“Right to Work” Isn’t About Your Rights

With the US Supreme Court hearing arguments today over agency fee requirements in public sector unions, its worth considering not only what the arguments are, but how we got here.

For those that may not know a lot about unions, we have an “all or nothing” system in the US. Workers are supposed to be able to freely decide if they want a union or not.  If 51% of a group does, then then whole group is represented by the union, but if only 49% does, then no one can be represented by the union.  Dues, in this case agency fees specifically, are effectively the only financial resource a union has to function.  “Right to Work” requires unions to represent people that pay nothing, draining the resources of the union to serve actual dues paying members.  Imagine any other membership organization being required by law to operate that way. “Right to Work” undercuts the Freedom of Association of union members.  The argument the other way is that people shouldn’t be required to pay dues to an organization they don’t support. Now you might not fully support everything your government does, but you probably still pay taxes.

So how do we provide the Freedom of Association fully to those that want to join and those that don’t?

Let’s start by realizing that US labor laws were not created primarily for the benefit of workers.  In the 19th and early 20th centuries, labor strikes were often messy and sometimes bloody events, like the 1892 Homestead Strike for example.  As protests and strikes started becoming more common and widespread during the Depression, Congress passed the National Labor Relations Act of 1935.  According to the NLRB: “Congress enacted the [NLRA] to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses, and the US economy.”  So our labor laws were set up channel people’s anger into the “all or nothing” collective bargaining system we have today, not necessarily for the good of the workers, but to avoid the disruptions of previous strikes for businesses and the economy.  The “all or nothing” system gave employers the opportunity to only deal with one union for a group of workers, or none at all.  In the midst of instability the Depression, “all or nothing” collective bargaining gave employers the opportunity of stability and predictability.  I say predictability because imagine one faction of workers strike for a couple hours one day because of a grievance, then a different faction of workers striking for a couple hours the next day over a different grievance. (This is how it works in some other countries today.)  In other words, Congress set up a system in 1935 that allowed democratic majority rule to supersede freedom of association.

If you really want Freedom of Association in the workplace, then the only way to do that is by getting rid of our “all or nothing” system.  Require employers to recognize and bargain with Unions even if they represent a minority of workers in a group, and don’t require Unions to represent people who aren’t members.  Then and only then can you really have Freedom of Association for people to join or not join a Union, to pay dues or not pay dues.  Now this would be a radical departure from our current system, but it would be more similar to the European system, where a much higher percentage of workers join unions.  Therein lies the truth, “Right to Work” isn’t about your rights or freedoms, it’s simply about undercutting the resources and membership of unions.

Is Our Democracy Broken?


Between 125 and 130 million Americans will vote in today’s election, but that’s only about half of the total U.S. population age 18 and over.  According to the polling averages on fivethirtyeight.com, about 48.5% of those voting plan to vote for Hillary Clinton for President and about 45% plan to vote for Donald Trump.  That difference is likely amount to less than 4 million votes, but about 40 million Americans who are registered to vote will not do so.  Another 50 million Americans are eligible to register to vote, but have not done so.  Is our democracy broken?

To own a better future, we need to have more ownership of not just our jobs, but more ownership of our lives, our communities, our government, and our politics.  Increasing participation in our democracy is an essential part of that.  That only about half of the adult population is voting in the election shows how far we have to go.


Union Co-op Overview

In 2009, the USW announced its collaboration with Mondragon to develop unionized, worker-owned cooperative businesses (“union co-ops”) in the U.S. and Canada.

About Mondragon

The Mondragon Corporation is comprised of over 100 separate worker-owned cooperative businesses in industrial, retail, finance and knowledge sectors, and was established in 1956 in Mondragon, Spain with the formation of its first co-op, ULGOR, comprised of 5 worker-owners. With over €12 billion in annual revenue and 74,000 employees, Mondragon is now the largest worker-owned business in the world. Overall, only about half of the workers are also owners, although within its historical core industrial sectors, 84% of workers are owners.

What is a Union Co-op?

Union Co-ops are for-profit businesses that are owned and directed by workers, which utilize the collective bargaining process and are guided by the core principles of sustainability, solidarity, accountability, and community.

In 2012, the USW, Mondragon, and the Ohio Employee Ownership Center (OEOC) jointly released an initial template for the Union Co-op model, to provide a starting point and rough road map for others interested in developing Union Co-ops and to respond to some of the more frequently asked questions about our efforts.

