Shadowbosses: Government Unions Control America and Rob Taxpayers Blind

by Mallory Factor

  And all this interstate migration has economic consequences on both the state losing population and the states gaining population.76 Between 1999 and 2009, California lost almost $29 billion in taxable income because an estimated 1.2 million more people left the state than moved into the state over that period. North Carolina received an extra $16.6 billion in taxable income from the 505,000 more people moving into the state than leaving the state over that period.77 Over time, America’s demographic profile is shifting dramatically as Americans move to states with less union influence.

  Courtesy: National Right to Work Committee.

  This migration from Union states to Free states is having political as well as economic consequences. Right-to-work states gained a total of eight to nine representatives in the U.S. House of Representatives each of the last three times that representatives were reapportioned based on census data. Ultimately, as more representatives come from the Free states, government employee unions will have to look harder to find pro–labor union politicians to elect to Congress, because people in these new districts will likely oppose the union agenda.

  Conclusion

  Think back to the lion at the beginning of this chapter. Is there any doubt that the unions are “bleeding our country dry,” as radio host Laura Ingraham puts it?78 And as Michelle Caruso-Cabrera of CNBC writes, “The economy sat on the verge of abyss in 2008 and the massive decline in state tax revenues exposed just how much unions are costing America. It’s time for Big Labor to adjust to the new world.”79

  But the government employee unions are refusing to adjust; instead, they are doubling down. The unions are tapping out the taxpayers in the heavily unionized states. They’re doing it with outrageous salaries, overtime, and pensions for government employees that they negotiate with their bought-and-paid-for politicians. They’re killing private enterprise, and taxpayers are fleeing heavily unionized states for the greener and freer pastures of the less unionized states. America is becoming two distinct nations: the Union nation and the Free nation. And where we go from here is anyone’s guess.

  Chapter 6 Summary Points

  About half of all state and local government revenue is now spent on pay and benefits for state and local employees, and that is increasing.

  Many union contracts allow workers to hike their pay by performing largely useless work—like police officers in Englewood, New Jersey, being paid $3,000 a year extra for showing up to work fifteen minutes early to change into uniform, or being paid $25,000 or more in “extra-duty pay” to stand around construction sites.

  Union contracts also may allow government employees to increase their pensions considerably by working extra overtime in the last years before retirement.

  States with high rates of unionism have heavier state tax burdens and slower employment and income growth than less unionized states.

  The most likely states to default on their obligations have an average unionization rate 20 percent higher than the other states.

  Right-to-work states show far more growth in average real personal income (24.9 percent) than heavily unionized states (7.8 percent) from 2000 to 2010.

  Median state debt per person is nearly three times higher in heavily unionized states than in lightly unionized states.

  Government pensions are destroying state finances. California’s per capita unfunded pension liability is over $13,500 per person, Connecticut’s is $17,622, and Rhode Island’s is $20,271. In contrast, less unionized states have an average unfunded pension liability per person of $10,030, still bad but much better.

  Unions are changing the demographic map of the United States as taxpayers flee highly unionized states and move to less unionized states. One consequence is that right-to-work states as a group gained eight to nine representatives, and heavily unionized states lost the same number of representatives, each of the last three times congressional representatives were reapportioned based on population.

  CHAPTER 7

  Corruption and Conspiracy

  SOVIET dictator Joseph Stalin wasn’t one to mince words. When asked once about democratic processes, he patiently explained: “I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this—who will count the votes, and how.”

  Government employee unions and their officials have taken this message to heart. Union officials sometimes cut their own members out of the union election process to stay in power. Worse, they extend those techniques to aggressive voter registration drives, which may include voter fraud, to win races for their political allies.

  When it comes to government employee unions, as we’ve seen, their lifeblood is politics. To survive, the unions must put their allies in power, by any means necessary.

  Culture of Intimidation

  Remember On the Waterfront starring Marlon Brando, the Oscar-winning Hollywood study of union corruption and mob influence on the docks of New Jersey? It was pretty accurate. In 1956, a New York journalist was blinded with acid after writing a column about connections between New York unions and New York mob leader Johnny Dio. After he appeared on television wearing dark glasses, Congress was forced into action. Congress investigated, and found links between Dio, Teamsters head Jimmy Hoffa, and other criminal figures—but more on Hoffa and his associates later.

  When Congress began investigating union corruption in the late 1950s, union bosses started talking about cleaning up the unions, too. George Meany, then head of the AFL-CIO, railed against union corruption at the 1957 union convention and said that the union bosses had been aware of corruption when the AFL and CIO merged together in 1955: “We thought we knew a few things about trade union corruption, but we didn’t know the half of it, one-tenth of it, or one-hundredth part of it. We didn’t know for instance that we had unions where a criminal record was almost a pre-requisite to holding office under the national union.”1 He went on, “We didn’t know that there were trade union leaders who charged to the union treasury such items as speed boats, perfume, silk stockings, brassieres, color TV, refrigerators, and everything else under the sun.” Previous union cleanup efforts had not worked because “you can’t get much cooperation from a national union the officers of which are practicing the same sort of larceny on a national scale as is being practiced by their so-called local representatives on a local scale.” Meany vowed to clean up the union movement.

