1. Personal Information.

For nearly one-half century I have focused my research on unions, collective bargaining and labor markets. The results of my work have been published in all the major journals of industrial relations and by the National Bureau of Economic Research. These have dealt with major aspects of unionism including union finance, union philosophies and the differences between public and private sector labor in the U.S. and Canada. I pioneered the study of union finance, union philosophies, the distinction between public and private labor organization, and the development of union statistics by state and region. My statistical data have been republished by the U.S. Bureau of the Census. I have also written several books on these matters, the most recent (in 1999) is Beyond Unions and Collective Bargaining, published by M.E. Sharpe. My next book is titled, The Twilight of Unionism. Newspapers including the Wall Street Journal have published my op ed articles, and in November, 1999, Forbes Magazine did a feature article on my and my work. A Lexis-Nexis search reports more than 500 'hits' reflecting the number of times I have been contacted and interviewed by the news media across the country. In addition, I have appeared on television and have done numerous radio interviews. I have also testified before Congressman Thomas' House Committee on Oversight in 1996. A year later I also testified before Senator Thompson's Senate Committee on Campaign Finance Reform.

2. Unions' Political Contributions and Endorsements in Presidential Election Cycle Years.

Unions' cash political contributions have been reported and commented on by many others; I will deal with them only as these affect the larger and almost universally ignored political contributions by unions, their in kind political contributions. Si9nce these are generated from compelled dues and fees, in kind contributions are also compelled speech and they exceed unions' cash expenditures. I concentrate on the presidential cycle election of 1995-96, the latest available, and regard the results as applicable to the current election cycle.

By in kind contributions, I mean any services and publications paid for by unions or provided by volunteer labor services on behalf of political candidates and a political party. Virtually all of these are expended on behalf of candidates of the Democrat Party. Examples of in kind contributions are as follows: labor services to promote the election of candidates; the services of union members who volunteer their time for campaign activities; union officials and staff who spend time on campaign activities and organize volunteers, whether or not they receive their regular pay; provision of data and telephone banks on voters; registering voters, voter tracking and polling; getting out the vote, including services to transport voters to the polls; subsidizing delegates or alternates to national political conventions; exchanging research and strategy decisions with the Democrat Party; direct mail to members comparing candidates' voting profiles, which almost universally caricature Republican candidates the villains; and providing platforms for public personalities sympathetic to the Democrat Party to make speeches endorsing Democrats.

Extremely valuable services which unions provide the Democrat Party are political operatives whose salaries are paid by the unions. The two teachers' unions, the National Education Association and the American Federation of Teachers are reported to field more political operatives than the combined number of the Republican and Democrat Parties. (Myron Lieberman in a communication to me, April 2000). This is particularly significant because these are professional operatives and activists, not volunteers who may be amateurs.

The most valuable in kind services provided by unions to the Democrats are the unions' journals and newspapers. These are mailed out to some 16 million members of unions, implying a minimum household audience of 30 million potential consumers of the unions' political point of view. These publications are issued mainly by the national and international unions (parent organizations), but also by many local and intermediate unions. In addition, many unions maintain websites to transmit the official union line.

The union media is biased in favor of the Democrat Party. In fact, the political views are so biased that it is no exaggeration to characterize the union media as a one-party press. The membership funds the union media from its dues and agency shop fees. Since these monies are collected almost entirely under compelled arrangements, the union or agency shop and the check-off, members and those represented by the unions are compelled to pay for political programs and candidates which they may not support, and in very many instances do not endorse.

The managers, the leadership, of unions contend that the political views expressed in the organizations media reflect the attitudes of a majority of its members, based on membership surveys. If this is so, why aren't the surveys' results, the timing of the surveys, the methods including sampling techniques and margins of error publicly disclosed? To date I am unaware of any such disclosure. In fact, in interviews I have done with reporters, I have urged them to inquire into this issue, but without avail. Most important, if these surveys are correct, why do individual members contribute so little to political campaigns, as will be reported below.

