Service Employees International Union

The Wall Street Journal explains the significance of the crucial shift in union membership that reached a tipping point last week: More union members now work for government entities than for private businesses. (I discussed this development last week.) The Journal editorial states:

Unions once saw their main task as negotiating a bigger share of an individual firm’s profits. Now the movement’s main goal is securing a larger share of the overall private economy’s wealth, which means pitting government employees against middle-class taxpayers.

And as union membership has grown in government, so has union clout in pushing politicians (especially but not solely Democrats) for higher wages and benefits. This is why labor chiefs Andy Stern (SEIU) and Rich Trumka (AFL-CIO) could order Democrats to exempt unions from ObamaCare’s tax increase on high-cost health insurance plans. To the extent Democrats have become the party of government, they have become ever more beholden to public unions.

The problem for democracy is that this creates a self-reinforcing cycle of higher spending and taxes. The unions help elect politicians, who repay the unions with more pay and benefits and dues-paying members, who in turn help to re-elect those politicians.

Indeed, today public sector unions constitute a permanent, organized, well-funded lobby for bigger government. However, that doesn’t mean that organized labor is giving up unionizing private sector workers.

In fact, private sector decline is a major motivation for unions to push as hard as they can for changes in labor law that would favor unionization — most notably the misleadingly named Employee Free Choice Act (EFCA), which, in its current form, would effectively eliminate the secret ballot in organizing elections, enjoin a federally appointed arbitrator to impose a contract upon a newly unionized company if the union and the employer cannot reach an agreement after 120 days, and increase employer penalties for unfair labor practices, which can arise from resisting unionization.

The current version of EFCA is in political trouble, due largely to the overwhelming unpopularity of its card-check provision, which would allow unions to bypass secret ballot elections by having employees sign union cards. The cards are signed in public, thus exposing workers to high-pressure tactics, which secret ballots are intended to avoid.

But EFCA is far from dead. Union-friendly Democrats in Congress could try to pass EFCA in parts, either by inserting its different provisions in other bills or by introducing those provisions as stand-alone bills. EFCA’s binding arbitration and increased employer penalty provisions haven’t received as much public attention as its card-check provision, which makes this stealth strategy attractive for EFCA supporters. EFCA-minus-card-check is something to watch for and guard against.

For EFCA supporters, this piecemeal EFCA strategy becomes even more attractive with the possibility that they could get either card check or some other legal mechanism to favor unionization through non-legislative means. The most obvious vehicle for this is the National Labor Relations Board (NLRB). Big Labor is going after the NLRB, with help from the Obama administration. Current NLRB nominee Craig Becker, a former SEIU associate general counsel, has said that employers should be cut out of the organizing process. (His nomination is on hold in the Senate.)

Meanwhile, as unions’ share of the public sector workforce continues to grow, so will those public employees’ union dues. Greater revenue from dues allows unions to increase their support for Democratic politicians, thus puting greater pressure on them to move further to the left — both by working to increase the size of government, where unions’ greatest prospects for growth lie, and by seeking to change the law to facilitate unionization in the private sector as well.

For more on public sector unions, see here and here.

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.

For the first time in U.S. history, the majority of the country’s union members work for government, the Bureau of Labor Statistics reports. For the cause of limiting the size of government, the implications of this development are ominous. Because they depend on the growth of government to increase their membership over the long term, government employee unions function as a permanent lobby for bigger government — one that is organized, motivated and well funded. As Brian Johnson of the Alliance for Worker Freedom notes in The Washington Times:

There once was a day when working for the government meant a sacrifice for public service. Government employees didn’t face the vagaries of employment in the corporate sector, where jobs come and go, but in return government jobs didn’t come with the salaries and perks of the private sector, either.

Not anymore. The government unions want it all – high pay, stability and a growing work force. And they’re willing to use their growing political clout to get it. Public-sector unions ferociously lobby each level of government for increased spending and oppose tax reductions.

In Oregon, public employees unions spent almost $4 million supporting ballot initiatives to raise personal income and business taxes by $733 million. The Service Employee International Union (SEIU) spent millions in California campaigning for higher oil, gas and liquor taxes. In Arizona, the Arizona Education Association lobbied successfully against repealing a $250 million-a-year statewide property tax. Even in the conservative state of Alabama, the Alabama Education Association’s annual convention endorsed tax increases on businesses, cigarettes and soft drinks – while voting down measures supporting spending restrictions to combat the state’s budget shortfall.

And how great is unions’ involvement in politics? Six of the top 10 — and 12 of the top 20 — donors to political campaigns during from 1989 to the present are unions, according to the Center for Responsive Politics. That the American Federation of State, County & Municipal Employees (AFSCME) is the second overall donor shouldn’t be surprising. Unionization in government is greater at the state and local level, so AFSCME has the most to gain from government budget bloat.

