card check

NLRB to Businesses: Tell Employees they Can Unionize

by Ivan Osorio on August 25, 2011 · 2 comments

in Deregulate to Stimulate, Economy, Employment, Labor, Politics as Usual, Regulation

The National Labor Relations Board has issued a new rule “requiring most private-sector employers to notify employees of their rights under the National Labor Relations Act by posting a notice.” The NLRB’s new rule, in its background section, suggests which right the Board considers paramount:

The NLRA, enacted in 1935, is the Federal statute that regulates most private sector labor-management relations in the United States.1 Section 7 of the NLRA, 29 U.S.C 157, guarantees that

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities[.]

In short, the ruling is part of the NLRB’s ongoing efforts to enact policy changes favorable to organized labor.

While the posting of a notice is hardly assured to send a flood of new members into union ranks, the new notice rule clearly fits into a pattern of pro-union activism by the NLRB — including proposals to shorten election periods and to allow unions to organize by remote electronic voting (essentially electronic card check), as well as the Board’s campaign against Boeing for opening a factory in a right to work state.

The notice rule’s impact may pale in comparison to those other actions, but it does suggest that the NLRB is throwing everything at the wall in the hope that something sticks well enough to keep Big Labor happy and on board, for political reasons. The Obama administration failed to enact pro-union legislation like the so-called Employee Free Choice Act when Democrats controlled the House, so now it is trying its hardest to get the unions something to keep them fully on board and engaged for the 2012 election.

The rule is scheduled to be posted in the Federal Register on August 30 and then to go into effect 75 days later, on November 14.

For more on the NLRB, see here.

For more on labor policy, see workplacechoice.org.

Trumka’s Empty Threat to Democrats

by Ivan Osorio on May 20, 2011

in Economy, Employment, Labor, Politics as Usual, Regulation

AFL-CIO President Richard Trumka is warning Democratic politicians today: Push our agenda, or we won’t support you in the 2012 election. It’s hard to imagine those Democrats quaking in their boots. As The Huffington Post’s Sam Stein notes,

The labor community — the AFL-CIO especially — has been taking steps towards greater independence from the Democratic Party as its disappointments with the Obama administration and congressional Democrats have mounted. The typical response from party insiders has been dismissive assumptions that labor has nowhere else to go.

Indeed, Trumka’s threats ring hollow. It’s not like the Obama administration hasn’t been trying to advance Big Labor’s agenda. It’s been Republican opposition in Congress that has thwarted card check legislation and the confirmation of some pro-union executive branch nominees. Yet it seems that Trumka still had to find some reason to throw a public tantrum. The HuffPo’s Stein reports:

Trumka also says in the prepared remarks that party affiliation alone won’t determine how the federation allocates its resources in 2012. If Republican lawmakers embrace parts of the AFL-CIO’s agenda, the union federation will respond in kind.

The likelihood of a rush of Republican politicians (beyond perhaps a couple of rust belt outliers) seeking union endorsements by supporting Obamacare, card check, foreign trade barriers, more spending, and higher taxes  is, to put it mildly, nil.

Today, government employees make up a majority of all union members, so it is in public sector employment where the future of organized labor will be decided. So far, the unions aren’t doing well.

At the state and local level, a growing number of Democrat elected officials are taking on public employee unions for the simple reason that their jurisdictions are broke. Facing a decision between angering either the general public through increased taxes and service cuts or their union supporters through spending cuts, many are choosing the latter.

The taxpaying public will put up with the diffuse costs they bear to pay for public sector unions’ concentrated benefits only as long they remain relatively low enough per payee. When those costs start rising and government employee compensation starts to drain resources from essential public services, public resistance will tend to rise with it.

By the same token, voters aware of their states’ and cities’ deep financial problems will likely reward elected officials who seriously address those problems. Thus, Democrats for whom losing union endorsements was once a worrying prospect may now find taxpayer ire a bigger concern.

For more on labor see here and here.