  Sadly, neither Meany nor Congress wiped out corruption in the unions. “Corruption remains deeply embedded in the way unions supposedly represent dues paying workers,” observes Carl Horowitz of the National Institute for Labor Relations Research. “The sheer magnitude of corruption is staggering, both in the number of cases and the size of the take. American trade unionism is shot through with a culture of intimidation.”2

  “The sheer magnitude of corruption is staggering, both in the number of cases and the size of the take. American trade unionism is shot through with a culture of intimidation.”

  We have seen this culture of intimidation in how unions deal with their rivals, how they treat corporations that don’t cooperate with their unionization drives, and how they handle opponents to their strikes. In this chapter, we will learn about the culture of intimidation within the unions themselves—and we’ll investigate how it affects our American democracy.

  Become a Union Boss!

  Would you like to become a union boss? It’s a great job: large salary, terrific benefits, and visits to the White House. All you need to do is win the internal union election for leadership, right? Well, actually you can’t. Many union bosses are handpicked by the previous bosses, use the union election process to keep themselves in office, and essentially rule for life like Communist leaders used to.

  Gerald McEntee has been at the head of the American Federation of State, County and Municipal Employees (AFSCME) for over thirty years. John Sweeney headed the SEIU and then the AFL-CIO for a total of almost thirty years. But then there is Andy Stern. After less than fifteen years a
s president of the SEIU, he abruptly resigned in April 2010 for “personal reasons,” which seemed highly unusual for a top union boss. A few months later, the press reported that he was under investigation by the FBI and Labor Department, although Stern himself denied it.3 But don’t feel too bad for Andy—despite these rumors, he kept his post on President Obama’s National Committee on Fiscal Responsibility and Reform, known as the Deficit Commission, and was just appointed as the Ronald O. Perelman Senior Fellow at Columbia Business School.4

  Sometimes it seems that only union bosses who are actual mobsters get thrown out of union leadership. Take a union boss of a local union in Chicago, for example. No one had challenged the local union president in a union election in quite some time. Then in 1998, union members allegedly discovered that their local union president was actually a “made member” of the Chicago mob. The U.S. District Court judge who adjudicated the matter pointed out that corruption should have been suspected because of “the alleged absence of contested elections during a twenty-five-year period.” The alleged mafia boss/union boss was scheduled to begin talks with the city of Chicago to negotiate a new contract for the members of his union when his mob connections were revealed. As normally happens when mob influence is alleged, the local union was placed under “trusteeship” control of the national union in an attempt to clean up the local union.5 Of course, this is like declaring martial law in order to restore democracy.

  Then there is the most famous union boss of all time, Jimmy Hoffa of the International Brotherhood of Teamsters. When Hoffa was boss, the Teamsters represented mostly transportation workers like truck drivers, distribution plant workers, and loading bay workers. The Teamsters still represent these types of workers, but they also represent over two hundred thousand government employees including police officers, parole officers, public works employees, school bus drivers, and transit workers.

  Hoffa served as Teamsters president from 1958 to 1971, serving his final four years as president from his prison cell in a federal penitentiary in Pennsylvania, where he was serving time for jury tampering. Hoffa was a thug through and through—his mob connections during his Teamsters career are extensive and well documented. Hoffa even channeled Teamsters pension funds into mafia projects like the construction of casinos on the Las Vegas strip.

  Hoffa and his predecessors at the Teamsters were so corrupt that Congress passed the Landrum-Griffin Act of 1959 to stop them and other union bosses at certain notoriously corrupt unions. As James Mitchell, then secretary of labor, explained in advocating for the bill, “Teamster officials have crushed democracy within the union’s ranks. They have rigged elections, hoodwinked and abused their own membership, and lied to them about the conduct of their affairs. They have advanced the cause of union dictatorship and have perverted or ignored their own constitution and bylaws.”6 Eventually, of course, Hoffa disappeared under mysterious circumstances.

  While Hoffa disappeared, the Landrum-Griffin Act lived on. Under the Act, union members were supposedly guaranteed the right to vote for union leadership, freedom of speech, approval over dues amount, and access to collective bargaining agreements, although these rights have proved limited in practice.7 The Act also required labor unions to file financial disclosure with the U.S. Department of Labor to explain their “financial condition and operations.”8

  When Congress passed the Landrum-Griffin Act, it was principally concerned with corruption at the very top of the leader hierarchy with the union bosses themselves. In recent years, however, much of the union corruption that has been detected has been at the level of local unions.9

