Right to Work Blog

The Examiner has reported that big labor’s pension plans are underfunded understands that the Forced Unionism Card Check Bill is an effort to force subsidization of these failing plans:

Private firms could be required to save underfunded union pension plans even if doing so reduces profits and jeopardizes the retirement savings of non-union workers. That’s the consequence of a binding arbitration provision in a proposal now before Congress. The provision is included in the horribly misnamed Employee Free Choice Act (aka Card Check) and may actually be the primary driving force behind the measure, which is described by labor bosses as their top legislative priority for 2009. Card Check abolishes secret balloting voting for employees in workplace representation elections, and mandates that federal arbitrators impose settlements when a company fails to reach an agreement with a newly recognized union within 120 days.

Card Check would not bar federal arbitrators from forcing companies into union-negotiated multi-employer pension plans, many of which are severely underfunded and staggering under steadily increasing rising liabilities. Pensions for nearly half of the nation’s 20 largest unions are classified as either “endangered” or in “critical” condition due to underfunding, according to federal actuarial reports. Pensions with less than 80 percent of the assets needed to cover present and projected liabilities are considered “endangered,” while those below 65 percent are classified as “critical” under the Pension Protection Act of 2006. The average union pension has resources to cover only 62 percent of what is owed to participants, according to the government-backed Pension Benefit Guarantee Corp. (PBGC). Less than one in 160 workers is presently covered by a properly funded union pension plan. Failed pension plans are bailed out by the PBGC.

But opposition to abolishing the secret ballot in the workplace is growing steadily, forcing Card Check backers to seek a legislative compromise with opponents. But if the compromise includes the mandatory arbitration provision, unions, particularly those with sickly pension plans, will be tempted to resist settling with a company, knowing that federal arbitrators will likely impose a settlement that is more to their liking, according to Ted Phlegar, senior counsel to the Workforce Freedom Initiative. “Unions are pushing this bill because they need members and they need the contributions as many of these funds are underwater. This is one way to save them,” Phlegar said. “In fact, this may have been the goal all along.” In other words, a Card Check compromise that includes mandatory arbitration would give unions that inadequately funded their pension plans a backdoor way to get a bailout, paid for either by the company or the tax payers.

After bashing everyone else for decades regarding pension funding, the Washington Examiner has discovered:

Almost half of the nation’s 20 largest unions have pension funds that federal law classifies as ”endangered” or in “critical” condition due to being underfunded, an Examiner review of federal actuarial reports shows.

Pensions with less than 80 percent of the assets needed to cover present and projected liabilities are considered “endangered,” while those that fall below a 65 percent threshold are classified as “critical” under the Pension Protection Act of 2006.

Unions are required to file 5500 forms that record the financial health of their retirement plans, show that union pension funds have lost their financial footing over the past several years.

Eight of the largest unions have underfunded plans, according to the most recent 5500 reports, including the Service Employees International Union (SEIU), the United Food and Commercial Workers (UFCW), the International Brotherhood of Electrical Workers, the Laborers International Union of Northern America, the International Association of Machinists, the United Brotherhood of Carpenters, the International Union of Operating Engineers, and the National Plumbers Union.

The average union pension has resources to cover only 62 percent of what is owed to participants, according to the Pension Benefit Guarantee Corporation (PBGC). Less than one in every 160 workers is covered by a union pension with required assets.

These figures demonstrate that the liability challenge to the long term of health of union funds is systemic and across the board, said Brett McMahon, vice-president of Miller and Long, a Maryland-based concrete construction company.

Demographics figure prominently in the erosion of pension assets now that a smaller percentage of union workers are available to support an expanded group of retirees, McMahon said. Only 7.6 percent of private sector employees are members of a labor union, according to the Bureau of Labor Statistics.

The growing number of local and national union pensions that lack sufficient resources to cover their obligations could threaten the retirement security not just of union members, but also non-union employees if the proposed Employee Free Choice Act (Card Check) becomes law as currently written, McMahon said.

The Card Check legislation includes provisions both to abolish secret ballots in union representation elections in the workplace and to require a binding arbitration process that greatly favors unions, McMahon said.

 ”It’s like the Social Security problem on steroids,” McMahon said. “We are talking about a systemic, demographic problem where there are too few people paying in and the plans can’t earn enough returns to make up for the difference.”

