Employee Rights

Targeting Target

The news of a union organizing drive at a group of Target Corporation stores in the New York City area raises the tantalizing possibility that the master of cheap chic may finally be knocked off its pedestal.

For years, Target has used its stylish image to obscure the fact that many of its employment and other practices are not significantly different from those of its scandal-ridden rival, Wal-Mart. It’s even managed to get itself included on a list of the “world’s most ethical corporations.”

Target’s stores, like those of Wal-Mart’s U.S. operations, are entirely non-union, and the company intends to keep them that way. The New York Times account of the organizing drive has Jim Rowader, Target’s vice president for labor relations, spouting the usual corporate rhetoric about how a union (the UFCW) would undermine the supposed trust that the company has built up with its workers. BNA’s Labor Relations Week (subscription-only) reports that Target is subjecting workers to captive meetings “conducted by store management in an attempt to dissuade workers from seeking union representation.”

Since no representation elections have been held yet, it is unclear whether Target will follow the lead of Wal-Mart in eliminating the jobs of those who dare to vote in favor of a union.

Target does not have a reputation quite as abhorrent as that of Wal-Mart when it comes to other employment practices, but neither is its record untarnished. It has been accused of subjecting its largely part-time workforce to the same abuses—inadequate wages, restrictions on health coverage, overtime violations, etc.—seen among other big-box retailers. Though not as often as Wal-Mart, Target has shown up on lists prepared by state governments of the employers with the most workers or their dependents receiving taxpayer-funded healthcare benefits. Target has fought against living wage campaigns, most notably in Chicago in 2006, when it threatened to cancel plans for two new stores in the city unless Mayor Richard Daley vetoed a wage ordinance (which he did).

Target has also faced accusations relating to the treatment of minority applicants and employees. In 2007 the company paid a total of more than $1.2 million to settle cases brought by the U.S. Equal Employment Opportunity Commission involving alleged racial discrimination in hiring in Wisconsin and a racially hostile environment in Pennsylvania.

There have been controversies involving the treatment of workers by Target suppliers and contractors, as well. In 2002 Target was one of a group of retailers that together paid $20 million to settle class-action lawsuits charging them with permitting sweatshop conditions at factories run by their suppliers in Saipan, part of the U.S. Commonwealth of the Northern Mariana Islands in the Pacific. A 2006 report by SOMO, a Dutch research center on transnational corporations, documented other instances in which Target garment suppliers were reported to be abusing workers and the retailer did little in response.

Target has a history of hiring janitorial contractors for its U.S. stores that tend to engage in rampant wage theft. In 2004 one such contractor, Global Building Services, paid $1.9 million to settle an overtime-violation case brought by the federal government on behalf of immigrant workers. In 2009 another Target cleaning contractor, Prestige Maintenance USA, settled an overtime lawsuit for up to $3.8 million.

Labor practices are not the only area in which Target’s accountability record falls short. Earlier this year, the company had to pay $22.5 million to settle civil charges that its operations throughout California had violated laws relating to the dumping of hazardous wastes. Target has had a good record on gay rights, though last year the company found itself at the center of a controversy after it was revealed to have contributed to a business PAC which in turn contributed to a gubernatorial candidate in Minnesota who campaigned against gay marriage (among other reactionary positions). Target later apologized.

And then there’s the matter of subsidies. Like Wal-Mart, Target has extracted lucrative tax breaks and other forms of financial assistance from many of the communities where it has built stores or distribution centers. One of its more audacious efforts was a proposal for a $1.7 billion mixed-use project in the Minneapolis suburb of Brooklyn Park, for which Target wanted more than $20 million in property tax abatements and a public contribution of $60 million for infrastructure costs. Despite seeking all this taxpayer assistance, Target demanded a waiver from the city’s living-wage policy for many contract and part-time workers who would be employed at the site.

Perhaps the best thing that can be said about Target, aside from its style, is that it is much smaller than Wal-Mart. Its total revenues are only about one-sixth of the worldwide sales (and less than one-quarter of U.S. sales) of the Bentonville behemoth. Target’s workforce of 355,000, all in the United States, is dwarfed by Wal-Mart’s domestic headcount of 1.4 million and another 700,000 abroad. Target thus has a much smaller impact on overall labor practices and the global supply chain.

What impact it does have is not salubrious. Now that it is facing some union pressure, let’s hope Target breaks from Wal-Mart and decides that it is makes sense to treat its workers with as much respect as its customers.

NOTE: Speaking of subsidies, the Subsidy Tracker database I created for Good Jobs First has just been expanded and now has more than 65,000 entries covering 154 subsidy programs in 37 states.

Boeing’s Flight Plan

Now that Osama bin Laden has been eliminated, the greatest threat to the American Way of Life, a growing chorus of right-wingers seems to believe, is a federal agency that has been around since 1935.

That agency is the National Labor Relations Board, and its atrocity is to have challenged the absolute right of a corporation to invest its money where it sees fit.

