The intent of Michigan’s compulsory arbitration law, Public Act 312 of 1969, was to provide municipalities with a device to resolve labor disputes with police and fire unions without a strike. The effect has been a financial nightmare for cities engaged in contract disputes with public safety personnel. Taxpayers would be best served by the repeal of this budget-busting legislation.

I didn’t come to this conclusion arbitrarily. In what now seems like another life, I once was the vice president of a Michigan State Employees Union local.  My brother, Keith Johnson, is the controversial president of the Detroit Federation of Teachers (DFT). Marty Bandemer, president of the Detroit Police Officers Association (DPOA), is a friend. I even agree with AFSCME Council 25 President Al Garrett that public employees shouldn’t have to suffer disproportionately from bad public policy and management decisions.

Howver, neither my brief labor background nor my labor relationships have convinced me of the logic of PA 312, or its public benefit.

The law was enacted with then-Senator Coleman A. Young’s sponsorship.  Mayor Young, with roots in the labor movement, quickly discovered the bill shifts power to labor’s side of the bargaining table. He rued the day he backed it. Despite misgivings, however, he never pushed for its repeal, even after several adverse arbitration awards substantially increased Detroit’s indebtedness.

Police and fire operations often make up the largest share of a city’s budget.

Fundamentally, the legislation strips management of the ability to effectively control their finances by removing the incentive for unions to bargain in good faith. When negotiations deadlock, arbitration is automatic and arbitrators have broad latitude to fashion awards that fly in the face of efficiencies or reforms.

These panels wield enormous power over fringes and work rules, often at the expense of policymakers and taxpayers. Inane rules and procedures are allowed to become permanent fixtures in union contracts. Exorbitant awards that have no relationship to a city’s ability to pay are ususally the culmination of this ominus form of dispute resolution.

Not only are the awards binding, arbitration decisions can stretch well past the expiration of the old contract. That makes it more difficult to accurately project expenditures and balance budgets in the interim.

Police and fire unions contend that the law safeguards the public by keeping public safety workers on the job when the collective bargaining process breaks down. It’s a specious, insulting argument.

Strikes by public employees are both illegal and unprofessional.  Even work stoppages, euphemistically called “blue flu” in which police and fire personnel strategically withhold services, suggest a callous disregard for, and an unconscionable threat to public safety.

AWOL firefighters run the risk of the city going up in flame. Cops who take to the streets give law-abiding citizens the impression that disrespect for the law pays better dividends than compliance with it. Thus, the mere talk of a strike cast police and fire personnel as enemies rather than protectors.

What should be non-negotiable are the findings of contempt, fines and jail time imposed on union leadership who are inclined to violate state law.

The demands on cities are so great and resources so constricted that their long term survival hinges on having maximum flexibility to resolve contractual disputes. While yielding no immediate savings, gutting PA 312 could be an important step toward containing costs as cities try to work their way out of budget holes. No employee group should be sacrosanct.

Fiscal responsibility, after all, is a fundamental imperative of government. The safety valve for employees is their ability to air grievances with the contractual and budget decisions of their elected representatives in the voting booth.

Freedom from excessive awards will come from repealing the law, not through begging arbitrators for leniency. At stake is the eventual bankruptcy of cities, villages and townships. That could mean the Legislature would be on the hook to bail out struggling municipalities with taxpayer dollars rather than sensible law.

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2 COMMENTS

  1. I would like to say thank you so much for that work you have made in writing this posting. I am hoping the same most effective work by you down the road too.

  2. Bill,

    While I often agree with many of your columns and discussions I have to part company with you on this issue.
    First, the law does not shift power to labor’s side of the bargaining table. That is a myth that has been circulated for many years. Several studies have been done that revealed the Fire Fighter Unions and Police Officer labor organizations did not prevail on most of the issues, including economic, that were argued in front of an Arbitration Panel. One of the first studies done was conducted by the Citizens Research Council in the early 1980’s and it disclosed that employers won most of the economic issues that were arbitrated.

    The legislation does not strip management of the ability to effectively control it’s finances. Many critics argue that the law does not require an arbitrator to take into consideration the municipality’s ability to pay but this is also a falsehood.

    The language in the statute clearly states that the arbitration panel in rendering its award shall consider a host of factors contained in the law including the unit of government’s ability to pay and the financial impact an award would have on the welfare of the community that is engaged in the process. The unions do have an incentive to bargain in good faith and again that is something that is disregarded by those who oppose Act #312.
    The incentive for the unions to settle rather than arbitrate is the cost of the process and the uncertainty of the outcome. Furthermore, arbitrators do not have broad latitude to fashion awards. On unresolved economic issues, Act #312 compels the panel to award the last offer made by each disputant and the panel cannot fashion a compromise in rendering its award. The panel has to accept either the final offer made by the employer or labor organization. In fact, if arbitrators had the latitude to fasion an award, outcomes may be bettter for either party especially the employer. Furthermore, Arbitration panels cannot issue awards on non mandatory subjects of bargaining.
    When the City of Detroit lost arbitration decisions during the Young Administration it was because his team did not prepare adequately to argue their positions or present enough evidence for the panel to accept the City’s position on the issues in dispute. Moreover, the arbitrators made note of this deficiency in their awards becasue the panel could only make a determination on the facutually strong presentations made by the disputants on the various issues that were unresolved.

    While you are correct that arbitration awards can be issued well past the expiration of the old contract, there are many reasons that are too numerous to discuss for the moment that lead to this problem but it has to do with surface bargaining and delay that is a characteristic shortcoming manifested by both sides of the table.

    To imply that police officer assoiciations and fire fighter unions are very strong benefactors of this process needs amplification and clarification. The facts are that Arbitraion awards regarding pay and benefits have overwhelmingly favored the public employers. This is not an exaggeration and it is a trend that has been consistently ongoing for at least 5 years and supports studies, as mentioned previously, that the employers are winning the cases. About three or four years ago the City of Detroit prevailed on curtailing health care costs when the arbitration panel ordered the DPOA membership to pay 20% of the health care premium. Recently, An Act #312 Arbitrator awarded the Employer every issue that was submitted to arbitration except one that the parties mutually agreed to. Arbitratiion panels have been recognizing the limited resources and constraints municipal employers are dealing with and once again this is acknowleged in the award.

    Strikes have not taken place and the red and blue flu don’t happen which suggests that the outcome for which the law was passed has been accomplished.

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