Will the NLRB Push Big Labor’s Agenda?

by Ivan Osorio on November 4, 2010

in Agenda for Congress, Economy, Employment, Labor, Regulation

Organized labor expended enormous amounts of resources and effort to give Democrats control of Congress in 2006 and the White House in 2008. For this considerable investment, union leaders hoped to get a rich return in enactment of the so-called Employee Free Choice Act (EFCA) — which, in its current form, would:

  1. Effectively eliminate secret ballots in union organizing elections;
  2. Enjoin federally appointed arbitrators to impose contracts on newly unionized companies that could not reach agreement with the union after 120 days; and
  3. Increase employer penalties for unfair labor practices, which include actions resisting unionization that would be legal in other contexts, such as promising to raise wages.

Now, with the Republican takeover of the House of Representatives and the Democrats’ Senate majority considerably narrowed, the clock is running out fast on Big Labor’s legislative agenda. As a result, Democrats in Congress will probably try to enact as many items on their union allies’ agenda as possible during the lame duck session. As I noted yesterday, we could see:

  1. A version of EFCA without its politically toxic card-check provision;
  2. A version of EFCA with card-check replaced with a different organizing mechanism favorable to unions, such as expedited elections or electronic voting;  or
  3. EFCA’s three sections being split off and attached to other legislation.

Moreover, as hopes for organized labor’s agenda fades in Congress, unions and the Obama administration are likely to shift the fight toward the National Labor Relations Board (NLRB). With Craig Becker and Mark Gaston Pearce, both recess-appointed by President Obama, sitting on the Board, the unions have a good chance of getting administratively what they couldn’t get legislatively.

Becker, a former associate counsel with the Service Employees International Union (SEIU),  failed to get Senate confirmation, largely due to previous writings in which he stated that employers should have no say in the organizing process.

Pearce hasn’t been as controversial, but he recently gave indication of being as dismissive of employers’ free speech rights — and of what the Board might try to accomplish. On October 21, at a labor law conference in Boston, Pearce said that he believed that the time period between the filing of an organizing election petition and the actual election should be “as brief as possible.” Shorten that period enough, and you end up with “ambush” election, in which employers barely get an opportunity to respond to a union organizing campaign.

Pearce’s comment suggests the possibility of the NLRB doing an end run around Congress. EFCA opponents in Congress should take the threat seriously, and counteract it if needed.

For more on labor, see here and here.

Killed by Pension Accounting

by Ivan Osorio on October 18, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Labor, Regulation

Think accounting rules are a boring topic? You wouldn’t if the fate of your business rested on it. Indeed, a rule change may be coming soon that may expose the huge liabilities many companies face as a result of their participating in some grossly underfunded union pension funds. In a straightforward, non-boring manner, Washington Examiner columnist Mark Hemingway breaks it down.

On Nov. 1, the Financial Accounting Standards Board (FASB) ceases to take public comment on a new rule requiring that companies more accurately report liabilities they have from participation in multiemployer pension plans. Unless FASB is persuaded otherwise, the rule takes effect Dec. 15.

There are some 1,500 multiemployer pension plans in the United States, which are unique to unions. In these plans, multiple companies pay into the pension plan, but each company assumes the total liability.

Under “last man standing” accounting rules, if five companies are in a plan and four go bankrupt, the fifth company is responsible for meeting the pension obligations for the employees of the other four companies.

What this means is that companies with union labor often have pension liabilities that are several multiples higher than the pension expenditures they report — the Kroger grocery store chain shocked analysts last year when it disclosed its multiemployer pension liabilities more than doubled in a year to $1.2 billion.

Ratings agencies such as Moody’s and Standard and Poor’s have been highlighting the lack of transparency in union pension plans. Now Wall Street wants union businesses to be upfront about their liabilities.

FASB’s new rule could effectively wipe out the paper worth of many companies, especially in the trucking and construction industries. Once banks and creditors are aware of these staggering pension liabilities, it will make it nearly impossible for union businesses to get loans, credit lines or bonding.

If forced to report their true liabilities, hundreds — perhaps thousands — of companies will scramble to get out from under their union obligations.

UPS did precisely that three years ago, opting to pay $6.1 billion to withdraw from the Teamsters Central States Fund. That’s right, UPS decided that $6.1 billion was less costly than the Central States Fund’s liabilities! The last-man standing rule made the situation especially bad. As Bloomberg reported at the time, “The Central States Fund has suffered as several unionized trucking companies have failed or been acquired during the past decade, leaving UPS and other remaining employers to bear greater liability for retirees covered.”

