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Is COVID a Wild Card for the Building Trades and Labor?

You may think this is no time to be talking about organizing. Let me shed light on a perspective worth addressing. While the plight of COVID takes shape and affects all North America, be assured that some (most) people’s pain offers an opportunity for extreme groups to advance their agenda.

Fighting the battles of organizing and getting our ducks in a row while the COVID war is being waged is essential. A cornerstone of Labor Rising Organizing is in depth market research – chart building and far more. What we have is time to build REAL info, not the BS currently taught. It will take months.

In the last 2 blogs Labor Rising has continued to cite verified numbers, making the case to move to hard core organizing and to put the Value on Display (VOD) DISASTER back in the genie bottle! It is the strategy that has failed across 4 decades and in every economic environment, in conjunction with every generation of trades senior leadership teams failing. Some trade(s) should have been able to figure out how to make VOD a winner, but none have – it is the VOD strategy that is the loser! It would be of immense help if our senior leaders would again be labor leaders – but they continue to think of the trades as a product/service to sell!

In the last 2 blogs and several others from 2012 to the present, Labor Rising clearly showed that the union trades are in fact being reverse-recruited, and that our combined training programs are training for both the union and non-union sectors. No spin or BS can dismiss the fact that MORE & MORE union trained workers work non-union. The trades have put themselves in this position which includes reverse-recruiting of union members, hiring policies in the halls that allow contractors to pick and choose and the total capitulation of senior trades leaders, to cite just a few.

Labor Rising’s trend lines indicated in the last blog that the union trades had maybe 10 years to again become a MOVEMENT and quit being a temp agency. With every year of the 10 lost, reversal becomes that much harder to accomplish.

With COVID just ramping up and so many unknowns due to lack of testing, workers are going to get hammered. And union construction is near or at the top of that list. Government workers will likely be blown out with the current declaration of a National Emergency. God forbid the threat of Martial Law becomes a reality, which would waive every type of law, including labor laws and Collective Bargaining Agreements, etc.

Before COVID, management of construction were working an effective strategy of letting us do all the vetting and training in our apprenticeship training programs, and then reverse-recruiting those skills over to the non-union as needed – a hugely successful strategy, as the non/anti-union market share has grown steadily in every decade since VOD has been the trades’ strategy.

Construction owners may not want the destruction of the trades. Especially since we have been lap dogs for decades with concessions of every type of conditions & packages. However, the anti-union see a path to knocking union labor out, including the trades. And COVID, in many ways, is the perfect Trojan Horse to accomplish that. With the “perfect storm” of COVID, Scalia at the Labor Department, Trump as the President, McConnell as Senate Leader and the anti-union entities like ALEC, RTW, CPAC, Heritage Foundation, et al, major changes are already underway.

While the Rank & File will mobilize using their skills to help all citizens union or not, many as volunteers/many as essential services, anti-union forces will be at work behind the scenes to knock labor down and out given the chance.

These groups have learned the lessons from pro-union periods during WW I till the 1950’s. Union density was at its max – 30% in 1960. So, in the late 60’s The Construction Users Anti-Inflation Roundtable, now simply known as the Business Roundtable, and later The Construction Users Round Table (CURT), were borne!

From then until now, the trades side of the labor equation has been systematically attacked by the above entities. I have shared several times the White Paper of JC Turner, Former General President of the Operating Engineers written in 1979. He was spot on in ALL areas of the White Paper! Here is the link. Few have read it in the past postings – lets see if readership improves: https://1drv.ms/b/s!AmKOi71GyLcgqyOmg3JjY_OKGTEi?e=5Ci2TC

The trades senior leadership have put us collectively in harm’s way with all the political BS over decades – along with the adoption of Value on Display. Robert Georgine’s capitulations to the Roundtable in the 70’s opened the door for most of the specialized agreements we see today. Add in Value on Display, which has its roots in the 90’s and was put on steroids in the early 2000’s by the trades as a “strategy” to recover work, and the trades leadership has clearly ceded their role as a Labor Movement under their watch!

Leading the list of threats to the trades are our pensions. The anti-union sees these pensions imploding in on trades. They know many funding wounds are self-inflicted. Bottom line is union leadership promised far more benefits than can be paid for; substantial liabilities that will not be paid putting those funds in jeopardy. True the “government” imposed rules around funding levels and markets have faltered. However, then ALL funds would be in nearly the approximate set of circumstances, and they are not! Many, but not enough Trustees, held the line in giving out benefits unless they were PAID for!

Reverse engineer your funds and see if those statements aren’t true and score high on the Fact Checking meter! Here is the link of the Multi-employer pensions that are currently in trouble as of 2019.  The 2020 list is due out soon; however, it is the 2021 list to watch out for if you’re vested. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/public-disclosure/2019-funding-status-notices

The anti-union has little more than to push a few initiatives to cause an implosion of union pensions. The anti-union has other avenues to weaken and destroy union labor – but pensions are our biggest Achilles heel and require the anti/non-union to do little to achieve a lot!

