Union Watch Highlights

The Union Pension Bomb

Editorial, May 14, 2012, Wall Street Journal

Imagine the panic if investors discovered that many of the nation’s biggest public companies had hidden liabilities so large as to make them worth a fraction of their value. That’s something akin to the shock created by the recent Credit Suisse report on multi-employer pension plans. In “Crawling Out of the Shadows,” analysts David Zion, Amit Varshney and Nicole Burnap address the big but opaque world of pensions in which companies across an industry pay into a single asset pool. These 1,400 union-run retirement vehicles have long been poorly run and underfunded. (See “The Next Pension Bailout,” August 16, 2010.) But Credit Suisse has dug deeper and found how really big the mess is. Among the findings: Multi-employer plans in the U.S. are underfunded by some $369 billion. An estimated $43 billion of that off-balance-sheet liability belongs to the 44 S&P 500 companies that are exposed to multi-employer plans. The other 88% of the $369 billion is borne by small, mid-cap or private firms that may be even less prepared to cover the obligations. The report says Safeway’s $6.9 billion in liabilities amount to 76% of the company’s market cap, for example. All of this ought to be especially embarrassing to Washington, which requires annual filings to the Department of Labor on multi-employer plans and measures their financial health. But Labor uses an “actuarial” reading of the numbers, which envisions an average (and hefty) 7.5% rate of return on investments, smoothed over five years. Even under that generous view, about 500 plans—or 37%—are less than 80% funded and thus considered financially troubled. Credit Suisse applies a more realistic “fair value” reading—which uses a lower rate of return and current liabilities. By that standard, only 4% of multi-employer plans are healthy and many are exposed as accounting scams. (read article)

NLRB Rule Speeding Union Elections Thrown Out by Judge

By Sara Forden, May 14, 2012, Bloomberg News

A rule change by the National Labor Relations Board that allows for faster votes on union elections was thrown out by a federal judge who said the agency lacked a quorum when it approved the measure. U.S. District Judge James Boasberg said only two of the three members of the board required to constitute a quorum actually voted on the rule. He said representation elections will have to continue under previously established procedures unless the board votes with a proper quorum. The rule went into effect on April 30. “According to Woody Allen, eighty percent of life is just showing up,” Boasberg wrote in an opinion issued today. “When it comes to satisfying a quorum requirement, though, showing up is even more important than that.” The rule change, challenged in court by the U.S. Chamber of Commerce, simplified and shortened balloting at a time when the unionized share of the workforce is falling, according to labor relations consultant Phillip Wilson. The compressed schedule could have cut the time permitted for voting in half to as few as 15 days, Wilson said. Unions win 87 percent of elections held 15 days or less after a request, a rate that falls to 58 percent when the vote takes place after 36 to 40 days, according to a February report by Bloomberg Government. (read article)

Union’s pension plan targeted for criminal probe

By Judy Thomas, May 14, 2012, Boston Herald

Federal authorities have launched a criminal investigation into the International Brotherhood of Boilermakers’ pension and benefit plans, McClatchy Newspapers has learned. The investigation began after federal agencies received anonymous complaints about mismanagement of the plans, according to court filings. The complaints included allegations that family members of some trustees received bonuses from companies that managed investments for the three funds, which total $8.5 billion. A grand jury investigation followed. The court filings do not provide much detail on the issues and people the grand jury is investigating. But a recently settled lawsuit by a former official with the Boilermakers funds made detailed claims about unorthodox investment schemes and questionable ties between the funds and a trustee’s daughter. Indeed, The Kansas City Star, a McClatchy newspaper, has found that the daughter of a former trustee and union executive works for a company that has been paid millions to manage investments for the three Boilermakers funds. (read article)

A ‘war on women’ at L.A. City Hall?

