Michigan Forces Business Owners Into Public Sector Unions

[Jack]

After hemorrhaging members for decades, labor unions have hit upon a new way to shore up their annual dues revenue.

By PATRICK J. WRIGHT AND MICHAEL D. JAHR
Flint, Mich.

Michelle Berry runs a private day-care service from her home on the outskirts of this city, the birthplace of General Motors. "The Berry Patch," as she calls the service, features overstuffed purple gorillas, giant cartoon murals, and a playroom covered in Astroturf. Her clients are mostly low-income parents who need child care to keep their jobs in a city that now has a 26% unemployment rate.

Ms. Berry owns her own business—yet the Michigan Department of Human Services claims she is a government employee and union member. The agency thus withholds union dues from the child-care subsidies it sends to her on behalf of her low-income clients. Those dues are funneled to a public-employee union that claims to represent her. The situation is crazy—and it's happening elsewhere in the country.

A year ago in December, Ms. Berry and more than 40,000 other home-based day care providers statewide were suddenly informed they were members of Child Care Providers Together Michigan—a union created in 2006 by the United Auto Workers and the American Federation of State, County and Municipal Employees. The union had won a certification election conducted by mail under the auspices of the Michigan Employment Relations Commission. In that election only 6,000 day-care providers voted. The pro-labor vote turned out.

Many of the state's other 34,000 day-care providers never even realized what was going on. Ms. Berry tells us she was "shocked" to find out she was suddenly in a union. The real dirty work, however, had been done when the state created an "employer" for the union to "organize" against.

Of course, Michigan's independent day-care providers don't work for anybody except the parents who were their customers. Nevertheless, because some of these parents qualified for public subsidies, the Child Care Providers "union" claimed the providers were "public employees."

Michigan's Department of Human Services then teamed with Flint-based Mott Community College to sign an "interlocal agreement" in 2006 establishing a separate government agency called the Michigan Home Based Child Care Council. This council was directed to recommend good child-care practices—and not coincidentally, to serve as a "public employer." Although the council had almost no staff, no control over the state subsidies and no supervision of the providers' daily activities, it became the shell corporation against which the union could organize.

Thus the state created an ersatz employer and an ersatz "bargaining unit" against which what was essentially an ersatz union could organize.

Today the Department of Human Services siphons about $3.7 million in annual dues to the union—from the child-care subsidies. The money should be going to home-based day-care providers—themselves not on the high end of the income scale. Ms. Berry now sees money once paid to her go to a union that does little for her. She says she is "self employed and wants nothing to do with the union."

The union claims it is working for Ms. Berry and others like her by pressing the legislature to increase child-care payments. But lobbying is not an activity that requires compulsory unionism.

Sherry Loar, who owns a day-care center in Petoskey, Mich., is the lead client in a lawsuit brought against the Department of Human Services in state court by the legal arm of the Michigan-based Mackinac Center, a free-market think tank for whom we work. (Ms. Berry is petitioning to join the suit.) The case is based on the grounds that state law presumes that no one is subject to public-sector bargaining unless state legislation has made them so, and in this case, there is no legislation—only the flimsy interlocal agreement. "I'm not opposed to unions," Ms. Loar says, "everything has a place. But when we enter my door, this is my home."

The larger question, not part of this lawsuit, is whether this sort of unionization violates the U.S. Constitution. The freedom of association clause prevents compulsory unionism except, courts have determined, when it is necessary for "labor peace." But in this case, whom would the day-care providers riot against? The parents?

The federal question may be raised soon, as other states have pursued similar unionization schemes over the past decade, primarily at the behest of the American Federation of State, County and Municipal Employees and the Service Employees International Union, better known as the SEIU. Fourteen states have now enabled home-based day-care providers to be organized into public-employee unions, affecting about 233,000 people. And nine have done so with home health-care providers. The idea to unionize in this way was hatched in California, though ironically Gov. Arnold Schwarzenegger has vetoed legislation to unionize child-care providers.

It's telling that in several states that have gone down this road, state and federal subsidies are the source of the union dues. In Michigan, the scheme is essentially throwing a cash lifeline to unions like the UAW, which are hemorrhaging members.

There's another, ironic twist to the story in the Great Lakes state. Last month the Michigan Economic Development Corporation granted a for-profit SEIU subsidiary, the SEIU Member Action Service Center, a $2 million refundable tax credit to locate a new business facility in the state that will provide administrative services for the union and other local labor organizations. The subsidy strikes us as inappropriate because it categorized the SEIU subsidiary as a business and occurred just before the 5,000 member SEIU local 517M granted the state wage concessions. Shamelessly, the SEIU requested the credit because Michigan has high labor costs.

Some states are redefining straightforward terms—a union as a business, an employer as an employee—primarily to aid organized labor. This highlights the need to re-examine public-sector collective bargaining. Shielded from market pressures, public employee unions have driven up taxpayer costs for decades. Now labor leaders are shanghaiing entrepreneurs such as Ms. Berry and Ms. Loar into government unions because their clients receive government aid. Who will be next? Grocers? Landlords? Doctors?

Mr. Wright is director of the Mackinac Center Legal Foundation. Mr. Jahr is senior director of communications for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich.

http://online.wsj.com/article/SB10001424052748703478704574612341241120838.html

[Jack]

State forces day care providers into union

Paulette Silverson has taught children the ABCs, shapes, colors, and more in the 12 years she has operated her privately owned and operated in-home day care business, Wonder Care.

