The
major news media hailed the 15-day strike in August 1997 by the
International Brotherhood of Teamsters against United Parcel
Service (UPS) as a decisive victory for organized labor, but, in
fact, it was little more than a brief public relations coup for
organized labor, especially the Teamsters. Organized labor in
general and the Teamsters in particular quickly became tarred by
the brush of union corruption that drove Teamsters President Ron
Carey from office just weeks after the strike ended. Moreover, as a
result of the strike, the rank-and-file Teamsters that comprised
the strikers at UPS lost two weeks of wages, their annual profit
shares, and the opportunity to accept a corporate pension plan that
was far more generous than the one negotiated by the Teamsters.
Before the UPS strike, organized labor was
in a state of decline as the result of powerful and continuing
changes in the workforce and the economy. Now, however, the
Teamsters and organized labor are even worse off because of the
strike. Not only has Carey stepped down from office, three of his
associates pleaded guilty to funneling contributions to the Carey
campaign. Federal prosecutors and congressional investigators are
examining the Carey campaign finance scheme, which involved
numerous labor leaders, liberal organizations, and perhaps even the
Democratic National Committee (DNC) and the Clinton-Gore reelection
campaign. Furthermore, the misuse of union dues in the Carey
reelection effort has strengthened the growing movement to require
unions to obtain written permission from union members before
spending dues on political purposes.
Background
The
UPS strike was one of the largest and, perhaps, the most decisive
labor dispute in the United States since World War II. It was a
desperate struggle by the largest private-sector union in the
country--the Teamsters, which claims 1.4 million members1
--to reassert its own waning power, and by the labor movement as a
whole to reverse a steady half-century decline in influence.
Although widely hailed as a major accomplishment for both unions
and workers, the UPS strike was, in fact, nothing more than a
carefully staged ploy. The strike achieved little for the Teamsters
union, which now finds itself in greater debt and continues to reel
from seemingly endless scandals; it accomplished even less for
workers, many of whom--if still employed by UPS--will spend the
remainder of the negotiated contract recovering from financial
losses incurred during the walkout.
Both
the news media and union protagonists hailed the strike against UPS
as a victory for the Teamsters and the leadership of Ron Carey, the
union's president. The media also proclaimed that the strike
signaled a turnaround in the long decline of unionism. The New
York Times rhapsodized,
[w]ith the United Parcel Service
settlement seen as a major triumph and an omen of future success,
union leaders and many experts say the labor movement is in its
strongest position in nearly a generation and is poised to increase
its membership after a two-decade decline.2
The
Financial Times noted a new mood of self-confidence among
union leaders, due in part to the "remarkable victory by the
Teamsters Union in its strike against UPS," and claimed that this
new mood "may have begun to reverse a generation of
decline."3 Carey himself
characterized the agreement as "not just a Teamster victory, but as
a victory for all working people."4 A former Secretary of
Labor, Robert Reich, greeted the settlement as a "watershed" that
reversed the defeat of the air traffic controllers more than a
decade earlier. For Reich, the strike translated into the triumph
of the Clinton Administration's labor policy over that of the
Reagan Administration.5
Reality, however, differs from the
proclamations of these union cheerleaders.6
The UPS strike was not a victory for the striking employees,
unions, or Carey. A careful review of the settlement reveals that
it did not produce gains for UPS employees, even for the part-time
laborers who ostensibly had the most at stake. Moreover, this
Pyrrhic victory failed to signal a turnaround for organized
labor,7 which remains in a state
of continuing decline because of powerful trends in the labor force
and the economy at large. The scandals surrounding Carey's
now-nullified reelection to the presidency of the Teamsters will
serve only to hasten labor's downward spiral.8
The
Teamsters scandal may engulf the American Federation of
Labor-Congress of Industrial Organizations (AFL-CIO), other labor
unions, and even the DNC as a federal grand jury and a
congressional subcommittee probe the 1996 union election. At the
center of this investigation is a complicated $1.5 million scheme
to raise funds for the DNC; liberal activist groups; and such
causes as the campaign to legalize marijuana in California. Three
top officials of the Carey campaign (and longtime liberal
activists)--campaign manager Jere Nash, Democratic political
consultant Martin Davis, and telemarketer Michael Ansara--pleaded
guilty in September 1996 to laundering funds. Davis has claimed
that Richard Trumka, secretary-treasurer of the AFL-CIO, was
involved in another scheme to divert $100,000 from the Teamsters'
treasury to the Carey campaign. Nash and Davis have alleged that
DNC officials and the Clinton-Gore reelection campaign agreed to
find donors for the Carey campaign in exchange for Teamsters
contributions.9 As federal prosecutors
investigate the Carey reelection campaign, Representative Pete
Hoekstra's (R-MI) Taskforce on the American Worker of the Committee
on Education and the Workforce of the U.S. House of Representatives
will hold hearings in spring 1998 on the Teamsters campaign scandal
with the assistance of Joseph Di Genova, former U.S. attorney for
the District of Columbia. Perhaps most significant, because the
tainted reelection of Carey cost taxpayers $17.5 million, Congress
has barred the use of federal tax dollars to pay for the yet-to-be
scheduled elections to choose Carey's successor.10
Was the Strike a
Victory for the UPS Workers and the Teamsters?
A
balanced assessment of the UPS-Teamsters contract agreement
indicates that the settlement ended in a standoff between the
contracting parties and does not represent a victory for the union.