The corporation in question is Boeing, which was recently accused by the NLRB of having violated federal labor law by locating a new production line for its Dreamliner aircraft in union-unfriendly South Carolina rather than Washington State, the company’s traditional manufacturing base. The Board’s acting general counsel, responding favorably to an unfair labor practice allegation filed by the International Association of Machinists, charged that Boeing’s siting decision was a retaliatory action against the union.

If the Board complaint prevails, “no company will be safe from the NLRB stepping in to second-guess its business decisions on where to expand or whom to hire,” thundered an official from the National Association of Manufacturers. Equally hysterical statements are being made by conservative public officials and commentators, who worry that the case could imperil job growth in “right-to-work” states. Some Republican Senators are touting a Right to Work Protection Act.

Boeing, meanwhile, continues to insist that its embrace of the Palmetto State was not driven by union-avoidance. Its CEO Jim McNerney just published an op-ed in the Wall Street Journal headlined BOEING IS PRO-GROWTH, NOT ANTI-UNION. While it is refreshing to see a major U.S. corporation disavow anti-union animus, McNerney’s statements are disingenuous. This begins with some simple facts.

McNerney asserts that the portion of Boeing’s U.S. workforce represented by unions is “about 40%…a ratio unchanged since 2003.” I hope McNerney is not involving in making any sensitive calculations about the company’s aircraft, because he seems to be challenged when it comes to numerical accuracy.

According to Boeing’s 10-K annual filing with the SEC for last year, 34 percent of its total workforce of 160,500 was represented through major U.S. collective bargaining agreements with the Machinists, SPEEA and the UAW. Other unions represent much of Boeing’s limited foreign workforce (in Canada and Australia), so there is no way the U.S. union percentage can be 40 percent, unless McNerney thinks you can round up from 34.

At the end of 2000, about 48 percent of Boeing’s U.S. workforce was represented by unions. The figure then began to slide—as a result of layoffs, outsourcing and union decertifications that must have been encouraged at least implicitly by management. The number of union-protected Boeing workers in the United States at the end of last year was more than 38,000 lower than a decade earlier.

McNerney’s description of how Boeing ended up in South Carolina is also highly misleading. He claims the decision resulted from an objective assessment of various factors in several states.

The fact is that Boeing set the stage for the move over a long period of time. South Carolina was one of the states considered in 2003 for the first Dreamliner production facility before the company bullied the Washington State legislature into enacting a $3 billion package of corporate tax breaks as the price for staying put.

South Carolina’s consolation prize was that in 2004 Vought Aircraft, a key supplier of the fuselage and other components of the Dreamliner, agreed to build a $560 million manufacturing complex at Charleston International Airport. In 2005 a Boeing executive told a public meeting in Charleston that the Vought operation could receive more Dreamliner work in the future (Post and Courier, 7/19/05). Despite the open anti-union stance of Vought management, the company’s South Carolina workers voted in 2007 to be represented to the Machinists.

Starting in 2008, Boeing bought out Vought’s interests in the Charleston operations. In September 2009 the Machinists union was decertified amid persistent rumors that Boeing would choose Charleston as the location for the second Dreamliner assembly line. In October 2009 Boeing made it official, announcing it would spend at least $750 million on the new production line.

During these years, Boeing executives made a series of public and private statements—some of which are cited in the NLRB complaint—expressing their frustration at having to deal with the assertive union workforce in Washington. Consequently, it was obvious to everyone that the Charleston announcement was a rebuff to those workers. BusinessWeek’s story about the move, headlined BOEING’S FLIGHT FROM UNION LABOR, stated that McNerney was “signaling the lengths he’s willing to go to loosen the union’s chokehold on the company.”

The need for the Charleston facility to remain non-union has been made crystal clear by South Carolina Gov. Nikki Haley, who chose Catherine Templeton, an attorney specializing in “union avoidance,” to run the state Department of Labor, Licensing and Regulation. “I think we’re going to have a union fight as we go forward with Boeing,” Haley declared in announcing Templeton’s nomination. “We’re going to fight the unions and I needed a partner to help me do it.”

The comments prompted the Machinists to file suit demanding that Haley and Templeton remain neutral in union matters. Haley, instead, has been a leader of the pack attacking the NLRB.

Despite all the righteous indignation being expressed by that pack, there is nothing remarkable or unprecedented about the Board’s complaint, as the Acting General Counsel has taken pains to point out.

What is remarkable is that so many public figures have forgotten that the National Labor Relations Act, which affirms the right of workers to act collectively to protect their interests in the workplace, is official U.S. policy on labor relations, not the “right to work” laws enacted in 22 states to weaken those activities.

Critics of the NLRB complaint incorrectly claim it will lead to the collapse of “right to work.” If only that were true. It will take a lot more—including a huge boost in labor activism—to restore the full rights of workers throughout the country.

