Corporate Misdeeds a Benefit for Labor?

After years of railing against corporate greed, union leaders are suddenly finding an audience--and with it, perhaps, their best chance in decades to remake labor’s image and build membership.

But some activists say top union officials aren’t moving aggressively enough to capitalize on the public flogging of corporate America. They want to see strategies that create drama and call attention to larger issues, such as the diminished clout of workers in a freewheeling global economy.

“I think they’re caught off-guard,” Washington political consultant Jim Grossfeld said of the union establishment. “Some of these guys have been knocking themselves out for 20 years, trying to get a message across. Now all of a sudden it’s on the front page .... People want labor to take the gloves off. But it’s hard to change gears so quickly.”

Several prominent union presidents agreed that they must do more to broaden the public debate beyond accounting reform, and predicted that would happen over the next six months.

Two said they plan to launch major initiatives soon, one addressing the loss of U.S. manufacturing jobs, another taking on large employers who fail to provide health benefits for low-wage workers.

“It’s a question of whether or not we can make this about something more fundamental,” said Andy Stern, president of the 1.5-million-member Service Employees International Union. “We need to pick out a poster child for irresponsible corporate behavior and really expose the effect that has on the people who work for them.”

AFL-CIO President John Sweeney, a low-key consensus builder by nature, has recently punched up his rhetoric as well. Two days before WorldCom Ltd. filed for bankruptcy protection, Sweeney chastised Chief Executive John Sidgmore in a three-page letter, and challenged him to follow 10 worker-friendly principles in planning the company’s restructuring.

On Monday, Sweeney will blast away at corporate tax dodgers during an appearance at the Bridgeport, Conn., offices of Stanley Works, which has announced plans to move its headquarters to Bermuda.

The next day, he is set to deliver labor’s biggest response yet to the string of alleged corporate misdeeds, speaking on Wall Street and flanked by more than 1,000 workers who lost their jobs in the aftermath of accounting scandals.

“This is not a short-term situation,” Sweeney said in an interview. “We’re going to carry this into the congressional elections in the fall. We’re going to make this a major part of our Labor Day activities. We’re not letting go.”

Drawing comparisons to the early 1930s, some analysts said the growing disillusionment with all things corporate could offer a psychological breakthrough for labor, which has struggled with declining membership and a sense of fading relevance for at least 20 years.

“Historically, the union movement and social reformers succeed when their opponents self-destruct,” said Nelson Lichtenstein, a history professor at UC Santa Barbara and author of several books on labor. “It’s a question of when the old elites lose credibility, when they are perceived as hypocritical or self-interested. That’s when people start looking for other institutions to fill the vacuum.”

But he said it’s not clear the American public has reached that stage. And he cautioned that unions, which represent only about 13% of the U.S. work force, still face many obstacles, including laws that make it difficult to organize new members, a White House that has been openly hostile to some pet projects, and internal bureaucracies that stifle innovation.

Even when unions take on substantial causes in creative ways, they might be ignored.

“Labor in so many ways has become invisible. Even the magnitude of this challenge doesn’t change that,” said Harley Shaiken, a professor at UC Berkeley who specializes in labor and the global economy. “It’s hard for them to get their message out.”

Asked whether labor has done enough amid the corporate scandals, Karen Nussbaum, a union veteran tapped by Sweeney to head the AFL-CIO’s public response, said testily that the federation has been deeply involved since the Enron case began, but has gotten little credit for it.

For example, AFL-CIO attorneys went to court for Enron workers and won them enhanced severance packages, even though not one belonged to a union. Then, while the loss of jobs and retirement funds was still raw, the federation took several ex-employees on a 15-stop, pro-union tour, hoping to build a cross-country consciousness of worker vulnerability. It now plans a similar tour with fired WorldCom workers.

“I’ve done lots of national campaigns,” said Nussbaum, who was previously the federation’s point person for women’s issues.

“After a while, you know when something is connecting. And it is now.”

