California Nursing Home Pact Stiffs Workers, Taxpayers

If growth in numbers were all that mattered, the Service Employees International Union’s Andrew Stern would be America’s most successful labor leader, hands down. As a top lieutenant in that union to president and future AFL-CIO head John Sweeney, and then, starting in early 1996, as SEIU president himself, Stern has built his union into a powerhouse – “1.8 million members and growing,” to quote the union’s website. Supporters of mass immigration among organized labor officials point to the fact that a huge portion of that growth is attributable to foreign-born persons, especially from Mexico and other Spanish-speaking countries. This, they argue, is evidence that Third World mass immigration is good for the SEIU and for unions as a whole. But growth may have come at a steep price: sweetheart deals that all but in name deliver substandard contracts for members. One large health-care workers’ local in California thinks Stern has sold out his people, a rift suggesting a major power struggle ahead within the Service Employees and its parent federation, Change to Win.   


Andrew Stern has been the subject of any number of admiring profiles over the last couple years, including a segment on CBS-TV’s “60 Minutes” on May 14, 2006. His recent life is the stuff of comeback-kid novel and movie plot lines. In 2002, his adolescent daughter died of natural causes. Not long after, his wife divorced him. Stern was down, but not out. He was determined to be reborn as a hybrid of Steve Jobs and Martin Luther King, pouring his energy into transforming American trade unions into bastions of entrepreneurship, in the process reversing their seeming slide into irrelevance. Union leaders, he argued, should apply business management skills and ideas to their own respective organizations.   


Growing unions in size and influence was Stern’s focus, some might say obsession. In the process, the differences between him and his former boss, John Sweeney, had grown so great by the eve of the AFL-CIO’s July 2005 50th-anniversary convention in Chicago that the SEIU and several other unions, including the Teamsters and the Laborers, exited the federation. Shortly thereafter, the Service Employees and a half-dozen other unions began their own federation, Change to Win. At the CTW founding convention in St. Louis that September, Stern exhorted: “We pledge to devote the vast majority of our resources to uniting the strength in modern, growing, strong, powerful organizing unions.” 


But growth has had its drawbacks, and perhaps nowhere more so than in Stern’s Service Employees. Other than nurses, this is a union overwhelmingly consisting of unskilled workers – janitors, security guards, home-health workers and bus drivers. Because so many of them, especially the recently organized, are first-generation immigrants possessed of limited education and English-language skills, their economic opportunities are limited. That puts them at a disadvantage when it comes to contract negotiations, a reality not lost on employers. With the SEIU having made growth its number-one priority, the union seems to have demonstrated a blind spot for terms and conditions that straightjacket rank and file. Lately, certain officials among the union’s health-care unions have been expressing their disdain.      


Sal Rosselli, leader of the 140,000-member United Healthcare Workers West, is the most prominent dissenter. The Oakland, Calif.-based local currently is embroiled in a dispute with California hospitals, nursing homes and other health-care providers. Rosselli is angry not only at facility operators, but also at the leaders of his own union, beginning with Stern, for negotiating contracts that give away basic workers’ rights. His anger is especially evident in a lengthy investigative report published in the San Francisco Bay Area alternative newspaper, SF Weekly. Stern, the article argues, wants to expand membership through promoting union-employer “partnerships” that result in employers holding a clear upper hand. Rosselli, by contrast, wants to use traditional approaches to organizing favored by AFL-CIO unions, such as recruitment, pickets, lawsuits, alliances with advocacy groups, and media outreach. Though neither Rosselli nor other UHW-West officials would respond to requests for interviews, evidence obtained by SF Weekly reporter Matt Smith indicates that Rosselli has been locked in a showdown with Stern. The article leans well to the left, but its implications should be disturbing across the political spectrum, especially to those favoring reductions in legal immigration.      


The focus is a secret 2003 agreement between the SEIU and a group of California nursing home chains for which an extension is under negotiation. The union pledged to advocate three industry-supported state initiatives: 1) larger MediCal subsidies to nursing homes by more than $2 billion over four years; 2) tort-reform legislation to limit a patient’s right to sue in the event of neglect or abuse; and 3) resistance to efforts by patients’-rights advocates to mandate baseline health and safety standards. Employers would retain the “exclusive right to manage the business,” which includes a clause barring union employees from reporting health-care violations to state regulators, other public officials, and outside persons such as journalists. Nor may UHW-West on its own conduct pickets or negotiate wages, incentive plans or job conditions. The SEIU has organized workers in 42 homes this way. Partisan union observers are perturbed that the international union has been an enthusiastic party to this. “I’ve never seen a labor union except for the SEIU enter into a top-down, industry-friendly agreement that binds the hands of the workers,” noted Jamie Court, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.            


If the agreement ensures health-care workers will remain inexpensive to hire, it also ensures that running California’s health-care system will become more expensive than ever for taxpayers. UHW-West’s own analysis indicates that the organized nursing homes received an additional $119 million in MediCal subsidies during the most recent budget cycle. Of that figure, home operators will spend $21 million – only a little more than a sixth – on labor costs. If the pact is extended, the SEIU would lobby for new legislation expanding MediCal subsidies by hundreds of millions of dollars. In return, the union would be allowed to represent workers from additional nursing homes. It looks like a high-quantity, low-quality strategy. And Rosselli’s local union is furious with this arrangement, especially given the apparent retribution by the international union. Recently, SEIU stripped the local of all authority to represent nursing-home employees. Andrew Stern’s representatives last year, during a statewide reorganization of local affiliates, recommended that all nursing-home workers be reassigned to a new bargaining unit to be run out of Los Angeles by Stern ally Tyrone Freeman.                 

This saga suggests, if anything, that there are practical limits to Andrew Stern’s dream of revitalizing American trade unionism through radically ramping up membership. By conflating key interests of management and employees, the Service Employees International Union is locking a heavily immigrant work force into low-wage, low-benefit contracts. Current immigration policy unwittingly encourages these deals by providing service-industry employers with a ready supply of heavily-foreign-born workers whose inability to cover the high cost of living can be covered by federal and state public assistance programs. Thanks to the help of the SEIU, the public also is on the hook for higher state health care subsidies. Few things these days may be more expensive than “cheap labor” – expensive, at least to taxpayers. (SF Weekly, 4/11/07).