Making Honeywell Feel the Heat

How would you describe the situation of a corporation involved in union-busting, mishandling of radioactive waste, production of nuclear weapons and the effort to lower corporate tax rates while cutting Social Security and Medicare? If you are Barron’s, you’d say the firm is “in its sweetest spot in more than a decade.”

That’s the way the investment weekly describes Honeywell International in a recent article that gushes over the company’s financial results and predicts that its stock is “poised for liftoff.” Honeywell, a $33 billion transnational, is viewed differently in Metropolis, Illinois, where some 230 members of the United Steelworkers union have been locked out of their jobs for more than nine months.

Apologists for the attacks on public employees often try to disavow anti-union motivations by saying they have no problem with collective bargaining in the private sector. Honeywell is a glaring reminder that challenges to worker rights can be found among employers of all types these days.

The dispute in Metropolis—which calls itself the hometown of the fictional character Superman—brings together a variety of current hot-button issues, including unions, nuclear power, environmental protection, healthcare coverage and pensions. Honeywell’s plant is the sole facility in the country that converts uranium ore into the uranium hexafluoride gas used in the production of both nuclear power and nuclear weapons. This is a risky process that involves highly toxic materials.

These dangers were highlighted in December 2003, when an accidental release of toxic gas forced the evacuation of nearby residents and the shutdown of the plant for four months. The U.S. Nuclear Regulatory Commission (NRC) issued two violations relating to the way the company handled the incident.

Given such hazards, the members of Steelworkers Local 7-669 have long focused on safety issues, both for themselves and for the surrounding community. The union has been particularly concerned about the high rate of cancer among the workforce and thus has sought to negotiate good health coverage for active workers and retirees. During contract renegotiations last year, Honeywell sought to eliminate retiree health benefits, reduce pensions for new hires, cap severance pay and contract out maintenance. When the union balked but declined to strike, the company abruptly locked out the workers in June. And in a move made all the more reckless by the dangerous nature of the work, the company brought in poorly trained replacements to keep the plant operating.

In September, a loud explosion was heard at the plant but there were no reports of toxic releases. A Steelworkers report notes that the company was cited by the NRC for improperly coaching replacement working during on-site job evaluations by federal inspectors. Honeywell’s safety image was further tarnished just a few weeks ago, when the U.S. Justice Department and the EPA announced that the company had paid a criminal fine of $11.8 million to resolve a charge of illegally storing hazardous and radioactive materials in Metropolis.

The $11 million is the latest addition to the more than $650 million in fines and damages Honeywell has paid since 1995 in connection with 32 instances of misconduct collected by the Project On Government Oversight in its Federal Contractor Misconduct Database (the company ranks 17^th in amount paid out).

Honeywell’s record of corporate irresponsibility goes back even farther. From the late 1960s through the late 1980s, the old Honeywell (prior to its 1999 takeover by AlliedSignal, which adopted the name) was targeted by antiwar activists because of its production of cluster bombs and land mines that were widely used in Vietnam and later because it was unwilling to take responsibility for clearing munitions that remained after the war was over.

Despite this checkered history, Honeywell has remained a large federal contractor. It is involved, for example, in both the clean-up of the Cold War-era Savannah River nuclear weapons complex in South Carolina and the construction of a new nuclear arms production facility in Kansas City.

And if all the above is not enough controversy, Honeywell CEO David Cote was named by President Obama (before the lockout) to the National Commission on Fiscal Responsibility and Reform, which issued a report in December that, among other things, proposed cuts in corporate tax rates. Cote issued a personal statement complaining that the report did not take a harder line on Medicare and Medicaid, and he recently called for cuts in Social Security. He also just told Bloomberg Television that he would love to see corporate income taxes entirely eliminated.

For many people, the Honeywell name is still associated with thermostats. But today, it is a poster child for much that is wrong with corporate America—mistreatment of workers, environmental recklessness, military profiteering, and unwillingness to pay a fair share of taxes. It should be made to feel more of the heat itself.

A Good Merger for a Change

AT&T’s proposed $39 billion acquisition of its smaller cell-phone rival T-Mobile has been widely criticized as anti-competitive and bad for consumers. Normally, I would be joining in such a chorus, but this is a special case.

Giant mergers are usually bad news not only for consumers but also for workers, especially if they happen to be unionized. Acquisitions are typically followed by layoffs and sometimes by efforts to bust unions at the firm being purchased. This was seen, for instance, after the acquisition of Northwest Airlines by Delta, which has been accused of intimidating flight attendants and other Northwest workers into decertifying their unions last year.

A very different dynamic is at work in the T-Mobile/AT&T deal. This is a rare instance in which the acquiring company has a vastly better labor relations record than the target.

