Labor Relations Insight by Phil Wilson

Big Labor’s $6.6 Billion Payday

Big Labor has a lot to be thankful for in 2015. Let’s face it. If you’re counting blessings the National Labor Relations Board offered quite a few. From the Ambush Election Rule to expanded online organizing to the Browning Ferris joint employer decision, unions received a lot of gifts this year.

In spite of these gifts, Big Labor is still running in place. For example, unions got the NLRB to rewrite how it conducts union elections – slashing the average election time by nearly one-third (from 38 to around 25 days). But unions have conducted nearly the exact same number of new organizing drives they did during the same period in 2014.

Some argue it is too early to judge how unions will profit from these changes. They say unions are just figuring out how to take advantage of the new election rules or the joint employer changes. There may be some truth to that, but I continue to believe Big Labor’s problem is with their model. I expect them to push for big changes here in the last year of Obama’s presidency.

Here’s my argument in a nutshell. Unions are in a death spiral. For example, the UAW has dumped piles of cash for several years into a “southern strategy” that has exactly nothing to show for it. This week they’re desperately trying to convince a small fraction of Volkswagen Chattanooga employees to join up.

Even if the UAW wins – and that remains a big question – they are just getting started. They will then need to bargain a contract that this small group of Volkswagen employees will ratify. That too is a big question: the UAW barely (some say didn’t) get their Big 3 contracts ratified this month. Then, assuming they can get this small group of employees to ratify a contract, will the UAW be able to convince others that all this hassle is worth the trouble? Doubtful. Their investment in this campaign will never pay off.

This isn’t just a UAW problem. Every union in America faces the same headwinds. The traditional “majority representation” model is broken. It is too hard to get into a company and once you’re in it is too hard to deliver a product that your members (or your organizers) will vocally promote.

Additionally unions have a real message problem with Millennials. The Millennial generation – who will make up 75% of the workforce by 2025 – just aren’t that into yesterday’s unions. They’ll say nice things about unions in opinion polls, but they aren’t joining up in anything close to numbers that matter. If unions don’t change dramatically there is little reason to believe they ever will.

What can unions do to counteract these headwinds? I think they are already building out the model of the future, and the NLRB is helping them do the heavy lifting. The recent joint employer decision is one example. Unions are trying to break apart longstanding business models like franchising and the use of temporary or agency employees. The purpose is to blur the lines of when one employment relationship ends and the next one begins.

I’ve discussed these ideas here before but the quick version is that I think unions must transform into an “association” (services) model and away from their historic “lodge” (bargaining) model. Think the American Association of Retired Persons (AARP) versus the Elks Lodge. This reinvention would allow them to offer services and collect money from any working person wherever they work (a huge increase in potential members), and for the most part get them out of the collective bargaining business which is expensive and doesn’t attract new members.

The big thing standing in the way of this transformation is unions figuring out a bundle of services they can offer that working people are willing to pay for. This is no small task. That’s why in addition to expanding joint employer two big areas I expect unions to push in 2016 include “members only” or non-majority bargaining and the expansion of union access into non-union workplaces. Along with joint employer these two changes will give unions the tools they need to transform their business model – and make huge piles of cash in the process.

How will these changes help unions transform and make money? If unions could compel employers to sit down with them and bargain over disciplinary action or wages, hours and work conditions of any person who signs up they would have something the average worker might buy. In addition to those services unions could also offer benefits that travel with the workers wherever they go (health insurance, retirement savings, lobbying for legislation, etc. –like AARP). This is an offer that could actually sell.

How big an opportunity is this for Big Labor? Think about it like this. There are over 100 million adults over the age of 50 and nearly 40 percent of them are AARP members (over 37 million in 2014). In 2014 AARP collected revenues of $1.48 billion (just over $40 per member annually). Around $592 million of those revenues were generated from the annual $16 membership fee. The remaining came from fees for service or commissions collected on sales of financial services products to members.

Today there are over 122 million full-time workers in the US and another 27 million part-time workers (less than 35 hours). If these workers joined union association in a percentage approaching AARP Big Labor would boast over 55 million association members. If unions just got AARP’s $16 annual membership fee that is nearly $1 billion per year in new revenue. That revenue number jumps to $2.2 billion per year if unions make a similar amount per member that AARP makes.

