LaborPains.org

Today, the Las Vegas Sun sat down with UNITE HERE president (formerly “co-president”) John Wilhelm to discuss his tumultuous relationship with the SEIU, the future of the labor movement, and the future of his own union. Wilhelm didn’t pull many punches when discussing his relationship with Service Employees president Andy Stern.

Wilhelm on Stern’s brand of top-down unionism:

It’s the whole question of whether the labor movement is a handful of very smart people in Washington and New York driving the train and figuring out what’s best for the mass of workers, or whether it’s the kind of union you see in the Culinary in Las Vegas, which certainly has very strong leaders but also enormous rank-and-file activity, ownership and empowerment.

Andy Stern believes the former. He says that contract standards don’t matter, that it’s a workable approach for unions to say to corporate leaders, “Give us card-check agreement, don’t fight unionization and we’ll give you a substandard contact in return.” That will never work.

There’s a big brawl within SEIU about this very issue. Tens of thousands of health care workers left SEIU in California to form a competing union. Stern came into that state and removed popular, elected leaders from a strong local. The rank and file was outraged. He also signed a secret deal with nursing home operators in exchange for card check. The standards were unconscionable.

This represents a race to the bottom that will destroy the labor movement. This is not just Unite Here vs. SEIU. This is increasing questioning of and resistance to the notion of top-down unionism that excludes decent contracts and the rightful role of union members in local unions. It’s a totally inappropriate model.

Wilhelm on the failure of Change to Win:

[I]t has to be judged as a failure. There’s a time for risk taking, and I don’t regret being part of taking that risk. But when we try something big and it doesn’t work, we have to own up to that.

Change to Win failed for the exact same reason Andy Stern’s New York-Washington model won’t work for the broader labor movement: It has no grass roots. It only exists in Washington, D.C. The AFL-CIO, for all of its problems — and it has severe problems — at least has a life at the state and local level. Change to Win did create good competition in the political arena, and the labor movement as a whole mounted an incredibly successful election effort in 2008. But now that the election is behind us, let’s figure something else out.

And finally, Wilhelm on whether he will accept Andy Stern’s offer to join SEIU:

Neither I or anybody else in Unite Here has any interest in joining SEIU, and not for personal reasons, but because they stand for the suicide of the labor movement. If death comes, it won’t be employer-inflicted. That’s why I called it suicide.

The UNITE HERE intra-conflict between the two sides and its leaders – John Wilhelm of the “HERE” faction and Bruce Raynor of the “UNITE” faction – spiraled into a full-on raging civil war in the past year.

It reached a critical point last night when Bruce Raynor, leader of the dissident group, officially resigned as president of UNITE HERE. He will be taking on a leadership role at Workers United, the recently formed union affiliated with the SEIU.

Raynor’s resignation comes after an escalating series of events between the two factions. UNITE HERE’s executive board had already suspended Raynor for his attempts to subvert the union. Just last week, Wilhelm and his supporters stormed UNITE HERE’s headquarters to “secure” documents and prevent them from being destroyed by Raynor. The New York Daily News provides good summary of the UNITE HERE conflict.

Even with his resignation, Raynor and Wilhelm are still locked in a dispute over who gets to control UNITE HERE’s assets. The union controls Amalgamated Bank, which has over $6 billion in assets and is the only union-owned bank in the country.

Bloomberg is reporting that the the AFL-CIO – the largest union in America – utilized “creative accounting” to hide its deteriorating finances last year.

According to Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, the AFL-CIO “obscured its financial difficulties heading into last year’s presidential election campaign.” The union’s net assets declined to a negative $2.3 million as of June 30, 2008, compared to a $66 million surplus in 2000.

It’s not clear what “creative accounting” tricks were used to mask the union’s finances, but the AFL-CIO certainly has not been forthcoming. A spokeswoman for the union declined to comment or provide any details on the report.

Chalk this up as another example of hypocrisy.

It’s particularly ironic given how much labor howled over the “creative accounting” scandals in the early 2000s (remember Enron?). In fact, the AFL-CIO’s own John Sweeney led a rally in 2002 at the New York Stock Exchange to denounce “corporate pirates” and demand for better accounting standards and transparency.

It’s doubtful the AFL-CIO will disclose what accounting gimmicks it employed. But we’re sure it’ll make the accountants at the former company with the crooked “E” as a logo green with envy.

The Houston Chronicle reported on Change To Win’s protest efforts against pharmacy retailer CVS, providing a revealing look at how unions operate intimidation and misinformation campaigns.

Change to Win, a labor conglomerate which includes unions like the SEIU and UFCW, has targeted CVS for “questionable business practices.” But in reality, the campaign is a union-coordinated effort to pressure the retailer because the company wanted to preserve the secret ballot option for its employees.

Unions, who are trying to make it easier to organize by bypassing the secret ballot option through card check, opposed this measure. But since they couldn’t actually force CVS to change its mind, they decided to wage a retaliatory campaign in order to shame and humiliate the company.

