AIG Shows Why We Need the Employee Free Choice Act

At first, it might seem a bit odd that Bank of America and Citigroup [1] paid for a conference call to coordinate a campaign against the Employee Free Choice Act. Why would Bank of America and Citigroup be so interested in hosting efforts against a measure that would allow workers to more easily join unions, since unionization has traditionally had little appeal for financial service workers? As a union organizer, I've never heard of stockbrokers wanting to unionize.

The real interest big banks have in opposing unions and the Employee Free Choice Act lies in the unions' role in preventing corporate greed.

Unions are a countervailing force against corporate greed in a market that has proven incapable of regulating itself. One example is the 2003 dismissal of New York Stock Exchange Chairman Dick Grasso [2]. CalPERS—the California Public Employees' Retirement System, the nation's largest pension fund with assets of over $200 billion dollars—raised red flags when it discovered that Grasso was going to receive a compensation package of nearly $140 million. The compensation package was designed for him by a board of representatives from NYSE-listed companies. Since Grasso was charged with regulating these companies, such a large compensation package represented a clear conflict of interest. Under the threat of pulling their investment out of NYSE-listed companies, CalPERS and other worker-run pension funds forced Grasso to step down as NYSE chairman. That was a major victory for workers and for market accountability.

Corporate greed has gone unchecked recently in part due to the decline of the labor movement. Is it a coincidence that union membership declined dramatically from 20 percent of the private sector workforce in 1980 to just over 7 percent in 2006 [3] while CEO pay has increased from 42 times what the average worker made in 1980 to 364 in 2006 [4]? Unions demand an economy that works for all, not just those at the top, such as AIG executives. As William Greider, author of the Soul of Capitalism [5], told me, "Unions are an honest broker in the economy.”

Through pension and retirement funds, workers can fund companies that invest in communities and in green jobs, promote workers' rights and operate in a transparent manner; and penalize companies that don't. With over $6 trillion of workers' money [6] in retirement plans, pension funds, profit-sharing and stock plans and union reserve funds, the money of workers' plays a large role in fueling the global economy. Through putting workers' representatives on the board of these funds, unions can make sure that "worker investments are managed in workers' best financial interests." By investing in transparent, open and financially healthy companies, unions through stockholder activism can lead the way in ending the culture of reckless corporate short-term profit-seeking, which led to the rise of subprime mortgages and credit-derivative swaps.

Unions have long sought ways to make corporate profits sustainable in the long run in order to both retain and create jobs. It is ironic that the United Auto Workers (UAW) has been unfairly scapegoated as the cause of the demise of the auto industry since, as early as 1949, they have called for the Big Three to make small, more fuel-efficient cars. In 1949, in a pamphlet entitled "A Small Car Named Desire," [7] the UAW cautioned automakers against investing solely in big cars since some consumers would ultimately be interested in cheaper smaller, more fuel-efficient cars. In short, unions have also sought was is best for all— not just for workers, but creating the economic conditions that will allow their companies to thrive.

As President Obama stated [8], "We know that strong, vibrant, growing unions can exist side by side with strong, vibrant and growing businesses. This isn't a either/or proposition between the interests of workers and the interests of shareholders. That's the old argument. The new argument is that the American economy is not and has never been a zero-sum game. When workers are prospering, they buy products that make businesses prosper."

Indeed, passing the Wagner Act, which allowed unions to collectively bargain for higher wages, in 1935— during the middle of the Great Depression—was crucial to getting the economy going again.

The recent AIG scandal shows why we need an active force to protect us against the greed of Wall Street CEOs. Unions, representing the combined interests of everyday Americans, can be a valuable instrument in fighting for the interests of all, not just those at the top. By passing the Employee Free Choice Act, we would make it easier for workers to advocate for a union without facing the kind of employer intimidation that currently results in one of five workers who attempt to organize a union being fired [9] from their job. The Employee Free Choice Act would not just protect the right of workers to join a union, but would protect us all from the corporate greed of AIG, Bank of America, Citigroup and the rest of their partners in crime.