Why are the USW and other Unions interested in Co-ops?

We are engaged with co-ops and worker-ownership for two general reasons, to help our current members and to organize new members.

For our current members, worker ownership has the potential to improve their jobs, improve their earning potential and to improve job security. Studies have shown worker-owned companies to be more productive and as owners, workers would have greater earning potential sharing in all of the profits. With the potential for greater rewards, however, comes some degree of added risk. Even in difficult circumstances, workers have more options as owners (and more incentive) to help the business survive and/or to sustain jobs. As a result, layoffs are rare and unemployment is low. To use Mondragon as an example, amid 26% to 27% unemployment throughout Spain, the Basque region, where Mondragon is headquartered and which has a high rate of worker ownership, has about half as much unemployment. The Basque region also has the lowest poverty levels in Spain, and the highest average income.

Worker ownership also provides a unique way for us to organize new members. Whether by helping workers to buy-out or to start-up a business, we get the opportunity to demonstrate the value of a having a union. In comparison to a traditional organizing campaign that has low success rates due to overwhelming employer opposition, worker-owners that already have some relationship with us are much less likely put up those types of barriers. Even when we win a traditional NLRB campaign, improving wages, benefits, and working conditions through collective bargaining can be a long and difficult road. In the context of a worker-owned business that journey is likely going to be much smoother and shorter.

Why do Co-ops need a Union?

Probably the most common question is “Why would a co-op need a union if the workers own the business and run it democratically?”.

The first part of the answer is co-ops are still very much like traditionally owned businesses, in that workers who have a union, benefit from gaining due process protections, a means of communicating their needs and concerns without fear of reprisal, and a stronger voice to improve compensation and working conditions through collective bargaining. Workers in a co-op may democratically elect a Manager and/or a Board of Directors, but their ability to influence and impact the day-to-day management of the business is too often limited. The bigger the co-op, the less “ownership” (meaning ownership as an experience, not just an account balance) a worker might have in the daily business. By integrating collective bargaining, the workers gain an additional avenue to exercise their “ownership” and to help keep management accountable to the worker-owners as workers. In other words, worker-owners elected a Board of Directors to advocate for their interests as owners, but also benefit by electing a Union bargaining committee to advocate for their interests as workers.

The second part of the answer is derived from the network and connectivity among co-ops that has made Mondragon resilient and successful. The connectivity of local unions into larger unions and larger unions into federations means that unions are able to network and pool resources to learn, build relationships, develop expertise, and pool resources that co-ops in the U.S. may be lacking. Whether that means access to a health and welfare fund, a pension fund, staff that have expertise in finance, connections to and relationships with potential investors, knowledge of and relationships within state and federal governments, knowledge of and relationships with thousands upon thousands of employers, or the ability to identify and understand best practices drawn from all of those relationships and connections, unions bring a lot to the table. In essence, unions can become co-op lead generators as well as co-op incubators, as well as a provider of benefits and services, lobbyist, and advisor.

Partnering with Private Equity

For many, the words “private equity” bring to mind Gordon Gekko, or more recently, The Wolf of Wall Street, and the mantra that “greed… is good”. It is a reputation not entirely undeserved. Too often we’ve seen the dismantling of businesses at the hands of private equity funds that use junk bonds and leveraged buy outs to suck as much money as possible out of a business, leaving behind a shell of a company that eventually implodes into bankruptcy with nothing left but the aftermath of desolation and desperation for the former workers and the community.

Is private equity the financial equivalent of Bram Stoker’s Dracula brought to life? Yes and no. Although the Gordon Gekko stereotype may be well deserved, not every private equity fund operates that way. Some private equity groups do actually try to build value by improving the health of the business and/or growing the business rather than bleeding it dry. To be honest, even these “good” private equity funds don’t always succeed at building a business up, and instead end up cannibalizing it, so there are no angels here, but there are potential partners.

Partnering with private equity may sound like selling your soul to the devil to those in social justice movements, but there are opportunities for – dare I say it – “win-win” partnerships. The key is finding the right partners with the right opportunities. No, really. Think of this analogy:

You get in your car one day, but it doesn’t start. Do you (a) sell the car; (b) dismantle the car and sell off the parts; (c) spend the money to repair it; or (d) declare bankruptcy after defaulting on the car loan and letting it be repossessed? For most of us, the reasonable answer would be to have the car repaired if the cost is not too high and the car is worth repairing. For some private equity groups, the answer is not as obvious and could be any one of those options or combination thereof. The private equity groups we want to partner with are the ones who see investing in repairs and keeping the car running as the preferred option.

