Wall Street Journal: California’s union showdown

NewsAugust 11, 2010


Next month in California, nearly 45,000 Kaiser Permanente health-care workers will choose their union. America hasn’t seen a private-sector labor election this big since the United Auto Workers organized Ford in 1941. By the time ballots are cast, tens of millions will have been spent on a six-week campaign as brutal as any political race this year. At stake? No less than the future of America’s most powerful labor group, the Services Employees International Union.

What’s also unusual about this election is that it doesn’t pit union against employer, but union against union. Kaiser’s workers were organized years ago by the SEIU. The drama started last year when Sal Rosselli, who ran the SEIU’s huge California health-care local from Oakland, left to found a rival outfit called the National Union of Healthcare Workers (NUHW). His union has but 6,000 members; the SEIU claims 2 million. Mr. Rosselli has spent the last 18 months trying to steal away as many of the 150,000 members from his old SEIU local as possible through a series of union elections. “It’s a real David and Goliath story,” he says.

Kaiser—the SEIU’s crown jewel in health care—is a possible game changer. Employees who hold some of the best-paying unionized jobs around will have the choice to switch from the SEIU to Mr. Rosselli’s group. Californians make up a third of the union’s members, so losing Kaiser would be a grave blow.

Of course, no union can afford to lose dues-paying members in a shrinking market for organized labor. Only 12% of the American workforce (7% in the private sector) belongs to a union today, down from 34% in the 1950s. Some see salvation in health care. America is aging, and ObamaCare will eventually push 30 million Americans into the health-insurance system, creating scores of new jobs along the way. “Outreach to nonunion workers is our top priority,” says Mary Kay Henry, who took the helm of the SEIU in April.

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Can Sal Rosselli and his upstart union take down the all-powerful SEIU?

First Ms. Henry must douse the fires started by Andy Stern, her controversial predecessor. In 14 years atop the SEIU, Mr. Stern pioneered a new labor strategy: Size brings power, so grow at all costs. He bullied and charmed companies to get them to unionize—often, claimed his critics, in exchange for weak contracts for the workers. He raided smaller unions. And he centralized power around the group’s Washington headquarters. In a decade, the SEIU doubled its membership and became the single biggest contributor to the Democratic Party.

But Mr. Stern made powerful enemies in the House of Labor, which was one of the reasons cited for his surprise decision to step down this spring. California is the most fiercely fought campaign left over from his tenure.

At 60, Mr. Rosselli considers himself “old school” labor. The primary job of unions, he says, is to get the best deal for the members. Active in Bay Area unions for decades, his strong grass-roots support is his best asset in the struggle against the deep-pocketed SEIU. In Mr. Rosselli’s telling, Mr. Stern—too busy playing Washington politics and shaping the Democratic liberal agenda—lost touch with the base and betrayed the Holy Grail of union democracy.

SEIU officials offer a different story. A longtime Stern lieutenant, Mr. Rosselli was happy to see the SEIU’s tactics turn his small northern California local into the second-largest health-care union in the country. Power, they claim, went to his head. He found the religion of “union democracy” only when the SEIU’s Washington leadership decided to split his union and put half of the members in a different local dedicated to home-care workers.

Mr. Rosselli fought the move, arguing that members weren’t consulted, and he was ousted in January 2009. The SEIU put unelected Stern loyalists in place to run the local, installing a “trusteeship,” which remains in place. In the messy aftermath of the divorce, the SEIU accused Mr. Rosselli of misusing union funds and filed a $25 million civil suit. This spring, a federal jury awarded it $1.57 million, finding that Mr. Rosselli and his followers hatched their plans for their new union while still on the SEIU payroll. Mr. Rosselli is appealing.

Speculation about what the SEIU will spend to counter Mr. Rosselli in the Kaiser fight runs from $25 million (as NUHW officials say they hear) to as high as $40 million. As in past elections, Ms. Henry’s group will likely deploy direct mail, phone banks, door-to-door campaigning and advertising. Speaking by phone, Ms. Henry says the $40 million figure “is nowhere near the ballpark,” adding that while she doesn’t know how much the campaign will cost, “our union is committed to making sure these workers prevail.” The SEIU spent $10 million last year on an election involving 10,000 home-care workers in Fresno, and won narrowly.

One bit of good news for the SEIU came last week, when Ms. Henry settled a huge Stern-era dispute with Unite HERE, an apparel and hotel workers union led by John Wilhelm. Mr. Stern tried to raid this international union last year, but Mr. Wilhelm held the stronger cards and won a large cash settlement.

Mr. Wilhelm had embraced his enemy’s enemy, lending Mr. Rosselli his union’s support against the SEIU. As part of Unite HERE’s deal last week, Ms. Henry got the union to end its backing for the NUHW in exchange for a peace settlement otherwise almost entirely favorable to Unite HERE. “For her, that was the bottom line, clearly,” says Mr. Wilhelm, referring to Ms. Henry’s insistence on his neutrality in California. “The support we provided NUHW,” such as giving it office space, he adds, “pales in comparison to what SEIU brings to the fight.”

Yet the SEIU’s heft can be a disadvantage in the People’s Republic of California, exposing the union to flak from an unlikely flank—the farther reaches of the left. Here sympathy tends toward Mr. Rosselli, who looks more like a traditional labor leader. The latest charge: that the SEIU is fighting the NUHW with tactics perfected by business, which is probably the worst insult in the book for this crowd.

Earlier this week, Dolores Huerta, a co-founder of the United Farm Workers and a historic labor figure in California, published an “open letter” to Ms. Henry on the Huffington Post that accuses the SEIU of intimidating Kaiser workers. Saying that she visited four Kaiser hospitals to talk to workers about the NUHW, Ms. Huerta wrote that at each, “SEIU staff surrounded them and began chanting and yelling insults, refusing to let workers talk.” Ms. Huerta called on the SEIU to put “an end to a mistaken campaign of aggression.” In its defense, the SEIU says the workers recently struck a new labor contract with Kaiser, which would be endangered if another union took over.

The outcome at Kaiser is hard to call. But the SEIU can remain a political powerhouse and the leading patron of Democratic candidates only as long as it keeps membership rolls strong and growing.

Source: Wall Street Journal