But the union association offer is much more compelling that that offered by AARP. The retiree association doesn’t go in and directly negotiate on your behalf if you feel like you’re getting a bad deal. They don’t provide legal representation. The bundle of services unions could offer is probably worth much more than what the typical AARP member pays. How hard would it be for unions to convince people that this new bundle of services is worth something like, say, a Netflix subscription or a couple of cups coffee each month? If unions could get $9.99 per month from association members they would rake in $6.6 billion per year. I think that estimate is conservative. Today the average union member pays around $33 per month for membership. At that rate unions would make over $22 billion per year.

Unions offering services to working people is not a bad thing – if they can offer a great service that people want to pay money for that is terrific. But the issue here is how they are offering those services. Getting the power of the Federal Government to compel businesses to deal with unions even where almost nobody wants them is terrible policy. It’s bad for companies and it’s bad for workers.

That is what’s at stake with these new NLRB rulings. What can employers do to respond? First and foremost is to make sure your company leaders are aware of what is happening. Nobody really pays attention to these NLRB decisions. In isolation they don’t seem to be that big a deal. But when you start adding them together they are worth way more than the sum of their parts.

Second, let your political leaders know about your concerns. President Obama is never going to sign a bill reversing these NLRB decisions. But there are other avenues available. Congress still controls the power of the purse. There are proposals on the table right now that would limit funding for the NLRB to enforce these rulings. That is an important place to start.

If you aren’t sure about your next step let me know and I can help you figure out what to do next. In the meantime, stay tuned. 

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Union Bailout

The NLRB continues to stretch the bounds of credible interpretation in the Sister’s Camelot decision, and in doing so are quite transparent about their tendency to bend (or ignore) the rules to fit their desires. Of the 11 factors designed to determine status as an independent contractor, the board seriously “bent” 4 of these in order to make their square peg fit the round hole of employee status that they were looking for. If you use independent contractors, click the link to get the details. Taxi drivers in Tucson, Arizona found similar favor in the eyes of the board.

Since the Ambush Rule was first proposed, we have been highlighting several damaging components of the rule beyond simply the shortened election period. One of these is the modified terms of the Excelsior list provision, specifically the need to provide the list within 2 days of the direction of an election, and the fact that the list now had to include “available” personal home and cell phone numbers as well as personal email addresses. A recent case provides an example of how far an employer must go to ferret out this information from all possible sources, or face the prospect of winning an election, only to be directed by the board to hold a second election.

A Connecticut hospital found out the hard way. When their 866 unit members voted against the union, the union objected that the hospital had failed to comply with the new Excelsior provisions, and the board agreed and directed a new election.

The hospital had culled the information from their HR database, providing phone numbers for 94% of that database, as well as all of the personal email addresses it contained. Unfortunately, there were several other systems “available” to the hospital from which additional data could have been derived, including the applicant screening system used to fill open positions. The hospital argument that it would be unduly burdensome to sort through 36,000 records to locate possible additional information on the relatively small number of the voting unit was flatly denied. There were several other systems, both formal and informal, that also could have potentially provided additional information. Read the details of this article to see the examples, so you can examine more carefully what steps you should take in advance to provide a proper list.

Exemplifying the unreasonableness of the current NLRB, the board held once again that an arbitration agreement is unlawful, despite having two similar findings reversed at the Fifth Circuit. The board seems to be maneuvering for a Supreme Court hearing on the subject by attempting to acquire a circuit split.

In a couple of moves that went in favor of employers and employees,

• an NLRB General Counsel advice memo stated that installation of a GPS tracking system on an employee’s company vehicle did not require bargaining with a union
• the governor of Pennsylvania signed a law that will strip unions of their exemption from prosecution for stalking, harassment, and threatening to use a weapon of mass destruction during a labor dispute.

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Union Density & Workplace Injury Rate On October 29th, the Bureau Of Labor Statistics (BLS) released their 2014 report on Employee-Reported Workplace Injuries and Illnesses. As we were reading through, our team couldn’t help but notice that many of the states with illness and injury rates above the national average (3.2 per 100 employees) were also states with the highest union density. Thus, we began our own research using the most recent data reported by individual states to the BLS. We divided the states into quartiles based on union density and looked at how those same states ranked in workplace injuries across the U.S. Our hypothesis was confirmed – the states in the highest quartile of union density had a 25.6% higher injury rate than the states in the lowest quartile. 

