The Business Agenda for America's Workers, Remarks
Address by Thomas J. Donohue
President and CEO, U.S. Chamber of Commerce
Little Rock, Arkansas
October 23, 2007
Introduction-The Competitiveness Agenda
Thank you very much and good afternoon ladies and gentlemen.
I'd like to thank Paul Harvel for inviting me today. Paul's game plan for revitalizing your organization is succeeding-membership is rising, revenues are increasing, and there's a renewed sense of teamwork and involvement. He has enjoyed strong support from his board and members, and together you are moving in the right direction.
I'm particularly pleased that you are establishing a national legislative committee and intend to get more involved in federal issues. Paul has long understood the need for state and local chambers to work hand in hand with the U.S. Chamber to advance the business agenda.
He's been a member of the Chamber of Commerce Committee of 100-a group of the leading state and local chambers across the country-for as long as I can remember.
A stronger Chamber federation partnership is key to the business community's ability to succeed in the years to come. We face many important issues. In fact, in recent months I've been traveling around the country delivering a series of speeches on challenges America must meet and master in order to succeed in a tough global economy.
Together, these challenges comprise the Chamber's competitiveness agenda. Over the next five years-and beyond-we plan to focus extraordinary resources on advancing these issues because they hold the key to our nation's future economic success.
The equation is simple. We need human capital. With 77 million baby boomers starting to retire, where are we going to get the workers at all skill levels to run a competitive and growing economy? We've got to meet this challenge through major improvements in public education. It's simply disgraceful that in the information and knowledge age, 30% or more of our students don't even graduate from high school. The world is in a global race for talent. We need to get back into this race with a rational immigration policy that allows us to attract the workers we need.
In addition to human capital, we must have an adequate supply of secure, diverse, and affordable energy. That means developing more coal, oil, and gas as well as alternative energy technologies. And it means achieving greater energy efficiency. We've launched the Institute for 21st Century Energy to help achieve these goals.
We need to seriously upgrade and expand our infrastructure-the roads, ports, airports, air traffic control systems, inland waterways, power generation, transmission lines, and broadband capacity. Based on current growth, we're going to hit a wall in this country if we fail to act now.
A competitive American economy also depends on having the most vibrant capital markets in the world. For a variety of reasons, we've started to lose our edge. So we're fighting for a regulatory overhaul of our markets, while reining in excessive securities litigation and the abuse of corporate governance rules by third parties.
We're working to protect and defend our intellectual property-the ideas and innovations that are critical to America's success and leadership.
We've got to reeducate our citizens and their elected officials about the importance of trade and open markets.
Our health care system, which is the best in the world in some respects, has also become a financial burden for many businesses as they try to compete with their international counterparts.
Our tax system is a competitive drag as well. Other nations are starting to cut their tax rates. Yet in our own country, we're hearing a lot of talk about raising taxes, including capital gains. It doesn't make sense.
And finally, we need commonsense reforms to a legal system that is sucking the vitality out of American businesses, driving investors away in droves, and making companies increasingly risk averse. Today, a company's first order of business is not to innovate, take a risk, build a project, provide a service, or help the community. The first order of business is how do I avoid getting sued?
The Labor Movement Today
I'd be happy to go into more detail on any of these issues during the Q&A. But for the remainder of my remarks, I'd like to focus on another competitive challenge facing our country, and it's a serious one.
Today our companies and our economy are being challenged by an emboldened labor union movement that seems determined to turn back the clock to the 1950s. Many union leaders today want to overregulate the American workplace. They want to re-unionize our economy. They want to control the boardrooms of our best companies. And they want to hijack our politics in order to advance an agenda that includes trade protectionism, tax increases, and a government takeover of American health care.
This agenda is bad for businesses, bad for the American worker, and bad for the country. We must not let them do it.
Now let me emphasize right off the bat that the U.S. Chamber strongly supports the right of workers to voluntarily organize and join unions under fair rules. We also acknowledge that the labor movement has made important contributions to worker safety and fair treatment in our nation's economic history. And let me also remind you that the Chamber has worked productively with a number of unions on important issues such as transportation, infrastructure, energy, immigration, and the effort to uphold the right of both business and labor to participate in political and policy advocacy. We hope to continue and expand these partnerships.
But what we will not do is sit idly by while other union leaders engage in abusive tactics and try to impose wrongheaded policies on the workers and businesses of America.
It's easy to understand the unions' frustration. The unionization of our workforce has dropped like a rock-from a high of 35% in 1954 to just 12% today. Among private sector workers, it's just 7.4%.
In some respects, unions have become victims of their own success. Much of what they've sought to achieve in terms of working conditions, workplace safety, and benefits has been codified into law.
In addition, they can no longer capitalize on widespread discontent among workers for a simple reason-employers have stepped up to the plate. Employers voluntarily pay out $1.4 trillion in employee benefits every year. One hundred seventy-five million people receive health insurance from employment-based coverage. More than 100 million people are in private sector pension plans. Three-fourths of employees-including part-time workers-receive paid time off. Sixty-five percent of employers with more than 100 employees provide both undergraduate and graduate educational assistance.
