Dr. Sally Gooddoc, a pediatrician working in the inner-city who relies on Medicaid payments to maintain her high volume practice, barely breaks even given her reimbursements relative to her costs. Sam Grocerman accepts food stamps and attempts to supply healthy fruits and vegetables to his customers whose welfare dollars might only last two weeks into the month. Larry Landlord relies on rent subsidies from Housing and Urban Development to keep the heat on and make sure his building complies with the housing code.
Suppose that each of these three recipients belongs to a union with mandatory monthly dues that are auto-withdrawn from the transfer payments they receive from the Michigan Department of Welfare. They are collectively members of state-sponsored organizations set up unbeknownst to them to offer “representation” from the organization that is paying millions of dollars to the state. The state considers them government employees even though they all consider themselves self-employed.
Is this someone’s bad dream? Could this be the plot of a new Hollywood sci-fi flick? Nope, it’s happening right now in Michigan.
A Stealth Union Start-Up
In 2006, the United Auto Workers and the American Federation of State, County and Municipal Employees (AFSCME) formed Child Care Providers Together Michigan (CCPTM), a union with the stated purpose of organizing “all home-based child care providers.”
Michigan Governor Jennifer Granholm set up a situation where instead of having the legislature create a group for these public center employees, the Michigan Department of Human Services (DHS) entered into an inter-local agreement with Mott Community College to create the Michigan Home Based Child Care Council (MHBCCC). In essence, this just means that the state agency agrees with the community college about the expansion of the definition of public center employees.
“In September 2006, CCPTM filed a petition with the Michigan Employment Relations Commission (MERC) seeking to organize against the MHBCCC,” according to a document produced by the Mackinac Center for Public Policy.
In October and November 2006, MERC conducted a vote by mail for home day care providers asking them to vote for or against unionization. Of the 40,500 providers who would be affected by this decision, a mere 6,396 voted, with 5,921 of those votes in favor of unionization.
Then, in 2008, CCPTM and MHBCCC entered into what they called “a collective bargaining agreement.” Soon after, in January 2009, DHS began collecting “union dues” from the subsidy payments that home childcare providers receive in order to reduce the cost of care for qualifying needy families.
In summary, because these business owners provided day care for the children of parents who receive day care subsidies through the DHS, they were forced into a union they had never heard of, that many of them had not voted for and that as of now has done nothing to bargain on their behalf. The inter-local agreement provided the legal mechanism that enabled the unions to accomplish this.
Opponents Take Action
In September 2009, the Mackinac Center Legal Foundation, a branch of the Mackinac Center for Public Policy, brought suit against the DHS and its director, Ismael Ahmed, on behalf of two Petoskey providers, Sherry Loar and Dawn Ives. These women, as well as Michelle Berry and Paulette Silverson, who provide childcare out of their homes in Flint and Brighton respectively, say they “didn’t receive mail-in ballots and would have voted against organizing if they had a choice.”
The daycare owners are claiming that just because one or more of their clients qualifies for a state subsidy to offset the price they pay for childcare, does not make them government employees. The women involved in the case, as well as most home daycare providers, consider themselves self-employed. There is not a clearly defined employee-employer relationship besides that of caregiver and family.
Herbert Sanders, the CCPTM Director explained that, “providers’ compensation is supposedly subsidized by government pay. And supposedly providers can set their own rates for compensation and get additional money from the parents…Most childcare providers, the majority, if not almost all, whom we’ve had, do not receive additional payments from the parents. The only income they receive is that which they receive from the state. You have childcare providers who are making approximately $2 an hour per child which is significantly less than the minimum wage.”
Case Dismissed
The Michigan Court of Appeals dismissed the case with a “one sentence dismissal” without other explanation. On March 24, the plaintiff’s attorney, Mackinac Center Legal Foundation Director Patrick J. Wright filed an appeal with the Supreme Court.
Wright testified before the Senate Families and Human Services Committee Tuesday, March 9 on legislation intended “to prohibit stealth unionization of small-business owners.” This legislation takes “what I think is already a clear definition of public employees that doesn’t include the home-based day care providers and makes it absolutely 100 percent rock solid that it doesn’t. It is an attempt to make it extremely clear that these people are not within the public sector bargaining statute that Michigan has,” says Wright.
