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In the Tank for Big Labor

Obama is making union dreams come true.

Jul 19, 2010, Vol. 15, No. 41 • By PEYTON R. MILLER
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Labor union membership has declined dramatically in the past six decades, from over a third of the workforce in 1945 to just 7.2 percent of private sector employees in 2009; unions are now overwhelmingly concentrated in the public sector. But organized labor continues to wield tremendous political influence. Unions spent $400 million during the 2008 elections in support of Democratic candidates, and Barack Obama has been grateful. 

In the Tank for Big Labor

While the president has failed to enact the Employee Free Choice Act (EFCA)—the mother of all pro-union legislation which includes the infamous “card check” proposal to effectively eliminate the secret ballot from union elections—he has made it possible for labor leaders to implement EFCA provisions by other means. Through the National Labor Relations Board (NLRB), for instance. The NLRB conducts union elections and remedies unfair labor practices in most industries; Obama has named two pro-union members to this body—both were radical enough to require recess appointments. Stewart Acuff of the Utility Workers Union of America vowed to the Huffington Post that even if EFCA does not pass, labor leaders will work with the president’s NLRB appointees “to change the rules governing forming a union through administrative action.” The board is now considering use of remote online voting rather than in-person ballots in representation elections, which like card check could expose workers to undue influence from organizers.

An Obama appointee to the National Mediation Board, which coordinates railroad and airline labor-management relations, precipitated a rule change in May to allow approval of union representation by a majority of those voting, rather than a majority of a company’s entire workforce as in the past. The U.S. Chamber of Commerce notes that the new rule violates the Railway Labor Act, which was designed to prevent a few disgruntled employees from triggering a strike that could cripple commerce throughout the country.

President Obama has unilaterally aided unions through regulatory initiatives, which, according to Randel Johnson of the U.S. Chamber of Commerce, have mirrored the “wish list” presented to the Obama transition team by the AFL-CIO. Obama signed an executive order requiring federal contractors to inform employees of their right to organize under federal labor laws, and revoked an order that they be informed of their right to forgo joining a union or paying certain union dues. Another executive order reflected unions’ preference for seniority-based hiring by requiring contractors to offer existing service employees first refusal of positions for which they are qualified under a new contract. Obama has precluded reimbursement of expenses contractors incur to influence employees’ decision to form a union, and relaxed union financial disclosure requirements. He strongly encouraged federal agencies to award construction contracts of more than $25 million to companies that either employ unionized workers or offer union wages and benefits, which is bound to increase the cost of government construction.

The president’s bailouts of General Motors and Chrysler subverted bankruptcy law by giving preferential treatment to the United Auto Workers over the automakers’ secured creditors. Bondholders ended up with a smaller stake than the UAW members of both companies, even though they had lent money under the contractual understanding that they would be compensated first in the event of bankruptcy.

Big Labor has also benefited from Obama’s legislative agenda. He enacted a 35 percent tariff on Chinese tires at the behest of the United Steelworkers, fulfilled a Teamsters Union priority by canceling a program allowing Mexican trucks to carry cargo on American roads, and required that projects funded by the 2009 stimulus use U.S.-manufactured supplies.

The stimulus bill operates under the Davis-Bacon Act, which requires that employees of public works projects receive the prevailing wage in the area as determined by the Department of Labor. The regulation raises costs by putting a floor under wages for the more than 678,000 public construction jobs to be created by the end of 2010—many of which are in areas where Davis-Bacon has not previously applied. The bill also included a $53.6 billion “State Fiscal Stabilization Fund” to prevent layoffs of heavily unionized public employees.

And labor unions have not been docile since 2008. They funded a multi-million-dollar “grassroots” effort to counteract opposition to Obamacare, whose mandates and subsidies will generate new demand for health services, and thus more dues-paying union members in the health sector. As J. Justin Wilson of the Center for Union Facts points out, the activism was also part of a broader advocacy of a federal beachhead in certain industries, which allows unions to lobby the government for favorable regulations. More directly, the Democratic health care bill included a $10 billion bailout of mismanaged retiree health plans that will benefit numerous former union workers.

Just last month, Obama asked Congress for another $50 billion, on top of what the stimulus already provided, to prevent states from firing employees. While he’s stopped campaigning for EFCA, the president may yet have an opportunity to sign it in some form. AFL-CIO president Richard Trumka is determined to see card check attached to an urgent bill while Democrats still have decisive congressional majorities. Democratic leaders have indicated that the lame duck session following the November elections may be the best opportunity. 

Even if no other pro-union legislation comes to pass, President Obama has more than paid off big labor’s $400 million investment, albeit at the expense of the rest of the country.

Peyton R. Miller is the editor of the Harvard Salient and a Student Free Press Association intern at The Weekly Standard.

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