• Similar collective bargaining grants were subsequently adopted in other American cities.
Landrum-Griffin Act Labor-Management Reporting and Disclosure Act 1959 • Act was designed to curb labor union abuses, corruption, and racketeering violations in the 1950s.
• Instituted secret elections for union officers, financial disclosure and worker protections.
• Barred members of the Communist Party and felons from holding union office.
• Required annual financial disclosure by labor unions to the Department of Labor.
• Provides safeguards for protecting union funds and assets.
• Extended to cover federal employee unions and their members by the Civil Service Reform Act , but unions representing solely state, county, and municipal employees are not covered.
• Administered by the Office of Labor Management Standards (OLMS).
Private Sector Unions, Federal Employee Unions, and Their Respective Members
Wisconsin Collective Bargaining Law 1959 • In 1959, Governor Nelson of Wisconsin signed the first state law to permit collective bargaining over state employees.
• Many other states added similar laws in the 1960s and 1970s.
• Currently 34 states plus DC permit unions to engage in collective bargaining over state and/or local government workers, and at least 22 states require employees under collective bargaining agreements to pay dues or fees to unions as a condition of employment (forced-dues).
State and Local Employees (Wisconsin, then other states)
Executive Order 10,988 1962 • Issued by President Kennedy.
• Extended collective bargaining to federal workers for the first time, although federal workers already had the right to join a union.
• Granted right-to-work protections to federal government workers protecting these workers’ right to decide whether or not to support a labor union.
• Inspired an extension of union collective bargaining power at the state level to state and local employees which led to huge growth in government employee union membership by the 1970s.
Federal Employees
Civil Service Reform Act 1978 • Signed into law under the Carter Administration, this law reformed the civil service of the federal government.
• Title VII of the act governs labor relations between federal workers and the federal govenment and formed the Federal Labor Relations Authority (FLRA) which is charged with overseeing federal employees’ so-called collective bargaining “rights.”
• Title VII also codified right-to-work protections for federal workers, limits union collective bargaining to codified working conditions, and prohibits federal workers from striking.
Federal Employees
CHAPTER 3
Follow the Money
IN the movie All the President’s Men, Bob Woodward (Robert Redford) meets informant Deep Throat to get the story about the Watergate break-in. “All we’ve got are pieces,” he tells Deep Throat. “We can’t seem to figure out what the puzzle is supposed to look like.” Deep Throat tells him, “Follow the money.” And, of course, the money leads right to the top.
The same holds true for unions and the Democrat Party. Watch as billions of dollars in union dues and fees forcibly collected from America’s workers flow into union coffers. Then, see the unions as they carefully separate that money into a series of buckets, reporting each amount on disclosure forms required by the government. Finally, watch with amazement as union officials pour almost all those different buckets, which they carefully filled and reported, right into the pockets of their favorite politicians and leftist groups—rewarding their friends and punishing their enemies.
But of course, that is just where the story begins. The next step is when the unions pull the strings attached to the money. They ensure that the union-friendly legislators pass laws that benefit the unions. These laws are then signed by executive branch officials who were also elected with union money. Once passed, the laws increase the number of workers forced to pay union dues, thus protecting the dues income that unions rely on. On and on, the river of money flows in a never-ending cycle of greed and corruption.
Why Unions Spend So Much on Politics
Unions (at the national, state, and local levels combined) collect an estimated $14 billion in dues alone every year, and more than half of this income comes from government workers.1 That’s more revenues than 65 percent of the Fortune 500 companies, giving unions huge money to spend on politics—almost all of which goes to Democrats.
Many Americans think that labor unions spend money on liberal causes and Democrat candidates because union officials are themselves socialists and leftists. There’s some truth to that—there are plenty of old socialists in the union leadership who love to support the liberal agenda. But the real reason that they spend so much money on Democrats isn’t ideological—it’s good business. Buying politicians allows unions to keep their dues-based business surviving and thriving.
Influencing our political system is a big part of the unions’ business model. Buying the cooperation of our government is far more critical for unions than for almost any other special interest group. Oil companies, Wall Street banks, or any of the other businesses that many people love to hate—none of them rely on government favors and grants of power as much as government employee unions do to keep growing and thriving.
Unlike private sector unions, government employee unions draw all their business directly from the government. The government actually gives government employee unions the power to unionize government employees—and, even more important, allows unions to collect dues forcibly in many states. As a result government employee unions spend far more of their dues income on politics than private sector unions do.2 Government employee unions have to spend money on politics to be sure that politicians will support their forced-dues collection business.
Unions (at the national, state, and local levels combined) collect an estimated $14 billion in dues alone every year, and more than half of this income comes from government workers. That’s more revenues than 65 percent of the Fortune 500 companies, giving unions huge money to spend on politics—almost all of which goes to Democrats.