The strike:
-
Cost union members thousands of
dollars in lost wages and profit shares;
-
Will fail to create new full-time
positions for part-time UPS workers;
-
Will not change the ratio of full-time
to part-time workers at UPS; and
-
Resulted in a pension plan that was
significantly less generous than the plan offered by UPS prior
to the strike.
The
strike imposed high costs on UPS workers, many of whom suffered
unrecoverable losses in income and or jobs.11
Thousands of UPS workers celebrated the "victory" on the
unemployment line.12 The company, too,
suffered large losses in terms of revenue and customer base, as
illustrated by a $450 million increase in revenues during the
strike at the U.S. Postal Service--a competitor of UPS in many
types of package delivery--and the fact that 15 percent of the
shipping volume shifted to Federal Express, another UPS competitor,
during the strike and has remained there.13
UPS
agreed to the Teamsters' key demand: to create 2,000 full-time jobs
from part-time jobs per year over the five-year duration of the
agreement. Because the new full-time jobs will be created by
combining and reclassifying existing part-time positions, however,
the wage gains negotiated for current full-time workers will not
accrue automatically to most of the newly created full-time
positions. Thus, the wage increases for full-time workers trumpeted
by the Teamsters were overstated. UPS also agreed to move 10,000
part-time staffers into full-time slots as current full-time
staffers retire. The company made clear, however, that all proposed
increases in full-time employment under the new agreement would be
subject to growth in business.
The
agreement to shift part-time employees into full-time positions is
not likely to alter the pre-strike balance of 57 percent part-time
and 43 percent full-time employees. Although UPS may add 10,000
more full-time jobs than it had offered originally and move as many
as 10,000 part-timers to fill full-time slots, there is no
requirement in the contract that it replace all retirees or other
full-time employees who quit with new full-time workers. Indeed,
many of these positions are likely to be converted to part-time
jobs in response to the contract's requirement to increase the
number of full-time positions elsewhere. Therefore, in the final
analysis, the strike is not likely to result in increased full-time
employment at UPS.
Teamsters leaders focused on the plight of
part-time workers, disparaging the value of those jobs throughout
the economy. Carey often referred to part-time positions as
"throw-away" jobs. (Incidentally, Carey apparently borrowed the
idea of focusing on the part-timers from his rival, James P. Hoffa,
Jr., in the course of their election contest.) The average hourly
earnings of UPS part-timers ($11/hour) compares favorably, however,
with the earnings of all workers in the service sector. Adding the
value of benefits (another $7) to total compensation makes these
jobs especially attractive to such workers as students and women,
many of whom prefer to work part-time.14 Moreover, the
differences in pay between part-time and full-time workers, which
Carey criticized, actually reflect differences in skill and job
requirements--as they should--rather than a conscious managerial
decision to denigrate part-time employment. Finally, considering
the high turnover rate among UPS's part-time employees (as high as
400 percent, by some estimates),15 the benefits of any
wage gains to part-timers are short-lived. In other words, many of
those whom the Teamsters asserted would benefit from the strike
were not around long enough to recoup the wages they lost during
the strike.
Certainly, the union won wage concessions
for both full- and part-time members. The annual increase of 3
percent in the wage rates of full-time workers, however, is not
much higher than the 1996 increase in consumer prices. If this
annual rate of inflation were sustained over the life of the
agreement, future gains in real wages for full-time UPS workers
would be negligible. Using the "blue chip" forecast for inflation,
it would take almost the entire five-year term of the agreement for
a full-time employee to recoup the lost wages and the
profit-sharing proposal made by the company in its last offer
before the strike began.16 (The union rejected
profit-sharing in favor of larger annual wage increases, so the
profit-sharing offer was not included in the settlement.)17
The
scale of union gains--an average of 3 percent per year over the
duration of the contract--loses even more luster compared with what
those employers negotiating agreements in 1997 expected to pay.
According to the findings of the 12th annual survey of employer
bargaining objectives for 1997 by the Bureau of National Affairs,
the "vast majority planned to bargain for less than four percent in
the initial year of the new agreement."18
The Teamsters' 3-percent wage gains at UPS fall within those
employer expectations.
Another point on which the Teamsters
proclaimed victory is the rejection of the UPS management's
proposal to convert the current Teamster-run, multi-employer
pension plans to a plan solely for UPS retirees, administered
jointly by UPS and the Teamsters. Under the company's proposed
plan, UPS retirees would have gained up to 25 percent in benefits
over the current multi-employer plans. UPS could improve pensions
for its Teamsters because it no longer would be compelled to
subsidize pensions for employees of other, less-profitable
companies that contribute less on behalf of their employees. (UPS
also guaranteed it would fulfill its existing financial obligations
under the multi-employer plans at a cost of over $700 million.) The
existing multi-employer plans, administered solely by the
Teamsters, redistribute benefits from one group (UPS members) to
other Teamster members. Carey never explained how the continuation
of this redistributive policy constitutes a "victory" for Teamsters
at UPS: He merely denounced the company's proposal as managerial
greed.
UPS
won a major concession from Carey when it obtained a five-year
agreement. The Teamsters historically and steadfastly have opposed
contracts of longer than three years in duration. In accepting the
UPS's demand, the Teamsters assured management an extended period
of labor peace, a matter of significant value in the company's
planning for the future.
