Binding arbitration is a complex process, poorly understood except by relatively few specialists: union officials, government negotiators, and their attorneys. At its core the arbitration process boils down to one person, the "neutral" arbitrator, offering his or her best guess at what is fair, then leaving the consequences for local officials and union leaders to sort out. As the Detroit example shows, arbitrators can make mistakes. Such mistakes are nearly impossible to correct.
Another difficulty that arbitration creates for government officials is delay. When rulings are not made until well after a contract is scheduled to take effect, state and local officials, both executive and legislative cannot be certain of personnel costs in the budget, and must prepare for the risk of large retroactive wage payments. So far, the Civil Service Commission has succeeded in keeping state employee contracts up to date. Arbitration under P.A. 312 is a time-consuming process, however, and late decisions are the rule.
Only 16.3 percent, roughly one in six, of P.A. 312 arbitration cases from 1990 to 1994 were resolved within 300 days of a petition being
filed.7 Arbitration rulings handed down since January 2000 show that only four out of 35 decisions came within a year of the date the contract was to take effect. The average ruling came more than 22 months late. In one case, police officers and officials in St. Clair County were forced to wait 46 months
- nearly a year after the three-year contract expired - for the arbitrator's ruling on their
When arbitration awards are late, pay increases given for earlier years must be made up as back pay. This imposes a burden, in terms of both cost and uncertainty on government finances, and forces employees to wait for pay increases and improvements in benefits.