Another top-10 heavy hitter is the Service Employees International Union, which is working to increase its presence in the public sector — which SEIU hopes will grow much larger through greater government involvement in health care. (Thanks to Iain Murray for the Opensecrets.org link.)

For more on public sector unions, see here and here.

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

The row between the UNITE-HERE hospitality and textile union and Workers United — which broke away from UNITE-HERE earlier this year and joined the powerful and growing Service Employees International Union (SEIU) — has taken a bizarre and ugly turn.

According to The New York Times, several UNITE-HERE organizers have complained about a practice known as “pink sheeting,” in which union members are pressured to reveal private and potentially embarrassing personal information about themselves. Union organizers then allegedly use those workers’ stories to present as testimonials that illustrate the kind of hardships that the union has helped its members overcome.

More than a dozen organizers said in interviews that they had often been pressured to detail such personal anguish — sometimes under the threat of dismissal from their union positions — and that their supervisors later used the information to press them to comply with their orders.

“It’s extremely cultlike and extremely manipulative,” said Amelia Frank-Vitale, a Yale graduate and former hotel union organizer who said these practices drove her to see a therapist.

Several organizers grew incensed when they discovered that details of their history had been put into the union’s database so that supervisors could use that information to manipulate them.

UNITE-HERE President John Wilhelm denied that pink sheeting was common, and denounced “the organized campaign to condemn it” (as Times reporter Steven Greenhouse describes it) as an effort by SEIU to discredit UNITE-HERE.  As I’ve noted here before, SEIU is not above bullying its own members, and SEIU President Andy Stern has motive to go after Wilhelm’s union.

Before UNITE (Union of Needletrades, Industrial & Textile Employees) and HERE (Hotel Employees & Restaurant Employees) merged in 2004,  Stern has made no secret of his desire for SEIU to absorb the two unions. He offered HERE’s Wilhelm and UNITE chief Bruce Raynor to join SEIU. They declined and merged their unions with each other, but did join the Change to Win coalition, which Stern helped found in 2005 when he took SEIU out of the AFL-CIO (the Wilhelm-led UNITE-HERE has since rejoined the AFL-CIO). As The Las Vegas Sun‘s Michael Mishak, who interviewed Stern in May 2009, notes:

To hear [Stern] tell it, two of the nation’s most progressive unions would not now be at war had they only listened to his advice five years ago. Back then, as Unite, the garment and apparel workers union, and Here, the hotel and casino workers union, considered merging, Stern suggested an alternative: join SEIU, which was surging forward as the country’s largest and fastest-growing union.

Unite President Bruce Raynor and Here leader John Wilhelm declined.

Instead they formed Unite Here, parent of the Culinary Union, promising to organize large numbers of workers nationally. The honeymoon was short-lived, and long-simmering tensions between the two leaders erupted into public view this year, with Raynor calling for a divorce and Wilhelm struggling to keep the merger intact

Yet whatever SEIU’s motives, the claims made against UNITE-HERE are serious enough to warrant further investigation. (Thanks to Vincent Vernuccio for the Times link.)

For more on SEIU, see here.

For more on UNITE-HERE, see here.

Workers may get violent if their wages are cut. The United Auto Workers union (UAW) has a monopoly and was an anchor on the Big Three U.S. automakers. These two ideas were professed by two labor leaders at the recent Federalist Society Convention in Washington, D.C.

There may be violence, says Damon A. Silvers, Associate General Counsel for the AFL-CIO and Deputy Chair of the Congressional Oversight Panel for TARP. Silvers spoke on last Friday’s panel “Labor: Wall Street, Labor Unions, and the Obama Administration: A New Paradigm for Capitol and Labor?” Speaking to the panel, he claimed economic downturns which cause people to have their wages cut, can have devastating results.

Silvers pointed to wage cuts in Brazil and spoke of the violence which ensued. He argued that when people are starving they may get violent, that the have nots will take from the haves. Quickly cautioning that this could not happen in the United States, he smirked and added, “but it may.” Not so subtly, Silvers implied that if you cut union wages there may be violence.

Another gem from the convention came from Thursday’s lead discussion “Redistribution of Wealth.” One presenter, when asked what happened to the auto industry in regards to unions, stated, “Unions missed the most basic fundamental economic role they have to play, which is to take wages out of competition. What happened was when they had a monopoly or took wages out of competition for the Big Three people competed more inefficiently…When the transplants came…the union didn’t do its job, it was an anchor to the competitive field as opposed to a help.”

Which right leaning free-market intellectuals stated this fact? None other than any Andrew Stern, the president of the SEIU! That is correct, Andy Stern blamed the collapse of the Big Three in part to the union monopoly of the UAW and called it an anchor to competition.

More characteristically, Stern also spoke of redistribution of wealth saying, “I do no support, I condemn, the redistribution of wealth — that is to say, the redistribution of wealth upwards.”