By Kate Linthicum, May 14, 2012, Los Angeles Times

They’re targeted disproportionately by Mayor Villaraigosa’s proposed layoffs, L.A. labor groups say. In a twist on a theme that has flared up on the national political stage, labor unions representing Los Angeles city workers are accusing Democratic Mayor Antonio Villaraigosa of waging war against women, saying most of his proposed layoffs would hit jobs traditionally held by female workers. In his proposed budget now under review by the City Council, Villaraigosa calls for eliminating 231 filled positions. Individual employees who would lose jobs have not been identified, but roughly 90% of the positions targeted are clerk, secretarial and other jobs mostly held by women. If approved, the job cuts would follow a pattern set two years ago, when women made up less than a third of the city’s total workforce but constituted 54% of the layoffs called for by Villaraigosa, according to records. Dozens of child-care workers and library employees were among those let go. (read article)

Hefty salaries, perks for union leaders raise eyebrows

By Judy Thomas, May 13, 2012, The Kansas City Star

First-class travel. Six-figure salaries for half the 132 officers and staffers. Plenty of plum jobs for family members. The union, with its headquarters in Kansas City, Kan., represents about 59,000 workers in the U.S. and Canada who make and repair boilers, fit pipes and work on ships and power plants. The recession has hit their trade hard, reducing union membership. At the same time, the president’s salary has surged 67 percent in the past six years, not counting a recent raise. Add in travel and some other expenses, and Newton B. Jones received more than $600,000 last year, putting him at the absolute top of the presidents of the dozen biggest unions in the country. Many relatives of union officers also ride the payroll. Totaling the pay to just the families of Jones and two other executives, the union and its affiliates gave them more than $2 million in annual salary, according to the most recent financial reports filed by the organizations. “This is one of the more egregious examples of money flowing like crazy that I’ve ever seen,” said Nathan Mehrens, a former U.S. Labor Department lawyer and now general counsel for Americans for Limited Government, a conservative watchdog group. (read article)

Michigan Pro-Union Move Shows Labor Wars May Help Obama

By Chris Christoff, May 11, 2012, Bloomberg News

Beth Cox works at the Ford Motor Co. (F) (F) plant in Dearborn, Michigan, where her grandfather was a mechanic and a United Auto Workers official. Cox and the petition drive are part of a Midwest resistance against anti-union laws that may help Democratic President Barack Obama win battleground states in November. The uprising began in 2011 when Republican Wisconsin Governor Scott Walker pushed to eliminate collective bargaining for most public employees — a measure that prompted a June 5 recall election that’s become the epicenter of the strife. Ohio voters repealed a similar law championed by Republican Governor John Kasich in November. Now, Michigan’s Democratic base is trying to reverse what it calls attacks by Republicans meant to erode its union support. The proposed ballot measure would block or unravel laws that curb health care and pension benefits for public employees, constrain bargaining and allow financially distressed cities and school districts to cancel contracts. (read article)

Former Labor Union Officer Pleads Guilty to Taking Payoff from contractor

FBI Press Release, May 10, 2012, Imperial Valley News

A former union officer from Local 592 of the Laborers’ International Union of North America admitted today that he took a bribe from a contractor, U.S. Attorney Paul J. Fishman announced. Patrick Viola, 45, of Edgewater, New Jersey, the former business manager and an employee of Local 592 of LIUNA, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with unlawfully receiving a prohibited labor payment. Viola was arrested on November 22, 2011 and charged by criminal complaint in connection with his receipt of a payoff. According to documents filed in this case and statements made in court: On January 25, 2010, Viola, while business manager of Local 592, met with a witness who was cooperating with the government (CW1), and who was a representative of a construction company in New Jersey. The company employed laborers at various construction projects in New Jersey. During a consensual audio and video recorded meeting, the witness said the company was about to start a construction project in Bergen County. Viola said, “Yeah, well, you do what you gotta do as far as I’m concerned. You going in there , do it non-union, you do it non-union, that’s the end of it.” The witness then said, “I’ll do that one in advance because I really can’t afford to have any kinds of problems.” (read article)

Monroe Labor Union Officer Pleads Guilty To Embezzling Funds

May 9, 2012, New Jersey Today

A labor union official from Middlesex County Tuesday admitted demanding and receiving unlawful payments from a contractor and embezzling funds from a labor organization bank account, U.S. Attorney Paul J. Fishman announced. Peter A. LoMauro, 42, of Monroe, pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to two counts of a seven-count indictment. They charged LoMauro with unlawfully demanding and receiving an unlawful labor payment and embezzlement from a labor organization. According to documents filed in this case and statements made in court: LoMauro was employed as an organizer and later as a business agent for Local 9 of the United Association of Plumbers and Pipefitters (“Local 9”), headquartered in Englishtown. LoMauro admitted that on Oct. 31, 2006, he unlawfully accepted a check for $6,000 from a company identified as “Company One,” which employed plumbers who were represented by Local 9. LoMauro told a representative from Company One he was raising money for his sick uncle, identified only as “A.C.,” and requested that Company One issue the check to A.C. (read article)

