LaborPains.org

We’ve noted before the impact of union spending funded by members’ dues money on national and state elections, but union political cash trickles all the way down to the local level. The latest example is the Los Angeles city elections being held this year, into which unions have poured significant sums.

Our Executive Director outlines some of this spending at Forbes:

The unions did their best to make this a reality. The International Brotherhood of Electrical Workers-backed […] super PAC raised more than $4.1 million to elect its candidate. The police union chipped in with another $1.4 million, while other unions—the Longshoremen and the Teamsters—made contributions to the tune of $300,000 and $100,000, respectively.

But do union members support the candidates that their unions are funding? Not necessarily, despite over 90 percent of union political money going to Democrats. Our Executive Director notes two cases where against all union harangues many members of union households chose the Republican candidate:

That’s where the real issue lies. Exit polling from 2012 indicates that 31 percent of union households in California voted for Elizabeth Emken, the Republican nominee for Senate. Elsewhere, even Wisconsin Governor Scott Walker—the most hated politician in America, according to union officials—received 38 percent of the union-household vote.

There’s a solution to this divergence between union officials’ politics and the politics of large numbers of union members. The Employee Rights Act contains a provision that would require unions to obtain the affirmative consent of their members (many of whom are under forced dues arrangements in non-Right-to-Work states) before using their dues money for political purposes. That provision would allow union members to have a real say in their union’s political activity, which they lack today.

The Wall Street Journal reports on what might be the next great federal bailout. The Teamsters Union Central States pension fund has been in trouble for some time—UPS pulled out of the fund in 2009—but now it’s advancing towards a point of no return.

It seems the Teamsters Union’s Central States pension fund is going bust fast, with companies like Republic Services pulling their employees from the fund. The Journal notes:

Investment losses during the financial crisis and hard times for trucking companies that pay into the Teamsters’ Central States Funds have sapped the fund of money it uses to pay promised benefits.

With just 60 cents of assets for every $1 in obligations, the Teamsters pension fund is considered in “critical” status by the Pension Benefit Guaranty Corp., the federal agency that backstops failed pensions.

You read that right: “backstops.” If the Central States fund goes bust, taxpayers could be on the hook. And how deep is the sea of red that drowns the fund’s ledger? The Journal continues:

The pension plan pays about $2.8 billion in benefits a year but takes in only about $700 million in employer contributions. “You have to make up the rest with investment returns,” said Mr. Nyhan, which he thinks is unlikely over the long term.

Companies are trying to preserve their employees’ retirements by trying to reform pensions. Unions want employees trapped in these dying funds.

Although former speaker of the Connecticut House of Representatives Christopher Donovan came up short in his run for Congress, the Hartford Courant reports that he’s being encouraged to campaign to be the next head of the state’s AFL-CIO. Donovan has a great prerequisite: he’s already involved in a serious scandal.

A few months before the Democratic primary, seven people were indicted by a federal grand jury for conspiracy in directing illegal campaign contributions to Donovan. Among those were Donovan’s campaign manager and long-time aide, his finance director, and a union leader. According to the Wall Street Journal:

Prosecutors also disclosed that Ray Soucy, a former union official and a key figure in the probe, pleaded guilty Tuesday to conspiracy charges in the scheme, which supplied straw donors with cash so they could write checks to Mr. Donovan’s campaign committee.

In exchange, according to court documents, Mr. Soucy assured the co-conspirators that Mr. Donovan would kill legislation to close a loophole allowing roll-your-own tobacco shops to avoid collecting cigarette taxes. The bill didn’t come up for a vote in the state Legislature.

Since his defeat, not much has been heard from Donovan. And although he has not been accused of wrongdoing, the swirling scandal around him is par for the course for union officials.

In Minnesota, a father-son duo has been accused by the International Teamsters of embezzlement, bank fraud, racketeering, and other financial crimes. Bradley Slawson Sr. and Bradley Slawson Jr. of Local 120 are currently on unpaid leave from the union. The pair is said to have received payments from a Teamsters-owned bar — payments adding up to $140,000 between the two of them. Another teamster, Todd Chester, helped to coordinate those payments from the bar and has also been charged. Chester, described in the Star Tribune as “a family friend of the Slawsons” and “the father of one of Slawson Sr.’s grandchildren,” also received a questionable finder’s fee of $90,000 for the construction of a new union hall. The Star Tribune reported in December that the Independent Review Board (IRB) report included an “unsettling allegation… that one of the bar managers wanted to hold a fundraiser for a ‘nonexistent fake sick baby’ and direct the funds instead to a bar the union owns in Fargo.” The bar, the Teamsters Club in Fargo, North Dakota, hosted a victory party for Democratic now-Senator Heidi Heitkamp.

