Time to Repeal Public Act 312

The Legislature is set to consider a bill that would repeal Public Act 312 of 1969, which creates a binding arbitration process for labor disputes involving police officers and firefighters. On its surface, binding arbitration seems to be an attractive way to bring unions and employers together and create a contract when the two sides cannot agree on terms, but in practice binding arbitration has failed to resolve labor disputes quickly and fairly.

  • Binding arbitration works well when there are clear rules for an arbitrator to apply, but under PA 312 the arbitration panel has a wide range of criteria, with no clear rules to guide them, as they attempt to cobble together the terms of a fair contract. Although arbitrators are often used to interpret existing contracts, it is rare for companies and unions in the private sector to bring in an arbitrator to decide the terms of a contract.
  • The panel is made up of a union representative, a management representative, and a third, neutral chairman provided by the state. In practice, the neutral member decides all controversial issues on his or her own. Too much depends on the wisdom of one individual who may have no independent knowledge of local conditions and no accountability to the residents who will live with the consequences of his or her decision.
  • Under the terms of the statute, the entire process should be completed within a few months. In reality, the typical arbitration ruling takes 15 months. In one case, the arbitration decision did not come down until three years later, after the contract it was to take the place of would have expired.
  • The process is costly. A task force assembled by Gov. Jennifer Granholm, not heretofore known as a union buster, found that binding arbitration added as much as 5 percent to the cost of local governments throughout the state.

At a time when governments are struggling to balance their budgets, it is essential that the public have maximum control over spending decisions. The choices that have to be made are not the sort that should be made by unaccountable arbitrators. The time has come for repeal of PA 312.

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.