The fight for $15. Unionized graduate students. Micro-unions.
When it comes to finding new schemes to expand union treasuries, Big Labor is nothing if not persistent. Union leadership's latest scheme is more technical than the rest, but involves hundreds of millions of dollars and limitless leverage in the workplace.
The Empire State is ground zero. In New York City, Services Employees International Union Local 1199, one of the most politically active labor unions in the country, administers the National Benefit Fund, whose objective is to provide health and welfare benefits to SEIU members and their eligible dependents. This ranges from covering hospital costs to providing health education courses and counseling services. With more than a half-billion dollars in net assets and 154,000 participants, the NBF is one of the largest labor-management funds in the country.
The fund's sheer size gives it enormous leverage in collective bargaining discussions with New York employers, which contribute more than $192 million to the NBF annually. While 1199 SEIU and the NBF are technically two separate nonprofit organizations, they are closely linked in practice. NBF trustees include appointed union members, and the fund's executive director used to serve as counsel for 1199 SEIU.
In 2016, the union donated more than $14 million to the NBF, while the fund reimbursed 1199SEIU over $356,000 in undisclosed expenditures. In a given year, the NBF pays more than $120,000 to SEIU-affiliated organizations.
The NBF's budget is a Pandora's Box of wasteful spending and lavish living. Just take Executive Charge, an "upscale executive sedan service" for high-profile clients that has received thousands of dollars from the NBF. In one recent year, the fund spent more than $126,000 at Grand Cascades Lounge, a "luxurious" golf resort in New Jersey. It also reported over $400,000 in non-itemized "union travel" expenses that year.
These are curious expenses for an organization focused on "cost-effective" healthcare, and they fall mostly on union members. But nothing stands out more than the NBF's weaponization for 1199 SEIU's benefit. If employer contributions make up the foundation upon which the fund is built, then delinquent payments — at least, in the union's eyes — are its worst nightmare. The NBF has put several punishments in place if an employer contribution does not meet the union's expectations.
When New York University Hospital recently left its trade association to bargain with the union independently, the NBF imposed an annual penalty of $25 million. When the hospital first announced its decision to bargain independently, some 60 union members marched in front of its doors, shouting "NYU! Shame on you." The SEIU local even summoned Manhattan Borough President Gale Brewer and New York City Comptroller Scott Stringer to support the protesters and pressure the hospital.
There are numerous other examples of labor disputes surrounding National Benefit Fund payments. Perhaps the most egregious one came in 2008, when Helen Sieger, the owner of a Bronx nursing home, allegedly "stopped paying into [the] benefit fund." Her workers walked off their jobs, costing the union nearly $1 million in strike pay and associated costs. Union president George Gresham enlisted the help of Sen. Chuck Schumer, then-Rep. Anthony Weiner, and then-City Council Speaker Christine Quinn, all of whom spoke at a rally at the nursing home. Presidential candidate Barack Obama even phoned in to the picket line, promising that the workers would "have a friend in the White House" after the 2008 election.
The SEIU's modus operandi: Pay up or face public humiliation.
Of course, the NBF's mission might at times be noble, but its dependence on bullying and intimidation undermines the union-employer relationship. It might also violate federal law, which is crystal clear that the fund exists for the benefit of participants, not as a means to hurt employers during the collective bargaining process. Ultimately, it's the employees who are hurt the most.
Jeff Joseph is a business professor at George Washington University.
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