As Hemingway notes, it is largely to shore up such failing pension funds that organized labor worked so hard for passage of the so-called Employee Free Choice Act — its card-check provision would enable unions to organize new members without the hindrance of a secret ballot election, while its binding arbitration provision would make it easier to impose pension liabilities on employers. He also rightly notes that the fight over EFCA isn’t quite over yet, and Republicans need to be on guard during the upcoming lame duck session of Congress.

Businesses should be even more on guard. As Brett McMahon of Miller & Long Construction (whom Hemingway also cites) described it, for a business, facing millions in new multi-employer pension liabilities would be “a good time to start liquidating.”

For more on union pensions, see here.

Two Health Care Unions Battle Each Other for Members

by Ivan Osorio on September 13, 2010 · 2 comments

in Economy, Employment, Labor

Voting began today in one of the most disputed union elections in recent years. The contest pits the powerful Service Employees International Union (SEIU) against the upstart National Union of Healthcare Workers (NUHW), which was created last year by former officials of a SEIU affiliate in Oakland, California. At stake are 44,000 at Kaiser Permanente health care facilities throughout Northern California.

SEIU’s national leadership placed its Oakland affiliate, United Healthcare Workers-West (UHW), in trusteeship in January 2009, alleging “financial wrongdoing” by then-UHW President Sal Rosselli. In response, Rosselli accused then-SEIU President Andrew Stern of using trusteeship to forcibly seize his local and merge it with a scandal-ridden Los Angeles-based local, whose president, Tyrone Freeman, had stepped down amid serious corruption allegations.

SEIU suffered a loss to NUHW in Southern California in January, so the current contest is major test for SEIU’s new national president, Mary Kay Henry, who took over from her notorious predecessor Andy Stern last May. Henry seems committed to this fight, and for good reason. She worked alongside Stern during his tenure as president, and helped to implement some of his more controversial policies, including his efforts to create a handful of giant mega-locals, through mergers such as the one imposed on SEIU’s California health care affiliates.

Union power struggles are nothing new, and, as in most, the dispute between SEIU and NUHW has its share of egos. But this fight also centers on the future of unionism in the private sector, where organized labor is a fading force. To revive unions’ sagging private sector numbers, SEIU, under Stern’s leadership, has pursued a strategy of increasing union “density,” which entails increasing the number of union members in the overall workforce to gain greater clout in negotiations. This often has meant compromising on contract terms to lessen employer resistance.

Rosselli, by contrast, has preferred to drive a hard bargain to gain the best contract terms for existing members, even while trying to organize new ones. Throughout this conflict, Henry worked alongside Stern to pursue the goal of greater “density,” which Rosselli has derided as “organizing workers for the sake of numbers.”

Whichever strategy wins out, it’s safe to say that the leaders of SEIU and NUHW can agree on at least one thing: support for the so-called Employee Free Choice Act (EFCA), which can help both their goals. EFCA’s card check provision would both allow unions to organize members more easily by effectively eliminating the secret ballot in organizing elections, while its binding arbitration provision would allow union negotiators to drive a harder bargain in the expectation that after 120 days a federally appointed arbitrator could step in to impose an agreement that is bound to be no worse for the union than management’s final offer.

Voting ends on October 4 and the vote count begins two days later. This is a contest well worth watching.

For more on SEIU, see here, here, here, and here.

SEIU and the Shareholder Resolution Weapon

by Ivan Osorio on January 27, 2010

in Economy, Employment, Labor, Politics as Usual

At Biggovernment.com, blogger Mandy/Liberty Chick has a good, concise account of the rise of shareholder resolutions as a favorite tool of organized labor. By leveraging their pension funds to purchase shares in companies they are trying to organize, unions can bring pressure on those companies, usually as part of a corporate campaign — a coordinated attack on a company’s reputation and ability to do business. She focuses specifically on the use of shareholder resolutions by the Service Employees International Union (SEIU), which has recently emerged as arguably the most powerful union in America.

Utilizing your proxy vote and providing feedback to the board as an active shareholder is a good thing!  But as others have noted, the potential for abuse also exists, if union shareholders engage the board for purposes other than their pension investment interests. Drucker (and lawmakers in the 1970’s) expected that shareholders and their trustees would either engage to positively affect the stock, or they’d sell it if they didn’t like the company’s management.  Perhaps it is this observation that SEIU’s Andy Stern has seized upon. Rather than sell the stock, maybe Stern wants to control the companies in which his pension trust is invested.  It may have less to do with protecting pension investments and more to do with unionizing workers at those companies.

