Unions scramble to aid victims in Detroit bankruptcy filing

WASHINGTON (PAI) – Union leaders, both in Detroit and nationally, blasted the decision of Detroit’s state-appointed financial czar to file for bankruptcy for the 750,000-person Motor City, even as they scrambled to try to help their members and retirees who suddenly face a very uncertain future.

American Federation of Teachers President Randi Weingarten, whose union represents the city’s teachers – whom the school district summarily fired en masse more than a year ago at the start of the crisis and then selectively rehired – reserved her highest scorn for GOP Gov. Rick Snyder. She said he set up the bankruptcy.

And Detroit’s firefighters went one better: Starting July 24, off-duty members hit the streets with informational picket lines about bankruptcy’s impact.  But their local union president assured Detroiters that his members would still stay on the job and respond to fires and other emergencies during their regular shifts.

Snyder, a white former corporate executive, and the Republican-run mostly white legislature imposed the financial regime on the heavily African American city. Financial czars run ailing Michigan governments in other majority-minority cities, such as in Flint.

Detroit Emergency Manager Kevyn Orr filed for bankruptcy for the city on July 18, citing a multi-billion-dollar debt and a declining tax base. He said creditors refused to accept low payments on their notes. The emergency manager statute lets Orr sell assets and rip up city contracts with its union workers, represented by AFSCME District 25, IAFF Local 344, a police local, a 50-person Utility Workers local, and other unions.

Bankruptcy would also let Orr, representing Snyder, trash pensions for current and future workers, as well as current retirees, along with health care negotiated in union contracts.  The hits sent the union retirees and union pension funds into federal court in Michigan to fight the bankruptcy. 

Metro Detroit AFL-CIO President Chris Michalakis and Michigan State AFL-CIO President Karla Swift said in a joint statement that Orr’s bankruptcy filing shows his prior negotiations with the unions over how to solve the financial crisis – Orr suggested things like offering pensioners huge cuts and eliminating health insurance — were a sham.

“Today’s action can be taken as confirmation that Kevyn Orr was hired, secretly and ahead of a declared financial emergency, because he is a bankruptcy expert,” the statement said.

“Every step of the way, the citizens of Detroit were told they had to give up their right to democratic representation in order to avoid bankruptcy.  Now that this filing has come anyway, it is clear that either state control has failed or that Snyder and his emergency manager appointee were not honest about their intentions in the first place.”

In an interview July 22 during her union’s Teach 2013 conference in D.C., Weingarten was even more caustic about Snyder’s role.

“It’s terrible,” she said.  “You have a city starting to see some roots and seedlings grow again” in economic development and an increased tax base after decades of decay and loss “and here you have a governor more bent on its demise.

“As someone who grew up in New York City in the 1970s,” when the Big Apple went broke, “I put all this at the feet of Snyder,” she said. A federal loan guarantee, deep pay and pension cuts New York unions agreed to and other changes – such as the end of free tuition at the City College of New York – pulled New York out of the hole.

“The moment a governor puts a city into bankruptcy, what does it say? That has to be the last, last, last (her emphasis) thing you do. If you think I’m passionate about this, you’re right,” Weingarten, a New York City teacher, declared.

Fire Fighter Dennis Hunter, a 14-year-veteran, told the Detroit Free Press he thought of the informational picket line after listening to what he called “hyperbole on the evening news” from Orr, Detroit Mayor Dave Bing, and other politicians.

The Fire Fighters walked informational picket lines, describing the impact on their pensions and on response times, at eight locations. In the last 30 years, Hunter told the paper, the Detroit fire department has gone from 1,800 Fire Fighters to 830 and from 77 fire companies to 42. Fire-related deaths rose from 30 in 1983 to 79 last year.

Orr blamed mismanagement for the city’s financial ills, but independent analysts traced another, larger cause: Detroit has been “hollowed out” for the last 60 years, and even more so when its economic mainstay, the car companies, fell victim to foreign competition. Its 1950 population was 1.8 million, while its 2010 count was 750,000, after a quarter-million-person exodus in just the prior 10 years. 

Businesses also left in droves. Residents who remained were disproportionately poor, compared to other cities. And since Detroit depends on income taxes instead of property taxes for revenue, one analyst said at an AFL-CIO session about civil rights, the city’s tax receipts crashed even faster.

Photo: Service Employees Union’s choir about to perform at a 2011 rally for jobs, Detroit. (John Rummel/PW).



Mark Gruenberg
Mark Gruenberg

Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of Press Associates Inc. (PAI), a union news service in Washington, D.C. that he has headed since 1999. Previously, he worked as Washington correspondent for the Ottaway News Service, as Port Jervis bureau chief for the Middletown, NY Times Herald Record, and as a researcher and writer for Congressional Quarterly. Mark obtained his BA in public policy from the University of Chicago and worked as the University of Chicago correspondent for the Chicago Daily News.