Union managements' disregard, if not contempt for the views of substantial proportions of their membership, is especially egregious given the established fact that so many actually vote Republican. Indeed, it is a virtual certainty that Ronald Reagan received a majority of private sector union members' votes in 1984, and probably close to that in 1980. To a very great extent, the term 'blue collar' Democrat of that era really meant and means to this day, blue collar unionists in the private economy. In 1996, Bob Dole won about one-third of all union households (meaning private and public combined), implying that perhaps 40 percent of more of the private sector workers probably voted for him. My estimate derives from the proportions of private and public membership to the total union population, and the widely recognized fact that most organized public employees vote Democrat. Unfortunately, pollsters from both political parties ignore the fundamental differences between private and public sector unionists and do not report on this schism in the union movement. Although public sector unionists vote more for Democrats than private sector unionists, a poll of the membership of the National Education Association (NEA), the largest union in America, with a membership of 2.4 million, reported about 30 percent of its members regarded themselves as Republicans and another 30 percent considered themselves to be independents. If so, this means that a minority is committed Democrats, by the NEA's leadership devotes nearly all its resources from compelled dues and fees to supporting Democrats.

The counter argument to the compelled union members' payments to support causes and candidates they oppose is that corporations also make political contributions which some shareholders may oppose. However, this comparison is invalid: Any shareholder, who objects to company policies of any kind, can sell his (her) shares at any time. And they have done so frequently as demonstrated by actions taken to show disapproval of apartheid, environmental practices and health (tobacco) and safety practices of the corporation. In contrast, the worker covered by a union shop agreement is compelled to resign his (her) membership to seek reimbursement of that share of dues which the union spent for political purposes. This is a high price to pay for a union member. It is a high price because it must take into account those union benefits financed out of dues (many of the old line AFL skilled unions continue to have these benefits) which would then be forfeited or denied. The price must also take into account that the same union and its officers will continue to represent the objector in grievance bargaining and bargaining in general, and though nominally required to do so fairly, one must reckon with the world as is, not as thought to be. Moreover, the objector runs the risk of the disapproval of fellow workers for opting out and being "sent to Coventry." To be sent to Coventry can be more than ostracism; it is often also means threats, intimidation and harassment. On the other hand, the shareholder may even make a wise investment change, so it is evident that equating the union member working under a union shop and shareholder who object to what their institution is doing in political matters is not comparable.

3. The Value of the Unions' In Kind Political Contributions.

Estimating the value of unions' in kind contributions is difficult because detailed figures are not available and many figures are classified by unions and by the Labor Department which conceal their political objectives. The Labor Departments financial forms which most unions must file are useless for measuring political spending because of the nature of the financial categories. If corporations used comparable forms in their financial reports, stock exchanges would not list them and the IRS would reject them. Even if the Labor Department forms were amended in an effort to elicit the relevant political information, unions would hid these expenditures in a labyrinth of other categories.

The key to the valuation of the unions' in kind contributions is my concept of the political multiplier. It is the analogue of the Keynesian investment multiplier in economic theory, a concept which has been established for more than six decades. Conceptually, the political multiplier postulates that a cash political contribution will generate a multiple dollar value of in kind political contributions. (See above for a definition and listing of major in kind contributions).

The cash expenditures used in this analysis are the Federal Elections Commission's reports that in 1995-96, unions' PAC disbursements totaled $100 million. (The actual figure was $99,769,350). The political multiplier, estimated to be 3, therefore probably produced in kind additional contributions worth $300 million. Hence, in the 1995-96 presidential cycle, the total value of unions' political contributions - nearly all of which went to Democrats - was worth $400 million!

The multiplier, a number without units, is derived as follows: l/l - mpc

Here, the acronym, mpc, means the unions' marginal propensity to consume (demand) additional political services of the Democrat Party associated with unions' cash expenditures for political purposes. Put another way, the unions' mpc for Democrat political services asks, what proportion of each additional dollar of the unions' additional income will the unions spend on in kind political services? Assuming, the midpoint between 1 (all additional income) or zero, no additional income will be spent on in kind services, one-half (.5_ of each additional dollar of income would be spent on in kind political purposes. The multiplier would then be 2. [1/(1-.5)=2], and therefore that unions' in kind political contributions would equal $200 million in the presidential cycle of 1995-96. Together with their cash contributions of $100 million, this would bring the total to $300 million.