McMahon believes “union members are not being told the truth about the condition of their retirement plans. The danger to non-union workers comes in with Card Check because there is nothing in it that prohibits an arbitrator from shoving companies and workers into these underfunded plans.”

Diana Furchtgott-Roth, a senior fellow with the Hudson Institute, is encouraging EFCA critics to focus more attention on the arbitration side of the bill in addition to “card check” for this same reason.

Multi-employer pension plans that are typically negotiated by unions should be of particular concern because they have less federal insurance than single-employer pension funds, McMahon pointed out. The PBGC only guarantees $12,870 in annual payments to a member of the multi-employer plan in contrast to $54,000 for members of a single-employer plan.

If anything, the current 5500 records vastly understate the deteriorating condition of union pensions because they do not include the stock market drop from last year, James Sherk a labor expert with the Heritage Foundation points out. Reports are typically not filed for more than 12 months after the end of a plan year.

 ”There are a lot of red zone notices going out now for funds that fell under the critical percentage for liabilities with the market meltdown,” he said. “This would not be evident under the most recent 5500s because they only cover through 2007.”

What do underfunded union pensions and Project Labor Agreements (PLAs) have to with each other?  A lot; the Obama Administration and Pelosi’s Congress chose to force construction workers to pay into union pensions to work.  That’s right, if you plan to work on the new federal construction projects you must pay into the union pension, even if you are not a member of the union.  And, now more research reveals that union pensions imperil your retirement.  Kevin Mooney of the Washington Examiner reports that half of the 20-largest unions have underfunded pensions.  Mooney quotes Diana Furchtgott-Roth who issued her own report last year that drew similar conclusions.

The report reveals that familiar union pensions are in trouble:  Service Employees International Union (SEIU), the United Food and Commercial Workers (UFCW), the International Brotherhood of Electrical Workers, the Laborers International Union of Northern America, the International Association of Machinists, the United Brotherhood of Carpenters, the International Union of Operating Engineers, and the National Plumbers Union.  Four of these unions will dominate the PLA forced unionism contracts created by the Obama Administration.  

Mooney’s report reinforces the detrimental harm caused by forced unionism through Project Labor Agreements.  PLAs force all workers working under the PLA to risk their retirements by forcing payments into these union plans.

With free legal aid from the National Right to Work Legal Defense Foundation, seven Chicago employees who refused to abandon their jobs during a strike forced a settlement with a local union after union officials levied exorbitant and illegal retaliatory fines against them.

The employees, truck drivers for industrial laundry company Lechner and Sons, filed unfair labor practice charges with the National Labor Relations Board (NLRB) against Teamsters Local Union 731, an affiliate of the International Brotherhood of Teamsters union, after Local 731 union officials hit the employees with fines ranging from $13,946 to $40,000 each for not abandoning their jobs during a strike. None of the employees were truly voluntary members of the union during the strike.

In July 2006, Local 731 union bosses ordered the employees to abandon their jobs during a so-called “sympathy strike” involving a different bargaining unit of workers at the plant where the strike occurred. After the strike ended in June 2007, union brass claimed the power to use fines to discipline non-striking employees.

Union officials never informed any of the employees of their right to refrain from formal union membership and pay a reduced amount of forced dues. Instead, union officials mislead the employees into believing that formal, full-dues-paying union membership was a condition of employment.

The union hierarchy also claimed the power to discipline two employees for working during the strike even though they were not union members during the strike. The union bosses illegally threatened one employee that if he did not pay the fine, he would never again work in a “union shop.”

With help from Foundation attorneys, the employees forced Local 731 union officials to drop the fines against the seven workers and refund part of their forced dues.

“It is unconscionable for union bosses to mislead employees into union membership and then attempt to drive them into the poorhouse in vicious retaliation for working,” said Stefan Gleason, vice president of the National Right to Work Foundation. “Confiscatory fines and kangaroo courts are just some of the disturbing, yet increasingly-used tactics of union boss intimidation that are all too common in states like Illinois where there is no Right to Work law on the books.”

The employees at the workplace have since decertified the Teamster union as their monopoly bargaining agent.

Last week Minnesota radio talk show host and occasional guest host for the Rush Limbaugh Show, Jason Lewis discussed forced unionism and worker freedoms with National Right To Work President Mark Mix. The Right to Work Legal Defense Foundation has the episode available on its site, link here.