But why do unions spend almost exclusively on Democrats? Legendary Democrat political strategist Pat Caddell frequently refers to our two political parties in America as the “corrupt” party and the “stupid” party. You can probably guess which party is which and also which party is more likely to enter into a quid pro quo arrangement with the unions. And, of course, the labor union movement’s agenda of unfree labor markets, regulation of businesses, wealth redistribution, and bigger government fits well into the Democrat Party agenda of promoting a greater role for government in all aspects of our lives. Big government makes it easier to grab big dollars for your big union.
And so the government employee unions dump cash on the Democrat Party. According to the National Institute for Labor Relations Research, labor unions spent well over $1.2 billion during the 2010 election cycle, almost all going for the Democrats.3 All the biggest government employee unions spend huge dollars on politics—especially, the American Federation of State, County and Municipal Employees (AFSCME); Service Employees International Union (SEIU); the AFL-CIO labor federation; and the two teachers unions, the National Education Association (NEA) and the American Federation of Teachers (AFT).
AFSCME was crowned as the biggest political spender in the 2010 election cycle, investing over $91 million in political campaigns.4 “We’re spending big. And we’re damn happy it’s big. And our members are damn happy it’s big—it’s their money,” said AFSCME president Gerald McEntee.5 Not that their members have much choice in the matter.
Voters are concerned that unions are using cash to influence our political process. A recent poll shows 68 percent of registered voters are concerned that government employee unions have too much influence over the politicians that pass laws and negotiate with them.6 But even union members are
largely powerless to stop the flow of cash from their unions to politicians and back to the unions again in political favors.
Where the Cash Comes From
Unions keep their dues collection data as vague as possible, but the vast majority of their cash comes from a special set of states—the forced-dues states. These are the states in which unions can force every worker they represent to pay dues or fees.7 There, the money that government employee unions spend on politics is ripped out of the wallets of America’s workers by government-sanctioned force.
As you’ll recall, once the government gives a union collective bargaining over a group of workers, only the twenty-three right-to-work states expressly prohibit unions from forcing all workers to pay dues or fees. In most of the other states, the unions can and usually do get a forced-dues provision in their union contract with government, allowing them to extract dues from their members.
In forced-dues states, even workers who choose not to join unions have to pay fees to the union. These forced fees are named by unions, in Orwellian fashion, fair share fees—and these rates are generally set near the same rate as union dues to encourage all workers to actually join the union. In these states, the state basically gives the union a cut of workers’ income—and this cost gets passed on to the taxpayer, since the government employees paying the dues still want the same take-home pay.
Even more incredible, many states and localities agree to collect union dues directly from their employees on behalf of the unions. Dues checkoff means the government deducts dues directly from the workers’ paychecks, like tax withholding or Social Security, and delivers the dues to the union. From the union’s perspective, why send reminder slips to workers to pay their union dues when you can get the government to withhold union dues directly from their paychecks? Imagine if your cable bill were deducted from your paycheck automatically each month, like withholding. Would you ever cut back on the premium channels? Of course not. Dues checkoff makes forced dues a bit easier for workers to swallow by hiding the costs of their dues in paycheck deductions. It also saves unions the cost and trouble of collecting union dues, and curiously, makes that the government’s obligation instead.
From the union’s perspective, why send reminder slips to workers to pay their union dues when you can get the government to withhold union dues directly from their paychecks?
These forced-dues and dues checkoff provisions are the reasons that government employee unions are able to survive, thrive, and spend so much on politics. And these are the contract provisions that the unions will go to the mat for, again and again. As Robert Chanin, general counsel for the National Education Association, admitted, “It is well-recognized that if you take away the mechanism of payroll deduction, you won’t collect a penny from these people.”8 By “these people,” he meant the NEA members. The fight for forced dues and dues checkoff is literally a battle for survival for the government employee unions.
Some members of Congress are working to prevent forced dues, at least in the private sector. Republican senators Jim DeMint of South Carolina and Rand Paul of Kentucky have proposed a national right-to-work law, which would give most private sector workers in America the right to choose whether or not they want to financially support a union.9 “Workers should have the right to provide for their families without having to pay for political activity they strongly disagree with,” explains DeMint.10 Senator Paul calls the national right-to-work law “an historic opportunity to break the cycle of tax-and-spend, political corruption and out of control budgets caused by Big Labor’s compulsory union power.”11 This law is a step in the right direction but doesn’t solve the problem of government employee unions influencing our political system. State and local government workers in forced-dues states would not be freed from paying union dues even if the law were enacted.