Let’s start with T-Mobile. The cell phone provider, owned by Deutsche Telekom, has aggressively opposed an organizing drive launched by the Communications Workers of America (CWA) after the German company entered the U.S. market a decade ago. The company’s anti-union crusade, not widely reported in the mainstream media, has employed the usual techniques of targeting workers with propaganda, misinformation, captive meetings and warnings that unionization would lead to job losses.

What makes T-Mobile’s practices all the more egregious is that Deutsche Telekom has good relations with unions in Germany. It is one of numerous European companies that operate under a global double standard: cooperating with unions at home while fighting them tooth and nail in the United States. It was one of those firms singled out in a report issued last year by Human Rights Watch with the title A Strange Case: Violations of Workers’ Freedom of Association in the United States by European Multinational Corporations.

The report charges that “T-Mobile USA’s harsh opposition to workers’ freedom of association in the United States betrays Deutsche Telekom’s purported commitment to social responsibility, impedes constructive dialogue with employee representatives, and in several cases, has violated ILO and OECD labor and human rights standards.”

These findings reinforced the conclusions of an earlier report written by John Logan for the American Rights at Work Education Fund.

Consider, by contrast, the case of AT&T, which in its current incarnation is the result of the 2006 recombination of various parts of the old Bell system that had been broken up in 1984. Its mobile phone business is what was previously known as Cingular Wireless.

Before the creation of the new AT&T, Cingular had adopted a policy of strict neutrality with regard to union organizing drive—the stance that the law requires but which is rarely adhered to by U.S. employers. That policy carried over into AT&T, which in 2007 was honored by American Rights at Work for its enlightened labor practices. A report issued by the group at the time quoted an AT&T executive as saying that the company “has long taken pride in our cooperative and respectful relationship with the unions that represent our employees.”

In keeping with this position, AT&T recently told a reporter from BNA’s Labor Relations Week (subscribers only) that it would maintain strict neutrality regarding union organizing after acquiring T-Mobile. This means that an estimated 23,000 T-Mobile employees would have an excellent chance of finally gaining union representation.

It is thus no surprise that CWA and the AFL-CIO have voiced support for the merger. This should not be viewed as a matter of narrow self-interest. The remarkable response to Wisconsin’s attack on union rights has revived the old labor solidarity principle that an injury to one is an injury to all. A corollary to that is that a boon to the rights of one group of workers is a boon to all.

The achievement of collective bargaining rights by 20,000-plus T-Mobile employees would be one of the largest labor gains in the U.S. private sector in many years and could serve as an important lesson about the willingness of workers to embrace unions when management thuggery is taken out of the picture.

Also keep in mind that if AT&T does not acquire T-Mobile, it might end up in the hands of the other industry giant, Verizon Wireless, which also has a dismal record on labor relations.

All this is not to discount the concerns of consumer groups. The fact that AT&T is union-friendly does not give it a pass in other areas. It wouldn’t hurt if the CWA works with consumer groups to be sure that AT&T does not abuse its bigger position in the market.

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Challenging Corporate America’s Hiring Freeze

You would never know it from the preoccupation with budget deficits and the attack on public unions, but there is still a severe jobs crisis in the United States.

The focus on the state and federal fiscal situation has deflected attention from what should be a major scandal: the failure of big business to accelerate hiring in step with the emerging recovery in overall economic activity.

In recent weeks the dimensions of that scandal have become increasingly apparent as corporations report lush earnings for 2010 while hiring remains depressed. To highlight this incongruity, I looked at the top 50 companies on the most recent Fortune 500 list. Twenty-nine of them have recently reported their annual profits while also disclosing the size of their payroll as of the end of the fiscal year.

On the earnings side, it is truly fat city. The 29 posted aggregate net income of $239 billion, a whopping 48 percent increase from the year before. Oil companies, of course, are raking it in. Exxon Mobil was up 58 percent and Chevron 81 percent. Service sector giants are also reporting much richer bottom lines. UPS showed an increase of 62 percent and AT&T 63 percent. Some blue chip industrials more than doubled their earnings. Boeing soared 152 percent and Ford Motor 141 percent.

By contrast, the employment figures are pitiful. Together, the 29 corporations reported a decline of about 3,500 positions in their aggregate head count of some 4.6 million. While most of the companies showed little change—and some banks increased their hiring a bit—a few of the corporate giants slashed payrolls. Telecommunications behemoth Verizon Communications reduced its workforce by 28,500 jobs while boosting its profits more than 13 percent. General Electric, whose CEO Jeff Immelt is advising the Obama Administration on job creation, got rid of 17,000 net positions during 2010 while enjoying a 6 percent rise in earnings. (GE is one of the few companies that provide a geographic breakdown of their workforce. In the U.S. GE’s head count was down by 1,000.)

It’s interesting that the percentage decrease in head count at Verizon and GE is almost identical to the percentage increase in profits at each of the companies.

Given these numbers, why is big business facing little criticism for its hiring freeze? There is a tendency to regard even large corporations as helpless in the face of economic conditions, and they are not expected to resume hiring until the market mandates it. Yet the overall economy is picking up and still there is a resistance to hiring.