The federation also campaigned to force Enron directors off other corporate boards, with some success. And it has stepped up the sponsorship of shareholder resolutions that would make boards more accountable and independent--an initiative started five years ago by the AFL-CIO department of investor relations.

“The immediate situation has to be addressed in terms of trying to help these workers survive and to get some action [on corporate governance] in Congress,” Sweeney said, describing the federation’s game plan. “The longer-term plan is to continue what we’re doing with the town hall meetings, to build up some greater visibility among unorganized workers.”

That’s not enough for some longtime critics of the union establishment, who say a historic opportunity may be squandered unless labor gets more ambitious. “From a PR angle, maybe it’s good that everybody puts in their two cents about corporate greed,” said Richard Bensinger, a former AFL-CIO organizing director who is now an independent union consultant.

“On the other hand,” he said, “I don’t think workers need much reminding of this. The substantive response has to be to take all this anger toward corporations and mobilize it into something constructive. And to do that, you have to create drama in the field on a massive level, through organizing campaigns. Scoring points against corporations in public relations does not make us relevant.”

Bensinger said the Enron debacle comes up frequently in house calls to prospective union members, not only as a symbol for how corporations have failed workers but also as a sign of how those once-untouchable companies now appear vulnerable. That, he said, is an important psychological leap for workers who may be inclined to join a union but fear retribution from their bosses.

Polling in the last decade shows that a growing majority of U.S. workers have a favorable impression of unions, and unions have long contended that their numbers would grow significantly if not for hardball tactics by employers to keep them out.

The plummeting value of many retirement funds, socked away in company-sponsored 401(k) plans, also is giving new weight to union-favored pension plans, which had been viewed by many younger workers as outdated.

“There was this sense in the ‘90s that we were in a new economy, and among younger workers in particular there was a general disdain for anything old economy,” said Guy Molineux, an analyst with Peter Hart Research Associates, which has conducted extensive polling and focus groups for labor. “Certainly unions were grouped with an old way of doing business. One very good outcome of this shakeout may be a respect for things that have been around for a while.”

Several recent polls show that public opinion about corporations has dropped since the Enron and WorldCom scandals broke. For instance, a Gallup survey in mid-July found that 38% of respondents considered “big business” to be a major threat to the nation’s future, compared with just 22% two years earlier.

However, Molineux said, disillusionment with business does not automatically confer points to labor. In fact, in the same Gallup poll, 10% of respondents saw “big labor” as a major threat, up from 7% two years ago.

The rash of scandals creates “a very good environment for labor’s general message, and for a lot of its legislative agenda,” he said. “What’s less certain is that it will help them in the realm of organizing.”

Labor also may be hamstrung by a boardroom scandal of its own. A federal grand jury and the Department of Labor are investigating allegations that several union presidents improperly used their positions on the board of Union Labor Life Insurance Corp., a union-sponsored insurance and pension investment company, to profit on inside information. At least three union presidents have admitted reaping profits of up to $200,000 but say they did no wrong. Sweeney is a member of the board but did not profit from the deal.

“If it turns out that one of these investigations finds union presidents profited at the expense of their own members, you may have the largest labor scandal in years,” said Ken Boehm, chairman of the National Legal and Policy Center, a conservative group in Falls Church, Va., that tracks union corruption. “The Sweeney quote you keep seeing about greed in the boardroom--that could just as easily apply to” Union Labor Life Insurance.

Still, the hope among labor leaders is that as the idea of market infallibility fades, more employees will feel the need to have a powerful institution looking out for them.

“There’s no question this is a historic moment,” said Bruce Raynor, president of UNITE, the national garment workers union, which is staging a comeback after years of hits from global trade. “Just a very short time ago, the most admired people in our country were CEOs. Now they are seen as people who cheated the system. The entire perception of business has changed.”

Now, he said, labor has an opening to prove its value. “It is the only force in society with the independence and the resources to tackle corporate America’s power,” Raynor said. “We need to rise to the occasion, and I believe we will.”