New Report Shows Some Progress in Union Transparency

Experience has shown that America’s labor unions, in absence of mechanisms to enforce accountability, have a penchant for disguising how they derive and spend their money. The Bush administration, led by Labor Secretary Elaine Chao, from the start has been engaged in an ongoing effort to combat union corruption before it happens. The centerpiece of that effort for several years has been an expanded, more detailed version of the “LM-2” annual financial reporting form for decades required of larger unions. The AFL-CIO went to U.S. District Court late in 2003 to block implementation of the new rule, but lost in federal appeals court a year and a half later. But many have wondered since: What effect is the new regime having on the way unions operate? A new report by Hudson Institute scholar Diana Furchtgott-Roth gives more than a few answers. Using extensive charts as well as narratives, she argues that unions have made some progress in improving their public transparency, but that this is primarily the result of government pressure. 


The 68-page report, “Improving Union Financial Transparency,” provides a wealth of data on what unions are doing – and not doing – to become more accountable to their rank-and-file members. Furchtgott-Roth explains how for decades, starting with the Labor Management Reporting and Disclosure Act of 1959 (Landrum-Griffin Act), Congress, a succession of administrations, and the courts have tried to bring Labor’s financial balance sheets into greater public view, but only with intermittent success. Even when the Justice Department during the Eighties and Nineties stepped up use of racketeering statutes against mob-infiltrated unions, it could do only so much in lieu of revamped reporting requirements. 


The Hudson Institute report, not yet available online, provides a context for the expanded LM-2 form. Based in large measure on legal research and recommendations by National Legal and Policy Center, the form was the Labor Department’s response to extensive evidence that officials at many unions were disguising or falsifying revenues and especially expenses. As a result, many working adults, even those belonging to unions, have come to lose faith in the willingness of unions to serve this country well. The author cites a 2005 Harris Poll indicating that 61 percent of union households did not favorably view unions as a whole. 


Furchtgott-Roth assembles tables illuminating what labor organizations have been up to in recent years. Based on files of about 5,000 LM-2 forms, she reveals that unions have bankrolled a wide range of Leftist political organizations, even though these expenses often are listed under “charitable contributions.” The author estimates that AFSCME, the AFL-CIO and the National Education Association (NEA) led the pack in fiscal year 2006, spending, respectively, $34.2 million, $29.6 million and $26.9 million on political activities and lobbying. The Service Employees International Union, for its part, donated substantial amounts from its $1.7 million political budget to such entities as People for the American Way, the Human Rights Campaign, the National Gay and Lesbian Task Force, and ACORN. Union chieftains are well-compensated for their efforts. Furchtgott-Roth lists the top-paid 50 union officers for fiscal year 2005. Rank and file members might be curious to know that United Food and Commercial Workers Secretary-Treasurer Ramon Rando received $376,505 in combined salary and miscellaneous, while Iron Workers General President Joseph Hunt earned $344,004 and NEA Secretary-Treasurer Lily Eskelsen received $329,378. The number-one earner was NFL Players Association President Gene Upshaw at a cool $2.4 million.

Furchtgott-Roth argues that continuous pressure is essential to union transparency. Labor officials and their Democratic Party allies can be counted upon to mobilize all available resources toward resisting this pressure. She cites three areas of needed improvement. First, too much union political activity remains undisclosed, with third-party payments functioning as political donations all but in name. Second, union-sponsored pensions and other trusts are still unregulated relative to employer-sponsored ERISA plans. And third, unions still intimidate employers into signing “neutrality agreements,” locking them into inaction in the face of aggressive union-dictated corporate, card-check and election campaigns. At minimum, the Department of Labor should continue to make available union financial disclosure forms for public online viewing, submitting them to regular audits. Unions are adept at fighting for their interests. All too often, the report shows, those interests are at odds with those of the general public. (Hudson Institute, 8/29/07).