L abor Department officials seeking to make it easier for union members to identify corrupt behavior recently proposed increasing union financial transparency using the form, known as LM-2, that large unions are required to file every year.
The proposal was yet another step by Elaine Chao, the longest-serving secretary of labor since the 1933-1945 tenure of Frances Perkins, to help union members learn how leaders spend their dues.
Newly proposed regulations can become final only after a public comment period. For the May proposal, that period will end on June 26.
One proposed change is requiring unions to report not only union officials’ wages and salaries, as is the case now, but also benefits such as health and retirement plan contributions, which have increased in recent years.
These expenses are listed on Internal Revenue Service tax forms, but not on LM-2 financial disclosure forms filed with the Labor Department. IRS documents are laborious tofind, whereas Labor Department LM-2 forms are easily available at union-reports.dol.gov.
President Andy Stern of the Service Employees International Union received $47,000 in benefits in 2006, which is chump change compared to the $150 million in union funds he has promised to spend to support Sen. Barack Obama and Democratic politicians. Perhaps Mr. Stern hopes for a Congress and administration that won’t look too closely at his management of his union’s funds. Surprisingly, AFL-CIO President John Sweeney, who represents millions of workers, is against the new rule. On May 9, he said “the administration is showing again that it would rather spend its time on a witch hunt aimed at unions than on advancing the interests of workers.” But the new rules do precisely that — advance workers’ interests.
Perhaps one reason that Sweeney objects is that new forms would require more disclosure of his income.
In 2006, Sweeney, AFL-CIO Treasurer Richard Trumka and Vice President Linda Chavez-Thompson received a total of $180,000 in deferred compensation and benefits.
Six officers of the National Education Association each received more than $100,000 in deferred compensation and other benefits in 2006. NEA President Reg Weaver received $171,164, and Vice President Dennis Van Roekel received $157,879. None of those numbers were disclosed on LM-2 forms.
Executive Director Roseann Demoro of the California Nurses Association, along with administrator Michael Lighty and controller Robert Henderson, received together nearly $96,000 in benefits not listed on the LM-2.
The Labor Department also wants to require disclosure of union expenses paid directly to vendors. Now, if a union official on a trip goes golfing, pays his greens fees and travel expenses out of pocket, and is later reimbursed by the union, the union must disclose the reimbursements. But if the union pays a hotel or a country club directly, such spending is not reported, and union members can’t track such uses of their dues.
The proposed new financial disclosure form would require that purchasers and sellers of fixed assets be identified by the union so that assets are not sold below their market value or purchased at overly high prices from “friendly” individuals.
For instance, Teamsters Joint Council 42, covering Southern California, southern Nevada, Hawaii, Guam and Saipan, in 2007 sold an automobile worth $34,892 on their books for $4,000. Teamsters Local 856, located in San Bruno, Calif.; sold a 2004 Chevrolet Impala listed at $8,701 for $250.
In her seven-year tenure at the Labor Department, Chao has changed the Labor Department from an agency that protected union bosses from their members to one that protects their members from union bosses through greater financial transparency. These new rules areher last hurrah, and she is to be congratulated.
Diana Furchtgott-Roth, dfr @hudson.org, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute and a weekly columnist for the New York Sun.
