When government employees are involved, there is a case to be made that agency fee is something that ends up costing taxpayers.
Thanks to a practice known as "agency fee," state and local
governments last year spent around $150 million to fund private organizations
that generally advance bigger and more expensive government. This expenditure
doesn’t appear on any government budget as a line item, but agency fee involves
real money that has real impact on state and local government, as well as on
On paper, agency fee means that all workers covered by a
collective bargaining agreement must either join the union or pay an amount
equivalent to union dues. Typically the employer agrees to collect those dues
and fees for the union. Agency fee is often described as "forced dues," because
employees are compelled to pay union dues to keep their jobs. But when
government employees are involved, there is a case to be made that agency fee is
something that ends up costing taxpayers.
There’s no law that requires the state of Michigan to impose
agency fee on state workers. First of all, government employee unions are
creations of state law. Michiganians, accustomed to collective bargaining, may
be surprised to hear this, but state governments are not obligated to engage in
collective bargaining. Several states, including fast-growing Virginia and North
Carolina, do not allow government employees to bargain collectively at all.
Or states can allow government employees to bargain collectively
without forcing workers to pay union dues. Twenty-three states have
right-to-work laws, which prohibit agency fee clauses. Indiana gives public
school teachers the same protection.
But even in Michigan, which lacks right-to-work protections,
state and local governments are free to negotiate contracts without imposing
forced union dues. Unions, for obvious reasons, place a premium on the agency
fee clause while governments, like most employers, tend to back down on the
issue. But there’s nothing in state or federal law that requires any government
entity to implement agency fee.
Under a string of U.S. Supreme Court cases, workers who are
subjected to forced dues may ask for a partial refund. In theory, their payments
to the union should be limited to their share of the costs of worker
representation, leaving them free of the costs of union political and social
activity. In practice, the process for determining the refund is burdensome,
clumsy and largely controlled by the union itself. The practical upshot is that
workers have little control over dues money.
Which leads to the question: When government collects money out
of its employees’ wages — paid with tax dollars — and turns that money over to a
union under the terms of a contract signed by government officials, with little
employee control over the process, who is it really that’s paying union dues,
government employees or taxpayers?
We estimate that agency fee clauses in state government employee
contracts extracted $18.9 million dollars last year. This amount only covers the
state civil service; local governments and public schools employ several times
as many unionized employees. The full cost of agency fee for Michigan taxpayers
is likely to exceed $150 million, all of which went to some of the most
intractable opponents of government reform in the state.
Since their dues income coincides with the number of state
employees, government employee unions can be counted on to fight layoffs or any
other changes to government operations that might make fewer government jobs
available, and to support tax increases over spending cuts. Union demands for
work rules and pay hikes in collective bargaining will tend to make government
services more costly as well. When government officials sign an agency fee
contract, they are effectively agreeing to fund a permanent lobby for more
State taxpayers should ask whether all that is money well spent.
Passing a right-to-work law covering government employees will take the
responsibility for funding government employee unions away from state officials
and leave it completely in the hands of government employees — where it belongs.
In the meantime, state and local government officials should call for the
removal of agency fee from the next set of government employee contracts. In a
time of unprecedented economic difficulties, it makes no sense for Michigan
taxpayers to fund organizations whose main effect is to increase the size and
cost of government.
Paul Kersey is senior labor policy analyst 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 author and the Center are properly cited.