The Slawsons claim that this is just a “witch hunt” because the family broke away from Jimmy Hoffa Jr. in 2010. But this isn’t the first time the Slawsons have been in the news for misconduct. In 2009, the Department of Labor conducted an audit of Local 120’s records under its Compliance Audit Program (CAP) of the Labor-Management Reporting and Disclosure Act (LMRDA) and found that Slawson Sr.’s chapter committed recordkeeping and reporting violations. In 2000, a press release from Overnite Transportation Co. reveals that Slawson Jr. pled guilty to disorderly conduct charges for his actions at a strike of the company. The release says:

Slawson was found in contempt of court on May 8 for his self-admitted threats and coercion in connection with unrefuted claims that he struck one Overnite driver with a picket sign and locked another Overnite driver in a trailer while the driver was attempting to make a delivery at a customer’s facility. Slawson was ordered to keep away from Over[ni]te property and that of the trucking company’s customers for the purpose of assisting the union in any labor action against Overnite. He was also ordered to pay $500 to compensate Overnite for attorneys’ fees and costs.

Not surprisingly, Junior was also a big fan of EFCA.

Labor should go no further than its own backyard if it is looking to blame anyone for its declining numbers. Rampant crime and corruption are just line-items on the long list of reasons why organized labor slides deeper into irrelevancy.

Teamsters Unionize Truck Drivers at Southern CA Ports

Having suffered a costly port strike in December, the businesses—to say nothing of the millions of Americans—who rely on the ports of Los Angeles and Long Beach won’t be happy to hear this news: The Press-Telegram reports that 65 truckers for Toll Group have reached a union contract agreement with port management. The paper declared them “the first truckers at the port complex to win a collective bargaining agreement since Congress deregulated the industry three decades ago.” 

Lafe Solomon, the Acting General Counsel of National Labor Relations Board, released his office’s annual report this week. The report revealed that almost 94 percent of all initial union representation elections were held within 56 days of filing unionization petition, with a median of 38 days. The much-needed Employee Rights Act proposed that there be standard election timing, requiring 40 days between the filing of the petition and the vote.

Unions like to portray themselves as the ones who fight back and balance out the equation between employees and management. But realistically, they are the yin to the company’s yang: employees and employers are interdependent, and one cannot exist without the other.

This lesson is most clear today at Hostess, where 627 employees lost their job after Hostess Brands, Inc. announced on Monday that it is permanently closing three of its 36 bakeries in response to a strike by the bakers union that began on November 9 with a walkout in Kansas. The strikes spread throughout the country, but those working at the bakeries in Cincinnati, St. Louis, and Seattle will be striking against factories that will not reopen.

Yet even with hundreds of workers out of jobs, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) has not called off the strike. It could be that BCTGM smells blood. The strike may bring the company to the brink and force it to liquidate. The maker of Twinkies filed for Chapter 11 bankruptcy in January and has been trying to restructure its debt to stay afloat. Hostess has toyed with a number of resolutions, even offering unions a 25 percent stake in the company. The Teamsters have already decided to accept a new collective bargaining agreement with the company. Because BCTGM didn’t settle with Hostess, a bankruptcy judge allowed the company to cancel its agreement with the union and impose a new contract that included wage and pension cuts.

Although the strike is only a few days old, it has already proved costly for BCTGM workers, but there are no signs that the walkout will cease anytime soon. Hostess’s CEO, Gregory Rayburn, stated what he thinks is on the mind of the BCTGM:

Some employees are apparently under the misimpression that if they force Hostess to liquidate, another company will buy our bakeries and offer them employment… The fact is, the bakery industry already has far too much capacity, and there is a strong risk that many of our facilities may never operate as bakeries again once they are closed. I believe the leadership of the Bakers Union knows this fact, but is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions. [emphasis added]

Some might question this as an empty threat, but business appears to be seriously affected.

This is another case of unions destructive behavior. In October, American Airlines pilots were aggravating the company and thousands of customers by calling in excessive maintenance repairs, causing massive delays, as a form of putting union pressure on the management. This, too, occurred while American Airlines faced, and continues to face, Chapter 11 bankruptcy. This hurt the brand and put it the company at further risk of losing more business.  It now appears that the pilots and the airline are close to a deal, so perhaps the prospect of job losses (and a legal threat over the allegedly illegal job action) came into play.