As scholar Lowell Ponte writes, forced-dues laws are essentially a giant “money-laundering operation” on behalf of the Democrats. “This union money is the mother’s milk of the Democratic Party. If these millions in union campaign contributions vanished tomorrow, most Democratic officeholders would be bankrupt overnight, and the Democratic Party would immediately shrink to permanent minority status,” says Ponte.12 And what a beautiful world it would be then.
Where the Cash Goes
So what do the government union bosses do with all this forced-dues income?
“Well obviously,” you might say, “they spend it on collective bargaining expenses and the cost of representing all those workers. After all, what are unions for?” You’d be partially correct—when the union bosses are divvying up the dues money into different spending buckets, there is a bucket for representational expenses. But that is certainly not where most of the dues income is going, as we will see in this chapter.
The unions have made sure that their activities and spending are fairly difficult to examine. Union financial reporting is largely limited to some basic financial information disclosed to the U.S. Department of Labor, making it difficult to pin down union spending and financial activities. Unlike public companies, unions don’t issue audited financial statements or annual reports that would give more detailed information about their finances, subsidiaries, and spending. Because of their special status under federal law as labor organizations, unions are able to maintain a lack of financial transparency that is unusual in our world today.13
This lack of transparency, incomplete financial reporting requirements, reductions in union disclosures by the Obama Administration, and some creative accounting in union financial disclosures make it very difficult for outsiders to dissect and analyze union finances. President George W. Bush’s secretary of labor, Elaine Chao, explains that before she overhauled union disclosure, “one union could get away with reporting a $62 million expenditure as nothing more than ‘contributions, gifts, and grants to local affiliates’—with no further explanation.” But the Obama Administration “wants to return to this nontransparent standard of financial disclosure.”14 Transparency does not seem to be a priority for the Obama Administration when it comes to union finances.
Other complexities complicate union finances. For example, unions are structured as an interrelated group of national, state, and local unions that are treated as separate organizations for legal and tax purposes. Some local unions are not required to disclose their finances publically. This makes it difficult to determine the total spending of any union. For example, to determine the spending of the largest teachers union, the National Education Association, you would need to aggregate the financial disclosure of the NEA and every state- and local-level NEA subsidiary teachers union—if in fact all this information were publically available.
For all these reasons, it is almost impossible to get the full picture of union financial activities. But we will make some important observations about how unions spend their dues income from the financial information that is available for the largest government employee unions.
Before unions start dividing up the money by activity, they take overhead off the top. Union staffing, salaries, and benefits for union fat cats, building rental, and the like, seem to take about 10 to 20 percent of union dues.15 Of course, since unions are heavily engaged in political activity, a big portion of overhead actually relates to political activity even though it is disclosed as “overhead.”
Each of the fifty-six unions that are part of the AFL-CIO federation, including the American Federation of State, County and Municipal Employees (AFSCME), pay about 10 percent of their dues income up front to AFL-CIO. Members of Change to Win, like the SEIU and the Teamsters, pay a similar charge to their federation. Of course, the AFL-CIO and Change to Win use these dues to pay for political activities of their own, so we should consider most of these amounts political spending, too.
Once overhead and transfers to their federation are paid for, the unions put that still-huge pile of money into three buckets: one for political spending, one for union charitable giving, and one for representational
activities.
Bucket #1: The Political Bucket
The first bucket into which unions dump their cash is the political bucket, which is used to pay for the unions’ vast political organizing activities. The actual amount of union political spending cannot be accurately parsed from the limited union financial disclosure, as we mentioned before, but political spending is huge. Reported political spending is about 20 to 30 percent for government employee unions,16 but this certainly understates the true amount of union political spending.
Remember, unions have an interest in reporting as little political spending as possible because “labor organizations” can lose their special tax-free status, or can be required to pay taxes on certain types of political spending, if they show too much political activity. An example of how unions may treat spending as nonpolitical when it has some political aspect to it is seen in the National Education Association’s $80,000 payment in 2011 to Rock the Vote, an organization that works to engage young people in the political process and register them to vote, which the NEA identifies as an “advocacy organization.” While the organization is officially nonpartisan, increasing the youth vote benefits Democrats—young people tend to vote Democrat and voted 2 to 1 for Obama over McCain in the last Presidential election. For financial disclosure purposes, though, the NEA treated this spending as completely nonpolitical; instead, they treated this spending as “union administration” for the purpose of “member/staff Education.”17
Of the money that unions disclose that they spend on political activity, much of the cash is so-called soft money spending. This includes a wide range of political organizing, including phone bank support, voter registration drives, mail and advertising, and turn-out-the-vote efforts. Soft money spending does not involve direct campaign contributions to candidates, which is called hard money support.
Shadowbosses: Government Unions Control America and Rob Taxpayers Blind Page 9