With
a tight labor market likely for the next two or three years, UPS
has locked in relatively low wage increases while the wages of its
non-union competitors are likely to increase more. Conversely, the
union agreed to lower long-run wage increases for its UPS
members.19
The Politics of
the Strike
Ostensibly, the motives for the strike
were the terms and conditions of employment at UPS. The strike's
real origins, however, lay in the Teamsters' discredited December
1996 election in which Carey narrowly secured reelection to the
presidency over his rival, Hoffa.20 Carey was vulnerable
because of several problems with his management of the union. Carey
had a reputation of weakness in negotiating with employers, and the
union had a diminished reputation within the labor movement. The
Teamsters' membership had declined, its assets were decimated, and
its record in organizing new members was dismal. In the first two
years of Carey's stewardship, for example, the Teamsters lost
68,000 members.21 In 1996, the union won
just 36.7 percent of representation elections, significantly below
the AFL-CIO's admittedly weak 50.1 percent that year.22
More
important, reports of impropriety in the 1996 campaign soiled the
image of integrity on which Carey rode to victory in the union's
1991 presidential election. Even before the election officially was
invalidated, Hoffa challenged the results. Carey fought back by
attempting to bolster his political position within the Teamsters.
For Carey, tackling the union's most important and largest single
bargaining partner provided the opportunity to overcome his
reputation as a feckless leader and to strengthen his political
position within the Teamsters should a new election be called. The
strike also was the opportunity to even the score with UPS
following the disastrous one-day strike he called against the
company in 1994. At that time, Carey initiated a walkout to stop
the company's order that drivers lift heavier loads. According to
press reports, no less than 80 percent of the workers ignored the
strike call.23
The
strike against UPS was a calculated gamble; the outcome could not
be certain. The Teamsters' strike fund was depleted, a factor that
might have given the leadership pause. To meet its obligation to
provide strike benefits--already reduced to $55 per week--the union
would be forced to draw from its general fund; but this, too, had
been drained: By April 1997, its level was below $7 million, an
amount insufficient to pay even one week of strike benefits, which
were estimated to cost $10 million per week. Likewise, the
Teamsters' net worth was depleted from $150 million when Carey took
office in 1991 to $11.3 million at the end of 1997. Nearly
three-fourths of these assets--$7 million--are not liquid and
reflect the Teamsters' real estate holdings in Washington,
D.C.24 Government overseers
since have determined that among the diversions of union revenues
were moneys illegally spent to reelect Carey in his contest with
Hoffa25 and funds contributed
to the Clinton-Gore reelection campaign in 1996.
Notwithstanding the poor economic health
of the Teamsters, Carey opted to go ahead with the strike to
bolster his position within the union. His weak control was
shattered following the strike, when the court-appointed federal
monitor of the election, Barbara Zack Quindel, belatedly announced
she had invalidated the 1996 Teamsters election because of
corruption and fraud.26 Subsequent evidence of
a conflict of interest compelled Quindel to resign, but not before
she extended Carey a helping hand by delaying her announcement
nullifying the Carey-Hoffa election results until after the UPS
strike had been settled. Incredibly, Quindel claimed she had
withheld her finding to avoid interfering with the bargaining and
strike at UPS. Her inaction and delay were, in fact, interference
and succor to Carey. One is justified in wondering whether she had
sufficient evidence on hand to announce the decision before the
strike even started.27
After a new court-appointed monitor, a
former federal judge, Kenneth Conboy, took over from Quindel,
Carey's political scandals came to a climax. In November 1997,
Conboy disqualified Carey from standing for reelection. Later that
month, Carey gave in to pressure and took an unpaid leave of
absence from the Teamsters, just hours before a federally appointed
Independent Review Board brought charges against him for diverting
union money to fund his 1996 election campaign.28
Carey's departure followed an agreement between the Teamsters and
the Department of Justice that allowed a federal monitor to oversee
union finances--a move meant to prevent further improper raiding of
the union coffers.29 Meanwhile, the new
election, originally rescheduled for March 15, 1998, was delayed
another 45 days to allow a new federal monitor (the third) to
investigate the campaign finances of Hoffa during his contest with
Carey. With one candidate charged, another being investigated, and
$17.5 million in tax dollars spent ineffectively to prevent
corruption in the elections, the Teamsters' election can be viewed
only as an abysmal failure of government oversight.
Beyond the
Teamsters: The Carey Campaign Scandal Widens
The
corruption in the Teamsters' election did not stop with the
Teamsters, however. Conboy's decision to declare Carey ineligible
to run for reelection because of financial improprieties engulfed
many leading officials of the labor movement, some of whom are
alleged to have intervened illegally in Carey's reelection bid. The
involvement of leaders from other unions had heavy partisan
overtones. Union officials sought to support Carey--a strong
proponent of the Democratic Party--and to defeat Hoffa, who
publicly denounced the use of union funds to promote liberal
political issues unrelated to workers' interests.