  Saga of the Teamsters

  The Landrum-Griffin Act didn’t stop the mob influence over the unions. In the 1970s and ’80s, the federal government brought civil racketeering (RICO) charges against the International Longshoreman’s Association and the Teamsters based on the mob connections of their union officials. Rudy Giuliani, then U.S. attorney in New York City, brought the 1988 RICO lawsuit against the Teamsters, alleging that union leaders let the mafia run certain local unions. In the same case, it was alleged that the mafia controlled the election process for union leadership and that the previous two Teamsters presidents had been selected by the mafia. One commentator noted, “The government’s civil RICO complaint listed scores of murders and assaults of [Teamster] dissidents in order to document the Mafia’s pervasive presence in union affairs.”10

  In settlement of the suit, the Teamsters agreed to court supervision over their union elections in order to purge the corrupt elements from the union. As part of the settlement, Teamsters had to hold rank-and-file secret-ballot elections of national union officials. Teamsters elections were designed to be much more democratic than most unions, which allow rank-and-file members to elect only delegates to a large representative assembly, which in turn elects the national bosses.

  So everything would now be better, right?

  Wrong.

  This oversight of Teamsters elections would eventually make way for the election to Teamsters leadership of… James P. Hoffa Jr., Jimmy Hoffa’s son. In 1997, Hoffa ran against incumbent Teamsters leader Ron Carey, who was considered a reformer. Hoffa’s opponents claimed that if he won, Hoffa would reinstitute “the union’s bad old days, when mafia chieftains used teamster officials as puppets and the union’s treasury as their piggy bank.”11

  So Carey’s backers created a “complex, interlocking fundraising scandal” to help keep Carey in power. The Teamsters even offered to give hundreds of thousands to the Democratic National Committee if the Committee found a friendly donor to give Carey’s campaign a $100,000 check. The Democratic National Committee didn’t get involved, but in the end the sides spent $3 million combined on the race for the union presidency. Carey won by 52 percent to Hoffa’s 48 percent, only to see his victory overturned by the courts when this illegal funding scheme was uncovered.12

  A court-appointed union monitor reviewed the election and found that Carey had funneled $700,000 of union funds to get himself reelected, a clear violation of union election rules. According to the union monitor, Carey had engaged in “significant electoral misconduct,” and the monitor denied him the chance to run again. The monitor explained, “To allow a candidate to run under the rules which he broadly and intentionally violated would do direct injury to the credibility of those rules. Allowing Mr. Carey to run, under these circumstances, simply would not provide a clean slate and a level playing field in the rerun election.”13 So what was the final result? Hoffa Jr. took over the Teamsters.

  According to the New York Times, the report also had one other interesting finding: “several other labor leaders, including Richard Trumka, the A.F.L.-C.I.O.’s [then] secretary-treasurer, and Gerald McEntee, president of the American Federation of State, County and Municipal Employees, had improperly raised money for Mr. Carey.”14 These leaders were not removed or charged, however. They remain at the heads of these unions to this day.

  Fifteen years later, Hoffa remains in charge of the Teamsters. He vowed in 2011, “We got to keep an eye on the battle that we face: The war on workers… The one thing about working people is we like a good fight… President Obama, this is your army. We are ready to march. Let’s take these son of bitches out and give America back to an America where we belong.” It almost sounds like he is promising Teamsters thuggery for Obama. And Hoffa backs Obama to the hilt for a good reason. During the 2008 election cycle, Obama was said to have privately promised the Teamsters that he would terminate the strict oversight of the Teamsters by the Labor Department.15 It hasn’t happened yet, but maybe Obama is waiting for a second term.

  And what happened to Ron Carey? After being expelled from the union for life, Carey was indicted for perjury, and then found not guilty. He was writing a book on union problems—including double-dipping by union officials—when he died of lung cancer in 2008. At least, unlike Hoffa Sr. his death appears to have been of natural causes.

  Stealing Union Elections

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p; “But,” you say, “corruption exists within many organizations. What’s different about unions?”

  Union election fraud has a long history. In 1964, an electrical workers union held an election for president. Soon, those counting the votes realized that the incumbent candidate was going to lose. Stealing votes at the two election sites was going to be difficult because the challenger had witnesses at both sites. So the vote counters allegedly came up with an ingenious solution: they opened three new branches on the spur of the moment, and didn’t let anybody in to watch them. Predictably, the incumbent president won. We know about this case because the scheme was uncovered, and when the U.S. Department of Labor examined the election closely, it found that that challenger had won by a large margin.16

  Numerous cases have been uncovered of internal union elections being rigged. But are the cases we discover most instances of union election fraud, or just the tip of the iceberg?

  In the late 1990s, New York City’s largest union of city workers was shown to engage in particularly egregious examples of voter fraud as well as corruption and embezzlement. Union officials were charged with falsifying a 1996 vote ratifying the workers’ five-year contract with the city. The officials stole the election by printing up thousands of blank ballots, marking each one with a yes vote and then mixing them in with the real ballots for counting.17 An investigation resulted in the conviction of at least twenty union officials for voter fraud, embezzlement and other crimes, and with the presidents of two local unions being convicted of embezzling over a million dollars for personal use.18