Big Labor's Secrets

April 25, 2005; Page A14

Among the endless piles of paper that make up Washington, a new stack has been rising in a corner of the Department of Labor. But these forms, known as LM-2 disclosure reports, are actually news, especially if you're a dues-paying union member.

The first George W. Bush Administration took a fresh look at the LM-2, which is supposed to reveal how unions spend member dues. The form had remained virtually unchanged since 1959, and today's union leaders were required to provide only the barest details. So in 2004 the Labor Department began to require expanded forms and, while the filing requirement doesn't officially kick in until this summer, a few early birds have started shipping their information.

Talk about eye-openers. Consider a LM-2 filed by a California local of the Communication Workers of America. While the union's spending is fairly routine, its dues base certainly isn't; 47% of its members are "agency fee payers." In plain English, these are members who, exercising their right under the Supreme Court's 1988 Beck decision, have withheld any dues that go to political or non-bargaining-related activity.

This suggests either that the members disagree with their leaders' agenda, or resent their forced enrollment in the union in the first place. It is especially notable because a vote of only 50% of a union's participants can oust the current leadership, or more drastically decertify the union altogether. Evidence of such disgruntlement in the ranks is exactly the sort of information that union chiefs would prefer to keep quiet.

The rank and file are also beginning to see a precise breakdown of how their money is spent. Prior to the new form, unions could lump millions into vague categories such as "overhead," or the ever-favorite "other disbursements." Unions must now account for dollars spent on anything from the grievance process to organizing to politics. This will help to keep leaders accountable and perhaps reduce such fraud as the officials of a Washington, D.C., teachers union who apparently bought mink coats and alligator shoes with dues money.

The forms will also shine a light on one of labor's darkest, dampest, corners: trusts. These affiliates are barely regulated slush funds into which unions funnel dues and then spend at will. The Detroit Free Press ran articles in 2001 detailing three such funds that the United Auto Workers ostensibly set up to finance worker training but in fact were also used by the top brass to sponsor Nascar racing, host political parties and underwrite trips to Palm Springs. Under the new rules, unions will have to account for this trust spending.

The AFL-CIO has branded the new rule "anti-union" but it's hard to see how. Unions exist to benefit their members, not their leaders. It's especially odd to see AFL-CIO chief John Sweeney, who stumps for greater corporate disclosure, demanding that labor chieftains be exempt from comparable transparency. As it is, the new disclosure rules apply only to the largest unions, those with annual receipts over $250,000 (about 5,000 of 30,000 unions).

None of this has stopped the AFL-CIO from attempting to block the regulation in court on grounds that Secretary of Labor Elaine Chao lacks the authority to order such disclosure; a panel of appellate judges will rule on the case soon. Assuming Ms. Chao prevails, unions will begin delivering their first required reckonings this summer.

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