In February, Michigan Rep. Justin Amash proposed a very similar law that also clarifies the definition of ‘state employee’ and prohibits unions from forcing membership upon individuals who are not state employees.
“The Michigan Department of Human Services’ current interpretation is not only unconstitutional but also redefines straightforward terms,” says Amash, R-Cascade, on his website. “It is absurd to treat private employers and those they employ as state employees, and then force them into a union they do not want to join.”
The likelihood that either of these legislative efforts become law this year is slight. “I expect that the governor would veto it” because she facilitated the expanded definition of the public sector employee, said Wright. He went on to explain that she has also been willing to fund the Michigan Home-Based Child Care Council, the supposed employer. While the MHBCC was defunded by the legislature in 2009, it continues to operate because the governor shifted funds. “So that fact that she set this thing up and the fact that it is still being funded leads one to believe that she would veto any legislation,” concluded Wright. The federal legislature has awarded $2 million to the union and as much as $3.7 million in “dues” could be siphoned annually from the subsidies these home-based day care operators receive.
Though the dues tend to be very small (approximately 1.15-percent of the subsidy payments), many of the childcare providers oppose it on principle. Sherry Loar, who runs Baby Steps Childcare Center out of her home in Petoskey, told John Stossel on Fox News, “I’m not opposed to unions. Everything has its place. But when we enter my door, this is my home. If they can do that to me in my home, where does it end?”
Wright understands that some members of the union are happy with their situation, though his clients disagree and object from having dues withheld. However he clarifies that “unions can exist without having mandatory collective bargaining and…if inter-local agreements had never been entered into in the first place, and all of these people wanted to form a union to get together and lobby the legislature to make changes, they can do it just in the same way that the Michigan Municipal League does it, the National Federation of Independent Business does it, that any group that lobbies does it.”
Thirteen other states have organized home-based day-care providers into public-employee unions, affecting about 233,000 people nationally. Many of these states have been successful at passing legislation to change those policies, doing it through an executive act or a ballot initiative. But Michigan passed a law in 1965 called the Public Employment Relations Act which included a definition of “public employee.” If that definition is changed in Michigan, it has to be changed by a legislative act.
Consequences for Families
Until some form of legislation is enacted, consequences are likely to be seen. According to Wright, the forced unionization is already taking its toll. He claims, in order to get the money that was taken from their dues back, “We’ve heard of some who are raising prices for any family that has children with subsidies.”
In areas like Flint, with an unemployment rate of over 26 percent, more parents receive this type of aid. Daycare providers who want to avoid dealing with the union dues have the option of rejecting prospective clients who receive this type of aid. Being rejected and not being able to find childcare could pose as a serious roadblock for these parents. This type of federal subsidy “is supposed to help people to get from welfare to work because it is for either parents who are working jobs or in school to get training so that they can work jobs,” according to Wright. People may have to travel farther to find affordable care. All of these scenarios are going to impact those families that this money was supposed to be helping.
The AFSCME website for the union explains that it “is comprised of 40,000 strong and united Family Child Care Providers…represent[ing] every corner of the state.” It then goes on to explain that “currently we are in the process of bargaining for a brighter future in the work we do…This is about more than just our future; this is about the future of our children as well. We know that working families of Michigan need our help. That's why we are pushing for better pay and affordable healthcare so we can continue to help Michigan families.”
Then, it announces that although “dues collection should have begun in January 2008, the Union will not attempt to collect dues retroactively. Consequently the members of CCPTM have received a year of free services.”
Exactly what these services are is unclear.
The site created by the AFSCME promises that “all providers are scheduled to receive raises in all three years of the contract! Provider rates will increase between 13% and 35% over the three year contract…In the first year, rate increases are between four percent and 13 percent.”
Director Sanders clarified that “the raises negotiated were approximately 8 percent. Unfortunately, the state legislature has not fully funded our contracts so our employees have not been compensated in accordance with what we negotiated.”
Wright is concerned about what an outsider looking in on Michigan is going to think when they see what is going on and the effects that this could have on our economy and how the state is perceived nationally. “Are people going to think, ‘This is the place I want to bring my business,’ or are they going to say, ‘I’m avoiding Michigan like the Plague’?”
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