You Don’t Want a Union?  This is My Baseball Bat & I Call It “Shareholder Resolution”

Of all those companies that have been SEIU’s protest targets, most have been the very same corporations in which the $1.9 billion SEIU Master Trust and some of parent Change to Win Investment Group’s $217 billion are invested. Is it also coincidence that many of these corporations were also the very targets of SEIU unionization efforts?

In early 2009, Andy Stern and Anna Burger wrote to the White House and Congress, demanding a list of financial reforms be legislated immediately, including a central regulator, and control over executive compensation and bonuses.  Then in April, SEIU Master Trust director Stephen Abrecht sent a letter to 29 financial firms in which the trust holds investments, demanding that the companies’ directors investigate more than $5 billion in paid bonuses that SEIU says were based upon false metrics. Among those firms on the list were AIG, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Citigroup, PNC Financial Services and others.

Shortly thereafter, SEIU proposed a number of shareholder resolutions to the boards of many of the companies on that same list, requesting everything from ousting CEOs or board members to controlling employee compensation structures.  Meanwhile, outside on the streets, SEIU’s protests were often coordinated with company meetings and events.  As banks and the U.S. Chamber of Commerce fought against the Employee Free Forced Choice Act legislation, SEIU levied shareholder resolutions against them and issued more demands to Congress for immediate consumer protection and financial reform.

When Anna Burger then testified in front of the Congressional Financial Services Committee in September, not only did she push for a central bank regulator and other financial reforms, but she concluded her testimony by calling for the unionization of bank workers, insisting that the bank workers could then “speak out in protection of consumers” without fear to prevent future crisis.

Not surprising, since SEIU has had its eye on unionizing bank workers for quite some time, placing repeated pressure on banks for years and conducting endless rounds of their infamous corporate campaigns.

The bullying aspects of such tactics is bad enough. Even worse is the effect that using pension funds for objectives other than increasing shareholder value can have on the funds themselves — and on the workers who depend on those funds for their retirement. As Diana Fuchtgott-Roth, former chief economist at the Department of Labor, notes in her study of union pension fund performance, published by the Hudson Institute, “an analysis of the financial status of individual pension plans shows that collectively bargained pension plans perform poorly when compared to plans sponsored unilaterally by single employers for non-union employees.”

The rise of private equity has hindered unions’ ability to wield the resolution weapon. In the case of SEIU, it has forced it to become more aggressive in other corporate campaign tactics, including street protests, such as one in October during the American Bankers Association meeting in Chicago, “where some of the protestors dressed in Grim Reaper garb chased down meeting attendees, brandishing cleavers and butcher knives emblazoned with bloody-looking slogans.”

The precarious state of union pensions is a motivating factor behind unions’ aggressive campaigning in favor of the misnamed Employee Free Choice Act (EFCA), which would allow unions to corral in more members into paying into their pension funds. EFCA’s card-check provision, which would effectively eliminate secret ballots in organizing elections, has proven politically unpopular. However, EFCA’s binding arbitration hasn’t received as much attention.

This provision would enjoin a federally appointed arbitrator — who would be unlikely to know much about the company — to impose a contract after 120 days if the newly unionized company’s management and the union representing its employees could not reach an agreement. This would give union negotiators who don’t get what they want in negotiations an incentive to hold out for arbitration, in the knowledge that they would be certain to do no worse than management’s final offer.

EFCA supporters have been trying to sell this provision as a guarantee of reaching a first contract, but in reality it would take the actual negotiating between the parties out of the contract process. Thus, an employer could find itself facing huge new liabilities in the form of pension obligations.

For more on pension fund activism, see here, here, and here.

For more on SEIU, see here, here, and here.

Say No to EFCA in 2010

by Ivan Osorio on December 29, 2009

in Economy, Features, Labor, Regulation, Zeitgeist

The first calendar year of the Obama administration draws to a close with organized labor not achieving its top legislative priority: the horribly misnamed Employee Free Choice Act (EFCA). Given the amount of palm-greasing that was required to get reluctant moderate Democratic senators to vote to end debate on Obamacare, it’s unlikely that those same moderate Democrats — especially Arkansas’ Blanche Lincoln — would be eager to expose themselves even more to the criticism that they are shifting to their party’s left.