Of course, even with the right partners, not every investment they are engaged in will make sense. Some are going to be sucked dry, some are going to be sold at a premium, but some will continue to be low margin, low growth – but profitable – companies where the exit strategy is less obvious. Even before the initial investment is made, the private equity group needs to have an exit strategy developed, but sometimes things don’t always turn out as planned. Whether as a “Plan B” exit strategy, or as the plan designed from the start, a transition to worker ownership could make sense.

Consider this scenario: A troubled business is in negotiations to be acquired by a private equity group.   The business could make money (or already does), but it’s a mature business with low growth and low margins. Instead of bleeding it dry, the right partner might be willing to invest in improving the health of the business, then transition it to worker ownership over a period of time, ultimately realizing a return on its investment from a combination of dividends and the sale of stock at a profitable, but fair, price that reflects the business improvements made by the private equity group. As an added benefit, there may also be tax savings on the group’s capital gains by using an Employee Stock Ownership Plan (ESOP) as a vehicle for the ownership transition.

The scenario runs essentially the same course for a private equity group looking for a “Plan B” exit strategy, but a shortened time-frame for the ownership transition could prove difficult to finance. A shorter transition time also means less time to transition the culture towards an ownership culture, which is as important – if not more so – than the financial transition and transaction.

Finding the right partners and the right situations may present limited opportunities initially, but success could breed more success as more “good” partners and “good” situations pop up. You and I might even start to imagine creating our own private equity funds and our own venture capital funds.

More to Come…

I haven’t been feeling well for the past couple of months, but there is still plenty more to come.  A few of the ideas I’m planning on writing about soon include partnering with private equity, culture is critical, and investing in inmates.

Some may find them a bit provocative and controversial, but the purpose of this blog is not only to write about why ownership makes sense, but also to brainstorm and develop ideas on how to push the envelope further and expand ownership opportunities for a more just economy.  Your ideas and comments are always welcome and encouraged.

Check back soon!

Organizing through Ownership

On Labor Day, many wrote about all the gains workers have made organizing through unions. Many others wrote about how union membership continues to decline, or what type of influence unions may have in upcoming elections. Some wrote that unions need to do more outreach, to be more inclusive. Some wrote about the need for raising the minimum wage to a living wage. There are seemingly endless prescriptions for what ails us, but it seems like we read the same stories every year. 

This Labor Day, many of us enjoyed a day off. A day that unofficially marks the end of Summer and the beginning of Fall. A day that too many of us take for granted.

Although many of us had the day off yesterday, it seemed like just as many, if not more, of us were working on Labor Day, and too many were working for low wages and few benefits. Some might even say they’re the “lucky” ones, because millions more of us can’t even find a job. Too many people are killed on the job every day, in fact over 4,000 people are killed on the job every year in the U.S.. Every day people are harassed or discriminated against because of their gender, their race, their sexual orientation, their age, their immigrant status, and so much more. Tens of millions of people still go without health insurance because they can’t find jobs, their employers don’t offer it, or it’s too expensive. Retirement “security” continues to become more and more elusive as employer’s do away with defined benefit pensions, even while making record profits. We need unions now as much as ever.

Labor unions and labor laws haven’t changed a whole lot over the past 50 years or so, but many of the jobs and workplaces have. Here in Pittsburgh, big manufacturers like U.S. Steel, Alcoa, and PPG once dominated the economy, now it’s UPMC, Highmark, Pitt, and CMU (aka “meds and eds”). Jobs have become increasingly subcontracted (and those subcontractors then subcontract out to others), not only fragmenting any workplace or employer identity, but also giving rise to a fast growing number of “freelancers”. The use of “temporary” employees has also grown to become an increasingly significant part of the full time workforce. Even low wage retail and service sector jobs are becoming increasingly part-time.

As much as we have tried to turn the tide on the erosion of good jobs with good wages and good benefits, success has been elusive. Yes, unions have made a big impact in protecting what we have, and slowing the erosion, but we have yet to stop it. And so, as much as we try, the trend lines continue.