Yet, it was the Brighton woman who learned a new lesson when the state told her she is a government employee and union member — statuses she said she did not want and did not know was possible.

"I was not aware of anything going on until I received a letter in the mail a year ago last December, which said, 'Welcome to the (United Auto Workers). You are now a union member,' " Silverson said. "How can I be a union member? I'm not employed by anyone. I'm self-employed. Don't you need to be an employee of someone to become organized into a union?"

The Mackinac Center Legal Foundation, a public interest law firm at the Mackinac Center for Public Policy, agreed and filed suit in the Michigan Court of Appeals in September claiming the state's Department of Human Services illegally took money from day care providers under a "scheme" that forced them into a government employees union.

The court dismissed the lawsuit in December without providing a reason for the action.

Patrick Wright, foundation director, said this week he is considering legal options to continue the fight on behalf of Silverson and co-plaintiffs Sherry Loar, of Petoskey, and Michelle Berry, of Flint.

"There is a potential cost to this whole process," Wright said. "First of all, some of the providers may bump their costs up to not lose money; and, secondly, it's money being taken from the program ... that is now going to a union, and, third, you may find some low-income families will find it harder to find providers."

That union, Child Care Providers Together Michigan, is a joint effort of the UAW and American Federation of State, County and Municipal employees. It began with a 2006 interlocal agreement between DHS and Mott Community College that created the Michigan Home Based Child Care Council, which Wright said is a government "shell corporation" designed to get around both possible political and constitutional obstructions.

Numerous inquiries to the UAW International Union in Detroit went unanswered, and efforts to reach the Michigan Home Based Child Care Council were unsuccessful.

State department spokesman Edward Woods III gave a two-sentence response: "The (appeals court) decision speaks for itself. We have no additional comment on this pending litigation."

The agreement
The agreement between DHS and Mott Community College states "providing quality care" in Michigan can be "improved further" by "enhanced cooperation" between the DHS and the college.

In September 2006, the union filed a petition with the Michigan Employment Relations Commission seeking to organize against the Michigan Home Based Child Care Council.

The Employment Relations Commission conducted a vote by mail in October and November 2006. Of the 40,500 home day care providers affected by the decision, 6,496 voted, according to information from the Legal Foundation.

Silverson said in hindsight she recalls receiving an envelope with writing on the outside asking if she wanted to join a union. She said she checked the "no" box without opening the envelope because she thought it might be junk mail, but a friend later told her that was probably her vote.

Kathy Clark, owner/operator of in-home day care Clark's Childcare in Olivet, said she used to get phone calls and fliers asking her to join a union so that "day care providers in Michigan could have access to lower health insurance costs." She always passed because she has health insurance through her husband's employer.

However, in December 2008, Silverson and Clark each received a letter from the Child Care Council informing them that, beginning in January 2009, a 1.15 percent union dues/service fee will be deducted from the subsidy they receive from the state. Those in-home day care providers who do not receive subsidiary payments from the state pay no dues to the union.

Wright estimated the union received about $3.7 million in dues by the end of 2009.

"Since receiving the (December 2008) letter, nothing else has been sent about health insurance costs," noted Clark, who is not a party in the lawsuit filed by the Legal Foundation.

Silverson said she also asked the state about the health benefits, but no one from the union or state has really answered her questions. She said she has never received a return call from the Child Care Council.

"I asked, 'What are you going to do for us,' and they both told me, 'We're going to work to improve your working conditions,'" Silverson said. "I said, 'Oh? Will you come in and paint my house? Will you put an addition on my house? How are you going to improve my conditions?' I've gotten no answer.

"I want my UAW benefits, my state benefits, my health care, my 401(k). I want every benefit," she said.

According to the bargaining agreement, a joint committee on health care is to be created to "explore options and costs with the intent of identifying and offering affordable health options for providers and their families." Whether that has been done has not been answered.

Who really suffers?
The very people the agreement is supposed to help — low-income families — said they could suffer instead because the now-affordable day care providers may find themselves having to increase costs to cover expenses.

That increase will be passed to the people who are already struggling to afford day care.

Among those worried is Jessica Rudolph, a single mother who relies on Silverson's day care for her 3-year-old son, Robert. Rudolph works an average of 30 hours a week cleaning houses. She earns $8 per hour driving to an assignment and $9.25 an hour actually cleaning.

After day-to-day expenses, Rudolph said she does not have a lot left for day care, but she has no choice because she has to work.

"(Robert's) had behavior problems, and being there has helped him," she said about Silverson's day care. "There are some cheaper ones, but they aren't as good as Paulette. She gives kids structure, discipline and activities. She's teaching, offering a warm environment, structure and discipline."

Fourteen states have enabled home-based day care providers to be organized into public employee unions, affecting about 223,000 people.

According to the Legal Foundation, Michigan used a model created in California, Oregon and Washington related to home care workers — those who provide care in the homes of older residents and the disabled.

"If the state is determined to place these day care workers in a union, it needs an act of the Legislature," Wright said. "If they can do this, who is next? The doctors whose patients get Medicaid or the tenants who get (government) help with rent? It could be the small grocers whose clients get food stamps. It could be anyone who has clients who get government subsidiary can be unionized."

http://www.livingstondaily.com/article/20100115/NEWS01/1150306/-1/