New Jersey Pay-To-Play: GOP Lawmaker Plans Bill To Limit Union Donations

By John Celock, May 9, 2012, Huffington Post

A close legislative ally of New Jersey Gov. Chris Christie (R) is planning to introduce a bill that would curtail the political power of unions in the state and cost campaign funds for Democrats. Tom Kean Jr. (R-Westfield), minority leader in the New Jersey Senate, will offer legislation to expand the state’s pay-to-play ban to include labor unions, specifically those negotiating contracts with state and local government entities, including school boards. Kean said he is seeking to close what he called the biggest loophole in New Jersey’s pay-to-play law, which imposes strict limits on how much businesses seeking government contracts can donate to political candidates in the state. “In my opinion, labor unions are no different than lawyers or consultants. They negotiate contracts and fees with elected officials,” Kean told The Huffington Post. “This would make pay-to-play more complete.” Kean said that local governments spend close to 50 percent of their budgets on salaries, which are mostly negotiated with local unions. (read article)

Labor Unions Respond To Emanuel’s Pension Reform Plan

By Chuck Sudo, May 9, 2012, The Chicagoist

As expected, labor unions aren’t happy with the pension reform plan Mayor Rahm Emanuel revealed in Springfield yesterday. Emanuel’s “roadmap to retirement security” calls for an increase in the retirement age to 67 for most civilian workers, and to 60 for police and fire department workers; a one percent yearly increase in employee contributions for five years, to 14 percent; and a 10-year freeze in annual cost-of-living adjustments for current retirees. After that, the plan would go to a simplified cost-of-living increase instead of compounded increases. Workers would also choose between a 401K plan and a standard benefits plan. Jorge Ramirez, president of the Chicago Federation of Labor, released a statement criticizing Emanuel’s plan and highlighted the city’s lack of accountability for their role in the pension mess. (read article)

A labor challenge to Republicans in Indiana

By Josh Goodman, May 8, 2012, Chicago Tribune

When voters in Indiana’s 64th state House district go to the polls today, their ballots will say that James Amick is a Republican primary candidate. But if they’ve heard some of Amick’s positions on the issues, they might not be so sure. Indiana Republicans’ signature achievement this year was a right-to-work law that unions despise. Amick, a tower crane operator and a member of the International Union of Operating Engineers, opposes right-to-work. Over the last two years, Indiana Republicans also have taken ambitious steps to offer private school vouchers, expand charter schools and allow private operators to take charge of struggling schools. Amick casts himself as a defender of public education and a skeptic about all those moves. Amick is a member of a nascent group called the Lunch Pail Republicans. In a state where organized labor has felt itself under siege from GOP lawmakers, the concept is to fight back not by electing more Democrats — or at least not only by electing by more Democrats — but by electing more Republicans who are sympathetic to unions. (read article)

Union with Obama ties rents offices for Occupy DC

By Aubrey Whelan, May 8, 2012, Washington Examiner

A labor union with strong ties to President Obama is helping make the Occupy Wall Street movement a more permanent fixture in the nation’s capital, moving Occupy DC into office space the group can use to organize and grow through the presidential election. The Service Employees International Union, one of Obama’s most vocal supporters among labor groups, is paying $4,000 a month for three offices the Occupy protesters will use for at least the next six months to plan future demonstrations, organize and host workshops. The offices are at the Institute for Policy Studies, a nonprofit progressive group headquartered at 16th and L streets NW, amid the major law firms, trade groups and lobbying shops that Occupiers have spent the past seven months denouncing. The offices are just a short distance from the tent city Occupy DC established in McPherson Square in October. Occupiers moved into their new digs Monday. The SEIU will pay the rent for six months, said John Cavanagh, director of the Institute for Policy Studies. (read article)

About the author: Jack Dean is editor of PensionTsunami.org, formed to monitor developments in all three pension spheres nationwide — public employees, corporations and social security. PensionTsunami, like UnionWatch, is a project of the California Public Policy Center. Dean is a former newspaper editor and a past executive director of the Reason Foundation. He has been active in politics for more than three decades and currently serves as president of the Fullerton Association of Concerned Taxpayers.