Times vs. Times: The Truth on Union Corporate Influence
Once again The New York Times misses the big picture in its coverage of organized labor. The Old Grey Lady reports:
[U]nion leaders had amassed an armory of research on derivatives, mortgage foreclosures and even Wall Street pay as part of their effort to hold bankers accountable for the economic pain they helped cause in Los Angeles and across the country.
Why? Labor leaders say the fortunes of banks and unions are linked more than people realize. Wall Street manages union pension portfolios worth hundreds of billions of dollars. Much of that is invested in financial institutions, giving unions a loud voice as shareholders.
Wall Street manages union pension funds? The New York Times failed to note that unions appoint their own trustees to these funds. Most union pension plans are known as multiemployer plans, which are comprised of several companies and generally only one union. The union appoints half the trustees of the plan. These trustees vote as a block and are the ones in actual control of the fund.
This distinction is important for two reasons. First, union pension plans are disastrously underfunded. Also, as The Washington Times’ Kevin Mooney reports:
The average union pension has resources to cover only 62 percent of what is owed to participants, according to the Pension Benefit Guarantee Corp. 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 blame everyone but themselves for the underfunding.
They blame Wall Street for their own pension mismanagement. They also claim the only reason for their pension shortfalls is the recent financial collapse. The Washington Times quotes Service Employees International Union spokeswoman Michelle Ringuette:
“SEIU’s pension funds – like all pension funds – were hit hard when the market collapsed in late 2008. The union is deeply concerned about the instability big banks and the high-finance industry have created in the markets and throughout our economy, and we take very seriously all threats to the retirement security of our members and people who work for a living,”
But, as Diana Furchtgott-Roth of the Hudson Institute notes:
“A lot of these plans were in trouble even before the stock crash, and the members are entitled to know,” she said, adding that “there should be a law against putting out information about pension funds that is simply false.”
The financial data for all private union pension plans are reported on the Department of Labor’s Form 5500. The Form 5500 has a lag time of one to two years, so most current reports were compiled before the 2008 financial meltdown. That means that the underfunding reporting is just now reflecting 2008 numbers. The current state of union pensions could be much worse than currently reported.
Second, unions use the money in their pension funds—which they control but do not own—for corporate proxy campaigns and political purposes.
Every year the AFL-CIO issues its Key Votes Survey as part of their Proxy Voting Guidelines. The Survey’s 2009 edition advised pension fund trustees to vote for proxy resolutions supporting health care reform, increased global warming regulation, and corporate governance proposals to allow unions to have a greater say on the pay and benefits of corporate leadership.
Unions use protests and the financial assets to strong arm companies into supporting left-wing social agendas and policies that help unions. Many times these agendas can harm the very companies in which unions have invested. The result is labor bosses getting what they want but the pensions of the rank and file workers being harmed.
The New York Times describes some of these campaigns:
This month, the A.F.L.-C.I.O., the nation’s main labor federation, has organized 200 protests nationwide to publicly shame bankers, calling for new taxes on bankers’ bonuses and on speculative short-term financial transactions — in the hope of collecting tens of billions of dollars to finance a job creation program.
Labor is directly at odds with Wall Street on unionization drives and many other matters. Banks and private equity firms own stakes in many businesses that unions would like to unionize, like nursing home chains and food service companies. Labor groups like the Service Employees International Union and the A.F.L.-C.I.O. are pressuring financial companies not to oppose union membership drives.
For instance, the S.E.I.U. has pressed several banks and private equity firms to agree to allow card check — a process that makes unionization easier — at companies in which they own stakes.
Big Labor should be more concerned with the health of their pension plans and providing for their workers than advancing its own agendas.