Transforming the U.S. Department of Labor to the Department of Organized Labor

by Rick Manning

In their first year in office, the Obama Administration has re-made the U.S. Department of Labor into the Department of Organized Labor, working hard to make certain that those who spent hundreds of millions of dollars to put them in office get a return on their investment.  While many dismiss the importance of the Department of Labor, virtually every person in America is directly touched by the rules and regulations that this federal bureaucracy creates and enforces, so changes at the top have real consequences for every working American.

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As we evaluate the impact of the past year on the nation’s workforce, it is worthwhile to remember the accomplishments of President Bush’s Secretary of Labor, Elaine L. Chao.

When Secretary Chao left office, workers were safer in their workplaces than at any time in history, the Labor Department was focused upon encouraging private sector job creation, and created an enforcement environment that successfully protected workers from employers who egregiously violated the law while providing the necessary education to limit inadvertent violations.

Secretary Chao put an emphasis on clarifying workplace regulations to make it easier for employers to know the rules of the game.  Her efforts led to overtime requirements being more clear-cut for employers while explicitly guaranteeing overtime protections for blue collar workers, police and fire fighters, EMTs, construction workers and others.

The Labor Department under Secretary Chao brought transparency to the spending of Big Labor through regulations which for the first time shined a light upon labor union expenditures.  These reports revealed the massive labor expenditures supporting ACORN’s efforts,and were used by LA Times reporter Paul Pringle in his Polk Award winning series that brought down the SEIU powerbrokers in the California SEIU.

This emphasis on transparency and private sector education and empowerment was geared toward preparing America’s workforce for the 21st century, all the while protecting the taxpayer by achieving cost savings in the Department’s discretionary budget of 19 percent in real terms since 2001.

The Obama Administration’s agenda is very different.

The first order of business has been rolling back those pesky union transparency regulations that allowed watchdog groups, the media and union members to know how union dues are spent.

Next, rather than getting out of the way and allowing the private sector engine to create jobs, the Obama Administration is hiring hundreds more OSHA and Wage and Hour inspectors with their job descriptions revised away from helping companies comply with the law to strictly writing citations for as much fine money as can possibly be warranted.

Believe it or not, in spite of record lows in workplace injuries, OSHA inspectors are now financially incentivized to write citations with heavy fines encouraged.  This is akin to making a police officer’s income directly related to how many tickets he/she writes.  If you have the misfortune of getting pulled over, you know that it is going to cost you big time.

Continuing on the enforcement front, it is instructive that President Obama’s appointee to be the top lawyer in the Department is Patricia Smith who currently serves as the head of the New York State Department of Labor.  In New York, Smith created a program that empowers unions to conduct wage and hour inspections of employers – typically, non-union employers.  This powerful coercion tool is conducted under the guise of ensuring that employees are treated fairly, but actually allows a union to target employers for organizing programs using this threat as a cudgel against that business.

The theme of expanding private sector union membership permeates the entire Obama labor agenda from the recently announced deal on the health care bill which exempts union members from paying a tax on what is deemed to be Cadillac health care insurance, to the Orwellian named Employee Free Choice Act that strips employees of secret ballot union elections, to Obama appointees changing union election rules that have stood for 75 years in order to help unions organize Delta Airlines.

This emphasis on expanding union membership, even at the expense of job creation, can be seen in one of the Administration’s early acts – to require Project Labor Agreements (PLAs) for federally funded projects.  PLAs require scale union wages be paid on all federally funded construction at an estimated cost of between 16-18%.

That’s shovel ready money that is employing fewer workers for the taxpayer dollar – all to force work into union shops and increase union dues payments.  Rather than employing more workers in this time of economic crisis, Obama instead has chosen to employ fewer people per taxpayer dollar in order to ensure that union dues payments go up.  Of course, the poster child for PLA projects is the notorious Boston Big Dig that ran billions of dollars of cost overruns while having to redo much of the work due to poor workmanship.  Of course what else can you expect when using union labor is more important than getting the job done.

PLA’s are not the only example of this Administration putting union membership ahead of job creation.  Amazingly, one of the requirements for consideration to receive a piece of the $100 million in “green job grants” was a partnership with a union affiliated group.  While union affiliation has nothing to do with whether or not a job is green or not, these grants are structured to force companies competing for these grants to employ union labor and at the least give labor affiliated organizations a piece of the pie.

At this writing, the 60 vote filibuster proof Democratic Senate was predicted to go down in flames in Massachusetts.  As a result, regulators, appointees to the National Labor Relations Board and Administrative Law judges are likely to be at the forefront of employment policy.  One name stands out as perhaps the symbol of the changes that we are likely to see in the Obama Administration – Craig Becker.

The Wall Street Journal calls Becker, “labor’s secret weapon”.  So who is he?

Becker is a yet to be confirmed appointee who would be the deciding vote on the National Labor Relations Board – the decision making body on the rules and validity of union organizing elections.

Instead of being a fair arbiter, Becker has advocated for extensive restrictions on employer communications with employees preceding a union organizing vote.  He has gone so far as to call for employers to be barred from attending NLRB hearings about elections, and not allowing employers to  challenge results even when evidence of union misconduct is present.  If confirmed it is likely that Craig Becker, not Hilda Solis, will have the lasting impact  on labor relations whether Congress passes the Employee Free Choice Act or not.

You might ask yourself, why is this Administration feverishly working to tilt the employment playing field dramatically toward the unions at the expense of real job creation?

The answer may be found in those very union disclosure reports that the Obama Administration doesn’t want you to see.

Big Labor is broke and desperate.  Declining membership combined with hundreds of millions in political expenditures to elect this Administration and Congress have left them on the financial ropes.

To understand the severity of their situation, you only have to go to the Wall Street Journal which reports that the AFL-CIO has more liabilities than assets, and a key member of their Finance Board worries that, “insolvency may be just around the corner.”  Further, Number One White House visitor, Andy Stern’s SEIU’s, is in severe financial trouble with his pension plans upside down and the union’s liabilities totalling almost 80% of its assets, and Jimmy Hoffa, Jr.’s International Brotherhood of Teamsters faces a pension disaster as its Central States Pension Fund teeters on ruin with an asset to liability ratio of only 43%.  In short, Big Labor’s finances are worse than a Wall Street mortgage derivatives fund in 2008, and like Wall Street, they are looking for government to bail them out.

Big Labor has bet their entire future on this Administration and this Congress.  Not able to compete in an environment where workers are safer than ever before, and there is a big screen in every living room, Big Labor needs the rules changed in order to survive, no matter the harm done to America and to workers across our nation.


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Posted Jan 20th 2010 at 12:17 pm in Big Labor, Economics | 68 Comments