Advocating the redistribution of wealth? Cautioning of violence if wages are cut? Is this really the message top officials in the two largest labor unions want to be sending? Both Stern and Silvers knew their audience did not agree with them – Stern was sweating during his presentation – but did make an effort to speak to the constitutionally minded lawyers association.

Unfortunately, while tempered, their message was a clear endorsement of class warfare. Espousing unions as the only way for workers to get ahead in America, they chastised the Reagan era and directly blamed the demise of unions for what they claimed were lower worker wages. They ignored facts of other presenters showing that most workers’ standard of living has actually gone up in the last 30 years.

Stern should be given credit for acknowledging that the UAW monopoly helped almost destroy the American auto industry. He must acknowledge that hard work, innovation, and ingenuity are the real engine of the American economy, not collective bargaining. The monopolistic nature of unions in many industries is a liability to both workers and unions. As Stern pointed out in the context of the failure of the U.S. auto industry, unions’ inflexibility can drag down companies and work as a hindrance, not a help.

The bitter ongoing fight between the national leadership of the Service Employees International Union (SEIU) and the former leadership of a SEIU Oakland, California, health care workers local has taken an even nastier turn.

Early this year, SEIU, under the leadership of Andy Stern, forced a merger between the Oakland health care local, United Healthcare Workers-West (UHW), and a Los Angeles-area local where a major corruption scandal broke last year — leading that local’s chief, Stern ally Tyrone Freeman, to resign.

In response to the Stern-led SEIU bullying, UHW president Sal Rosselli broke with SEIU and formed a new union, the National Union of United Healthcare Workers (NUHW). Since its founding, NUHW has tried to attract workers disgruntled with SEIU, which has fought back, hard. Last Friday, November 6, NUHW filed a complaint with the California Public Employment Relations Board, alleging voter intimidation and vote tampering by SEIU representatives in a June decertification election, reports, The Wall Street Journal.

The allegations are ugly. As the Journal‘s Matthew Kaminski further explains

The NUHW immediately called for a re-run of the election, challenging voting irregularities. The two unions have traded accusations since. But now, Carlos Martinez, an immigrant from El Salvador who was on the SEIU’s staff during the campaign, has come forward—so he says—to blow the whistle on his employer. Mr. Martinez went door-to-door canvassing the home-care workers during the 15-day election. Like him, many of them are native Spanish speakers; some are illiterate.

… Mr. Martinez says he was instructed by superiors to tell the workers that if they voted against the SEIU, they could lose their medical benefits, see their green cards or citizenship revoked and possibly be deported. He says he and other staffers were also told to pressure voters to spoil ballots that had been filled out for the NUHW. In other instances he filled ballots out for them. He says he even took some to the post office, as did other SEIU campaign workers.

All of these actions, if true, are a violation of state or federal laws governing union elections. In all, he adds, he visited 550 homes. “We scared people. We took the secret ballot away from these people,” he says. “It was wrong.”

SEIU has denied these allegations. SEIU needs to make its case, but its own recent history of trying to intimidate opponents will make doing so very difficult before any fair-minded audience.

For more on SEIU, see here.

Slate blogger Mickey Kaus explains how public sector unions are driving state and local governments to the brink of bankruptcy (via Nick Gillespie at Reason Hit & Run, via Glenn Reynolds at Instapundit):

The justification for public sector unionism is way weaker than that for private sector unionism. “[Government] workers are not extracting a share of the profits but rather a share of taxes,” as former N.Y. Liberal Party leader Alex Rose puts it. And the right to strike, in the hands of key public unions, approaches a blackmail power. But the political strength of the unions is such that even most Republicans, at the state and local level, are scared to question them. They gelded Arnold Schwarzenegger. You want to be next?

Kaus cites a Weekly Standard article by Fred Siegel and Dan DiSalvo, in which they explain the public choice dynamic that makes government employee unions especially powerful:

[W]ith the power of the public sector unions to drive election outcomes, they now sit on both sides of the bargaining table. Unlike private sector unions, the sheer number of workers represented is not the linchpin of their influence. Private sector unions have a natural adversary in the owners of the companies with whom they negotiate. But public sector unions have no such natural counterweight. They are a classic case of “client politics,” where an interest group’s concentrated efforts to secure rewards impose diffused costs on the mass of unorganized taxpayers.

And how bad can it get?

The combined power of the teachers and health care workers has made the New York state legislature a wholly owned subsidiary of the public sector unions. The law mandates that all new legislation be evaluated for its fiscal impact. In recent years those calculations were performed by an actuary named Jonathan Schwartz. In 2008, when Schwartz found that a piece of bipartisan legislation allowing city workers to retire early with full pension benefits would impose no new costs, the New York Times blew the whistle. Schwartz, who had been fired from a city job, worked not only for the state assembly but also, it turned out, for District Council 37 of the SEIU. When asked which other unions he had worked for, he replied, “How many unions are there?” His client list included the teachers, firefighters, detectives, correction officers, and bridge and tunnel officers. Not surprisingly New York State has the highest per-employee pension costs in the country.