To
defeat Hoffa, AFL-CIO leaders apparently laundered thousands of
dollars for Carey, who also ran on an anti-corruption platform. The
secretary-treasurer of the AFL-CIO, Richard Trumka, has invoked the
Fifth Amendment while testifying, refusing to answer Conboy's
questions on his role in laundering the election money. AFL-CIO
President John J. Sweeney's predecessors, George Meany and Lane
Kirkland, had strict policies requiring the resignation of any
AFL-CIO officer who invoked the Fifth Amendment in order to avoid
explaining the ways in which union members' moneys are
spent.30
No
information is available at this time regarding the role Sweeney
may have played in allegations implicating his second-in-command,
Trumka. Press reports, however, have speculated that Sweeney must
have been aware of Trumka's illegal activities.31
As the leader of the largest union in the AFL-CIO, Carey also
played a key role in ousting Kirkland and electing Sweeney as his
successor.
Conboy discovered that other top union
officials had violated the rules governing the procedures of the
Teamsters election, too. Among those Conboy cited are the president
of the American Federation of State, County and Municipal
Employees, Gerald W. McEntee (who orchestrated the palace coup that
ousted Kirkland in 1995), and the president of Sweeney's former
union, the Service Employees International Union, Andy Stern.
Clearly, leadership of organized labor favored Carey and backed his
election to the presidency of the Teamsters despite the
risk.32 The Teamsters set up a
committee, ironically named the Teamsters for a Corruption Free
Union (TCFU), as the vehicle to handle the money laundering.
Federal overseers and congressional investigators have found that
the TCFU also was involved in attempted money swaps with the
DNC.
These other union leaders made a
significant (albeit potentially illegal) investment to assure that
Carey won reelection. Can there be any doubt that these same
leaders also actively encouraged the UPS strike to protect their
investment and political interests? For Sweeney, there was another
compelling reason to encourage the strike: It would provide further
evidence in support of his frequent prophecies of a resurgent union
movement. The news media echoed and re-echoed this rhetoric.
Once
the strike was under way, Sweeney provided financial assistance to
the Teamsters to assure that Carey could maintain the strike. The
assurance of financial support to resolve the Teamsters' financial
problem in paying strike benefits was, per se, routine in union
affairs.
The
promised amount of financial support to cover strike pay--$10
million per week--is noteworthy, however, compared with the $35
million media campaign undertaken to defeat Republican candidates
to Congress in 1996, a campaign Sweeney claimed would mark the
dawning of a new era for organized labor, an era of taking the
fight to the opponents of organized labor.33
It
is worth noting that the DNC and the Clinton-Gore reelection
campaign employed some of same the political operatives involved in
Carey's corrupt reelection. For example, Martin Davis, a Carey
consultant who has since been charged in federal court in New York
for hiding illegal gifts to the Carey campaign, is a former
co-owner of the November Group, a direct mail firm that counted the
DNC among its clients. Jere Nash, Carey's campaign manager, served
simultaneously on the staff of the 1996 Clinton-Gore reelection
campaign.34 But the
Clinton-DNC-Carey connection goes far deeper, as evidenced by
Conboy's decision to bar Carey from running for reelection in a new
presidential campaign. Conboy cited Nash, who provided testimony
about a conversation between Carey and Terence McAuliffe, chairman
of the Clinton-Gore campaign, in which Carey thanked McAuliffe for
attempting (ultimately unsuccessfully) to find a Democratic donor
to give $100,000 to the Carey campaign in exchange for $270,000 in
Teamster money channeled to the Democrats.35
In June 1996, the Teamsters "rushed" $211,000 of this money, in
various sums, to 35 state Democratic parties at the request of
Laura Hartigan, finance director of the 1996 Clinton-Gore
campaign.36 This scheme served the
dual purposes of aiding candidates friendly to Carey and laundering
Teamster funds into the coffers of the Carey campaign.
The Taft-Hartley
Act and Presidential Responsibility
The
Teamsters began their strike against UPS on August 4, 1997, just
four days after their previous contract had expired. Despite
good-faith bargaining by UPS officials, including offers of
profit-sharing and a more lucrative pension program, the strike
continued. After 11 days, UPS offered to amend its "last, best, and
final offer," and, after 15 days, the Teamsters and UPS agreed to a
new contract. Throughout the bargaining process, the Clinton
Administration chose not to invoke the authority the Taft-Hartley
Act grants the President to interrupt private-sector strikes that
pose a threat to the economy. Instead, the Clinton Administration
effectively assumed a position at the bargaining table, thereby
placing additional pressure on the parties to come to a
resolution.
President Clinton's public explanation for
not invoking the Taft-Hartley Act to interrupt the strike amounted
to little more than an admission that he had abdicated presidential
responsibility. He contended that the strike did not meet the
standards set in the emergency disputes section of the act, which
provide that the President may intervene when a strike affects
national health and safety. Market changes marginalized the power
of the industries for which the law originally was intended, such
as coal and steel; and the economy's shift to services obscured,
but did not obviate, the potential effect of a strike against a
supplier of services that could affect the well-being of the
economy--as the UPS strike did. In previous cases in which
Presidents asked for an injunction to end a stoppage, the courts
accepted that a strike affecting a major portion of an industry is
sufficient to meet the standards of the Taft-Hartley Act. In the
case of UPS, the strike affected the bulk of an industry and had a
very large impact on the economy. The scope of the strike may be
sketched from these vital statistics of the economy: Estimates
suggest that from 5 to 7 percent of the national output--some $400
billion to $560 billion in all--may have been affected. The strike
interrupted 83 percent of all ground deliveries of parcels and
packages, and 63 percent of all combined ground and air deliveries;
it involved a total of 12 million deliveries and 4.9 million
customers, including hospitals and medical research organizations.
