Opening the Fortress Gates
Chris Bohner, a former union researcher working with a consulting firm called “Radish Research,” recently issued a report on labor union finances titled “Labor’s Fortress of Finance.” In it, he makes the claim that more-than-ample resources exist within organized labor to prioritize new organizing and more confrontational strategy.
His report was covered in In These Times by Hamilton Nolan, who characterized the report as “damning” and a “devastating indictment of the strategic approach of American labor,” and criticized the union world as an “exclusive club sitting in a walled garden, watching its bank accounts swell.” He suggests that pointing out the federalized nature of organized labor is a distraction, and demands that leaders “unify all these points of light” in service of a “coherent direction, towards progress.”
Bohner’s report is a rare utilization of data available from the Office of Labor-Management Standards, which collects financial and other data from labor unions and entities with private sector membership. He uses it to present an interesting argument: that from a global perspective, organized labor is financially healthy, that the trend remains healthy, and that we should utilize those resources.
Bohner’s report is an interesting starting point for a discussion, and is well worth a read and serious consideration. However, there are a number of questions and points of debate that call into question how flush the “Scrooge McDuck” vault really is.
METHODOLOGY & THE DATA
There are signs — which Bohner acknowledges — that there’s a reason the data hasn’t been widely used.
OLMS is self-reported — one reason that their membership figures have often been taken with a grain of salt — and unions report on different cycles. Not all unions (such as those with exclusively public sector members) are subject to reporting requirements. From a data integrity standpoint, utilizing aggregate OLMS data should carry a heavy asterisk when conducting any analysis.
There are practical ways in which that could directly impact the financial questions at hand, and how finances are reported can create the illusion of greater liquidity. Looking at Section 7 (Other Assets), one local, SEIU 1199E, reported $2.5 million in prepaid insurance as an asset, and SEIU’s international headquarters reported pass-through funds earmarked for transfer elsewhere as an asset. Based on different reporting cycles and timelines, it’s entirely plausible that the originator of pass through funds, the pass through entity, and the recipient could all report it as an asset.
Bohner also flags the question of strike funds and their lack of explicit disclosure: a key aspect of determining whether liquid assets are truly available for reprioritization. However, we do know the financial figures for at least one strike fund: that of the United Auto Workers. Indeed, UAW’s strike fund alone, resting at approximately $826 million dollars, accounts for approximately 3% of the total assets reported by the entire movement. The Teamsters strike fund, which has also been publicly disclosed, totals approximately $350 million. In other words, somewhere in the range of 4-5% of the total liquid assets available to the movement are earmarked for the strike funds of two unions.
Following that, it’s reasonable to expect that a significant percent of liquid assets globally are earmarked, either formally or informally, for strike action: making them liquid, but functionally restricted financial reserves that should not be extensively raided for other uses. If anything, the liquid assets available for strike pay are insufficient rather than excessive: a point I’ve addressed previously.
Take the Teamsters for example. Based on napkin math on strike payments — monthly dues (Google gave me $90) x strike benefit multiplier (5) x weeks in a month (4) x number of UPS workers (185,000) indicates a rough estimate that a month-long UPS strike could cost $333 million in strike pay alone — almost exhausting their entire strike fund.
Finally, Bohner applies general corporate financial principles when application of nonprofit financial principles would be more appropriate. Taking nonprofit accounting principles, the true “excess” is unrestricted funds available beyond a defensive interval — usually 180 days for a nonprofit organization. The “defensive interval” is the amount of time an entity can meet their financial obligations based solely on reserves: a very real threat for unions, as found by UNITE HERE and WEAC (outlined below). Although the donor-based accounting principles used by nonprofits aren’t perfectly translatable to labor, which has a slightly more stable membership base (and thus can likely safely maintain a slightly lower defensive interval), they’re a far better application than corporate accounting principles.
In other words, if we want to find a better picture of what “excess” money exists, it’d take surplus, less future obligations, less other legitimate restrictions (such as strike funds) on use, and less the defensive interval. Moreover, that’s the total assets — if new priorities require long-term obligations, the total amount available narrows significantly based on the average annual surpluses ($1.7 billion) and available reserves that can be spent down.
All of these points — the nature of the data itself, and available information on how some of the financial reserves are allocated, and the analytical principles utilized — immediately calls into question the report’s assessed figure for “available” assets.
MEMBER DEMOCRACY
One item missing from this piece and Nolan’s commentary, but utterly essential to problematizing it, is simple: member democracy.