Corporate apologists such as the U.S. Chamber of Commerce would have us believe that the reason is excessive workplace regulation. The Chamber has just come out with a report making the preposterous claim that if state governments would only curtail their employment rules to the lowest common denominator, 746,000 new jobs would magically materialize.

A major reasons hiring is anemic is that workplace rules—and union presence—are too weak rather than too strong. Companies can do more business and garner more profits without increasing their head count largely because there is nothing stopping them from squeezing more work out of the same number of employees. Stricter protections and more collective bargaining would result in higher employment levels.

One of the favorite policy prescriptions for high joblessness is to offer tax credits to companies to hire more people. The existence of those programs at the state and federal levels is, however, contributing little to job creation.

Rather than thinking up more incentives, perhaps there we should create a disincentive for corporations to continue their hiring boycott. There is a growing awareness these days that big business is not paying its fair share of taxes. We could begin to address this problem by creating tax penalties for profitable companies that refuse to use their earnings to alleviate understaffing.

Pressuring corporations to do more hiring would not only improve life for the overworked employed and reduce the ranks of the unemployed. The additional tax revenue that comes in—whether from the penalties or the withholding paid by the newly hired—would also alleviate the state and federal fiscal crunch and make it easier for us to ignore those who insist that cutting the size of government is the solution to everything.

Public Employees and the Public Interest

Chicagoteachers1900 — Chicago Tribune, January 29, 1900

Well before Wisconsin Gov. Scott Walker began his unholy crusade, the Right was heavily promoting its claim that public employee unions are a threat to the public. The title of a 2009 book by conservative ideologue Steven Greenhut said it all: Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.

What the union bashers are trying to obscure is that public employees have a long history of supporting policies that promote the broad public interest. This goes back to the very roots of the public employee union movement.

In the 1890s teachers in Chicago created a federation that became the first real teachers union and one of the pioneers of public employee unionism in general. When the federation, led by Margaret Haley and Catherine Goggin (illustration), was confronted with a move by the board of education to cut teacher salaries because of a purported fiscal crisis, the teachers responded to the claim of a revenue shortfall in a creative way. They launched an intensive investigation of tax dodging by some of the largest corporations in the city, finding that property tax underpayments amounted to some $4 million a year (serious money back then).

Tax officials were reluctant to crack down on powerful business interests, so the teachers sued, eventually winning a favorable ruling in the Illinois Supreme Court (though the U.S. Supreme Court later went the other way).

A cynic might say that the teachers were simply acting in their self-interest by finding a new revenue source that would help restore their lost wages. Yet their goal was also to find funds that could improve conditions in the schools—and those conditions were truly abysmal. In his 1975 history of the American Federation of Teachers, William Edward Eaton writes that in the 1890s:

The teachers of Chicago daily faced the horrors of overcrowded, unsanitary buildings stuffed with too many children and controlled by an impersonal bureaucratic structure. This they did with poor pay, no job security, and no pension system.

The efforts of teacher organizations to address these problems, through collective bargaining as well as tax justice campaigns, also redounded to the benefit of the students and their families.

The Chicago teachers were also an important force in the passage of the Illinois Child Labor Law of 1903. That cynic might say this was aimed at boosting school enrollment and increasing the demand for teachers. Maybe so, but can anyone deny that banning child labor was also a boon for society as a whole, aside from sweatshop proprietors?

In the decades that followed, unions of teachers and other government employees have been among the strongest advocates of a vibrant public sector. They have continued to be leading critics of corporate tax dodging and opponents of efforts to gut public services. Unions such as AFSCME have been at the forefront of campaigns to stop the contracting out of government functions and the privatization of public assets such as highways—practices that usually work to the detriment of taxpayers as well as public employees.

The state and local public employee unions accomplished this against all odds. Denied the protection of the National Labor Relations Act, they had to get states one-by-one to recognize their right to organize—the right that is at risk in Wisconsin and elsewhere. It took a period of remarkable militancy in the 1960s and 1970s—including defiance of laws banning strikes by public employees—before they made significant progress. Among those strikes was the 1968 walkout by sanitation workers in Memphis, where Martin Luther King Jr. was visiting to show his support when he was assassinated.

And even then there were often severe fiscal limits on the ability of public employees to bargain for substantial wage gains. To compensate, many public unions put more emphasis on securing better retirement benefits for their members. These pension rights—in effect, deferred wages—are now under attack as if they were some giant giveaway.

The real giveaways are the lavish business tax cuts and corporate subsidies that the likes of Gov. Walker promote at the same time that they are demanding severe concessions from government workers. The great confrontation of 2011 comes down a question of whose interests are more closely aligned with those of the public at large: those who teach our children, drive our buses and put out fires in our homes—or superwealthy individuals and large corporations that are reluctant to create new jobs.

