Viewpoint: It’s Time to Tap into Labor’s Fortress of Finance
Despite the recent upsurge in worker militancy, union membership and density have been declining for decades. But a close look at labor’s finances suggests that unions have the economic resources to potentially reverse this decline.
Standard explanations for labor’s decline blame our grossly unfair labor laws, the full-scale corporate attack on organizing and collective bargaining, and economic trends including the decline of manufacturing.
But labor is not a passive bystander. Unions have the resources to deploy to new organizing and growth. They have chosen to pursue a defensive financial strategy instead.
Consider the National Education Association. Since 2010 its membership has declined by nearly 300,000—while its net assets more than doubled.
The United Auto Workers has seen membership drop by 20 percent since 2007, yet over the last three years less than 10 percent of its budget was spent on organizing.
Twenty-five years ago, John Sweeney was elected to lead the AFL-CIO after a vigorous debate about organizing strategy. Sweeney set out real organizing goals for the affiliate unions, and proposed that they devote 30 percent of their budgets to organizing. Many of the affiliates rebelled, and the goal was quietly shelved.
Today UNITE HERE (my former union) is one of the few unions that devotes significant resources to organizing, up to 50 percent of its budget—consistently running operating deficits, spending more than its dues revenue. As a result, it was one of the fastest-growing unions before the pandemic, increasing its membership by 34 percent from 2010 to 2019.
FLUSH WITH CASH
In 2021, large unions booked $18 billion in revenues (mostly from dues) and spent $15.5 billion on operating expenses—leaving a surplus of $2.5 billion.
Though labor’s revenues are far less than those of business associations, they’re substantially bigger than those of environmental, human rights, and political organizations.
WHERE THESE NUMBERS CAME FROM
The Labor-Management Reporting and Disclosure Act requires unions to file financial reports every year. These reports are publicly available at the Department of Labor website.
This financial analysis used the Form LM-2, which is required for labor organizations with $250,000 or more in total annual receipts. Smaller unions, which file the Form LM-3 or LM-4, were not included. The figures for revenues and assets included in this piece represent the sum total of all unions filing LM-2s.
For more details on the methodology, read the full report at radishresearch.org.
In 2021, organized labor had $31.6 billion in net assets (assets minus debt). That’s more money than any U.S. foundation but one: the Bill and Melinda Gates Foundation, with $48 billion.
While union membership declined by more than 700,000 from 2010 to 2021, total revenues increased by 33 percent over the decade, thanks to higher dues (the average rose from $778 per member in 2010 to $1,089 in 2021) and significant increases in investment, rental, and miscellaneous income, such as government training funds and royalties from selling membership lists.
Meanwhile, unions cut staff by 20 percent—they employed 24,540 fewer employees in 2021 than in 2010—a 20 percent decline in the workforce. (Management positions in unions, however, increased by 64 percent, and more than 10,000 union employees now earn salaries over $125,000.)
Unions also paid out an average $78 million a year in strike benefits during this time—less than half a percent of net assets or revenues in most years. Overall, union spending increased only 18 percent over the decade.
As a result, unions generated large budget surpluses, and their net assets more than doubled. If these trends continue, labor’s assets could double again by 2031.
These figures suggest that labor had substantial assets available to deploy to new organizing and growth—but chose not to do so.
Instead, to the degree it is pursuing any conscious strategy, the labor movement has followed the one laid out in a 2013 article by union researcher Richard Yeselson: “Fortress Unionism.”
Yeselson argued that, due to the straitjacket of labor law and an “uninterested working class,” labor should not undertake “lengthy and expensive campaigns to organize new sectors.” Organizing workers “takes too much time,” he wrote, “and it costs too much in money and staff resources to do so over that long period of time.”
He counseled that labor should “work to buttress the areas in which it is already strong” and “[d]efend the remaining high-density regions, sectors, and companies.”
Meanwhile, unions should “wait for the workers to say they’ve had enough”—at which point workers themselves would “militantly signal that they want unions.”
It’s long past time to adopt a dramatically different approach. We shouldn’t let labor hide behind the idea that it doesn’t have the resources to fund large-scale organizing. It does.
We should demand that our unions—from the local level to the AFL-CIO headquarters—back the current upsurge with a massive investment of resources.
Labor could theoretically afford to:
Hire 20,000 new organizers. With union density hovering at 10 percent of the workforce, every established union has the opportunity to expand and organize within its industries, building upon its existing power.
The real power is in the rank and filers who could lead organizing campaigns. Labor has the finances to recruit and train these worker-leaders, who are hungry to be part of a larger labor movement and organize their fellow workers.