The Hostess scenario is a repeat of the pilots union experience—except that Hostess is more willing to close up shop than be fiscally irresponsible and give in to union demands. Nevertheless, BCTGM continues to strike despite the very real threat to — and now realized loss of — union employee jobs.

The Teamsters, on the other hand, saw the writing on the wall.

“This was a difficult decision [to approve of Hostess’s offer],” said Teamsters General Secretary-Treasurer Ken Hall in the statement. “Our members are frustrated at being in the position to bail out the company again, but overall we’re willing to accept modifications with the hope that Hostess will recover and be in a better position in the years to come. At the end of the day, our members recognized that they can’t replace their pay and benefits in the nonunion sector.”

Rhetoric aside, the Teamsters recognized that a job with reduced benefits is better than no job at all. For consumers, it might be hard to part with the Twinkie and other Hostess treats (although there are some good recipes out there for making your own small batches at home). But BCTGM members, as well as other union employees, may find themselves out of work in short order.

Should you be allowed to sell a stock if it was dropping like a rock?

That’s the question that our executive director contemplates in Forbes. Unfortunately, many Americans can’t do the same with their own poor investment — their labor union.

Rather than supporting efforts such as the Employee Rights Act, unions are busy spending on candidates that a number of their members do not support. Furthermore, union membership is falling as those who have a choice are sending in their “sell” order by not joining the union and not paying its costly dues.

And now, union members have another reason to take stock of their situation and reconsider mailing that next check. Unions are opposing the RAISE Act, which would set the collectively bargained wage as the wage floor, but not the ceiling, in collective bargaining agreements. As the law currently stands, unions have the ability to reject merit raises earned by individual members. Unions say that it undermines the collective bargaining process.

At a subcommittee hearing in the House last week union lawyer Devki Virk, who is on the Board of Directors for an AFL-CIO committee,  testified that the RAISE Act is not fair because workers won’t have a say if they want individual raises. Virk says that it would put the decisions regarding raises in the hands of the employer.

We’ve heard this rhetoric before from both the Teamsters and the SEIU about raises not being “fair” to all employees.

But when you get down to it, the true motivations are clear. As James Sherk notes, it’s because unions know that if employees are in a state where they actually have a choice about being in a union, they’ll understand that it’s a bad investment:

 Collective bargaining presupposes that workers can negotiate higher pay together as a group. That’s why union members will pay hundreds of dollars annually in dues. But if the wage that the union negotiated is $15 per hour and an employee gets a performance-based raise to $20 per hour, then why is he paying union dues?

Unions want exclusive power over their members’ investments, but the ERA and RAISE Act, even with their values rising, aren’t part of the portfolio.

After 20 inches of snow were dumped on New York City last week, the media has been atwitter about allegations made by one city councilman. Dan Halloran claimed he was approached by three Sanitation Department workers who confessed they had been ordered to slow down the snow removal as a protest against recent budget cuts.

The accused unions are the Sanitation Officers Association (which is part of the SEIU) and the Uniformed Sanitationmen’s Association (which is part of the International Brotherhood of Teamsters). Both have claimed that the sluggish plowing was due to budget cutbacks and that no one takes Halloran’s allegations seriously.

But apparently the feds do–at least enough to open an investigation:

Federal prosecutors in Brooklyn have opened a preliminary investigation into allegations that disgruntled sanitation workers sabotaged the cleanup after the blizzard last week that left some neighborhoods snowbound for days, people who have been briefed on the inquiry said Tuesday.

The investigation is focusing on whether there was a work slowdown and, if so, whether it was an effort to pad overtime. If the actions took place, two of those people said, they could constitute wire fraud or wire fraud conspiracy, both federal crimes. Both people spoke on the condition of anonymity because the investigation was continuing.

Meanwhile:

Between 660 and 720 Sanitation workers called in sick for the cleanup of last week’s blizzard — more than double the usual rate, The Post has learned.

About 11 to 12 percent of the Sanitation Department’s 6,000-strong force didn’t show up for work on Monday or Tuesday, city officials confirmed, as 20 inches of snow brought the Apple to a near-standstill.

Of course, there’s no way of knowing whether those absent employees were protesting or snowed in. But for what it’s worth, this is far from the first time Teamsters-affiliated sanitation workers have called in sick. The worst incident occurred in nearby Yonkers where garbage festered in some neighborhoods for weeks after a budget battle angered the local sanitation union. On one day, 46 out of 48 sanitation workers scheduled to pick up garbage called in sick. More details will come out in the next few weeks, and in the meantime, we are keeping an eye on this.

Image courtesy of Barbara L. Hanson.