Keeping Unions Accountable

By DIANA FURCHTGOTT-ROTH
December 19, 2007

While government spending, saving energy, climate change and a new strategy for Afghanistan have been dominating the news as Congress struggles to finish its work before Christmas, another important issue has gone unnoticed — union transparency.

The omnibus spending bill that is close to final passage would increase funds available for every oversight agency in the government except the Office of Labor Management Standards at the Labor Department, the group that oversees union finances. There's more dollars for the Security and Exchange Commission, the Mine Safety and Health Administration, and the Occupational Safety and Health Administration. But OLMS gets short shrift.

President Bush asked Congress for $57 million for OLMS in 2008, an increase of $9 million from the 2007 level of $48 million. Instead, congressional Democrats are appropriating $45 million, cutting the president's request by $12 million, or 21%. This is $3 million, or 6%, less than in 2007.

OLMS is to unions what the Securities and Exchange Commission is to corporations. The SEC, with a budget of more than $842 million in 2007, or more than 16 times the purse of OLMS, is charged with protecting investors from irregular if not fraudulent accounting and other deceptive practices by publicly traded companies. In 2005, just four years after the passage of the Sarbanes-Oxley Act, which required greater disclosure of corporate finances, the Labor Department began to require more information on union spending, too.

OLMS protects union members from deceptive practices and irregular accounting by forcing union leaders to disclose them. That is a worthy purpose. Yet, earlier this month the liberal Center for American Progress issued a report by senior fellow Scott Lilly entitled "Beyond Justice," attacking the Labor Department. Mr. Lilly wrote, "In at least one instance, rigorous and in fact pernicious regulatory enforcement was the course chosen by the Bush administration."

Mr. Lilly suggests that the new union financial disclosure rules are too costly for unions to administer, saying that union employees now have to keep records, buy software, and pay accountants, none of which they had to do previously.

Although the Labor Department has offered record-keeping software free to any union that requests it, it is true that the requirement to keep records imposes certain costs. But organizations that require membership as a condition of working, such as unions, and that levy dues on members, are reasonably required to take the time to keep records and present financial information in an understandable manner.

Moreover, unions are using members' dues to take an increasingly active role in politics. The Web site of the Center for Responsive Politics lists top all-time donor profiles for major organizations, with the data taken from federal campaign disclosure forms. Twelve of the top 20 are unions, and, no surprise, all are listed as favoring Democratic candidates. Perhaps that's why congressional Democrats want to reduce OLMS investigations.

The biggest donor is the American Federation of State, County, and Municipal Employees, which has given more than $39 million to Democratic candidates. Others in the top 10 are the National Education Association, the International Brotherhood of Electrical Workers, the Laborers Union, the Service Employees International Union, and the Carpenters and Joiners Union.

The New York State political arm of the Laborers Union, which represents construction trades, has sent $215,000 to its national committee. This election cycle the national committee has spent $32,000 on Democratic presidential candidates, $701,000 on Democratic House candidates (nearly 10 times as much as on Republican candidates), and $46,000 on Democratic Senate candidates (more than 15 times the amount spent on Republicans). Union members are entitled to be informed about such contributions. Union members also deserve to know that the SEIU International Union Local 1999 PAC of New York City had, by June 30 of this year, transferred $2 million to the SEIU/Committee on Political Education PAC. The SEIU Intl. Union 32B-32J, another local in the New York City area, contributed $600,000. The New York Transport Workers Union PAC contributed $48,500 as of October 31 to Democratic Senate candidates, and $203,800 to House candidates (only $6,000 found its way to four Republicans running for House seats).

New York union members have the right to know their bosses' salaries, which are paid out of members' dues. Lillian Roberts, executive director of New York's State County and Municipal Employees AFL-CIO District Council 37, made $393,077 in 2006. James T. Callahan, business manager of the Engineers, Operating, AFL-CIO Local Union 15, made $298,466. And John Hickey, president of the Service Employees Local Union 758, made $220,893.

Perhaps there's nothing wrong with spending union dues on political campaigns or on high salaries for union bosses. Perhaps the rank-and-file don't disapprove — if they know. But do they know? They're entitled to the best information available, which requires not just union reporting but audits by OLMS. In 2006, OLMS had the staff to audit only 4.6% of unions required to file the forms. That's why it needs more funding, not less.

Congress could not cut the budget of the SEC. It is a large and visible agency whose budget is closely watched by outside groups. But the Office of Labor Management Standards works in relative obscurity, protecting millions of American union members. The Democratic majority does not care about these workers — it just wants to protect the union bosses to preserve the flow of campaign contributions.

Ms. Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. She can be reached at dfr@hudson.org.

Keeping Unions Accountable

Reader comments on this article