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Right-To-Work Takes the Spotlight

In a recent meeting of the Joint Standing Committee on the Judiciary in West Virginia, WSU economics researcher John Deskins reported his findings of the differences between right-to-work and non-right-to-work states. He prefaced his remarks by acknowledging that with 25 states on each side of the law, the comparison should prove useful. Deskins stated, “we find that right-to-work does decrease union membership by about one-fifth, it does increase employment growth and it does increase output growth,” and stated that he would expect to see similar results if West Virginia were to become a right-to-work state.

Union proponents have argued for years that union membership increases wages, and union-backed  “research” organizations have attempted to provide data supporting this point of view.  The Heritage Foundation’s Center for Data Analysis (CDA) recently replicated a study by one such organization, the Economic Policy Institute (EPI).  CDA used EPI’s model, but fully controlled for cost of living in the analysis, and doing so showed that employees in right-to-work states have the same purchasing power as employees in non-right-to-work states. In fact, as the chart below indicates, forced-dues states contain the 10 highest positions when ranked for cost of living, whereas right-to-work states hold 11 of the 15 lowest cost of living slots. This article is long and detailed, and contains many graphics and charts (like the one below). We highly recommend reading it and bookmarking it as a reference.

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Steelworkers Learning The Hard Way

In this article on the World Socialist Web Site, locked out members of the USW at several smaller mills are finding out first hand that the USW has an agenda beyond that of helping its members. Although allocated strike pay stands currently at $200 per employee per week, the striking employees are only seeing $100 per week, as the rest is held by the local for “emergencies.” Meanwhile, the USW appears to be considering reducing that pay even further.

In an interesting analysis of the events by the article author, the USW seems to be trying to isolate the workers from these smaller plants to get them to toe the line and prevent a “unified struggle against the steel manufactures.” Pretty compelling evidence that the USW has interests that trump those of its members.

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Teamster Beat

More than 273,000 Teamsters members and retirees are facing drastic pension cuts.

While Central States Pension Fund claims the average cut is 22 percent per retiree, Mike Walton, chairman of the recently formed Central Ohio Committee to Protect Pensions, said “We don’t know how they even came up with those numbers.” He cites a friend and Teamster retiree who claims a cut of over 60 percent. Whatever the true numbers are, they’re bad enough that committees are being created across the nation to fight it. There are currently 31 committees in 28 states.

The big question on everyone’s mind is: “What happened to all that money?”

A recent investigation into the Ohio Conference of Teamsters by the Independent Review Board found that the conference spent 70 percent of the money it took from members “for the benefit of its officers, employees and other local officers.” The report also states “[The Conference] failed to follow basic financial controls that the constitution, its bylaws, IBT policies, and federal labor laws imposed on it.”

The IRB recommends that the Teamsters impose a trusteeship.

In separate matters, Teamsters Local 399 is under investigation for vote-tampering charges and a former member of the Boston Teamsters has been found guilty of extortion.

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Fight for $15

The Service Employees are finally bringing their internal drama into the Fight for $15 movement. As California’s SEIU State Council leads a proposed ballot initiative to increase the minimum wage, SEIU-United Healthcare Workers West is doing the same thing. Both groups propose minimum wage increases, but vary on mandates for sick leave. All endeavors combined, the Service Employees have spent an estimated $80 million on the movement over the last three years.

The mayor of Syracuse raised the wage for city employees to $15 an hour last month; a Beacon Hill committee voted in favor of a $15 minimum wage in Boston by 2018; and, as we all know, New York Governor Andrew Cuomo is trying to bring the minimum wage in NYC to $15 by 2018 and statewide by 2021. The problem with this is that, in New York alone, a $15 minimum wage could lead to job losses as large as 588,000. This, according to recent reports by The Empire Center and American Action Forum.

From the other side of the table, the Ohio Department of Commerce announced earlier this month that the state’s minimum wage will remain the same through 2016. Ohio has a constitutional amendment that calls for a yearly increase due to rate of inflation, but since the federal Consumer Price Index showed a decline, the state is permitted to keep the minimum wage unchanged.

