SEIU’s Stern Leaves Troubled Legacy

Andrew SternAlmost everyone connected to organized labor by now has heard the news: Andrew Stern soon will resign as president of the Service Employees International Union. His departure in all likelihood will be permanent. And, if somewhat muted, so will the edgy aggression of the union he redefined. Stern made the announcement on April 14 at an SEIU executive board meeting, confirming a flurry of rumors emanating from an internal e-mail sent by Seattle SEIU local leader Diane Sosne. Stern subsequently e-mailed his own members: “There’s a time to learn, a time to lead, and then there’s a time to leave. And shortly, it will be my time to retire…and end my SEIU journey.” The date of departure, though unspecified, will be within a month. Better political instincts suggest Stern will find plenty of ways to keep himself busy.

As the leader of the second-largest union in the country – only the National Education Association has more members – Stern, now turning 60, for years has propagated a view that more is better. The only way unions can regain their post-World War II preeminence, he argues, is to dramatically expand membership, even if that means in practice (not that he would put it this way) stretching the law, discouraging internal dissent, and cutting sweetheart deals with employers. Stern’s centralizing and domineering management style has made him enemies, something he readily admits. At the same time, even his enemies concede he’s a relentless general who advances troops rather than manages an orderly retreat. He’s also cemented ties to longtime allies, particularly Anna Burger and Mary Kay Henry, respectively, SEIU’s Secretary-Treasurer and Executive Vice President. By all accounts, one of these two women will succeed him.  (That Stern did not name his successor raises more than a few questions about the circumstances of his departure.)

In terms of numbers, Andrew Stern’s tenure as SEIU president has been a success, especially in the overall context of organized labor. Only 12.3 percent of all workers belonged to a union in 2009. That’s down from more than 30 percent during the mid 1950s and 23.6 percent in 1980. These “union density” figures for the private and public sectors in 2009 were 7.2 percent (the lowest in more than a century) and 37.4 percent. The Service Employees, with private- and public-sector affiliates, for three decades or more have bucked that trend. Through abrasive organizing drives and corporate campaigns, the union has sought and often won representation at the lower end of the service sector, especially janitors and health care workers. The union had slightly less than a million members when Stern took over the reins from Interim President Richard Cordtz in the spring of 1996 – Cordtz had succeeded longtime President John J. Sweeney, who the previous fall had been elected AFL-CIO president. Under Stern, the union has doubled membership to nearly 2 million (though often through taking over existing unions), a figure not including another 300,000 workers belonging to SEIU affiliate Purple Storm.

As Sweeney’s right-hand man and then as international president, Stern has been central to every major Service Employee project, including the ongoing “Justice for Janitors” campaign that for some 25 years has created near-mayhem on downtown urban sidewalks across the U.S. in an effort to pressure building management companies into recognizing subcontracted employees. Stern’s obsession with boosting membership eventually led him to cross swords with Sweeney. Dissatisfied with what he saw as the AFL-CIO’s excessive focus on lobbying, research and voter registration, Stern led a walkout by several unions from the federation convention in Chicago in July 2005. Eventually, half a dozen unions – the Teamsters, the Laborers, UNITE HERE, the United Food and Commercial Workers, the Carpenters and the United Farm Workers – joined the SEIU to form a rival federation, Change to Win (CtW). At the group’s one-day kickoff convention in St. Louis that September, Stern excitedly remarked, “We pledge to devote the vast majority of our resources to uniting the strength in modern, growing, strong, powerful organizing unions.” His chief lieutenant, Anna Burger, would chair CtW. In retrospect, it may have been the zenith of Andrew Stern’s nearly 40-year career.

Stern understandably defends his legacy as both SEIU president and de facto leader of Change to Win. He sees his departure as a fitting coda to a long string of victories. To some extent, he’s got a point. His union was the first out of the starting gate in 2008 to endorse Barack Obama for president. The hugely expensive health care overhaul was in large measure due to pressure from him and other SEIU activists. As Stern explained to Ezra Klein in a long interview in the Washington Post appearing only days after his announced departure, he has accomplished what he set out to do and doesn’t want to wear out his welcome:

In 1972, I signed a union card for SEIU. And for the last 38 years, 14 as president, it’s been my life. I’ve seen the most miraculous, spectacular things. But there’s a time to learn, a time to lead, and time to leave. And my leaving really has two parts to it. One is the union’s never been stronger. We’ve elected a president. We have passed health care reform. We have the strongest and most diverse group of local union leaders in our history. We finished the restructuring of our union; our political program is spectacular in terms of the 100,000 members that participated in the last election; we have the largest PAC.