With each passing day, the momentum is moving in favor of the descendants of the 1890s Chicago teachers who are fighting for their rights and for the public interest in Madison, Columbus and other capitals across the nation.

Note: A new movement called US Uncut is organizing actions around the country calling for a crackdown on corporate tax dodging as an alternative to harmful cuts in government programs such as education.

The Selective Sanctity of Contracts

Along with the rule of law and private property rights, the sanctity of contracts is considered fundamental to “economic freedom.” Yet certain kinds of contracts, namely the collective bargaining agreements of U.S. public sector workers, are now starting to be regarded as dispensable.

In Wisconsin, newly elected Gov. Scott Walker – whose official website is emblazoned with the slogan “Wisconsin is Open for Business” – is trying to strip state employees of their right to bargain collectively on the full range of workplace issues and force them to pay a much larger portion of the cost of their pension and healthcare benefits, sparking unprecedented protests (photo). Similar attacks on public bargaining rights are under way in states such as Ohio, and a wide array of public officials are talking about the possibility of reneging on state and local government pension benefits negotiated over many years.

These assaults on the contract rights of public workers are said to be necessitated by the dire fiscal condition of many states. Yet it is telling that those assaulting public unions are not also questioning the viability of other expensive government obligations, for which the beneficiary is business rather than labor.

State and local governments spend an estimated $70 billion a year on economic development subsidies – corporate income tax credits, property tax abatements, direct cash grants, etc. – to lure large companies to invest in their jurisdiction or to retain those already there. They do so despite extensive evidence that such subsidies are often immaterial in corporate site selection decisions and that their costs—which for some tax deals can last for decades—often far outweigh the economic benefits of the investment.

The current fiscal crisis is a perfect opportunity for states to abandon these self-defeating subsidy practices. Yet aside from a small number of places such as California, where Gov. Jerry Brown is seeking to eliminate the highly ineffective enterprise zone program, and a few other states where film production tax credits have been reduced or suspended, surprisingly little is being done to end the corporate giveaways.

Shutting down or cutting back the boondoggle programs would limit new obligations, but if states are truly facing a fiscal emergency perhaps they should also look for ways to escape from expensive financial commitments that are already in place. Why are state and local governments not looking for ways to abrogate existing subsidy agreements?

Some might say that companies would lay off workers if they had to return subsidies. That’s debatable, but the problem could be addressed by limiting the revocations to large and profitable companies. For example, why shouldn’t Google (2010 profits: $8.5 billion) be required to give back the big subsidy packages it has extracted for its data centers, including $200 million for a facility in Lenoir, North Carolina and about $50 million for one in Council Bluffs, Iowa?

The same goes for the big Wall Street firms. Should Goldman Sachs (2010 profits: $8.4 billion) be allowed to keep the $175 million in subsidies (and $1.7 billion in tax-exempt financing) it received for its new headquarters in lower Manhattan—or the $164 million it got for an operation across the river in New Jersey?

What about Boeing ($2.1 billion in profits for the first three quarters of 2010): Should it retain the estimated $900 million subsidy package it received for its new Dreamliner production line in Charleston, South Carolina? Must Procter & Gamble ($12.7 billion in profits for the fiscal year ending June 2010) retain the $85 million tax break it got for a plant in Utah?

And, of course, there is Wal-Mart (which will soon announce annual profits expected to exceed $14 billion). Over the years it has received what my colleagues and I at Good Jobs First estimate at more than $1.2 billion in subsidies at hundreds of stores and around 90 percent of its 100 or so distribution centers—including at least five facilities in Wisconsin. Couldn’t it afford to give some of that back in a time of need for many of the communities in which it operates?

Business advocates would no doubt scream bloody murder if subsidy abrogation were ever seriously considered by state or city governments. They would accuse officials of breaking solemn promises and poisoning the business climate. They would mobilize small business owners to defend the rights of their larger brethren. And they would waste no time bringing suit against public officials for breach of contract.

On what basis can subsidy agreements be considered sacrosanct while public sector collective bargaining agreements and pension obligations are torn to shreds? The failure of those seeking to undermine commitments to public workers to also call for sacrifices by business suggests that their real objective may have more to do with ideology than fiscal relief.

Note: For more details on the subsidy deals cited above and many more, see the Accountable USA state pages of the Good Jobs First website (index by company name here). And see our Subsidy Tracker database as well.

U.S. Workers Face Chinese Employers

Much of the discussion of Hu Jintao’s visit to the United States is focused on China’s treatment of its dissidents and its workers, but another issue is becoming increasingly important: the treatment of U.S. workers by the Chinese companies that are rapidly expanding their presence in the United States.

Hu’s decision to include a stop in Chicago is not meant primarily as an homage to President Obama’s hometown. He wants to spotlight a Chinese-owned company called Wanxiang America, which from its suburban Chicago headquarters has built an auto parts and renewable energy conglomerate that has become the largest example of direct foreign investment in the U.S. from the People’s Republic.

