- The Washington Times - Monday, September 2, 2002

As we celebrate this Labor Day, we should take a look at the state of labor today and how we got to where we are. Never before has the work force held as much skill, flexibility, and individual power and never before has there been less of a need for labor unions.
Labor unions are desperately clinging to life at a time when they are 70 years past their prime and their continued relevancy. Labor unions no longer fight for the big issues such as minimum workplace protections. The big fights almost always revolve around the unions trying to keep their members from enjoying tighter relationships with employers.
Remember the UPS strike a few years back? The main dispute behind the massive work stoppage was control over workers' pensions. The union wanted to maintain the old-school status quo, and UPS wanted workers to have the same 401(k)s that are desired by almost everyone. The union, of course, sold its members a red herring, and it prevailed in the end.
In the past few months, a far more disturbing trend than mere irrelevancy has developed. Big Labor has notched two major sets of scandals, which taken together, interestingly mimic, respectively, the messes at Enron and Arthur Andersen.
Big Labor's Enron occurred at ULLICO formerly Union Labor Life Insurance Co. where the fat cats on the board of directors were allowed to sell shares at a dramatically high price that they themselves set, while the rank-and-file workers were locked out from selling those very same shares.
ULLICO began investing in high-flying telecom stocks, primarily Global Crossing, as part of its transformation from its roots as a life insurance provider for blue-collar union workers into a financial services company, investing the money of pension funds from unions around the country.
ULLICO's metamorphosis included making ULLICO itself an investment vehicle for various union pension funds, as well as for those sitting on its 32-member board of directors all of whom are heads of major unions. In 1997, ULLICO changed its longstanding policy of offering its privately held shares for a nominal, fixed price of $25 each. Share prices were adjusted annually a seemly infinite amount of time in the roller-coaster financial world with new prices decided each May based on an independent audit of the books of the previous calendar year.
The individual members of the board took advantage of this huge time lag to both secretly buy shares when the price of Global had soared but before the new price for ULLICO shares had been set, virtually guaranteeing a tidy profit and to sell ULLICO shares after Global's stock had tanked, but before ULLICO's then-higher share price had been adjusted back down to reflect the large decrease in value of ULLICO's investments.
Because the price of ULLICO's privately held shares was only set annually, it was the equivalent of reading the stock market results in the newspaper a month or more in advance, because you buy when you know prices will rise, and sell when you know the prices will fall. But since ULLICO couldn't afford to be a free-money ATM for everyone smart enough to game this obviously flawed set-up, it chose to strictly limit the ability of union pension funds to sell their shares back when those shares were at an inflated price even though members of the board could sell their entire stakes.
Members of ULLICO's board reaped $6.5 million in profits, leaving rank-and-file workers to foot the bill.
Big Labor has also had its very own Arthur Andersen, where a partner at the accounting and auditing firm of choice among unions, Thomas Havey LLP, pleaded guilty last month to a federal felony count of helping the iron workers union to conceal more than $1.5 million in expenses at country clubs and fancy restaurants. The top brass at the union racked up get this $460,000 in charges over six years at one restaurant, the Prime Rib, right here in Washington. Havey helped the union classify these lavish meals under the category "Education & Publicity" on federal disclosure forms.
The only answer to stopping this ridiculous corruption is to rob Big Labor of its artificial power base. Compulsory unionism is at the heart of these scandals because of the arrogance that results, leading union bosses to believe they are above the law. Union bosses should not be able to have their way with the law or with workers who might want the freedom to choose whether or not to join a union in the first place.

Joel Mowbray is a contributing editor to National Review Online. E-mail: [email protected]

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