According to A. Kevin Troutman, a labor lawyer who was interviewed for the story, Change to Win’s consumer-based, “grassroots” accusations have all the markings of a corporate campaign. Unions have resorted to such tactics by “complaining to regulators, generating bad publicity, launching boycotts and picketing board members at their homes.” Troutman said, “I’d be amazed if this is purely a coincidence.”

Labor’s campaign against CVS is not a coincidence. It is just another example of unions resorting to intimdation to get their way.

We’ve discussed how labor may be shifting its focus towards binding arbitration amidst talk about compromise on EFCA. The Wall Street Journal ran an editorial focusing on the problems with binding arbitration, or as the paper called it, “federal wage setting.”

The Journal discussed how binding arbitration would upend the incentives for unions to bargain in good faith and keep their demands within reason. Armed with the knowledge that any impasse would go to a federal arbitrator who, as the Journal put it, “naturally would be subject to political, er, incentives,” unions would be “inclined to ask for the moon, knowing they will do well” in the arbitration process.

Under binding arbitration , the process would go through the Federal Mediation and Conciliation Service, an agency that the Journal points out has a director appointed by the President. The future of both employers and employees are placed in the hands of a federal bureaucrat with little knowledge or familiarity of the company’s operations.

The Journal notes that binding arbitration will “strip workers of valuable rights,” depriving them of the right to vote on a contract. This, in turn, also reduces accountability for union leaders.

And the Journal advances an argument that hasn’t been made as often as it should: binding arbitration would make it more difficult for workers to get rid of a union. The law limits how soon workers can petition to decertify a union. Workers can petition against a union if they have gone a year without a contract. But with binding arbitration, workers would be able to only kick out their union “at the end of the government-imposed contract,” which would be decided at the whim of a federal bureaucrat.

The civil war at UNITE HERE escalated Friday when John Wilhelm- the leader of the “HERE” faction of the union – and his supporters rushed the union’s Manhattan headquarters. The executive offices were being controlled by the Bruce Raynor-led faction, which house the offices of  Raynor and the “UNITE”  portion of the union.

A judge recently ruled against Wilhelm’s request that would have granted him control of union assets, leading Wilhelm and his supporters to storm the headquarters to seize and protect documents from destruction.

Both sides provided different accounts of what transpired.

A spokeswoman for Workers United claimed that Wilhelm brought security guards and a locksmith at 4:00AM to break into the office.

The spokeswoman for Wilhelm’s faction said actions were taken to “preserve what remains of the status quo and to prevent the further theft and destruction of UNITE HERE property and documents.” According to the spokeswoman, Raynor’s side had been destroying records with “Defense Department-grade” software.

Take a second to internalize what both sides said. One side said the other broke into a building to steal records. The other side alleged that “Defense Department-grade” software had been utilized to delete records. Both sides would probably agree that their actions and tactics are entirely justified. It’s just another example of what lengths and measures unions will resort to in order to win, even if it is against their own side.

The Politico is reporting that unions are intimidating Wall Street by leveraging the billions in dollars in pension funds that financial firms manage for workers and retirees. In a questionnaire making the rounds on Wall Street, unions are asking pointed and specific questions about fund managers’ history and associations. Although it’s not explicit in the letters, unions are implying that that they will pull their pension funds with firms that support EFCA.

The questionnaire has three parts: 1) what are the fund managers’ public positions, lobbying history, and political contributions? 2) Do the managers have any “relationships” between the company and any organization(s) that oppose EFCA? 3) Do the managers belong to any other trade associations that oppose EFCA?

Union leaders claim that pension fund managers are actively undermining the interests of the unions. Officials in the financial services industry were understandably none too pleased with the unions’ overt attempts at shaking down firms. An official for one trade organization said that the unions’ threats to Wall Street were “beyond outrageous” and that it was “troubling that Big Labor would use their pension plans as the bargaining chip.”

Of course, using pension plans for political leverage is illegal:

The Department has also consistently rejected a construction of ERISA that would render ERISA’s tight limits on the use of plan assets illusory and that would permit plan fiduciaries to expend trust assets to promote myriad public policy preferences. Rather, the Department has reiterated 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.

It shouldn’t surprise anyone that unions have attempted to intimidate through financial means. Unions already tried to limit a newspaper’s right to free speech.  And now we see them attempting to scare companies into giving up their right to petition the government. What’s next?

See the complete letter here.

The Investor’s Business Daily featured an editorial about how unions hurt a company’s stock price.

According to a study from the National Bureau of Economic Research, a unionized public company lost, on average, $40,500 per each worker eligible to vote to organize. Researchers also found that a doubling of unionization in the U.S. would lead to a 4.3 percent decrease in the stock value of companies “at risk of unionization.” The study examined data from unionized public companies between 1961 to 1999 and focused on stock performance 24  months before and after a union vote.

Why do equity values fall when unions form? According to the study, a “combination of a transfer to workers” and “lost profit due to inefficiencies caused by the union” cause a company’s equity value to drop.

The results from the NBER study is yet another example of how damaging EFCA will be if passed.