Finance Unionism’s Built-In Defeatism

Although labor’s $32 billion in net assets is larger than most US foundations, the Department of Labor financial data actually understates the true value of labor’s assets, because unions are only required to report the cost of their investments rather than the market value. This divergence was vividly illustrated at the United Auto Workers (UAW) 2022 constitutional convention, where delegates debated the feasibility of increasing strike pay from $400 a week to $500 a week, a particularly important debate given the upcoming contract negotiations at the Big Three automakers.

The strike pay resolution was ultimately defeated after delegates, relying on financial statements provided by the union, concluded that increased strike benefits might be financially unsustainable. Yet an investigative report by the Intercept found that delegates were provided with misleading financial information at the convention.

While delegates were told union assets were valued at $960 million (at cost), the market value of the union’s assets was around $1.4 billion, about $424 million higher. If delegates were aware of the true value of the UAW’s assets, the resolution on strike pay may have met a better fate. Nevertheless, the UAW example suggests total union assets are far higher than the $32 billion number if assets were reported at market value.

In responses to the Department of Labor report on union membership, the AFL-CIO (a federation of most US labor unions) called for “elected leaders to fix what’s broken by reforming our outdated labor laws that for far too long have stacked the deck against working people.” Undoubtedly, labor law is fundamentally broken, as the rampant illegal anti-union activities at Starbucks and Amazon clearly illustrate. But few believe that the PRO Act, the most recent proposed labor law reform package, has a credible chance of passage anytime soon, stymied by the Senate filibuster and “moderate” Democrats.

The worry is that organized labor will draw the same lesson they drew from the defeat of labor law reform legislation in 2009: organizing on a large scale is impossible without new labor legislation, and unions should hold back until the political climate changes. Finance unionism is a powerful economic inducement to remain on this defeatist track.

The problem is that if unions don’t dramatically expand organizing, particularly in the Midwest and South, it is hard to see how the political dynamic changes in a way conducive to passing federal labor legislation. Since 2010, unions have tried to change the dynamic by spending (at the minimum) over $8 billion on politics. But the real source of labor’s political power will come from mobilizing new union workers, particularly in red and purple states with low union density.

“All In”?

The AFL-CIO says it isn’t just waiting for labor law reform, asserting that “[t]his year, the labor movement is going ‘all in’ on an organizing agenda that will ensure every worker who wants a union has the chance to join or form one.” That agenda consists of creating a new organizing department called the Center for Transformational Organizing (CTO) with a goal of organizing one million new workers over the next ten years. The AFL-CIO executive board approved a per-capita increase (the amount member unions pay to the federation) to raise $10.8 million to fund the CTO.

While proposing any plan is a step forward, the goal of one million members over the next decade will not move the union density needle. The US economy is expected to add 8.3 million jobs over the same time period, and one million new union members will keep union density at or around the current 10 percent level. And while new spending on organizing by the AFL-CIO is welcome, the total spending by the AFL-CIO is miniscule (0.7 percent) compared to the spending by union headquarters and their local affiliates. The vast majority of assets and organizers are located at the affiliate and local level, and only through a change at that level will any program make a meaningful impact.

This point was well understood by John Sweeney, who led the AFL-CIO from 1995 to 2009 after winning the first contested election for the leadership of the federation. (I worked at the AFL-CIO from 1997 to 2000.) Running on an aggressive organizing platform, Sweeney and his supporters set a goal of organizing one million members a year. More importantly, Sweeney publicly called on all unions to devote 30 percent of their budgets to organizing new members.

In some respects, the 30 percent goal was low in comparison to spending during the heyday of union organizing in the 1930s, when the AFL spent 50 percent of its budget on organizing and the CIO spent substantially higher, according to one labor scholar. (The AFL and CIO merged in 1955.) Yet Sweeney’s 30 percent goal was quietly shelved after most unions refused to adopt the budget targets, eventually driving a group of frustrated unions led by SEIU to create the rival labor federation Change to Win in 2005 (currently down from eight affiliate unions to three).

Just spending more dollars on organizing isn’t a surefire recipe for success, but it certainly is a key ingredient to any program to reverse union membership decline on a large scale, and complementary to efforts by workers to organize independent unions like the Amazon Labor Union. Most unions do not publicly disclose the amount they spend on organizing, and unions successfully rolled back a proposed rule by the Department of Labor to require additional reporting on organizing expenditures.

Yet for the few unions that do disclose their budgets, the data are dispiriting. The two key unions that propelled organizing in the 1930s, the steelworkers’ union and UAW, devote very little resources to organizing today. In 2020, UAW allocated 6 percent of its budget to organizing, while today’s United Steelworkers earmarked 3 percent of dues. The Teamsters spent 13 percent of their budget on organizing in 2021, although that will hopefully increase under the new reform leadership. On the encouraging side, SEIU requires in its constitution that locals spend a minimum of 20 percent on organizing.

Yet until the bulk of the labor movement is “all in” on devoting meaningful resources to organizing, it’s hard to see a realistic path to meaningful growth.

1.5 Million Union Members on Strike in 2023?

Of course, the real source of labor’s power isn’t located in its balance sheet or financial resources. Power ultimately lies in collective action by workers withholding their labor to disrupt production through strikes and other activities. In 2023, approximately 150 union contracts will expire, covering 1.5 million workers, or over 10 percent of total union membership. New reform leadership at the Teamsters and UAW (if Shawn Fain wins the election currently underway), representing nearly half a million workers at UPS and the Big Three automakers respectively, are signaling an aggressive and militant bargaining stance.

Their aim is not only to roll back decades of concessionary contracts, but to use strong collective bargaining contracts as a springboard to organize nonunion workers at Amazon and the auto industry. Successful strikes that demonstrate the power of collective action could serve as a powerful object lesson for all workers that they can organize and win against some of the largest companies in the world.

And, the silver lining of finance unionism is that there are billions in financial resources to support courageous workers who make the difficult decision to strike. Over the last decade, labor was unwilling to use its large balance sheet to support strikes, spending less than 3 percent of its net assets on strike benefits. Perhaps 2023 will signal a new era.

Every year, trade unionists examine the annual Department of Labor report on union membership looking for hopeful signs of a resurgence. But the metrics of finance unionism may be a better indicator of change. When we begin to see labor’s net assets decline rather than grow, when surpluses turn to deficits, it may signal that unions are finally spending more on organizing, aggressively engaging in strikes, and employing militant civil disobedience activities that provoke fines and penalties from the government and courts.

Or on a less optimistic note, the decline of union assets will mark the day that the decades of complacency and membership decline have finally come home to roost. Here’s hoping for the former.