Union Pension Fund Bailout Taking on a New Form

by Ivan Osorio on July 17, 2009

in Bailout Watch, Economy, Labor, Regulation

Senate Democrats and organized labor leaders are reportedly near a deal on removing the card-check provision from the s0-called Employee Free Choice Act (EFCA). That provision, if enacted, would have made secret ballots in union organizing elections a dead letter.

Naturally, it generated a lot of opposition. Having lost that public opinion battle, Big Labor is now trying to push through the other parts of the bill, including its bindig arbitration provision, which would subject newly unionized companies to the whims of a federally appointed arbitrator — who is unlikely to be knowledgeable about a company’s operations.

Union chiefs and their Congressional allies are still trying to salvage some form of easier organizing method from the old card check provision’s wreckage. As The New York Times reports, “key senators are considering several measures. One would require employers to give union organizers access to company property. Another would bar employers from requiring workers to attend anti-union sessions that labor supporters deride as ‘captive audience meetings.’”

Whatever “compromise” emerges from this round of sausage making, it is almost certain to include binding arbitration as it stands in the current bill. Binding arbitration could impose not only onerous work rules, but millions in new liabilities on companies, including payments into severely underfunded union pension funds.

For the unions that have mishandled those funds, this would constitute an indirect bailout, as more employers are corralled into paying into those funds. Yet no one should expect unions’ management of their pension funds to improve, since they have shown no indication of ending their established pattern of shareholder political activism, which has done nothing for shareholder value.

For more on binding arbitration, see here.

For more on EFCA in general, see here.

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