Like CapCon on Facebook
Follow CapCon on XUnion Surrenders Member Benefits To Keep Unenforceable Clause In Contract
Some teachers could lose as much as $12,700
A union representing workers in the Wyoming Public Schools district gave up as much as $12,700 in annual salary and concessions that would have been paid to its members so the union could keep language in the contract that makes the payment of dues or fees mandatory as a condition of employment.
But the state's right-to-work law makes that illegal if the contract takes effect after a specific date, and, Matt Lewis, director of finance and human resources for Wyoming Public Schools, said district officials believe that clause is not enforceable.
The Kent County Education Association wanted the district to leave language in the contract that says if a teacher fails to pay dues or fees to the union, the district would begin "involuntary payroll deductions." In return, the union gave up paid leave days and altered the salary schedule by as much as $12,700 a year in some instances, Lewis said.
"Preserving that language in the contract until 2016 earned us a lot in return," Lewis said.
A separate state law prohibits school districts from deducting union dues or fees from teachers' paychecks.
Michigan Education Association UniServ Director Sandy Paesens, who represents the unions in the Wyoming Public Schools, did not respond to a request for comment.
The district has since stood by its belief that the clause is not enforceable. In April, the union asked the district to fire a bus driver who was not paying dues or fees to the union and the district rejected that request.
When the right-to-work law was passed in December 2012, many unions negotiated with school boards so they could extend their contracts for several years before right-to-work became effective on March 28, 2013.
Some unions gave up salary and benefits to get that agreement with their districts.
Patrick Wright, senior legal analyst for the Mackinac Center for Public Policy, said the union security clause in the Wyoming district was put in before March 28, 2013, but did not take effect until Aug. 15, 2013. That means it has no legal standing.
Lewis agreed.
"The union security clause is valid but innocuous," Lewis said. "In other words, we are a closed shop, but the district cannot threaten termination of an employee who refuses to pay union dues."
Audrey Spalding, education policy director for the Mackinac Center, said the negotiations to keep language that benefited the union by forcing people to still pay dues or fees wasn't in the best interest of teachers.
"This clearly shows that the union doesn't care what is best for the teachers but what is best for the union," Spalding said. "They gave up thousands of dollars per employee for unenforceable language."
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
Enjoying CapCon?
Make sure you aren’t missing anything! Sign up for our daily or weekly emails and get the quarterly print edition mailed to your home. All free!
Hydra-Lock employees vote to decertify their union
Caregivers protest union effort to skim home helpers’ pay
Right-to-work no longer rules in private sector
Small Business Owner: An Increased Minimum Wage Hurts Everyone
By Kevin Kelly
The ballot proposal that would raise Michigan's minimum wage to $10.10 per hour has raised a number of concerns for small business owners in Michigan.
This would increase the wage by 36 percent for non-tipped employees and 280 percent for tipped employees. The magnitude of this increase will have a dramatic impact on the restaurant industry.
I would venture to say few industries, if any, in Michigan are capable of absorbing this percentage increase in costs when labor already represents 30 to 35 percent of every dollar spent by the consumer.
Research indicates that today 1 in 4 restaurants fail in the first year and 60 percent within three years. That failure rate likely will increase significantly with this proposal. Furthermore, future investments in this industry will be curtailed as investors/business owners will find more profitable ways to spend their time and capital.
The coalition behind this proposal suggests that this increase be passed on to the consumer in terms of higher prices, and in part be absorbed by the business owner via lower margins. What they fail to realize is that the return on investment for the business owners in this industry is only about 3 percent. Consequently, further reduction in the margins will make this industry even less attractive for investors/business owners.
And passing this major increase in cost on to the consumer in terms of higher prices is just not practical. The cost increase will be compounded as the restaurant suppliers will also increase their prices to the restaurant. This would necessitate an even higher cost pass through to the consumer.
At a time when the Michigan economy is still struggling and consumers are by necessity very price conscious, I doubt most businesses will be able to pass on a significant price increase and survive.
A recent survey in Michigan found that 75 percent of consumers believe that small businesses will have the hardest time adjusting to price increases resulting from this minimum wage increase proposal. They stated that if approved, they will tip less than they do today. That's bad for local restaurants and servers.
Restaurant employees initially may applaud this wage increase, but I believe the reality will be either no change or even a reduction in their disposable income. The great majority of these employees today earn $15 to $20 per hour — the mandated increase to $10.10 will mean they receive fewer tips while paying higher FICA, state, and federal taxes on their new minimum wage. Restaurants also will be more likely to shift away from having tipped employees.
If approved as proposed, a greater number of businesses will fail and those that survive will need to change their business model. The cost structure will have to be greatly reduced, which generally means fewer employees. All in all nobody wins.
As in all business, cost increases are a way of life and a reasonable increase to the minimum wage could be managed by most businesses. However, a lower tipped minimum wage is essential if the restaurant industry is going to prosper and continue to provide employment opportunities for these entry-level employees.
The current proposal eliminates the tipped exception and increases Michigan's minimum wage to the highest in the nation. That will harm business owners, employees and consumers.
Kevin Kelly is the owner of Blackthorn Pub in Holly.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
More From CapCon