But every institution needs to renew itself, and I’ve seen way too many labor leaders stay way too long – and politicians – and I have no intention of doing that. The union is ready for renewal, and the first renewal is electing new leadership and then another generation of leadership to take the union to the future.

That Stern has delivered results for the faithful is not in dispute. His unrelenting “corporate campaigns” against nonunion companies have resulted in actual concessions, if not necessarily collective bargaining agreements – witness Wal-Mart’s vow to expand employee health benefits and support pending health care legislation after the SEIU for years had been in its hair. But expansion has come at the price of quality contracts and a loss of local affiliate independence. Stern has used a mix of aggression and sweetheart deals with employers (depending on the nature of the situation) to secure bargaining agreements of such dubious value that California health care workers in particular actually may be worse off. His union’s alliances with the corrupt Association of Community Organizations for Reform Now (ACORN), far from delivering quality contracts, created an ethical blot.

In the electoral and policy area, Stern has had his successes. The SEIU’s early endorsement of Obama for president gained him almost unlimited access to the White House, in apparent violation of federal lobbying laws. Obama also appointed a hard-Left union lawyer, Craig Becker, to a vacant position on the National Labor Relations Board (NLRB). And at Stern’s urging, the White House and congressional Democrats commandeered a health care bill into law that, barring repeal, will cost Americans trillions of tax dollars over the next few decades. But Stern also leaves much unfinished business. He and other union officials won a delay, but not a repeal, of a new tax on high-cost ‘Cadillac’ health insurance plans of the sort found in larger industrial unions. And the eventual health care overhaul lacked the public option (i.e., government-owned) system that Stern sought. Most crucially, thanks to Republican opposition, Congress has been unable to pass the misnamed Employee Free Choice Act (EFCA) that would enable unions organizers to gain far more new members; the bill’s ‘card check’ provision would force nonunion employers to recognize a union as a sole collective bargaining agent if organizers are able to obtain, through various methods of persuasion, signatures from at least 50 percent of all potentially affected workers.

In the area of internal governance, Stern has been a divisive as well as uniting force. Most tellingly, directing the show from SEIU headquarters in Washington, D.C., Stern placed a 150,000-member California mega-local, United Healthcare Workers-West, under trusteeship. Local leader Sal Rosselli had been publicly critical of Stern’s heavy-handed management and weak contract agreements. The result was a virtual civil war, culminating in Rosselli breaking away from SEIU and in January 2009 forming a new union, the National Union of Healthcare Workers (NUHW). The SEIU sued 28 NUHW officials, charging them with fraud and misuse of Service Employees funds. Formally, the SEIU won, receiving a jury award earlier this month of $1.5 million from the renegade union. But it was a hollow victory. Stern originally had demanded $25 million. And the jury dismissed the substantive charges that the SEIU hadn’t dropped already. In all, the SEIU spent $10 million in member dues on four separate law firms to make its case – an expensive way to win.

Given the state of SEIU finances under Stern, the union could use $25 million – and then some. In 2000, with Stern four years into office, the union’s liabilities totaled $7,625,832. By 2009, they had increased to $120,893,259. SEIU assets did nearly triple over that time, from $66,632,631 to $187,664,763. Yet much of those assets consist of receivable IOUs from financially-strapped locals. And the SEIU hasn’t repaid its largest creditor. According to the union’s LM-2 financial form, at the end of calendar year 2007, the SEIU had taken out $96,319,029 in loans from Bank of America, of which it had paid back less than $2 million. The irony is that Stern had been waging a bitter campaign against Bank of America whose demands included the ouster of now-retired CEO Ken Lewis. Does this not at least suggest a shakedown? Underfunded pension plans have been another chronic problem. Both SEIU employee retirement funds are in “critical” status as defined by the 2006 Pension Protection Act; i.e., assets are less than 65 percent of liabilities. Generally, when a pension plan falls below that level, it finds it difficult to avoid being taken over by Pension Benefit Guaranty Corporation.

