For Immediate Release
Friday, May 25, 2012
Contact: Michael Jahr
Vice President for Communications 
or 
Patrick J. Wright 
Director, Mackinac Center Legal Foundation
989-631-0900

MIDLAND — Michigan’s 60,000 home health care aides should no longer have so-called union dues skimmed from their subsidy checks as a result of an informal but binding opinion letter issued today by Michigan Attorney General Bill Schuette. The opinion was issued in response to a request by Rep. Paul Opsommer, R-DeWitt, six weeks after Gov. Rick Snyder signed legislation ending the stealth unionization. The Service Employees International Union has taken some $30 million from the state’s most vulnerable residents over the last six years, including more than $680,000 since the scheme was outlawed.

“This episode demonstrates how government-sector unions often act in ways that benefit themselves at the cost of taxpayers and their shanghaied members,” said Mackinac Center Legal Foundation Director Patrick J. Wright. “The independent contractors and family members who provide aid to the developmentally disabled were never government employees and should not have been paying dues in the first place.”

The SEIU was able to skim the so-called “dues” under a scheme that was concocted during the administration of Gov. Jennifer Granholm. An interlocal agreement between the Department of Community Health and the Tri-County Aging Consortium allowed for the creation of the Michigan Quality Community Care Council, which served as the shell employer for people who are actually self-employed independent contractors or, overwhelmingly, family members caring for loved ones. 

Senate Bill 1018, now Public Act 76 of 2012, made it explicit that home health aides are not public employees. An early version of  legislation to end this practice was introduced  by Rep. Opsommer.

Despite the clear language of the new law, the dues skim had continued. Michigan Capitol Confidential recently reported that the MQC3, the so-called public employer, was receiving no government funds but did receive operating expenses from the SEIU. CapCon also reported that the MQC3 is being operated out of its director’s basement. The director is currently limited to working three hours a week because she is receiving unemployment insurance.

Wright cautioned that the SEIU is trying to pass a constitutional amendment to allow the union to once again designate home health care providers as government employees and revive its lucrative revenue stream through coerced dues.

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Michigan stands at the threshold of pivotal reform that could easily save its taxpayers $10 billion by the end of this decade.

The state Senate has already acted in support of legislation that would close the chronically underfunded "defined benefit" school pension system to new employees starting in 2013. Indications are that Gov. Snyder would support this. Current public education employees would still be covered under the existing system.

This transformational reform would be wholly consistent with a 1997 measure that did the same for new state employees, providing them with a 401(k) "defined contribution" pension plan. (Public school workers were not included in the 1997 reform, although Gov. John Engler had tried to do so.) 

Such reforms are essential if Michigan's public sector is ever to achieve an economic status consistent with real-world dynamics, and if our state ever hopes to have a public sector whose compensation and benefit costs are affordable to taxpaying firms and individuals across Michigan's private sector.

Bond and credit ratings for Michigan and its local units of government will improve once this reform is enacted. This is because, as years roll by, it adds predictability, transparency and financial viability to public employee "legacy costs."

Financially and economically, this reform legislation is an essential measure for restoring Michigan to nationwide pre-eminence.

David L. Littmann is senior economist with the Mackinac Center for Public Policy, He retired from Comerica Bank in early 2005 as senior vice president and chief economist after a 35-year career in charge of Comerica’s Economics Department and Research Library. He also served as chairman of the Economic Advisory Committee of the American Bankers Association in Washington, D.C., where he met regularly with governors of the Federal Reserve Board.