Letter Warns Union on Threats Over Pensions

Posted May 4, 2005 at 6:46pm

The Department of Labor this week warned the AFL-CIO not to skirt federal labor laws as the union works to oppose President Bush’s Social Security overhaul.

In a letter Tuesday, the department told unions not to use financial services firms’ positions on the issue as a primary reason to withdraw pension business from those firms.

Labor union officials said they are well within the law and called the letter the result of an inappropriate push by Republican Reps. John Boehner (Ohio) and Sam Johnson (Texas), both leading members of the Education and the Workforce Committee, to use a federal department to bring the group to heel.

“That’s not how things work in this country,” said Damon Silvers, associate general counsel of the AFL-CIO.

Boehner, who chairs the Education panel, and Johnson prompted the Labor Department letter by requesting an opinion in March.

In a statement, Boehner said the letter suggests the AFL-CIO has already broken the law and he expects the department to “investigate it vigorously.”

Business groups likewise hailed the letter as vindication of the idea that the labor group has stepped out of bounds in its efforts to oppose Bush’s plan.

Labor Department officials did not return calls for comment, and Silvers called the charge absurd.

The letter does not directly accuse the AFL-CIO of breaking any laws. But it does ask the group to clarify to member unions that they cannot determine which financial services firms manage their pensions solely on the basis of their Social Security views. Silvers said his group would answer the request by forwarding the letter to member unions this week.

Financial services firms that profit from the billion-dollar pension business have complained in recent months of union harassment for their stance on Social Security. Earlier this year, the AFL-CIO succeeded in knocking two companies and a trade association from the coalition of business-backed groups helping sponsor the lobbying campaign for the president’s effort.

Meanwhile, Derrick Max, head of the Alliance for Worker Retirement Security, which includes business interests supporting Bush’s drive, said the letter was a good start.

“It clarified the stuff we’ve been harping about,” Max said. “Hopefully, it’s over. Hopefully, these letters [from unions to fund managers] will stop. Hopefully, on Social Security, we can focus on the merits of reform and not intimidation or blackmail.”

But Silvers said his group plans to continue to press financial services firms Wachovia and Charles Schwab, both of which handle large union pension business, on their support of Bush’s campaign to overhaul Social Security.

The AFL-CIO has recently turned its attention to pharmaceutical giant Pfizer, whose CEO, Hank McKinnell, serves as chairman of the Business Roundtable, a Washington business lobby leading the fundraising drive to support the president’s plan.

The AFL-CIO last week sent McKinnell a letter asking him to explain his retirement package worth $80 million, according to The Associated Press. A labor union representative followed up on the request last Thursday at the company’s annual meeting, but McKinnell said the company needed more time to evaluate it, the AP reported.

Silvers said no labor protests of Pfizer have been scheduled but added they could be soon.

If the Labor Department does investigate union intimidation of financial services firms, Max said his group would share evidence it has collected showing labor “over or around the edge” of the law.

But Max added that labor pressure has tapered off recently, a development he dated to the Labor Department’s agreeing to review the matter.

The Labor Department letter, sent by Deputy Assistant Secretary Alan Lebowitz, also warned the AFL-CIO not to use pension fund dollars to pay for its opposition to the reform drive or to educate members about their viewpoint.

Silvers said his group was still reviewing that advice.