycheck) and
requirement for annual, worker consent of PAC payroll deduction authorizations
were significant steps toward greater worker freedom and union accountability.
According to the Michigan Chamber of Commerce, after union legal challenges
resulted in Public Act 117 being upheld in court, worker contributions to union
PACs declined in 1998, indicating many workers' desires were previously being
thwarted. The Legislature should build on these reforms by prohibiting
government collection of all political funds via payroll deduction.
Prohibiting political payroll deduction would serve three additional purposes.
First, it would afford greater protection of workers' free speech rights by
returning direct control over disbursement of union political funds to the wage
earner before it goes to union coffers. Second, it would compel unions during
collection periods to persuade their members that the unions' political
expenditures properly represent the political views of their memberships. Third,
it would save Michigan taxpayers the cost of having the government acting as the
dues collector for unions, which are private enterprises and ought to absorb
such costs themselves.
See Chart 4 for an illustration of PAC contributions.
22. Repeal the Prevailing Wage Act of 1965.
Imagine a law that subsidizes the well-off, discriminates against large segments
of the workforce, wastes tens of millions of dollars every year, and hurts the
competitiveness of Michigan businesses. Unfortunately, there is no need to
imagine such a law: Those are the effects of the Michigan Prevailing Wage Act of
1965. It is a classic case of special-interest legislation that benefits a
narrow few at the expense of the many.
The act, which covers construction projects in Michigan that receive full or
partial funding from the state, requires workers to be paid "prevailing" wages
and benefits.7 In practice, this invariably means the rates fixed in
local collective bargaining agreements-in other words, union wages and benefits.
The competitive compensation packages established by nonunion contractors and
their employees-who make up almost two-thirds of Michigan's construction
workforce-simply are ignored in determining "prevailing" rates. Less expensive
nonunionized firms, along with their competent and qualified workers, are
effectively frozen out of work on a host of projects from school construction to
road repair. In a Mackinac Center report, Ohio University professor of economics
Richard Vedder estimates that Michigan's prevailing wage law increases the cost
of construction on applicable projects by at least 10 percent.8 That means the
Prevailing Wage Act cost Michigan taxpayers an extra $421.2 million in 1999, an
amount equal to 6 percent of the revenue generated by the state's income tax on
The prevailing wage law also reduces employment in construction. Between
December 1994, when the law was found to be pre-empted by federal law, and June
1997, when the law was reinstated, Michigan saw construction employment rise by
17,600 jobs, compared to only 4,000 jobs that opened up in the period
immediately prior to the court decision that temporarily struck down the
The Legislature should apply common sense and sound economics by repealing this
costly special-interest legislation. At the very least, it should follow the
example of the Ohio Legislature, which in 1997 exempted public schools from
having to pay the excessive costs mandated by that state's prevailing wage law.
Hillsdale College economist Gary Wolfram estimates that by following Ohio's
example, Michigan would save over $150 million in school construction costs
The evidence on employment and construction costs shows that the state
prevailing wage law has adverse consequences. The Legislature would do well to
For further information, please see