Big Labor’s Prodigal Son

When Andy Stern announced his retirement as head of the Service Employees International Union (SEIU) and the “Change to Win” federation, he took a generous retirement package with him, and left his union $85 million in debt, having spent $61 million to elect President Obama and a Democratic Congress.

A good case can be made that he earned every penny of that package, and has left Big Labor stronger than ever.

Organized labor is engaged in its most audacious offensive since the New Deal. And Andy Stern has put it in an advantageous position because he learned the age-old lesson of American organized labor: politics pays. He’s not running off with an early inheritance. He’s returning to his movement’s first principles.

When Stern led five unions out of the AFL-CIO in 2005, he said that the old federation had become stodgy and complacent, too much a part of the political establishment and not zealous enough about grassroots “organizing,” especially the sort of unskilled workers who compose SEIU. Stern’s organization sought “Justice for Janitors,” and clamed to speak for the minority workers in service-sector jobs.

On paper, he had a point.

Where the AFL-CIO spent 40% of members’ dues on organizing activities in the 1950s, it spent under four percent by the 1990s.

But Stern was really just dusting off an old union myth, that organized labor is about organizing the masses from the bottom up rather than playing politics from the top down.

The myth was concocted by AFL founder Samuel Gompers. Nineteenth-century American labor organizations tended to become absorbed into political parties. Quaint organizations like the “Noble and Holy Order of the Knights of Labor” wanted government to “abolish the wage labor system” and restore a mythical premodern world where every man was his own boss. Others helped form the Greenback-Labor party. They all disappeared.

Gompers, head of the cigar makers union, broke away from the Knights of Labor, steered AFL unions away from political entanglements. He claimed that he only wanted government to leave workers alone, to win concessions from employers by organization, strikes, and boycotts. The concessions were limited to wages, hours, and working conditions—“bread and butter unionism,” it came to be called, or “business unionism.”

Union “privatism” was always something of an illusion. AFL unions needed government power to achieve their goals, and they lobbied for it. They sought to limit “cheap labor” competition by protective tariffs, immigration restriction, limiting the hours that women could work, and by licensing entry into trades. Above all, the AFL wanted exemption for unions from the antitrust laws and injunctions. They needed to be free to conspire and coerce in ways that other organization could not.

The AFL won these legal privileges. But the Congress of Industrial Organizations (CIO), the “Change to Win” of its day, went further. The National Labor Relations (Wagner) Act forced employers to bargain with whatever organization was chosen by a majority of its members, supervised by a new national bureaucracy, the National Labor Relations Board (NLRB).

The AFL and CIO began to take over the great mass-production industries like autos and steel. But they killed the goose that laid the golden eggs. Congress finally reacted, and the 1947 Taft-Hartley Act clipped Big Labor’s wings. Most importantly, it allowed states to prohibit compulsory (“union shop”) unionism. Businesses moved to the southern and western states that adopted “right to work” laws. Global competitors added to Big Labor’s woes, and the organized share of the private-sector work force dropped from about one-third to below one-tenth by the end of the twentieth century.

Stern’s solution: Card-check. Doing away with secret-ballots would improve the dismal record of unions in elections. But more important is the proposal to allow the NLRB to impose a contract when unions and employers cannot come to terms.

Moderate Democrats killed card-check in the 107th Congress, and the experience of private-sector unionism suggests the futility of the plan. Card-check unions will kill Wal Mart just as Wagner Act unions killed GM and US Steel.

While Wagner Act private-sector unionism collapsed, the government began to promote organization in the public sector. The movement began in cities like New York and states like Wisconsin in the late 1950s. In one of the most overlooked acts of his presidency, John F. Kennedy signed Executive Order 10988 in 1962, permitting federal employees to unionize.

We have become inured to the idea of the government bargaining with its own employees, but the idea is manifestly absurd. When public-employee unions spend most of their dues to elect the officials with whom they bargain, it’s easy to anticipate public bankruptcy. New York City’s 1975 bankruptcy was largely due to municipal union largesse. California is essentially bankrupt today for the same reason. British unions nearly bankrupted that nation in the late 1970s. Big Labor expects the federal government to bail out these states just as Euro-Socialists expect the EU to bail out Greece.

Thus, Andy Stern pushed harder for health-care nationalization than he pushed for card-check. Private-sector unionism (what used to be called “syndicalism”) has repeatedly shown its limits. Public-sector unionism (what used to be called “socialism”) is all that remains.

Observers noted that Stern became bored with the day-to-day, bread-and-butter issues of organizing and negotiating. He became attracted the world of politics, becoming the most frequent guest in the Obama White House. Andy Stern had re-learned what United Mine Workers president John Mitchell said in 1902, “The trade union movement in this country can make progress only by indentifying itself with the state.”