For more on the strain that public sector unions place on government budgets — and on democratic government itself — see “Vallejo Con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Representative Government.”

In his Wall Street Journal column today, Holman Jenkins highlights one of the prizes at stake for organized labor in the current health care debate.

Union members not only like the tax-free, open-ended health -care benefits they’re used to getting. More important and often overlooked, organized labor itself is increasingly made up of health-care workers who benefit from an incentive system that artificially force-feeds great gobs of GDP into the industry’s maw.

Their long retreat elsewhere in the economy may continue unabated, but unions are steadily growing their clout in government and health care, two sectors that increasingly overlap and would become even more overlapped under the bills in Congress. Consider a scheme being test-driven in Missouri, where Democratic Gov. Jay Nixon, AFSCME and SEIU last year backed a ballot proposition to create a “Missouri Quality Homecare Council.”

As the A.P. matter-of-factly reported: “The ballot summary shown to voters said nothing about making it easier for in-home care providers to unionize.” But that was precisely the function. Now some 13,000 home health workers hired by patients but paid for by Medicaid are on the verge of being recognized as a union.

But won’t collective bargaining inevitably mean higher Medicaid costs for Missouri taxpayer? Gov. Nixon, whose campaign reportedly received $650,000 from SEIU and AFCSME, obviously has other priorities.

In Canada, where health care is largely government controlled, 61% of health-care workers are unionized. In the U.S., it’s only 11%. Democrats are bent on changing that and the bills floating around Capitol Hill are rife with provisions to replicate the Missouri scheme nationally.

As my co-authors and I point out in a new Cato Policy Analysis (“Vallejo con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Limited Government”), organized labor has been pursuing this strategy for some time now.

Now some unions are trying to expand the definition of “public” by trying to organize government contractors. Washington state provides a good example of this. There, the trend began in 2001, when voters approved a ballot measure, Initiative 775, to allow independent long-term health care providers to unionize and bargain collectively over hours, compensation, and working conditions.39 Then in 2007, Washington state authorized collective bargaining for adult-home-care providers who receive Medicaid and other state aid.40 Stretching the definition of “public employee” to any home-care provider who may contract with the state can give a public employee union a foothold in the private sector. Further, under such an arrangement, union fees can be deducted from state compensation checks before the recipients ever see them, so the care providers never miss money they never see.

For more on labor, see here.

For more on SEIU, see here.

For more on health care, see here.

Remember the California budget debacle? Now it seems like not a month goes by without another state facing a budget crisis. Now it’s Michigan’s turn. Predictably, state politicians are trying to scare the public with talk of cutting funding for libraries and prisons, in order to make tax increases an easier sell. Also predictably, policy makers appear to be avoiding looking for budget savings where substantial ones could be realized: government payrolls. As The Detroit News points out:

Employee pay and benefits make up one of the biggest costs of state government. Michigan had 52,769 workers as of March and a state classified payroll of $4.73 billion for fiscal year 2007-08. When the auto industry was larger, Michiganians were among the top 20 states in per-capita income. But that income has declined to 11 percent below the national average. The state with the nation’s worst unemployment rate can no longer afford to pay above-average compensation. Michigan state workers earn 6 percent more than the national average in salary and benefits, according to the U.S. Bureau of Economic Analysis. Michigan private-sector workers make 29 percent less than the national average for state workers.

As in other states, government employee unions oppose cuts that would affect their members. All unions do this, but public sector unions are different in that they don’t have to fear putting their employer — government — out of business, so they can ratchet up demands, which are fulfilled at taxpayer expense, to a much greater extent than private sector unions generally are able to. The upward spiraling public sector pay and benefits that result from this can wreak havoc on public finances.

For an in-depth analysis of the effect of the widespread unionizaiton of government employees, see the new Cato Institute Policy Analysis,Vallejo Con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Representative Government,” co-authored by University of South Florida economics professor Don Bellante, David Denholm of the Public Service Research Foundation, and myself.

The Service Employees International Union (SEIU) is giving away copies of a poster (pictured right) of Barack Obama, which it describes as “an original piece of art for those closest to the movement to fix health care.” Of course, for this crowd, to “fix” generally means to bring government in.

Fittingly, SEIU is limiting the giveaway to “only ONE poster per person and address.” This led the Libertarian Party to challenge SEIU “to live up to the promises behind government-run health care and offer everyone in America unlimited access to as many posters as they want without increasing their costs.”

However, I wouldn’t expect SEIU — or anybody who would commission such a blatantly sycophantic portrait — to get the irony.

For more on SEIU, see here.