Four threats loom on the immediate horizon for the pensions – all pensions, not just those on the list!

The anti-union knows that…

  • Hours – down across the board even in good construction times, as in the case of the last few years. Hours and market returns drive the ability of a pension fund to promise a level of benefits. Hours are trending down overall because of loss of market share and increasing use of technology in construction delivery. We can’t control the use of technology, nor should we. However, we can control organizing workers. Value on Display and recruiting has NEVER and will NEVER get hours up to where they need to be to have both a career, a pension and most likely an affordable Health & Welfare benefit. Hours are a huge part of the trades’ viability to secure our pensions! They also are mandatory to have political influence. No politician must listen to most state, local & national BT affiliates as they are either too weak or not to be found.
  • Markets, both stocks and bonds – The S&P average return is 9.8% over the last 90 years. The funds typically use the S&P benchmark. ALL the trades’ multi-employer funds hover around a 7% actuarial assumption +/- ½ %. Simply stated, after all fees, commissions and administration costs are paid, does the fund meet the 7% assumption? If at the end of year, year after year, if the realization is less than 7%, then the Fund is underwater on schedule of benefit payments promised. Add in hours that are at, above or under those needed by the Fund and you have a starting point of calculating benefits and the sustainability in the future. There are some other very important components of time that factor into a fund. Pensions ARE NOT Ponzi schemes – although they can look that way to members when the leading trustees play politics with the funds returns and spent far more time on the golf course with the respective managers. Example: The S&P is 9.8% just on the stock side of the investment funds which is typically 60% of the total asset allocation. A trade fund typically spends approximately 1½% in administration and fees. Now that number is 8.3% on 60% of funds. Remember that different types of stock investing also can affect the return by+/-, such as small caps. 40% of investments can be in fixed investments, like different types of bonds. Bonds seldom in a fund’s history hit a composite return of 7% after fees. USUALLY fixed investments are a drag on investment return but are strongly needed to balance the long-term volatility and returns. Now add in hours to the above equation. What was full time employment 10 years ago is NOT what full time employment has been the last 5 years. And, that’s a big deal! The actuary must adjust the total hours down and that is painful. The anti-union only has to keep withdrawing hours to sink even healthy pensions, which would be catastrophic to the funds on the DOL link above.
  • Specialty agreements – There is a growing evidence that management wants to exclude the pensions in upcoming specialty agreements. Since the trades have zero negotiating pressure due to low market share, they are now able to be dictated to! Post COVID jobs will be faced with this. Why? The construction management firms are all reorganizing their business models. They have a 3-fold reason to do this: 1. Get rid of any potential liability; 2. Reduce the cost of construction so they can rebuild profits and save end-users’ money, all off the backs of union trades; and 3. Put pressure on the fragile pension structures that many are in and many more will face. Trades pensions are failing now, and they will hit critical mass if the trends continue. Think of union members PR when they lose a pension speaking to all workers, union or not. Game over!
  • PBGC – The insurer of our Multi-Employer pensions is the PBGC. They are having a hard time getting enough funding to even cover the $0.30 cents on the dollar for pensions that go insolvent! They are basically broke and have no where near the funds needed for current insolvencies, much less those that will become insolvent. With all the relief and stimulus packages the government is going to provide in the upcoming months/years, the odds that the trades even get the PBGC funding is shrinking to highly unlikely. Even if the D’s win control of all parts of national government, the deficit will be a direct threat to the national economy; and, it is unlikely in an austere budget to get this kind of relief. It could happen, but it will be a tough hill to climb. And, remember that is only to cover the $0.30 cents, not the entire insolvent fund. There are now even more draconian measures for U.S. pensions being used today – but we will close here!

Bottom line – ORGANIZING the company and the workers, regardless if they want to come or not, is the ONLY way to keep the trades in the game. Bottom-up & Top-down are far to slow to secure the number of new members and contractors. What is in it for the younger members? When they raise market share and pour huge hours into the funds, (approx. 9% market share increase ASAP) those funds will surpass the liabilities they owe which will in turn produce surplus. That and us old guys & gals cashing it in. Surpluses for prudent affordable and sustained pensions and to make workers a force again politically.

Also, COVID is a double-edged sword. There will be many anti-union companies that can be put out of business with the right concerted activity. Unions need to be smart. The Patriot Act could pronounce unions as unamerican. It has been done before (unions pronounced as unamerican) in the U.S. We must be about BUSINESS – Labor Rising develops Compression Zones staying INSIDE of business law, NOT organizing law! When organizing is all about going after the end users, developers and construction managers clients, credit and their social perception – the trades win!

“if you see a good fight – get in it”

Danny L Caliendo

Organizer

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