The Politico’s Ben Smith exposes more attempts by Big Labor Bosses to use clout gained from forced unionism; union pension “trustees” are attacking the National Right To Work Legal Defense Foundation.  While ignoring pension fund trustees’ fiduciary responsibility requirements, Teamsters union’s health, welfare and pension fund trustees are trying to intimidate Wall Street against NRTW and away from any opposition to their card check forced unionism bill. 

Just by listing NRTW in their letter, the union is trying to create a scarlet letter-effect that will steer Wall Street away from the Foundation.    

To sum it up: Big Labor Bosses are using the public votes of congress to intimidate congressmen into taking away workers’ private ballots and now they are using the pension fund gains through forced unionism to intimidate Wall Street against opposing card check forced unionism; and yet, we are supposed to believe that card check will not lead to increased intimidation?

The labor movement is taking square aim at Wall Street with a new tool in its fight to pass the Employee Free Choice Act: the hundreds of billions of dollars in pension funds it manages for union workers and retirees, some of it held by the same firms that are fighting the provision known as “card check.”

“Has your company made any public statements in support or opposition to EFCA?” asks one of nine pointed questions in a polite, detailed four-page questionnaire.

“If ‘Yes,’ please explain.”

The detailed questionnaire has three parts. The first asks about fund managers’ public positions, lobbying and political contributions. The second asks managers to “disclose any relationships during the past five years between your company and any organization(s) opposing the passage” of EFCA. The form lists [the National Right To Work Foundations specifically]. 

Another labor official said the AFL-CIO, the largest labor federation, is set to ask its own pointed questions of money managers soon.

“In the coming weeks, we will be rolling out initiatives from shareholders, investment groups and businesses in support of the Employee Free Choice Act,” said AFL spokesman Eddie Vale, who declined to discuss targeting Wall Street.

Financial industry officials took a darker view of the survey. “The fact that union bosses would try and shake down financial institutions by asking that they disclose information” about the bill “is beyond outrageous,” said an aide to one trade organization, who – like other industry officials rattled by the letters – refused to speak on the record. He also called it “troubling that Big Labor would use their pension plans as the bargaining chip.”

Steve Malanga compares the effects the economy has had on the private and public sectors in the Wall Street Journal and the comparison is startling.  While private companies are forced to cancel bonuses, freeze salaries and sometimes layoff workers, public sector workers are thriving, thanks to the political force of big labor who continue to squeeze taxpayers.

Malanga insightfully notes:

Call it a tale of two economies. Private-sector workers — unionized and nonunion alike — can largely see that without compromises they may be forced to join unemployment lines. Not so in the public sector.

Government unions used their influence this winter in Washington to ensure that a healthy chunk of the federal stimulus package was sent to states and cities to preserve public jobs. Now they are fighting tenacious and largely successful local battles to safeguard salaries and benefits. Their gains, of course, can only come at the expense of taxpayers, which is one reason why states and cities are approving tens of billions of dollars in tax increases.

It’s not as if we haven’t seen this coming. When the movement among public-sector workers to unionize began gathering momentum in the 1950s, some critics, including private-sector labor leaders such as George Meany, observed that government is a monopoly not subject to the discipline of the marketplace. Allowing these workers — many already protected by civil-service law — to organize and bargain collectively might ultimately give them the power to hold politicians and taxpayers hostage.

It wasn’t long before such fears were realized. By the mid-1960s, dozens of cities across America were wracked by teachers’ strikes that closed school systems. Groups like New York City’s transit workers walked off the job in 1966, bringing business in Gotham to a near halt. The United Federation of Teachers led an illegal strike which closed down New York City schools in 1968.

Widespread ire against strikes by public workers produced legislation in many states outlawing them. That prompted government workers to retreat from the picket lines into the halls of government. In Washington, they organized political action committees, set up sophisticated lobbying efforts, and used their muscle to help elect sympathetic public officials.

Today, public-sector unions sit atop lists of organizations that devote the most money to lobbying and campaign contributions.

In Pennsylvania, a local think tank, the Commonwealth Foundation, counted the resources of the state’s teachers union a few years ago. It had 11 regional offices, 275 employees and $66 million in annual dues. In Connecticut, representatives of the teachers union camped outside the legislators’ doors in 2005 to keep tabs on school reformers who were calling on these officials to expand school choice.

And in California, unions spent more than $50 million in 2005 to defeat a series of ballot proposals that would have capped growth in the state’s budget. Now the state’s teachers union is putting its clout behind a ballot initiative, to be voted on next week, that would restore more than $9 billion in educational spending cut from the state’s budget.