The effects reached 1.16 million companies--most of them small
businesses--that depended on UPS to carry on operations. (Small
businesses, incidentally, also have been the engine of most
employment growth in the economy.) As many as 185,000 employees
were involved, a far larger number than in past strikes in which
Presidents invoked Taft-Hartley procedures, and courts granted
injunctions to halt stoppages for 80 days. UPS is, in fact, the
fifth largest private employer in the United States; The Wall
Street Journal noted that few companies reach so deeply into
the heart of the U.S. economy. Finally, competitive companies and
the U.S. Postal Service announced they could not handle UPS's
delivery volume, a fact that undoubtedly played a role in the
union's decision to strike.
Thus, despite the obvious damage to
business (especially small business), consumers, and the economy,
President Clinton refused to initiate the procedures of the
Taft-Hartley Act that could have led to a court injunction
interrupting the strike. President Clinton's inaction stands in
sharp contrast to his behavior in other strikes in which he stood
to gain politically by making his presence known. For example, he
did not hesitate to invoke the procedures of the Railway Labor Act
to stop the pilots' strike at American Airlines earlier in 1997.
Moreover, he attempted to intervene in the 1995 Major League
Baseball strike. The list of President Clinton's selective
involvement in other labor disputes could be extended; however, no
other strike or labor dispute so profoundly affected the economy,
making President Clinton's lack of attention particularly
inappropriate. The oversight committee of the House of
Representatives Committee on Education and the Workforce, which is
investigating improprieties in the 1996 Teamsters election, is
examining whether the White House coordinated its response to the
strike with union officials, thereby violating its supposedly
neutral stance in the negotiations between the Teamsters and
UPS.37
Deprived of a Taft-Hartley delay, and
abjuring a knockout fight with the union (with striker
replacements), UPS returned to the bargaining table to face not
just the Teamsters but the Clinton Administration as well. Even
though the Taft-Hartley Act remained on the books, its policy for
averting damage to the country's economic health appears to have
been sacrificed.
Does the UPS
Strike Signal a Turnaround for Organized Labor?
The
strike and its resolution were a standoff, not a Teamster
"victory." They will not reverse the march of private-sector
unionism into decline. Private-sector unions, or "Old Unionism,"
will not become extinct, but their economic power will continue to
diminish. Quantitatively, the current private-sector union
membership of 9.3 million is likely to fall by another 1 million,
and the private-sector market share of unions probably will fall
from the current 9.8 percent to 7 percent by the turn of the
century. The number of local unions--the bedrock of unionism in the
United States--will continue to shrink. It is possible that as many
as 15,000 local labor organizations have disappeared since peaking
at 55,000 in the mid-1950s. Meanwhile, the continuing merger of
unions provides additional data on the steady decay of Old
Unionism. Contrary to Sweeney's rhetoric, mergers are not a sign of
nationalizing the labor movement but a confession of its continuing
decline. The scandals surrounding the Teamsters' presidential
election, including the role that top officers of the AFL-CIO and
affiliated unions played, will raise new barriers to any potential
turnaround. Even in the absence of these scandals, however,
private-sector labor's continuing decline could and would not be
reversed.
The
causes of Old Unionism's decline are rooted in the economy and
increased competition, both global and domestic. President
Clinton's failure to win fast track authority for new trade
agreements--a triumph of the AFL-CIO over the Clinton
Administration's trade policy that was widely ignored by the same
media that avidly seeks examples of union victories--at most may
slow the expansion of international competition, but it will not
reverse the competitive forces already developed. Meanwhile, the
U.S. market--itself the largest free market in the world--continues
to generate increased competition that militates against union
recovery.
In
addition to the rebirth of competition, structural changes in the
labor market have shifted employment away from the manufacturing
and construction industries, sectors in which unions gained a
foothold and expanded their numbers and power, toward the
historically non-union private-sector services. Concomitantly,
there has been a revolutionary change in the occupational makeup of
employment. Not only have white-collar occupations ballooned with
the advent of new service industries, they also have jumped
enormously within manufacturing and all other goods industries.
This means a shift away from blue-collar jobs, the mainstay of Old
Unionism, and toward newer jobs in the private economy that unions
never have enjoyed success in organizing. The direct result of
these structural shifts is a reduction in unions' market share, a
shrinkage that would occur even if unions had not lost a single
member since hitting their peak in 1970 at 17 million. Only in
government service have professional, technical, managerial, and
other white-collar occupations been unionized.
The
same forces that have undermined Old Unionism in the United States
have eroded Old Unionism in other advanced industrial economies
(for example, the Group of Seven, or G-7, countries).
The
decline of Old Unionism in the United States, therefore, is not
unique. The difference between the United States and other G-7
countries is that the United States led in the decline and that the
decline has gone much deeper in the United States than it has
abroad. This, of course, is consistent with the fact that the
United States led in the structural shift in the labor market, that
this shift has gone further than anywhere else, and that
competition (which includes the deregulation of industries in
communication and transportation) has proceeded sooner and gone
much further in the United States than it has in other G-7
countries.
The
decline of Old Unionism in the United States is of historic
proportions. Indeed, the decline is too large to be the result of
recent scandals, as damaging as they may be. Membership peaked at
17 million in 1970; since that time, Old Unionism has lost 7.5
million members, a number larger than the entire public-sector
union movement.