In 2009, our big push was for EFCA to make it easier for workers to join unions, creating a way-over-the-top pushback from employers, almost predicting the end of all freedom. Although EFCA might have made it easier for some to organize, it would have little to dampen the openly hostile and threating anti-union campaigns and tactics that many employers use. Unions have also tried organizing in non-traditional sectors and jobs, like home health aides, teaching assistants, adjunct faculty, even college athletes. While those efforts are worthwhile and sometimes fruitful, maybe we need to go even further outside the box.

For much of our history in the U.S., unions have waited for businesses to start up and hire people at whatever wages, benefits and working conditions the company can get away with, then we try to help them join the union and improve those wages, benefits and working conditions. In short, we react to employers. Sometimes we even react in proactive ways, such as political action, legislation and trade policies. If we are going to shift the path we have all been on, union and non-union alike, for the past 40 years, then we do indeed need to change the paradigm, and that is to start creating our own jobs.

Let’s get to the heart of the matter: the whole point of organizing, of unions, is to take collective action for a collective benefit. In today’s world, in today’s economy, taking collective action is difficult and gaining a collective benefit is even harder.

A weird thing happened this past summer; employees of Market Basket – both management and hourly – took collective action against the company’s majority shareholders and their Board of Directors, and won! Those workers may never have signed an official union card, paid union dues, or negotiated a union contract, but they certainly formed a union, even if only for a summer. Part of the narrative coming out of that action is that maybe lots of working people are becoming fed up with benefits being eroded, wage increases (if any) barely covering their increased health insurance costs, and any hope of retirement being slowly extinguished – but are too unsure about how to push back. So maybe there is an appetite for collective action for a collective benefit, but no mechanism to do so appears accessible.

The opening for organizing through ownership is here. People have been organizing themselves through collective ownership for over a hundred and fifty years, through worker-owned cooperatives. Yet, so far, worker-owned cooperatives exist only on the margins of our economy. Is it because those businesses are less productive or less profitable? Actually, studies have shown worker-owned cooperatives to be more productive and more profitable, on average, than businesses with more traditional forms of ownership. The answer, I believe, comes down to resources and organization. If the organization existed to provide education and training, as well as the resources to financially back new co-ops and provide ongoing support and networking, then growth could become significant.

Not only is there one organization that has begun to provide those types of resources and networking, there are several that have recently emerged. The U.S. Federation of Worker Cooperatives (USFWC) was formed 10 years ago by existing worker-owned co-ops to do that type of work at a national level. USFWC has recently taken another big step forward and launched a non-profit, the Democracy at Work Institute. In Cincinnati, a group of labor and community activists launched the Cincinnati Union Co-op Initiative (CUCI), which has been an incubator and has already launched several unionized worker-owned cooperative businesses (Union Co-ops) in the Cincinnati area. This year, 1worker1vote.org launched to expand upon the work of CUCI and the USW-Mondragon collaboration to promote and incubate Union Co-ops around the country. The Freelancers Union was formed a few years ago as a support network for freelance writers, graphic designers, and others who no longer had an employer and were out on their own. As freelancers collaborate more and more, interest in co-ops has been growing.

So here we have a growing interest in a form of collective action for collective benefit, co-ops, yet unions continue to come under attack and face declining membership. Maybe it’s because we’ve become an easy target. Our collective actions *have* created collective benefits, and as a result, union members have significantly better wages and benefits than non-union workers. Where we have been unable to lift them up, they appear ready to tear us down. However, organizing workers through co-ops may be able to lift us all up.

In addition to all of the work our unions already do, we can make collective action for a collective benefit accessible to more working people through ownership. Unions have the skills, the resources, and the network to reach millions of people – also the reason some people and organizations are afraid of us and what we might be able to do, even with union membership as a percentage of the workforce at historic lows. Unions have the ability to change our economy, and change it for the better. Tapping into the ability, however, means taking a slightly different approach.

As job creators, unions would have the ability to organize large segments of the workforce, such as independent contractors, that have been out of reach for too long. The Cooperative Home Care Associates in New York, NY is already an example of how homecare workers might be better organized. Union Cab in Madison, WI is already an example of how taxi drivers can organize into ownership. WAGES in the San Francisco Bay Area is already an example of how house cleaners can organize. And there are so many more examples… but replicating and building on those examples (and more) takes organization and resources. That’s what unions bring to the table.

By recognizing unions and co-ops are part of the same labor movement, and by creating a strong collaboration between them, creates the opportunity for unprecedented growth in worker ownership, while improving wages and benefits, and lifting up whole communities to become more viable and more sustainable.