The results of such efforts are evident in the rich rewards that public-sector employees now enjoy. A study in 2005 by the nonpartisan Employee Benefit Research Institute estimated that the average public-sector worker earned 46% more in salary and benefits than comparable private-sector workers. The gap has only continued to grow. For example, state and local worker pay and benefits rose 3.1% in the last year, compared to 1.9% in the private sector, according to the Bureau of Labor Statistics (BLS).

But the real power of the public sector is showing through in this economic crisis. Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession, and the jobless rate for government workers is a mere 2.8%. For anyone who thinks such low unemployment numbers are good news, remember that the bulging public sector must be paid for with revenues that most governments don’t currently have. This is one reason for a spate of state and local tax increases, such as $5 billion in tax increases New York state passed in April, and $12 billion in tax increases California’s legislature agreed to in February that will only become law if voters pass a series of ballot initiatives next week.

The next lesson we are likely to learn is that voter revolts against new taxes are no longer effective because of the might that these public- sector groups now wield. The tax-cut uprising of the late 1970s began in California with Proposition 13 capping property taxes. It then spread to more than a dozen states before it became a national movement that helped elect Ronald Reagan. The next tax revolt, during the recession of the early 1990s, helped sink officials like New Jersey Gov. James Florio and produced ballot propositions in places like Colorado that capped spending or made tax increases more difficult.

Now powerful and savvy, public unions have moved effectively to quash antitax movements. In New Jersey, public unions derailed a taxpayer revolt in 2005 by using their legislative clout to water down a bill that would have created a state constitutional convention to enact property-tax reform. Meanwhile, under pressure from unions, state legislatures in places like Florida have been tightening rules and requirements for passing voter initiatives and referenda — blunting a favorite tool of antitax groups.

In states like Iowa where public unionization rates are still low government workers have had to accept concessions. But allies of the unions in Washington are working to rectify that situation with union-friendly legislation like the card check bill, which will make organizing much easier.

In the private sector such efforts will still be subject to the demands of the marketplace. Employers who are too generous with pay and benefits will be punished. In the public sector, however, more union members means more voters. And more voters means more dollars for political campaigns to elect sympathetic politicians who will enact higher taxes to foot the bill for the upward arc of government spending on workers. That will be the pattern for the indefinite future unless taxpayers find a way to roll back the enormous power public workers have acquired.

Sen. John Ensign (R-NV) said that Republican Senators are “nervous” that Sen. Arlen Specter (D-PA) will flip-flop on the Card Check Forced-Unionism bill.

“We’re very nervous about some of the public statements he’s made,” Ensign told a group of conservative bloggers Wednesday, as reported by the American Spectator.

Specter had announced that he wouldn’t back EFCA (or “card check”) before having switched parties last month to pursue reelection as a Democrat. Since then, union officials have  lobbied Specter to get the critical votes to overcome a filibuster of the bill.

“We hope he honors not just the letter of his pledge, but the intent of the pledge,” Ensign told the bloggers.

Diane Furchtgott-Roth looks behind the rhetoric of the Card Check Forced Unionism bill:

Under binding arbitration, if firms and newly-organized unions cannot agree on their first collective bargaining contract within 120 days, the Federal Mediation and Conciliation Service, a government agency headed by a political appointee, would set up arbitration panels to craft two-year contracts. Neither the union nor the employer would have an opportunity to choose any members of the panel, and the Mediation Service would write the regulations. 

Unions want mandatory arbitration because they believe the threat of arbitration, followed by arbitration itself, will force employers to pay better compensation packages. That will help them recruit more members, providing a fresh infusion of funds for daily operations as well as for failing pension plans.
…With fewer workers joining unions, the collectively-bargained multiemployer pension funds are characterized by an increasing number of retirees supported by fewer younger workers. Many systems are typical Ponzi schemes, with new contributions paid out in benefits rather than being saved for contributors’ retirement.

Union pension funds can only survive through new contributions. That’s why unions will do anything to raise participant levels-including taking away secret ballots and forcing workers into underfunded pension plans.

America’s workers should not have to give up secure retirements in the name of a compromise on the Employee Free Choice Act. Just as workers deserve secret ballots in union elections, they also deserve the right to consider judiciously their labor contracts, and walk away from those that they deem unfair.