Until recently, China accounted for a negligible portion of overseas money flowing into the American economy. But in the past two years there has been an enormous influx. The Washington Post cites a consulting company estimate that the Chinese stake has jumped to $12 billion since the beginning of 2009.

There’s every indication that number will continue to rise rapidly. The Chinese government is encouraging the trend to help protect its access to American markets, and the job-hungry U.S. seems to no longer have any of the objections that thwarted the efforts of Chinese companies to buy the oil company Unocal and the appliance firm Maytag a half dozen years ago.

Many U.S. observers are celebrating the arrival of Chinese capital, but this is actually a very dismaying state of affairs. The fact that companies from a country in which many workers are paid near-starvation wages find it economical to produce here says a lot about the dismal state of labor in the United States. The anti-union hostility of American employers has forced down pay rates in this country to the point that the U.S. is now considered a low-wage haven, at least among the countries of the developed world.

There’s no indication that investors coming from a dictatorship of the proletariat will do anything to reverse the decline of U.S. workers’ power. If anything, they will follow the pattern of companies from heavily unionized countries in Europe and Asia that eagerly embrace the culture of union-busting once they arrive on these shores.

Chinese investment in U.S. industry has already shown signs of anti-union animus. Not long after China International Trust and Investment Corp. (CITC) took over bankrupt Phoenix Steel in Delaware back in 1988 with the support of the United Steelworkers, the new operation, named CitiSteel, refused to recognize and bargain with the union, which had represented the Phoenix workforce for decades.

And when appliance-maker Haier Group became the first large Chinese company to build a factory from scratch in the United States, it chose South Carolina, one of the states most hostile to labor unions. In subsequent years, Chinese firms have continued to concentrate on right-to-work states. For example, Tianjin Pipe is planning to build a $1 billion production facility in Texas.

Today’s U.S. affiliates of Chinese companies are not entirely non-union. Wanxiang America has taken over unionized auto parts operations being shed by major U.S. companies, but many United Autoworkers members depart during the buyouts and other workforce reductions that accompany the change in ownership. The UAW has also survived GM’s sale of Nexteer Automotive to China’s Pacific Century Motors—a deal that went through after union members approved a contract that cut wage rates.

The ability of these companies to maintain good relations with their unions will depend in part on whether they engage in the kind of restructuring ploys favored by U.S. employers. It was not an encouraging sign when Neapco Components, an affiliate of Wanxiang America, announced last year that it was shutting down its manufacturing plant in Pottstown, Pennsylvania and transferring the operation to Nebraska, where state officials arranged for the company to get $1 million in federal stimulus funds to underwrite the move.

The larger labor relations challenge is the inevitable clash between Chinese and U.S. workplace cultures. Even in non-union companies, U.S. workers are used to a certain level of respect for individual rights. Many Chinese firms retain the remnants of a repressive collectivism. The Haier plant in South Carolina, for instance, is festooned with motivational banners exhorting workers to “make the impossible possible without an excuse.” The original Chinese managers there caused resentment by chastising individual workers for slip-ups in front of the entire workforce.

It remains to be seen how U.S. workers take to the pseudo-Maoism of contemporary Chinese business, but there’s no question that the rise of Chinese investment is another strong argument for the revival of an aggressive U.S. labor movement.

A Corporate Full-Body Scan

The one redeeming feature of the abominable Supreme Court ruling on corporate electoral expenditures is the majority’s retention of the rules on disclaimers and disclosure. While opening the floodgates to unlimited business political spending, the Court at least recognizes that the public has a right to know when a corporation is responsible for a particular message and a right to information on a corporation’s overall spending.

Writing for the majority, Justice Kennedy states: “The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

There’s no question that steps must be taken to mitigate the Citizens United ruling, whether through changes in corporation law, shareholder pressure, enhanced public financing of elections, or even a Constitutional amendment.

Yet while these efforts progress, it is also worth taking advantage of the Court’s affirmation of the principle of transparency and push for even greater disclosure than what we have now. Groups such as the Sunlight Foundation are already moving in this direction.

The effort could begin with pressing the Federal Election Commission to tighten the existing reporting rules on what are known as “electioneering communications” and to enforce them more diligently. But that’s not enough.

In the wake of Citizens United, we’ve got to demand more information on the many ways corporations exercise undue influence not only on elections but also on legislation, policymaking and public discourse in general. Now that Big Business is a much bigger threat to popular democracy, we have to subject corporations to intensive full-body scans to find all their hidden weapons of persuasion. The following are some of the areas to consider.

Lobbying. In his State of the Union Address, President Obama said that lobbyists should be required to disclose every contact with the executive branch or Congress. That’s fine, but why stop there? Many corporations do their lobbying indirectly, through trade associations which disclose little about their sources of funding. How about rules that require those associations to disclose the fees paid by each of their members and require publicly traded companies to disclose exactly how much they pay to belong to each of their various associations?