That doesn’t mean that union-supported Democrats are going to stop trying. We should expect to see “compromise” proposals that replace EFCA’s most controversial provision, the “card check” provision that would effectively do away with secret balloting in union representation elections, with some form of “expedited” election process, or possibly take out card check and leave the rest of the bill intact.

Any such “compromise” would still be economically costly. No EFCA supporters have even entertained the possibility of shedding the bill’s binding arbitration provision, which would impose contracts on newly unionized companies. It would do so by enjoining a federally appointed arbitrator to impose a contract if the company’s management and the union have been unable to reach an agreement after 120 days. This would encourage the union to press for maximal demands, in the knowledge that they are very likely to get nothing worse than management’s final offer.

Worse, binding arbitration could impose huge liabilities on a newly unionized companies without the management having a say. One particularly dangerous liability would be the obligation to pay into dangerously underfunded union pension funds. EFCA would allow unions to keep these funds going — for a time — by corralling in new workers into them. Like all such Ponzi schemes, this is bound to crash some day. Keeping it going longer and with more workers would only make the future losses worse — and endanger more workers’ retirements.

This is the point EFCA opponents need to drive home in 2010.

For more on EFCA, see here.

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.

Feinstein Withdraws Support for EFCA (for now)

by Ivan Osorio on June 3, 2009

in Economy, Labor

California Democratic Senator Dianne Feinstein is withdrawing her support for the so-called Employee Free Choice Act (EFCA), organized labor’s top legislative priority, reports a California news station. She joins two Democratic colleagues, Blanche Lincoln (Ark.) and party switcher Arlen Specter (Penn.), in opposing the bill. (Log-in required to view KHTS news story.)

While this is a serious blow to EFCA in its current form, Democratic leaders are working on devising a “compromise” that would likely not include the current bill’s card-check provision, which would effectively do away with secret ballots in union orgaizing elections, while keeping EFCA’s other harmful features.

Chief among these is EFCA’s binding arbitration provision, which would enjoin a federally appointed arbitrator  to impose a contract on newly unionized companies if the company’s management and the union do not reach an agreement after 120 days. Needless to say, the arbitrator is unlikely to have any knowledge of the company’s operations.

Thus, a newly unionized company could find itself burdened with millions in new liabilities in the form of obligations to pay into union a pension fund, as required in the new arbitrator-imposed contract. As Diana Furchtgott-Roth of the Hudson Institute found, many such funds are severely underfunded, especially in comparison to private company funds. It is for this reason that the Teamsters are currently threatening to shut down the Minneapolis Star-Tribune.

Sen. Feinstein’s switch is very good news, but it is not the end of this fight. Card check may have receded, but binding arbitration still looms on the horizon as a threat to economic recovery.

UPDATE: Indeed, the Huffington Post’s Sam Stein quotes a “confidant of the senator” as saying: “She is looking for a compromise. And anyone who says otherwise is engaging in some wishful thinking.”

I’d call this strategic fence-sitting.

For more on EFCA, see here.

The AFL-CIO’s “Creative Accounting”

by Ivan Osorio on May 29, 2009 · 2 comments

in Economy, Labor

The AFL-CIO has obscured its poor financial condition through “creative accounting,” says Machinists union President Tom Buffenbarger, reports Associated Press.

Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, said in a report that the labor federation obscured its financial difficulties heading into last year’s presidential election campaign, in which it backed Democrat Barack Obama. Net assets of the 11 million-member AFL-CIO declined to a negative $2.3 million as of June 30, 2008, from a $66 million surplus on July 1, 2000.

“A new leadership — leaders chosen by our members, leaders help accountable by our members — is needed,” wrote Buffenbarger, who is a member of the AFL-CIO’s finance committee and the president of one of the nation’s largest unions. Alison Omens, a spokeswoman for the AFL-CIO, declined to comment on the report.

Where all that money has gone would take considerable financial detective work to determine, but there are a few obvious places to start looking. First, as the report notes, the AFL-CIO lost more than $13.9 million in annual revenue as a result of the Service Employees International Union, the Teamsters, and some other unions leaving the AFL-CIO in 2005 to form the new labor federation Change to Win.