However, based on experience in the Beck (private sector; (CWA v. Beck 487 US 935, 1988) and the Abood (public sector; Abood v. The Detroit Board of Education 431 U.S. 209, 1977) cases, a political multiplier of one-half is clearly too small. Judicial decisions concluded in the Beck case that unions spent less than 20 percent of their income on collective bargaining, and even less in the Abood case. The remainder, the bulk of unions' income was allocated to other purposes, included political expenditures. The exact share going to political purposes is not known. However, given the often stated and forceful intention of the unions' management to implement their political objectives, and the range of possibilities opened up by the Beck and Abood cases, it is reasonable to estimate that the unions' political multiplier would be larger than 2. I estimate it to be 3. This means that the unions' marginal propensity to demand (spend) about two-thirds of each dollar of additional income, or .67, for political purposes. [l/(l-.67)=3]. Therefore, the unions' in kind political contribution had a value of $300 million in 1995-96. Since total unions cash expenditures are likely to be no less than the previous presidential cycle year, the political multiplier should be about the same, or perhaps slightly larger. Figure 1 illustrates the political multiplier; the services of the Democrat Party referred to in Figure 1 are discussed in the Appendix.

To critics who challenge my estimate of the unions' political multiplier, I call attention to additional millions of dollars in unions' cash contributions which I could justifiably have included in the base (the multiplicand) which is multiplied to derive the in kind total. Thus, in the 1995-96 election cycle year, unions spent $50 million on categories of political expenditures other than PAC spending. (Masters and Jones, Table 4, Journal of Labor Research, 1999, vol. XX, No. 3, p. 311).

Beyond these is the remarkable 1995 financial arrangement between the AFL-CIO and Household International: In exchange for the right to issue an AFL-CIO emblazoned credit card, Household agreed to pay the Federation $75 million a year for 5 years for a total of $375 million. Should $50 million be added to the unions' political spending and thereby enlarge the value of their in kind contributions? To date I a/m unaware of any public accounting of those funds - to what purposes they were put, and most importantly, the apparent absence of any accounting to the members using the credit card responsible for generating these payments to the AFL-CIO.

4. Can the Union Movement Sustain $400 Million of Political Expenditures?

Many, and not only the general public, equate the union movement with the AFL-CIO and therefore equate unions' political expenditures only with that organization. Because of its newsworthiness, its position in the structure and operation of organized labor is misunderstood. While, the Federation is the association of nearly all the major unions in the country, excepting the largest one, the National Education Association (NEA), in a sense it is the peak of the proverbial iceberg. The foundations of organized labor in this country are the thousands of local unions. Exactly how many there are is now known because the Labor Department has reduced the number which must file financial reports and because many others in the public sector are not subject to the Departments' reporting requirements. At this time, there are probably about 45 thousand local unions, a number far below the number since the initial reports to the Labor Department, but much larger than is generally recognized. The large decline is the result of the decline of private union membership in this country over the last three decades leading to the disappearance of thousands of locals because of the shrinkage of businesses and from union mergers. In addition to the locals there are perhaps some 2 thousand or more intermediate union groups (district councils and the like), and about 150 parent regional, national and international (members in Canada) unions. The union structure also includes more than one hundred state and city councils, affiliated with the AFL-CIO; these are important and effective lobbying and political bodies. Likewise, the Federation maintains a number of special departments at both the national and state levels, all of which add to the structural outreach of the union movement and enhancing its political power.

Combined, the income of the union movement was estimated at $12.7 billion and their assets valued at $10.1 billion in 1995. (Masters and Atkin, Table 1, Industrial Relations, Oct. 1997, p. 494.). Both figures understate the actual totals because most public unions are not required to file financial reports with the Labor Department and, therefore, the aforementioned figures based on the Labor Department data understate the total. Thus, the state units of the NEA and the American Federation of Teachers (AFT) receive a combined income in excess of $700 million, and their locals account for more than $300 million, implying a total income of the union movement of about $1 billion larger than noted above. Similar figures of assets are not available, but obviously unions as a whole have more than the $10 billion in assets just reported.

The financial power of unions is nearly evenly divided among the 45 thousand local unions and their parent bodies. Locals control about 47 percent of unions' total revenue and assets, while the parents unions' share accounted for 40 percent of revenue and 42 percent of assets; intermediate organizations accounted for the balance. Hence, it is clear that unions' power to spend the compelled cash income and in kind contributions is widely spread across the country and therefore in a position to benefit the Democratic Party at all political levels. All financial figures are for 1995. (Masters and Atkin, Table 1, Industrial Relations, Oct. 1997, p. 494; and Lieberman and Haar in a fax to the author).