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SCORE BOARD [links need to be corrected]

Who are the winners (and losers) of the labor movement? Don't guess, just check the LRI Scoreboard

View this month's scoreboard (archives also located here).

Download a PDF of this month's scoreboard

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Whistlin’ Dixie

The UAW attack of the Volkswagen plant in Chattanooga took another turn when the union decided on a carve-out strategy, selecting a group of 162 maintenance employees. The NLRB agreed to the micro-unit election, scheduled to begin on Dec. 3rd. The group comprises about 12% of the total plant workforce.

Mike Cantrell, president of UAW Local 42, characterised the move this way: "There are multiple paths to collective bargaining, and this is a step in the right direction."

In an interesting move, IG Metall, Germany’s largest union, is opening a joint office with the UAW in Spring Hill, TN, a suburb of Nashville. The office will be located near a General Motors plant. According to the German union, over 100,000 Americans work for German-owned automotive companies, most of them not represented by unions. Beyond the obvious goal of helping the UAW to organize more non-union employees, the IG Metall also touts the desire to promote German-style works councils for both salaried and hourly employees.

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Detroit News

Negotiations between UAW and the Big Three are officially over as of a couple weeks ago.  The agreed upon changes in labor costs are as follows:

• Fiat Chrysler: From $47 per worker per hour today to $56 by 2019 
• General Motors: From $55 per worker per hour today to $60 by 2019 
• Ford: From $57 per worker per hour today to $60 by 2019 

It was a big win for workers; and even though all three companies agreed to invest billions in U.S. plants over the next four years, many are concerned about the effect of higher labor costs on future business – namely, outsourcing less profitable auto production to Mexico.

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SEIU Watch

A tentative agreement for a three-year contract between SEIU-UHW and Daughters of Charity has been ratified. The problem, according to one member is:

“Despite reports from all hospitals that there was an overwhelming no vote, the yes votes appeared by magic in the ballot boxes and the deed was done.”

Most people believe Dave Regan rigged the vote; and it doesn’t help his case that he’s done it before (in 2012 at Chapman Medical Center). It makes sense that he’s not taking no for an answer when you take into account the massive number of members he’s lost recently. First, when Mary Kay Henry created a new local with half of his members (about 60,000); and again just last month when SEIU-UHW lost another 700 workers to National Union of Hospital Workers.

In other news, the United Auto Workers Local 2350 currently represents 135 administrative and support staff for the Service Employees Local 1000. The two unions have been tangled in labor talks since 2012. Local 1000 employees will vote on the most recent contract soon. If approved, UAW will gain the arbitration rights back that they lost under imposed terms.

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Labor Around The World

On November 12, nearly 25,000 protesters in Athens, Greece participated in the first general strike in the country since its current government came to power in January. The issue at center involved a new round of “bailout-related tax hikes and spending cuts.”

After a three-week-long strike, Brazilian oil workers finally ended their protest against state-run oil producer Petróleo Brasileiro’s planned divestment program. The stoppage cost the company 2.29 million barrels of oil production.

The Connecticut AFL-CIO voted last month to join the United Electrical, Radio and Machine Workers in their support of Boycott, Divestment and Sanctions Movement (BDS). BDS is a Palestinian movement that encourages people to boycott Israeli business and enterprises until they comply with international law and Palestinian rights.

On November 11, the U.S. Equal Employment Opportunity Commission (EEOC) and the Republic of Ecuador entered into an agreement to “ensure workers and employers of Ecuadorian origin are protected under, and acting in accordance with U.S. anti-discrimination laws.”

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Sticky Fingers Current charges or sentences of embezzling union officials:

• William Davis - AFGE:  $120,000
• Robin Pirrello - IBEW:  $22,184
• Michelle Misso - Ironworkers:  $47,161
• Dawn Colley - USW:  $7,201
• David Deitrick - USW:  $8,993
• Thomas Flaherty - IBT:  $22,011
• James Coffee Jr. - USW:  $7,098
• Alton Alexander - USW:  $1000
• Anthony Frederick - LIUNA:  $1,700,000
• Mark Durinski - AFGE:  $53,544
• Cynthia Angulo - SPFPA:  $61,200

http://www.nlpc.org/union-corruption-update