But that steep drop in revenues seems not to have cooled the AFL-CIO’s aggressive use of pension funds to advance political goals. This is part of a deliberate strategy, as I wrote in 2005, on a Federalist Society-sponsored panel discussion on institutional investors, where the issue of fiduciary duty proved contentious.

AFL-CIO Associate General Counsel Damon Silvers sought to define union pension fund managers’ fiduciary responsibility broadly. First he pointed out that, “There’s a big difference between union and pension funds,” because pension funds have one function, while unions have several functions, and that the AFL-CIO, its affiliates, and “ex-affiliates” — the unions who bolted the old federation and formed Change to Win — seek to maintain that distinction. By this definition, unions’ fiduciary responsibility for their investments does not just address the return on those investments, but how they can advance the unions’ greater goals. As Silvers said, union fund managers must ask the question, “Are these assets being managed in our interest?”

The problem with this view is that such interest can be defined very, very broadly.

Earlier this year [2005], the AFL-CIO successfully pressured some banks and brokerage firms to distance themselves from organizations supportive of the Bush Social Security plan to create private accounts. In a letter to AFL-CIO General Counsel Jonathan Hiatt dated May 3, 2005, Department of Labor Deputy Assistant Secretary for Program Operations Alan Lebowitz stated that, “The Department reiterates its view that plan fiduciaries may not increase expenses, sacrifice investment returns or reduce the security of plan benefits in order to promote collateral goals.” According to The New York Times, the unions’ anti-Social Security reform campaign also involved protest rallies in New York, Washington, San Francisco, and 70 other cities.

The Labor Department was right to call the AFL-CIO on this dubious use of pension funds they are entrusted to manage in the individual pensioners’ interest; any definition of fiduciary that seeks to go beyond increasing shareholder value is mere sophistry. Yet that is precisely what the AFL-CIO has pursued as a deliberate strategy. As Diana Furchtgott-Roth of the Hudson Institute notes in a study of union pension funds:

Over the years, unions have successfully changed the operative meaning of fiduciary duty. This process of change started in the early 1990s when the AFL-CIO published Proxy Voting Guidelines. These guidelines encouraged union pension funds to consider not only how investment decisions would affect a pension fund’s financial performance, but also the effect of these decisions on communities, the environment, and the economy. This overly broad interpretation of “fiduciary duty” has allowed unions to join forces with others in the left-leaning progressive community by making investment decisions whose goals are not always consistent with traditional investment strictures.

In her study, Furchtgott-Roth found that union pension funds are severely underfunded compared to private company pension plans. (The current AFL-CIO proxy voting guidelines can be perused here; see page 21 for the “Corporate Responsibility” section.) While Furchtgott-Roth’s study does not single out the AFL-CIO, and Buffenbarger does not specify pensions as a source of trouble, the AFL-CIO is doing a lot of pensioners no favors by promoting a definition of “fiduciary duty” that concerns itself with political activism.

With union pension funds facing severe shortfalls, the obvious first step for unions seeking to address that problem would be to stop digging — that is, focus on shareholder value without other considerations to cloud investment decisions. But rather than opt for a more conservative investment strategy that they have followed to date, union leaders seem more intent on getting access to more dues by corralling in new members, though changes in the law such as the so-called Employee Free Choice Act’s (EFCA).

EFCA’s card-check provision, which would have allowed unions to circumvent secret ballot elections in organizing campaigns, turned out to be a public relations disaster for organized labor — for good reason. Now, however, union activists and their allies on Capitol Hill are looking for ways to get enough support for a “compromise” that would include EFCA’s binding arbitration provision. Under this provision, if a newly unionized company would have 120 days to reach an agreement with the union that had just begun representing its employees. After that period, a federall appointed arbitrator can come in and impose a contract — including retirement benefits.

Thus, literally overnight, a business could find itself on the hook for millions in pension obligations which it did not itself assume. For the union, this allows it to keep its pension fund going for some time longer. For the company, it could spell disaster.

As far as the government is concerned, it should maintain union financial reporting requirement at least at their current level. Rolling them back would allow greater obfuscation of the kind Buffenbarger is denouncing. Moreover, when workers decide on whether to join a union or not, they need to know what they would be getting into.

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