Currently, I estimate that unions' income from the dues of about 16 million members and agency shop fee payers averages about $800 per year, for an annual total of about $12.8 billion. Hence, union management at all levels of the union structure has a meaningful and steady source of income on which to build its political agenda.

Conclusions.

In my judgement, there are numerous ethical and political problems with existing campaign finance legislation and policy. My recommendation, which I have consistently held, and presented in the past to the aforementioned Congressional Committees, is that contributions should be unrestricted for any domestic institution providing there is full disclosure of the identity of the donor, the amounts contributed, when and for which campaigns. This applies to both cash and in kind contributions. The most important reason for abandoning regulation of campaign finance is that the new regulation will surely fail just as it has in the past. Shrewd attorneys and clever judges will make Swiss cheese of any new legislation to regulate campaign finance. Finally, one may ask, are campaign finance matters the root of the perceived ills of the American political system? Free markets have served this country's economy and society well. Why shouldn't they in the political market? To paraphrase the observation of the greatest statesman of the 20^th century, Winston Churchill's comment on democracy, that democracy is the worst form of government - except for all the rest! Likewise, a free political market would be the worst form of raising contributions - except for all the rest, current and proposed.

Appendix

Major Democrat Party services sought by the unions and referred to in Figure 1 are as follows: Restrictions on trade agreements, including extending most favored nation status with China; new labor law; minimum wage legislation, defeat of paycheck protection legislation; defeat of vouchers in education.

On these issues, just as on political expenditures the unions' managements often impose their own views despite the clash of interests between them and the membership and within the membership itself. The most notable is paycheck protection. Enactment of legislation which would require unions to obtain the signature of members before spending monies for political purposes would severely reduce the unions' management political power.

Another important union demands for Democrat Party services are restrictions on trade. The union leadership's demand that environmental and labor standards be included in trade agreements is actually intended to slow if not halt the importation of certain goods. These demands pretend that there are no such standards, when actually the International Labor Office has addressed them for years and the U.S. government is a signatory to these agreements. Moreover, as official members of the American delegation to the ILO, union representatives regularly participated in determining these standards.

The leadership's demand for separate American standards make them the 21^st century version of the Luddites. Adoption of these rules might benefit some private sector organized workers, but a far larger group of private sector workers organized and nonunion (who are 90 percent of the labor market) would lose jobs, especially in the export industries. Needless to say, it will cost all consumers, reduce their standards of living, and reduce the output of the economy.

The position of the leaders of public sector unions on trade restrictions is even less defensible: The output of their members does not enter into the trade accounts, so they have not stake in protectionism. On the contrary, they have a stake in free trade. Trade restrictions will reduce their members living standards because they are also consumers. Similarly, this applies to the public sector members of private unions, a class of unions I have identified as the joint union. A particular case in point is the Service Employees International Union, the union once headed by John J. Sweeney, president of the AFL-CIO. About 75 percent of its members are in the public sector, so their standards of living would be damaged by Sweeney's championing trade restrictions.

Another important example of the Democrat Party services which the teachers' unions in particular wishes to obtain is their rejection of educational vouchers. The power of the teachers' unions is rooted in their monopoly control of public education; vouchers are a competitive challenge to that monopoly. By acquiring the Democrat Party's opposition to vouchers, the teachers' unions can maintain the status quo. So, like their confreres in the private sector, they, too, practice a 21^st century version of Luddism.

Organized labor's partnership with the Democrat Party will lurch further to the Left as the new century unfolds. Because of the future demographics of unionism, the dominant force within the union movement will become the public sector unions. Atop this group are the teachers' unions, the NEA and the AFT, and they are much further to the Left than most other unions. I expect the two to merge in the near term creating the largest union in the world. As part of that merger, the NEA will affiliate with the AFL-CIO, and in due course, will supply the leadership of the Federation. That development will further cement the close political relationship between organized labor and the Democrat Party and their interdependence will inevitably shift the political orientation of both further to the Left.