Yet it would be a mistake to count unions out based on their shrinking percentages. For one thing, they are doing quite well in the public sector, where 36% of workers are unionized, with large concentrations of state and local government employees.
That in itself poses a significant threat to our competitiveness. Government workers and their unions have every reason to want to grow government as big as possible, and we all know big government means less economic freedom and more taxes!
Even though only 7.4% of the private workforce is unionized, that represents
8.3 million workers, all of whom can be assessed mandatory dues, except those in right to work states. That gives unions the ability to funnel tens of millions of dollars into politics and either rally-or pay-grassroots organizers and foot soldiers.
They have refined the art of the corporate campaign, which is a concerted attack by a union on a company's reputation, its customer base, and its ability to conduct routine business. The goal is to generate so much pressure on the target that it will give into union demands. Tactics include public smear campaigns, frivolous regulatory investigations, the communication of false statements to analysts intended to reduce the company's stock price, and other extortionate measures.
More and more, we are seeing some unions leverage the power of union-controlled pension funds to oppose takeovers, take sides in bidding wars, fight for board seats, and otherwise achieve through the proxy process what they can't achieve at the bargaining table.
And they've partnered with a diverse mix of special interest allies, such as the class action trial lawyers, to increase their power and reach.
Let's take a closer look at what these union leaders hope to accomplish and what that could mean for businesses here in Arkansas and across our country.
The Labor Agenda
Flush from what they view as a tremendous victory in the 2006 elections, unions are pursuing two major objectives. First, they want to fundamentally rewrite workplace rules and reshape policies on trade and health care in ways that could seriously harm our competitiveness. And second, they want to use our political system and corporate governance rules to reunionize our country on a mass scale.
A Radical Rewrite of Labor Laws
Let's look at their Capitol Hill agenda first. With the election of a new Congress in 2006, the unions have unleashed 12 years of pent-up legislative demands. The new majority in the House has been anxious to accommodate them.
Broadly speaking, the unions want legislation that will make it easier for them to do the following: organize workers to offset their declining membership base; impose new benefit mandates, increase litigation exposure and liability for employers, and reduce companies' flexibility to adjust quickly to economic circumstances.
On the surface, much of what they propose is hard for a member of Congress to object to. What elected official will want to go on record opposing paid leave or sick time? Who will want to oppose self-described workplace safety measures? Especially when the unions ally themselves with special interest groups with pleasant sounding names like "National Partnership for Women & Families" and "People for the American Way."
Items on their wish list include expansion of the Family and Medical Leave Act to include paid leave, mandatory sick leave, and a massive expansion of the Americans with Disabilities Act.
They want to lengthen the lead time for plant closing warnings and cover smaller businesses, as well as stiffen fines for non-compliance.
They want to limit the definition of "supervisor," a move designed to increase the number of rank-and-file workers who can be organized and to drive a wedge between workers and management.
They are also pushing so-called OSHA reform, which would increase fines, regulations, and the potential for harassment against businesses without improving safety. They are even trying to revive the previous administration's ergonomics standard that would impose billions of dollars of new costs on companies with no proven benefit!
The new Congress has already moved on several of their agenda items. The House has passed a provision that will reduce the budget of the Department of Labor agency responsible for investigating union wrongdoing by $2 million why?
The House has passed legislation amending the civil rights law to effectively eliminate the statute of limitations for filing claims of discrimination, dramatically expanding those who can file claims. Combined with the fact that other legislation would remove caps on damages for these types of cases, this would be a real boon to the trial lawyers.
And the House has held hearings on eliminating binding arbitration in employment law, exposing employers to the uncertainty of litigation and jury trials.
Of course, organized labor's top legislative priority this year was to do away with secret ballot organizing elections. They want to replace them with a card check system that would lead to abuse and intimidation.
They are even pushing hard for "mini-unions" at National Labor Relations Board small union cells that can be established at worksites, even if the number of workers who sign up does not comprise a majority. Think of it ten "mini-unions" of three employees each could be formed in your workplace. You would have to collectively bargain with each of them, and you couldn't fire their members even if they went "on strike." Think of the nightmare that would be! They would be easy for the unions to establish, and that's what this is all about.
Thanks to a multifaceted grassroots lobbying campaign led by the U.S. Chamber-in which you played an important role-the card check measure passed the House with a much smaller margin than anticipated and was blocked in the Senate.
We were able to defeat it, but it cost the business community $2 million to do it. And that battle is far from over. This gives you an idea of the kind of resources and resolve the business community needs going forward.
We're also challenging in court-in Chamber of Commerce v. Brown-a California law that restricts employers' rights to oppose unionization of their employees and opens employers to possible triple damages if they do not comply.
This case may very well go all the way to the Supreme Court.