The
market share of Old Unionism has plunged from its peak a generation
ago--36 percent of the private-sector workforce in 1953--to its
current level of 9.8 percent. Restoring a position approximating
either of these historic pinnacles is impossible. Nor will the
gains that Sweeney has predicted--3 to 4 percent per year--be
realized. His goals imply private-sector membership gains of
between 280,000 and 375,000 over existing membership levels each
year, a prospect that statistics on union elections belie.38
Nevertheless, the mainstream media echo and re-echo Sweeney's
rhetorical claim that the AFL-CIO and its affiliated unions are
"organizing the unorganized." Factually, however, the number of
elections unions have sought and the number unions have won
continue to decline.39 Similarly, Sweeney's
announcement that the AFL-CIO's membership records show an increase
does not reflect actual membership trends. Membership reporting
from affiliated unions to the AFL-CIO is made on the basis of
administrative or political decisions at affiliated unions--not on
the basis of actual dues-paying membership. Hence, the AFL-CIO's
numbers are questionable at best. Moreover, when growth in the
labor force is taken into account, these reported putative gains
would be insufficient to prevent the continuing decline in unions'
market share in the private-sector economy.
The
routine explanation for the shrinkage of Old Unionism among leaders
of organized labor and the conventional wisdom among academics is
that union losses are due to employer opposition. Employers
certainly oppose unions now, as they always have, for rational
economic reasons. Yet, in the 1930s, when employer opposition was
at its fiercest, unions made enormous headway in organizing
unorganized workers, especially in manufacturing. By tradition,
employers have opposed unions, but corporate opposition is a
marginal factor at most, not an explanation for the huge loss in
membership that Old Unionism has endured since 1970.
To
understand the role of employer opposition, it first is necessary
to explain its meaning. Employer opposition applies only to union
efforts to organize the unorganized, and not to the loss of union
members in existing bargaining relationships. It is preposterous to
believe that employer opposition can thwart the replacement of 7.5
million members.
A
major goal of union political efforts is to rewrite the country's
basic labor law, the National Labor Relations Act (NLRA). Although
this has become a vain hope by this time, what difference would a
new, pro-union labor law make? In a word, none. Global competition
and the shift from a manufacturing- to a service-based economy not
only has reduced the strength of organized labor, it has made the
NLRA irrelevant. Hence, the charge that the Taft-Hartley amendments
to the NLRA in 1947 bolstered employer opposition and led to the
current decline in Old Unionism is more rhetoric than reality, as
is the exaggeration of employer opposition.
The
evidence that a new Wagner Act (referring to the original pro-union
labor law of the United States, enacted in 1935) would not breathe
new life into the ebbing Old Unionism is as close at hand as the
49th parallel in Canada. Despite labor laws at the federal and
provincial level that Canadians themselves characterize as Super
Wagner Acts, private-sector unionism nevertheless has declined
throughout Canada. Quebec, with labor policies more pro-union than
any other Canadian jurisdiction, also has experienced a pronounced
decline in its private-sector union movement, both in membership
and market share. Old Unionism is the victim not of villainous
employers but of the fundamental forces of supply and demand.
More
formidable than employer opposition or government policies is
employee opposition to organizing, a factor union protagonists
regularly ignore. U.S. Department of Labor statistics contradict
the politically correct conviction that all workers hunger to join
unions. 40 In polls, almost 70
percent of non-union employees declare they would not join a union
if given the chance.41 Moreover, union leaders
enjoy very low job-approval ratings.42
In
contrast with declines in the private sector, the future of
public-sector unionism (New Unionism) is likely to be stable: there
will be only minor fluctuations in the current levels of membership
and market share, now approximately 6.7 million members and 37
percent of government employment (federal, state, and local). Until
recently, New Unionism has been a growth industry, with increases
by politicians seeking to build a political partner irrespective of
the impact on the public economy. Even this sector,
however--despite its virtual immunity from competition and
structural change--apparently has topped out. Over the past three
years, public-sector union membership has edged down in both
membership and market share. This is attributable primarily to the
closure of military bases and cutbacks in government employment,
notably in the Department of Defense's civilian workforce. Its
market share, now slightly below its peak of 38 percent, is nearly
four times that of Old Unionism --and higher than Old Unionism ever
achieved (36 percent in 1953). Because of its relative immunity to
the laws of supply and demand, New Unionism is durable; early in
the next century it is likely to become the dominant form of
unionism in the United States as it has already in all other G-7
countries (with the possible exception of Germany). In eclipsing
the private sector, the shift to the dominance of government
employee unionism also promises a shift in union philosophy, which
will demand an increasing share of national income through taxes
and government spending. This shift will fit in well with the New
Left orientation of AFL-CIO President Sweeney.
Unions Respond
to Declining Membership by Turning to Politics
To
compensate for their failing efforts to rejuvenate unionism, unions
have shifted their emphasis to political action. This move also is
entirely consistent with the shift of unions toward public-sector
membership. The current poor economic health of the Teamsters
notwithstanding, the money that flows through union coffers is
significant: Unions collectively take in an estimate of nearly $13
billion in annual receipts and hold over $10 billion in total
assets. 43 The money unions spend
on political campaigns is significant as well. The Center for
Responsive Politics estimates that unions spent over $49 million on
federal campaign contributions in 1996 alone. The Teamsters PAC
(political action committee) led all other union PACs with over
$2.6 million in contributions just to federal candidates.44
Sweeney promised $35 million to topple the Republican majority in
Congress. Federal overseers investigating the Teamsters' election
discovered that Carey diverted over $885,000 from the Teamsters'
general fund to liberal advocacy groups in an attempt to influence
the 1996 elections and launder money back to his own election
campaign. These contributions are just the tip of the iceberg,
however. The real money spent by unions falls into the category of
"in-kind" donations, including phone banks and other
get-out-the-vote efforts, which totaled between $300 million and
$500 million in the 1996 elections.