Unions, both at the international and local level, are democratic entities. Spending priorities are shaped by democratic deliberation and process. This is both good, and necessary, and inadequate member democracy (as in the case of the United Auto Workers’) leads to reform movements to make institutional direction setting more democratically accountable.
Indeed, the institutionalist approach embraced by the report (an implicit assumption that unions are similar to autocratic corporate actors) obscures the reality that unions both are and should remain membership based organizations with varying degrees of direction-setting and resource prioritization determined by democratic mechanisms. Foregrounding that reality makes our analysis of the why of finances and the what is to be done of financial prioritization a very different discussion. Even were a reader to concede the report’s claims, turning that knowledge into an actionable plan ideally requires vast internal organizing and debate across the movement. At minimum, any shifts will necessarily be mediated through the balancing act between member direction-setting and institutional prioritization.
This reality runs directly contrary to Nolan’s dismissal of the federated nature of organized labor, and his appeal for charismatic leaders to impose unity and discipline on a federated movement. Although his frustration and desire are sympathetic, centralized imposition of union-wide priorities and restructuring had its moment with Andy Stern’s leadership of SEIU, and proved harmful to the movement as a whole even when practiced within the confines of a single international union.
ONE BIG UNION*
Bohner more directly acknowledges the legitimate problem presented by the federalized nature of the finances in question: they’re spread across hundreds, and even thousands, of legally distinct entities, and the financial picture of some of those entities may appear significantly different.
The problem extends beyond the logistics of reprioritizing that money, and applies to how we should interpret it altogether. Take as an example a common talking point deployed by conservatives: pointing to the aggregate reserves for public schools across a state to create the perspective of vast reserves, in order to attack calls for additional funding. In reality, the vast majority of schools are operating within reasonable financial parameters, and some — often the poorest — are operating with significant structural financial deficits. The aggregate conceals the far more important specificity of the operational needs and deficits of individual school entities.
Applying this to a specific case: UNITE HERE has been financially devastated by the COVID-19 pandemic, and has yet to recover from significant membership loss. Indicators in their OLMS reporting suggest that they’ve been forced to turn to liquid assets to fund the union’s continued operation, and that some fixed assets have been converted to liquid assets in order to stabilize their financial footing. This sober reality, faced by one of the more organizing-minded unions within organized labor, is obscured by the aggregate picture of overall flush finances.
Another case study can be found with the Wisconsin Education Association Council. Once a large, powerful public sector union representing education workers across Wisconsin, WEAC’s annual revenue has plummeted due to Wisconsin’s Act 10, cratering from $26.7 million in 2011 to $7.4 million in 2020, forcing the sale of their headquarters in 2016. Public sector unions, although not fully accounted for in Bohner’s analysis, often have to struggle with heightened vulnerability to political attack, with the case of WEAC demonstrating the devastatingly rapid collapse caused by anti-worker assaults.
Operationally, where money exists and how it’s used matters. The AFL-CIO national headquarters is included in the aggregates; however, the AFL-CIO does not organize workers, making their finances largely inaccessible for direct organizing. Organizing occurs at both the local and international levels, and there can often be tension between locals over jurisdiction, politics involved in use of local vs. international resources, etc. In other words, you can’t just draft an army of organizers and march forth — you have to look at where the money is, where the organizing is occurring, and the path to reprioritizing those finances in that specific context.
LEAVING THE FORTRESS
All of this suggests that Bohner’s report isn’t the final word on the financial picture of organized labor, and that its conclusions should be viewed as an interesting starting point for a discussion rather than definitive answers.
But despite the necessity of further discussion, Bohner is right: organized labor should open the fortress gates and march, and to do so, we need to take budgets seriously. Even if the “true” figures are smaller than Bohner suggests (and I believe they are), that isn’t an argument for inaction — rather, it should lead organized labor to better explain current finances, and for us to ask how much more we need to accomplish necessary strategic goals, and how we’ll get it.
Although analysis suggests the financial picture may not be as flush as Bohner finds, it’s entirely reasonable to conclude that some amount of resources exist that could be tapped to fund additional organizing while avoiding institutional harm. Spending that money isn’t just possible, it’s necessary.
But that can’t be imposed centrally, nor should it come from top-down decision-making. One of the most compelling and valuable reminders of the present moment is that member-led organizing is far more effective and scalable, and that if we truly wish to win transformative victories — like those at Starbucks — we need to turn to workers themselves, and to trust them to lead.