Organized labor, still smarting from its multi-million-dollar failure to defeat George Bush, got another dose of bad news recently when the Bureau of Labor Statistics reported that the percentage of Americans belonging to labor unions fell last year to an all-time low.
These figures show that only 12.5 percent of workers, including both the private sector and government, were enrolled in unions in 2004, down from 12.9 percent in 2003. For the private sector alone the number declined from 8.2 percent to 7.9 percent. This represents a dramatic drop from labor’s peak in 1956, when 35 percent of private-sector workers belonged to unions.
Concerned about this ominous trend, major labor bosses are proposing sweeping measures. Andrew Stern, president of the Service Employees International Union, laid out a 10-point plan that includes merging smaller unions to create mega unions, restricting the trades or economic sectors these unions could organize, and requiring unions to spend more time organizing workers. If implemented, the number of unions that make up the AFL-CIO would shrink from 60 to 20. It is thought that such centralization would enable unions to conduct more targeted and efficient organizing campaigns.
While many unions oppose the Stern plan, major unions such as the Teamsters and Communications Workers of America support some of its elements.
But even if the measures are adopted, they completely fail to address what’s undermining organized labor’s credibility with the American worker: misuse of members’ dues for political activism, and lack of financial accountability.
Unions take in at least $17 billion annually, which mainly comes from the compulsory dues culled from the paychecks of more than 12 million workers. But only about 20 percent of dues are used for collective bargaining – which is the top priority of rank-and-file workers. As a result, unions are able to lavish hundreds of millions of dollars on politicians.
In the 2004 election cycle, union political action committees gave more than $58 million to political parties and candidates. Of this amount, 87 percent went to Democrats. Unions also donated about $100 million to pro-Democratic 527 committees, which ran ads and conducted get-out-the vote efforts. The Democratic Party, in fact, has become so beholden to unions that the latter has virtual veto power over Party policy decisions.
There would be nothing wrong with such political spending if it expresses the wishes of labor’s rank-and-file. But all too often, it does not. Usually, 35 to 40 percent of union members vote Republican. And even many Democratic union members do not approve of their dues going to political activities. When the AFL-CIO launched a $35 million campaign in 1996 to buy ads for Democratic congressional candidates, a Luntz Research poll showed that 62 percent of union members opposed the plan.
Most workers who join a union do so to advance their economic interests; pushing a political agenda is at best a secondary activity that should not consume a disproportionate amount of union dues.
Union leaders also undermine their credibility by misusing members’ pension funds for political advantage or personal gain. Federal law requires fund managers to act solely for the benefit of workers. However, members have little say in how unions use their retirement plans. For instance, unions will invest pension funds in corporations just to force boards of directors to adopt shareholder resolutions endorsing labor’s political goals. The problem is that such politically motivated investments often do little to improve the profitability of the members’ pensions. Worse, bosses raid pension funds to simply enrich themselves, their cronies, or their friends in the mob. In 2002, 44 percent of the Justice Department’s 357 racketeering investigations involved union pension and welfare funds.
If unions were serious about restoring credibility with workers, they should simply open their books. The federal Landrum-Griffin Act ostensibly requires unions to file annual financial reports with the U.S. Department of Labor in order to provide union members with information about the financial practices of their union. But Landrum-Griffin is an ineffectual law that unions brazenly flout. Every year, roughly 30% of unions don’t even file the report. Compounding the problem, the Department of Labor audits a miniscule 1-5 percent of the unions who do bother to file.
Amid all the brave talk of change at the AFL-CIO, there is no mention of the need to stop these abuses.
Labor experts warn that if dramatic steps are not taken soon, organized labor could collapse within a generation. Thanks to union bosses like Stern, who refuse to acknowledge labor’s culture of corruption, that warning may very well come true.