Are unions giving Democrats a free pass on card check? At first
look, it appears that way. Congressional Democrats are focusing
on the health care debate and it is unlikely that EFCA will be
voted on until late this year -- if at all. And union leaders
have been unusually complacent with the bad news.
Earlier this summer, a group of Democratic Senators considered
taking the card check provision --which would effectively
eliminate secret ballot elections in union organizing -- out of
the so-called Employee Free Choice Act (EFCA.) Recently, Senate
Majority leader Harry Reid (D-Nev.) said that he and his
colleagues have "too many other things on our plate" to work on
EFCA. And presumed incoming AFL-CIO chief Richard Trumka has
stated that card check "may or may not be" the key to labor
reform. His current focus is solidly on healthcare telling his
members that, "the President/and Emanuel have both said they
don't intend to bring Employee Free Choice Act up until Health
Insurance Reform is done...which gives us an additional reason to
do Health Insurance Reform now!"
EFCA has been called labor's top priority, so after contributing
over $130 million to Democratic candidates in the 2008 Senate,
House, and Presidential races, why are unions so easily rolling
over?
The answer is that they are not. With EFCA facing a difficult
political environment, union leaders are going after other items
on their policy wish lists -- and getting many of them. Vice
President Joe Biden told the AFL-CIO Executive Committee in March
that, "rebuilding our broken economy gives us the opportunity to
get it right and reward workers." More specifically, he was
telling the AFL-CIO that the administration would reward unions.
One vehicle for doing this is the gargantuan $787 billion federal
stimulus bill.
To ensure that many of the jobs funded by the stimulus bill go to
unionized workers, the Obama administration is pursuing two
courses of action.
First, the Department of Transportation has issued guidelines
(pdf) directing all construction work on infrastructure projects
to be subject to Davis-Bacon prevailing wage determination, which
requires federal contractors to pay the "prevailing" wage in a
given locality as determined by the Secretary of Labor. Because
this has typically been equivalent to the prevailing union wage,
the law makes it harder for non-union contractors to compete.
Second, the administration is requiring (pdf) contractors who
want to bid on large federal construction projects to be subject
to project labor agreements (PLAs), which impose burdensome
requirements on non-union contractors. PLAs typically require
non-union employers -- even those who provide their own benefits
-- to pay into union benefit plans. This can entail paying into
underfunded union pension funds, which can impose huge
liabilities on companies. PLAs may also require contractors to
employ workers from union hiring halls, acquire apprentices from
union apprentice programs, and require employees to pay union
dues.
The administration and some congressional Democrats are also
trying to bail out union pension funds. For taxpayers, this
should be especially galling, as many of those funds are grossly
underfunded because they have been poorly managed. For years,
unions have leveraged their pension funds to pursue political
agendas by introducing shareholder resolutions at public
companies' shareholder meetings and investing for political
rather than economic goals. Often, such resolutions and
investments do nothing to increase shareholder value. As a
result, many union-sponsored multi-employer plan are today in
critical condition (pdf).
But no need to worry-relief is on the way in the form of health
care "reform." The United Auto Workers (UAW) has asked its
members to support the Democrats' health legislation efforts,
specifically citing a provision in the House health care bill
that establishes a reinsurance program for pensions. Section 164
of the Affordable Health Choice Act of 2009 (H.R. 3200) sets
aside $10 billion for the government to pay 80 percent of the
benefits to corporate and union insurance plans for claims
between $15,0000 and $90,000 for retired workers aged 55 to 64.
This would be a major boon to the UAW's so-called voluntary
employee benefit associations (VEBAs), which now own a 55 percent
stake in Chrysler and a 17.5 percent stake in GM in exchange for
taking on billions which the auto giants owed in health care
benefits.
And there is yet another benefit bailout for Big Labor on the
horizon. In late August, Rep. Earl Pomeroy (D-N.D.) announced
draft legislation to change how pension fund valuations are
determined. For multi-employer (i.e. union) plans, Pomeroy's
proposal would extend the rehabilitation and funding improvement
periods for plans in endangered or critical status. It would also
authorize the Pension Benefit Guaranty Corporation (PBGC) to
financially assist in the merger of multi-employer pension funds
when it determines that financial assistance "is reasonably
expected to reduce the PBGC's likely long-term loss," according
to the bill summary. Like rearranging deck chairs on the Titanic,
this essentially would allow underfunded union pension plans to
"re-value" assets to make pensions that are in trouble look
healthier than they really are.
That is quite the bill of goodies the unions are getting, but
that doesn't mean that EFCA is going away. In fact, this looks
like a holding pattern, as they prepare to come back to push for
it in the near future. Making pension funds look healthier can
only ever be a short-term fix. To push their troubled pension
funds out of the red, union bosses' preferred solution is to
corral more employers into paying into those funds. And that's
where EFCA's binding arbitration provision comes in.
Under this provision, a newly unionized company and the newly
certified union have 90 days to negotiate a contract. If they
have not reached a contract after that time, they must negotiate
for another 30 days, at the end of which a federally appointed
arbitrator may step in and impose a contract. This creates
perverse incentives for union negotiators to stall, and may give
the union a lot of what they want through arbitration --
including requiring the company to pay into a multi-employer
union pension fund. For union leadership, this is too enticing a
prospect to walk away from.
So, while union chiefs privately fret in frustration over EFCA
having stalled, they still have plenty to celebrate. But don't
bother congratulating them; you're already paying for their fun.
topics:
Unions, Card Check, Big Labor, Richard Trumka