The
funds spent on the campaign finance barrage in 1996 were taken
primarily from dues paid under the compulsion of a standard union
or agency shop checkoff. Under Communications Workers v.
Beck,45 union members are
entitled to a rebate of that portion of the dues spent for
political purposes. Yet, under the Clinton Administration workers
have been kept in the dark about their Beck rights, allowing
unions to continue to extract funds from workers and spend that
money on causes and candidates--including President Clinton--with
whom some workers no doubt disagree. For example, although
approximately 40 percent of union members tend to vote Republican,
92 percent of campaign contributions went to Democratic candidates
in 1996.46
Those who compare unions' use of
membership dues for political purposes to stockholders of
corporations that make political expenditures are comparing apples
to oranges. Stockholders, after all, have the freedom to sell their
shares and reinvest in other companies if they object to the
political uses of their funds, just as some investors trade only in
environmentally approved companies or refuse to buy shares in
companies marketing tobacco products or alcoholic beverages. A
comparable alternative is not available to unionized workers. Under
a standard union shop agreement, a worker must maintain membership
in good standing in order to retain his or her job; the non-payment
of regular dues and fees are grounds for the union to deny a worker
membership and therefore to demand that the employer discharge the
worker. Furthermore, it is not even possible for an individual
worker to withhold dues under a checkoff agreement.
In
the absence of federal enforcement of Beck, citizens are
utilizing state initiative processes to assure that workers have
the opportunity to pre-approve (or deny) union deductions from
their paychecks for political purposes. In Washington state, voters
enacted Initiative 134, which requires unions to obtain annual
permission before collecting or using any portion of workers'
salaries for political purposes.
The
response to the initiative by union members has been incredible.
Since Initiative 134's approval in 1992, the number of teachers
contributing to the education union's PAC dropped from 45,000 to
8,000, and the number of state public employees contributing to
their union PAC plummeted from over 40,000 to only 82. In short,
the Washington state initiative shows that workers will exercise
their right to avoid compulsory political contributions when given
a reasonable opportunity to do so.
The
next state scheduled to consider an initiative of this kind is
California. California's Campaign Reform Initiative would prohibit
employers from making automatic deductions from employees' pay for
political purposes without annual, written authorization from the
individual. It also would prohibit labor unions from using any
portion of a member's dues for political purposes without similar
authorization. The initiative collected over 775,000 signatures to
qualify for the June 1998 ballot, and initial polls show that
California voters support the initiative by a margin of 4:1. If the
initiative passes, it would take effect on July 1, 1998, and
therefore could have an impact on political spending in preparation
for nationwide elections to Congress in November.
Policy
Recommendations
The
roots of the strike at UPS were the illegal, fraudulent, and
capricious interference of union leaders--both inside and outside
the Teamsters--in the union's presidential election in 1996. These
leaders demonstrated their disregard for the law and for their
responsibilities to union members. Their practices should evoke a
response from Congress on behalf of all union members and the
public.
Congress can take several steps to protect
the rights of individual workers.
- Reform the
law on collectively bargained pensions. No reform would have
greater impact to prevent the improper use of union revenues than
changing the law on collectively bargained pensions. Under current
practice, contributions on behalf of the pensions of individual
union members are managed by a collective: Either a union (as in
the Teamsters-UPS case) or a joint company-union administration (as
UPS proposed) controls the fund. Instead, pension contributions
should be converted to individual property vested in the individual
worker after a short period of employment. This system would grant
individual workers the freedom to invest their retirement funds
into any one of a wide range of financial options, including mutual
funds, insured savings, or other bona fide financial
instruments.
Because such pensions would accrue
according to defined contributions, the problem of unfunded
liabilities would be eliminated, making the pensions of union
members more secure. In addition, such pensions would be portable,
allowing union members to transfer retirement savings when they
change jobs. Because trustees would manage funds individually,
neither union officials nor employers would have the ability to
divert or abuse the pension funds of workers. The retirement system
enjoyed by unionized federal government employees provides a useful
model for the type of secure, worker-directed, and portable
retirement plan that should be available to private-sector union
members.
- Require
unions to make more thorough disclosure of receipts and
expenditures, including dues money and funds spent for
non-collective bargaining purposes, especially politics.
Currently, the Labor Management Reporting and Disclosure Act
requires unions to file financial reports. Information on union
membership and finances provided in annual LM-2 union disclosure
forms filed with the U.S. Department of Labor, however, frequently
is vague and incomplete. The Department of Labor neither sets
guidelines for the information it requests nor performs audits in
order to verify the accuracy of the information submitted.
Therefore, reforming disclosure could be as simple as applying more
stringent requirements to existing reporting forms. Perhaps most
important, this information should be made available to union
members and the general public via complete disclosure of LM-2
forms on the Internet.
