Whatever Happened to Paycheck Protection?

Allison R. Hayward

March 1, 2002

President Bush enjoys tremendous public support, and labor unions do not. What’s more, during the primary campaign, one chief point of contention between candidates Bush and McCain was campaign finance reform. McCain ran on the promise to eliminate soft money and issue ads. Bush instead favored disclosure and eliminating labor unions’ use of compulsory dues for political purposes—known popularly as “paycheck protection.” Bush defeated McCain.

But now, the President has signed McCain’s polymorphous reform bill, with no paycheck protection. To understand how this could occur requires first a closer look at unions and politics.

Labor union membership is declining overall, but remains a relatively bigger deal in the public sector than in the private sector. What do we know about these unions? Not as much as we should. Some unions are required to file financial reports with the Department of Labor, but these are vague when it comes to union expenditures. We don’t know how much unions make in dues as opposed to income from other sources, or how much of that is spent on collective bargaining, or on politics. Many unions representing public employees need not file even these reports. Clinton’s Labor Department rescinded regulations that would have improved the situation somewhat by requiring unions to report expenses by functional category.

Paycheck protection proposals seek to limit unions’ use of dues for political activities, by requiring annual approval from employees before dues could be collected for use for politics. Of course, such a reform only affects employees in closed shop states (when I last checked there were 29 such states). Paycheck protection follows in the spirit of the Beck decision, which recognized non-members rights to object to the use of dues for political purposes, but goes beyond Beck by protecting all employees—not just those who do not join the union. Since state laws regulating dues collection could be preempted by federal labor law, the best reform must be made at the national level.

Unions, especially those representing public sector employees, tend to favor regulation, government spending, and oppose privatization. They thus tend to support liberals over conservatives and Democrats over Republicans.

Unions can be big political players. They have been a significant source of soft money to the Democratic Party, and make contributions at the state and local level in jurisdictions that permit them. They have produced issue advertising. They administer PACs. They communicate and organize their members to assist with campaigns. Our new campaign finance laws affect their issue advertising and soft money programs, but do not touch their rank-and file mobilization efforts. And by and large, they are not friends of the Bush Administration. So, one might assume, the Administration would be pleased to fight for a reform that decreases their influence.

But the Bush team didn’t ultimately demand paycheck protection reform. Perhaps they believed that, given the uncertain efficacy of the reform, the game might not be worth the candle. Paycheck protection reforms affect only dues assessments in closed shop states, and although union finances remain shrouded, it is likely that unions make significant sums outside of dues that could still be used for whatever purpose the union chooses. Paycheck protection laws also limit only those dues used for political purposes—which is understood not to apply to issue advertising, and may not touch union member-only communications and organization.

Bush shouldn’t ignore this area, though. One alternative would be to revisit the transparency reforms pursued by his father’s administration. The more the public and the rank and file know about a union’s finances, the better able we shall be to evaluate unions’ activities, and the suitability of candidates who rely on their money and manpower. In the era of Enron, who could argue for secrecy over disclosure?

Allison R. Hayward is an attorney in California and an Adjunct Fellow of the Ashbrook Center for Public Affairs.