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Secretary Chao: Demanding transparency from unions can start a revolution

By Paul M. Weyrich
web posted March 31, 2003

Labor Secretary Elaine Chao is a very kind and soft-spoken person. She has gone about her business at the Labor Department in such a low-key fashion that it is easy to forget she is there. Yet when all is said and done, at the end of her service in that Cabinet capacity, we may well look back to find that Secretary Chao has accomplished more principled action than any other Republican Secretary of Labor in history.

An example of what she is doing has to do with what is known around Washington as 'transparency.'

Elaine ChaoIn December of last year, Secretary Chao submitted a proposed rule to the federal register. Once that is done, there is a 90 day comment period where interested parties can make their views known. Sometimes those comments result in the rule being revised; other times the rule may even be withdrawn. In this case, however, the rule is moving forward, despite vehement opposition to it by organized labor.

This rule requires large labor unions to give much more detailed information about how they spend the dues they collect from the workers who belong to the unions than they ever have before. Presently, there are broad categories of expenditures listed, but the unions do not have to disclose any details about these categories. One union last year reported that they spent $7 million on travel, but nowhere do they explain what the travel was about. I can tell you as someone who has worked on presidential campaigns, it takes a lot of effort to spend $7 million on travel. One wonders what sort of travel was involved? Was the whole staff going to conferences? Did they all go first class to Europe?

Or are they traveling to participate in special elections or even the general election, which would be illegal.

There was a lot of applause when President George W. Bush went after transparency for corporations in the wake of Enron and other scandals. He did so in the name of workers, investors and retirees. Well, this rule simply parallels one that is now applied to corporations.

The fact is that the rules and forms have not been substantially updated since 1959, following passage of the Landrum-Griffin labor reform act. Before Landrum-Griffin was passed by a heavily union-dominated Congress, because President Eisenhower made it a priority, the unions had almost no reporting requirements at all. That was thanks to the passage of the Wagner Act during FDR's Administration. That act tilted things so much in favor of the unions that they could get by with almost anything and there was no penalty for it. The Taft-Hartley Act, passed a decade later, tilted things back somewhat, but it was Landrum -Griffin that specifically dealt with union corruption. The current disclosure forms, however, do not provide meaningful information to help members gauge the financial health and integrity of their union. The reforms being implemented by Secretary Chao will empower union members to root out corruption within their own unions. One observer noted that when rank and file members find out what some of their dues money is being used for, there will be a revolution.

We shall see about that.

So that smaller unions will not be unduly burdened by the new reporting requirements, only the top 20% of the unions, those which are the largest and most likely subject to the greatest amount of corruption, if there is any, will be required to report under the new rule. In fact the Department of Labor is even developing new computer software which will be made available to that 20% free of charge. That will greatly reduce the administrative burden of having to comply with the new rule.

Secretary Chao says that the large unions would be required to itemize expenditures above the $2,000 to $5,000 range. This itemization will more accurately reflect the services which unions are providing to their members, the Secretary insists. Oh, and by the way, for the first time, unions would be required to disclose financial information for joint training funds to which they contribute more than $10,000. Currently these funds have no reporting requirements despite the billions, yes that's billions with a B, of dollars spent every year in this category.

The Secretary is convinced that this transparency rule will change the dynamic within the large unions. She believes the membership will be shocked when they find out what is going on in their own unions. Time alone will tell if union members really care about how their dues money is being spent. If they do and if reports of widespread corruption are true, this pleasant, quiet, thoroughly decent Secretary of Labor may have indeed started a revolution.

Paul M. Weyrich is Chairman and CEO of the Free Congress Foundation.

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