Front Groups. Corporations also indirectly seek to influence legislation and public opinion by bankrolling purportedly independent non-profit advocacy groups. Such front groups—such as those taking money from fossil-fuel energy producers to deny the reality of the climate crisis—do not have to publicly disclose their contributor lists. Why not require publicly traded companies, at least, to reveal all of their payments to such organizations?

Union-Busting. Encouragement of collective bargaining is still, in theory, official federal policy. Yet many companies violate the principle—and the rights of their workers—by using corporate funds to undermine union organizing campaigns. The existing rules on the disclosure of expenditures on anti-union “consultants” are too narrow and not vigorously enforced. That should change.

These are only a few of the ways that undue political influence and other forms of anti-social corporate behavior could be addressed through better disclosure. Yet, as we’ve seen, transparency by itself does not counteract corporate power unless something is done with the information.

This came to mind in reading the last portion of the Citizens United ruling. Not all five Justices in the majority went along with the idea of maintaining the disclaimer and disclosure rules. Parting with Kennedy, Roberts, Scalia and Alito, Justice Thomas argued not only that corporate independent expenditures should be unrestricted, but also that they should be allowed to take place under a veil of secrecy.

He bases his argument not on legal precedent, but rather on dubious anecdotal evidence that some supporters of California’s anti-gay-marriage Proposition 8 were subjected to threats of violence after their names appeared on public donor lists. Thomas thus suggests that corporations should be able to make their political expenditures anonymously to avoid retaliation.

While I am in no way advocating violence, I think activists need to use the information that becomes public as the result of expanded disclosure to make corporations pay a price for any attempts to buy our political system. If we can get them to worry about (non-violent) retaliation to the point that they limit their expenditures, then we will have gone a long way toward neutralizing the pernicious effects of the Citizens United ruling.

Workplace Tyrants Talk “Democracy” to Undermine Worker Free Choice

The halls of Congress are buzzing with talk of “workplace democracy.” This isn’t about syndicalism or co-determination. The slogan is being brazenly exploited by front groups for corporate interests fighting against a piece of federal legislation, the Employee Free Choice Act (EFCA), that would make it easier for U.S. workers to form unions free of management intimidation.

Major companies and their trade associations are sparing no expense in fighting EFCA, which was just introduced in the Senate by Tom Harkin of Iowa and in the House by George Miller of California . We thus have an abundance of bogus grassroots campaigns operating under names such as the Coalition for a Democratic Workplace, the Employee Freedom Action Committee, the Workplace Fairness Institute and the Alliance for Worker Freedom.

They all foster the delusion that U.S. workplaces are currently a realm of full self-determination in which employees can robustly exercise their Constitutional rights. This Eden of autonomy is said to be threatened by EFCA, which, according to the Coalition for a Democratic Workplace, “is fundamentally incompatible with protecting the interests of individual liberty and the principles of a sound democracy.”

It is mind-boggling that these groups can get away with mouthing such slogans in furtherance of a movement whose leading proponents include Wal-Mart Stores, a company whose name is synonymous with labor abuses ranging from short-changing workers on overtime pay to mercilessly squashing any union organizing efforts. “We believe every associate or employee should have the right to make a private and informed decision regarding union representation,” a Wal-Mart spokeswoman told the Wall Street Journal recently. And when that decision results in a vote favoring the union, the company promptly shuts down the offending workplace.

Given its reputation, Wal-Mart has nothing to lose in openly opposing EFCA. Most other large non-union companies have been more circumspect, letting the front groups and trade associations do the dirty work. Yet their fear and loathing of EFCA sometimes make it on the record. For example, Wal-Mart’s cooler competitor Target Corp., which is just as “union free,” is also riding the anti-EFCA bandwagon, according to a Minneapolis Star Tribune article that appeared in January. That same article cited two other Twin Cities-based firms, Best Buy and Hubbard Broadcasting, as EFCA opponents.

The latter company’s chief executive, Stanley S. Hubbard, is a long-time foe of unions who has kept collective bargaining out of nearly all his stations. Just this week, union members in the Twin Cities picketed (photo) the company’s flagship station KSTP to protest Hubbard’s effort to extract radical concessions—including the right to withdraw negotiated pay increases at any time—from NABET-CWA Local 21 at WNYT in Albany, New York. The workers at the station have been without a contract since last September.

Stanley Hubbard also has a history of mistreating his non-union employees. A May 1997 profile of him in the publication Corporate Report Minnesota (available via Nexis) stated: “Junior reporters and cameramen regularly told friends that they would have to leave KSTP just before their fifth anniversary because the Hubbards didn’t want them vested in the company pension plan.” The author of the article quotes Hubbard as mocking reporters who challenged his autocratic style: “Newspeople think, Oh, no one should tell me what to do.”

Such is the workplace “democracy” that corporate opponents of EFCA want to preserve.