The union's agenda also extends beyond workplace rules and regulations. They are also opposing most free trade agreements, pushing for government-run health care, and pushing for tax increases-all further threats to America's competitiveness.
Add these policies together and what do you see? You see a labor market and workplace rules that the Europeans would be proud of! Countries like France and Germany have been suffering double-digit unemployment for years. Nearly all the experts agree that a prime reason was their straightjacket approach to labor regulations.
In contrast, the United States has been a growth and productivity leader because of our labor flexibility. Recently, the Europeans have begun to move in our direction-and they have the economic benefits and results to show for it. Union leaders and their allies in Congress want to move in Europe's direction. It doesn't make any sense!
Politics and Corporate Governance
Now let's talk briefly about tactics and politics. For starters, some labor unions are employing a "shareholder activism" strategy, leveraging the nearly $450 billion invested in union multiemployer plans and the $3 trillion that is in public employee retirement plans.
The goal of pension fund activism is to use union-controlled pension fund assets to gain influence and control over public companies and to advance a legislative and political agenda.
They do it by developing wide-ranging proxy agendas and by pressuring investment managers who oversee union pension assets to vote for their proposals. They issue annual report cards to create a "blacklist" of investment managers who don't fall in line.
The AFL-CIO has also said that it will push shareholder proxy resolutions requiring employers to provide expensive new health benefits and pressure them to support government-run health care. Proxy resolutions would also be used to force companies to disclose corporate contributions to political activities and trade associations, as well as those made by directors and executives.
This is not the first time the AFL-CIO has encouraged union pension plans to tap workers' retirement savings in support of its special interest agenda. In 2005, the AFL-CIO had encouraged union pension funds to threaten withdrawal of pension plan assets from companies that supported President Bush's Social Security reform proposal.
The Chamber has formally urged the SEC and the Labor Department to put a stop to this inappropriate use of proxy resolutions. We have also told the SEC that we oppose and will fight its recent proposal, which would allow shareholders owning 5% of a company's stock to propose changes to a company's bylaws and allow shareholder director nominees to appear on the company proxy.
If such efforts to change the proxy rules and expand shareholder activism were to succeed, we could see a situation in which a group like the ISS-Institutional Shareholder Services-was voting 80% of the proxies. That's not good for companies or investors.
Union officials seem to have forgotten that the billions of dollars held in union pension funds belong to workers, not to them. The unions' endgame is clear. They want to dictate executive pay; wield veto power over boards of directors; control corporate policy on outsourcing, layoffs, health care coverage, and environmental protection; and elect union officials to key corporate boards.
And, of course, force companies to unionize!
Through a concerted strategy of legal action, filing comments with regulatory agencies, and public exposure and education, the Chamber is determined to stop these abuses of the rules governing our companies and markets.
The Political Agenda
And then there's politics! In case you haven't noticed, we're in a political season.
AFL-CIO President John Sweeney has vowed to spend $200 million on the 2008 elections and field 200,000 volunteers. They are going for the trifecta-the House, the Senate, and the White House.
Even if there is some Irish bluster in those numbers, assume it's only half that? Imagine what impact that could have in closely fought elections.
Of course, the unions have every right to participate in the political process, but business must do the same. At the Chamber, we are already building a political and grassroots system in 144 key congressional districts across the country.
We're going to pour unprecedented amounts of resources into these communities-and do so on a nonpartisan basis-and battle on the ground with business adversaries. Then, as election day draws closer, we will target a select number of key House and Senate races that could make all the difference in building a firewall in the next Congress a firewall that stops the worst ideas and advances positive proposals for a competitive American economy.
We will spend millions and millions of dollars doing this, but it's not just about money. It's also about organizing and activating companies, chambers, and associations. And it's about educating the employees with factual information about what's at stake economically for their families.
When you add it all up, the labor unions' legislative, corporate, and political agendas-and the tactics they're employing to achieve them-pose a major challenge to the competitiveness of the nation.
The labor movement wants to turn back the hands of the clock to a time when unions were powerful and influential. While our global competitors are racing further into the 21st century, we shouldn't go back to the middle of the 20th.
The unions' best chance of succeeding is if we do nothing if we refuse to believe they pose a threat, that pension fund managers won't capitulate to their demands, and that their pleas to Congress won't be heard.
The unions' success will be the worker's loss.
Think about some of those issues I mentioned at the outset: improving education, expanding trade, building roads, constructing new power lines and nuclear plants, protecting our products from intellectual property theft, expanding opportunities for all families to invest in our capital markets, and keeping taxes low.
That's an agenda that can create hundreds of thousands of good-paying jobs for Americans. It's an agenda that can train our workers for the jobs of the future. It's an agenda that will put and keep more money in the pockets of employees and there families.
It's an agenda that all unions should be supporting but sadly are not.
Ladies and gentlemen, if today's labor leaders won't represent American workers with the vision and common sense needed to compete in a tough global economy, then I can assure you, we will!
Thank you very much.