As de facto leader of the Change to Win federation, Stern hasn’t fared that well either. He was a driving force behind the schism of UNITE HERE, the CtW affiliate created through a 2004 merger. The UNITE (textile and laundry employees) and HERE (hotel and restaurant employees) factions, respectively headed by Bruce Raynor and John Wilhelm, never really meshed. Within a half decade the two were barely speaking to one another. Stern invited Raynor’s people – about a third of all UNITE HERE members – into the SEIU fold. Last year Raynor took the offer. Wilhelm, seeing Stern as a raider, seceded from Change to Win and last September formally re-affiliated with the AFL-CIO. Change to Win is imploding in other ways. The United Brotherhood of Carpenters and Joiners recently bolted. The Laborers have rejoined the AFL-CIO Building & Construction Trades Department, though not the federation itself. And while the United Food & Commercial Workers remains in the fold, its president, Joe Hansen, is on good terms with the AFL-CIO. Change to Win has come upon hard times, and recently instituted staff layoffs. As the federation from the start has been largely a projection of Stern’s iconic personality, there isn’t much of a reason for CTW to continue.

Much of Stern’s intensity springs from his conviction that unions are indispensable to prosperity and produce no downside. In his Washington Post interview, he stated, “It (organized labor) is the greatest middle-class, job-creating mechanism that we have ever had in America that doesn’t cost taxpayers a dime.” This is simply absurd. Unions do not “create” jobs; they preserve them for members (and future members) at wage and benefit levels higher than those obtainable through individual negotiation. As labor cartels, unions are focused on securing advantages for members, even if at the expense of nonunion workers and consumers. There is nothing wrong with workers uniting to improve their situation. Employers, needless to say, pursue their own interests through trade associations. But unions, by nature, backed by federal law, seek to force membership upon workers who might have reasons not to join. The lack of voluntary membership works against liberty and prosperity in the long run. Writing in the Winter 2010 issue of the Cato Journal, Florida State University economists Randall Holcombe and James Gwartney observed: “The rhetoric in labor law tends to be couched in terms of workers’ rights, but review of U.S. labor law shows that in fact workers have lost a substantial amount of their freedom to contract for the terms of their employment, because labor law has given union leaders the right to dictate conditions of employment.”

What, then, is the prospect for American unions in a post-Andrew Stern world? John Judis, a longtime social democrat, believes that his legacy has left unions better off. “For all his faults,” he wrote in The New Republic, “Stern was one of the few union leaders of the last two decades who worried and actually did something about arresting the labor movement’s decline.” By contrast, Newsweek’s Howard Fineman, though sympathetic, sees Stern as creating a culture of “Shakespearean backstabbing” and thus weakening the labor movement. Brian Johnson, executive director of the Alliance for Worker Freedom, a Washington, D.C.-based free-market nonprofit activist group, believes Stern has harmed public integrity:

This year, more than any other in recent history, Andy Stern has been the voice of Big Labor – a voice that pushed for less worker freedom and more union control while skirting the law. Stern continued to lobby year after year, even after he terminated his registered status as a lobbyist, possibly violating federal law. I guess now we will never know exactly what happened…

Stern defined the modern labor movement. It will be interesting to see who picks up the reins and what Stern does to occupy his time. Regardless, I am certain Washington has not seen the last of Andrew Stern.

Andrew Stern wants a breather. The final question of his Washington Post interview was: “Are you planning to run for anything?” Stern’s response: “No. I plan to run to the beach.” It’s not likely he’ll stay there. The Service Employees International Union has been the center of his life for nearly four decades. Sooner or later, he’ll tire of sunbathing and get back to where the action is, even if not as SEIU president.


SEIU President Andrew Stern Is Frequent White House Visitor; May Have Violated Lobbying Laws.

Raynor Forced Out of UNITE HERE; Allies Form New Union and Affiliate with SEIU.

Union Pension Fund Management Concludes Plan Is Critically Underfunded.

California Local and SEIU Battle; Stern Seeks Trusteeship.

Members of Large California Health Care Local Sue SEIU, Stern.

California Nursing Home Pact Stiffs Workers, Taxpayers.

Union Bosses Demand New Congress Pass Card Check Bill.

New Labor Federation Downplays Corruption Issues.