Congress also should require unions to
mail copies of their financial reports, including dues rates per
member per year, to their members and to those paying agency shop
fees. Currently, some (but not all) unions distribute annual
financial statements to members via union newspapers and journals.
These statements fail to inform members of such basic information
as the percentage of their pay exacted by the unions, a figure that
is obfuscated by periodic rate changes made by union leadership as
well as by automatic adjustments triggered by the consumer price
index. As a result, many members do not know what they are paying
to their unions in the form of dues and therefore cannot assess
adequately whether they are receiving benefits commensurate with
the costs.
-
In particular, unions should be
required to report the amount of dues money spent on non-collective
bargaining purposes, particularly politics. Disclosure of union
spending on activities beside collective bargaining should include
separate reports on the value of in-kind contributions made to
political campaigns. In-kind contributions should include paid time
off for employees of unions, reimbursements issued to union
campaign volunteers for expenses, and the share of administrative
and officers' salaries and expenses allotted to political
activities.
Congress and the
states should enact paycheck protection legislation so that union
leaders do not spend dues money on politics without annual written
consent from union members. Congress should seek to protect union
members from having their dues money used, without authorization,
for political purposes. Under President Clinton, the National Labor
Relations Board has failed to keep union workers informed of their
rights to a refund of dues money used for non- collective
bargaining purposes. Considering the inaction of the executive
branch, Congress should seek to implement Beck rights via
legislation. To correct the abuse of compulsory union dues, and to
enable union workers to exercise their full rights under the Beck
decision, Representative Harris W. Fawell (R-IL) has introduced the
Worker Paycheck Fairness Act (H.R. 1625). This legislation would
require employers to inform workers of their legal rights regarding
the payment of union dues, compel unions to inform workers on how
those dues are spent, and mandate that unions obtain written
permission from their members before spending their dues for
non-collective bargaining purposes. Senator Don Nickles (R-OK) has
introduced similar legislation in the Senate in the form of S. 25.
These efforts in Congress, however, do not preclude states from
insuring Beck rights through state legislation or initiatives. To
the contrary, the success of Washington state's Initiative 134 and
the public support thus far for the California Campaign Reform
Initiative suggest that popular support for workers' rights is
capable of achieving at the state level the protection denied
workers at the federal level.
Leaders in Congress should seek to correct
the financial roots of the scandals surrounding Carey's reelection
as the Teamsters' president. In particular, Congress must address
the way in which union leaders treat their fiduciary
responsibilities for their members' moneys--moneys obtained
primarily from dues paid under the compulsion of a standard union
or agency shop and the checkoff.
- The federal
government should increase its supervision of labor unions through
both the Department of Labor and oversight committees in
Congress. The events preceding and following the strike at UPS
also should bring about important changes in public policy
governing the election of union officials. The Department of Labor
is supposed to monitor union elections under the Labor Management
Reporting and Disclosure Act of 1959, but if the Teamsters election
reveals anything, it is ineffectiveness of the Department of Labor
and the Labor Management Reporting and Disclosure Act. (The
Teamsters' presidential election in 1996 was held under a special
1989 agreement between the union and the Department of
Justice.)
Because the Department of Labor in the
Clinton Administration has been so lax in enforcing its oversight
responsibilities, the Oversight Subcommittee of the House Education
and Workforce Committee will hold hearings in spring 1998 regarding
irregularities surrounding the 1996 Teamsters election. The guilty
pleas entered in federal court by officials of Carey's campaign,
the gravity of the charges leveled against Carey and other leading
union officials, and the alleged involvement of officials from the
Clinton-Gore reelection campaign make oversight hearings in
Congress essential. As part of its investigation, the Oversight
Subcommittee should examine the management, security, and rates of
return of Teamsters pension funds. The Employee and Workforce
Commission's Taskforce on the American Worker should review union
pension arrangements generally as a part of its review of workforce
needs for the 21st century. The Oversight Subcommittee should be
unflinching in its use of subpoenas and other investigative tools
to pursue an effective inquiry into the misuse of union funds.
Conclusion
Historically, public policy has bestowed
numerous and important legislative privileges on labor unions in
what was believed to be the public interest. Surely, Congress has
an equal responsibility to the public and to union members to
insure that these privileges and immunities safeguard rank-and-file
union members and do not place union officials effectively above
the law. Above all, Congress must insure that union managers are
held accountable for their members' moneys, especially because most
of those funds are collected under compulsory membership agreements
and the checkoff.
The
Teamsters' strike against the United Parcel Service was the most
important and far-reaching strike in decades in U.S. labor
relations, but its results were not those for which union leaders
had hoped. Initiated ostensibly for the usual bargaining
purposes--wages and the conditions of employment--the real motive
for the strike was political: To refurbish the image of the
Teamsters' then president, Ron Carey, and to demonstrate that labor
was rebounding. On both counts, the strike at UPS failed. Labor's
perennial claim that it represents the interests of all
workers--non-union and union alike--was always just rhetoric.
Rather than reversing labor's decline, the UPS strike was a
desperate attempt by beleaguered union leaders to preserve their
own political power. The failed strike, and the scandals related to
it, will serve only to hasten the decline of traditional unions.
The 90 percent of private-sector workers that is nonunion will
remain skeptical--and its share is certain to increase.
Leo Troy is
Distinguished Professor of Economics at Rutgers University in
Newark, New Jersey.