SUPPORT LABOR NOTES
BECOME A MONTHLY DONOR
Give $10 a month or more and get our "Fight the Boss, Build the Union" T-shirt.
Boost funding of worker centers and independent unions—increasing grants and contributions to $1.5 billion.
Currently labor spends just $382 million on contributions and grants to outside groups, 1.2 percent of its net assets. In contrast, foundations must pay out 5 percent to maintain tax-exempt status.
Many labor leaders would bristle at the comparison to foundations, since union assets belong to the members. True, but these assets are also the legacy of prior worker movements and struggles. And unions rarely win first contracts without support from other unions and social justice movements.
The tens of millions of unorganized workers have no legal claim on labor’s assets, but perhaps they have a moral claim.
Radically increase strike activity, spending $1 billion a year on strike benefits—which would be more than 10 times what unions currently spend.
Capitalize a new $3 billion entity (or entities) that could engage in riskier civil disobedience activities like illegal strikes, secondary boycotts, or defiance of restrictive court injunctions on picketing and protest.
Historically, illegal tactics have been crucial to labor’s growth. But these days, unions shy away from such activities because they risk financial liability that could put labor’s assets in jeopardy.
That’s why labor could, as Joe Burns proposed in Reviving the Strike, spin off organizations that engage in more militant activities—turning on its head the corporate tactic of “double-breasting,” where a union employer sets up a parallel company to run nonunion.
Imagine that these new entities committed financial assistance to workers and unions defying public employee strike bans, disobeying injunctions against picketing, or violating no-strike agreements in the private sector.
With more strikes in the organized sectors of the economy, the landscape might start looking like the 1930s, when union membership dramatically increased.
WHY ISN’T THIS HAPPENING?
So what’s holding us back from adopting a more offensive posture? Financial inertia.
Even as membership declines, labor (as a whole) has been able to run large budget surpluses and nearly double its net financial assets. Labor law reform and large-scale organizing do not seem to be necessary for labor’s economic viability, at least in the short term.
A more aggressive approach might break the decades-long organizing stalemate in the U.S.—but also subject the labor movement to significantly higher financial risk.
Another challenge is that the resources of labor are dispersed among more than ten thousand entities grouped into more 100 union affiliations.
But if even a fraction of these unions meaningfully increased their spending and deployment of assets (as the CIO, the Congress of Industrial Organizations, did in the 1930s), it could substantively affect the landscape.
The alternative—to keep waiting for labor law reform—is unacceptable. In 2010 labor seemed poised to win the Employee Free Choice Act, only to be thwarted by “moderate” Democrats and the filibuster. Today the PRO Act seems headed to defeat by the same forces.
Changing this dynamic will require labor to tear down the walls of Fortress Unionism, put its significant financial assets at risk, and fund a wide range of strategies to take advantage of the present historic moment.
This change is unlikely to come from the top. It’s more likely to come from workers defying their union leaders to strike against global corporations; from reform movements for union democracy; from public sector workers, even without formal unions, disobeying state bans on strikes; from members backing left candidates in defiance of union political directives; from independent unions defying conventional wisdom; and from young workers impatient for change and intolerant of bureaucratic hierarchies.
It is this constellation of forces that could “follow the money” and seize the assets from a labor movement that has failed to seize the moment.
THE FED'S NEW ORGANIZING FUND
The AFL-CIO Executive Board has approved an increase in per capita fees (the amount affiliate unions pay to the AFL-CIO) to raise $10.8 million for an organizing fund.
The fund would increase the fed’s total spending (at the headquarters level) next year to $105 million, a 12 percent increase from this year. But that total is still far below what the AFL-CIO was spending as recently as 2017.
The AFL-CIO laid off dozens of staff as part of a restructuring in late 2017, inaugurating a period of reduced spending.
A leaked AFL-CIO budget for 2018-2019 showed that the federation was spending less than 10 percent on organizing, labor journalist Hamilton Nolan reported at the time, down from 30 percent a decade earlier.
Even the new $10.8 million organizing fund is far less than the federation spends on politics.
Nevertheless, it is mildly encouraging that the AFL-CIO is increasing spending. And if all of labor followed its lead and increased spending on organizing by 12 percent, we would be talking about $1.9 billion in new spending. Now that would be something.
Chris Bohner is a union researcher and activist who has worked with the AFL-CIO, Teamsters, UNITE HERE, Culinary Workers Local 226, and a variety of worker centers. This article is based on the report “Labor’s Fortress of Finance: A Financial Analysis of Organized Labor and Sketches for an Alternative Future,” available at radishresearch.org.