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A Public Service Message foam the American Income Life Insurance Co.Waco, TexasBernard Rapoport, Chairman of the Board and Chief Executive Officer career upgrading programs directly sponsored by unions, such as the SEIU’s \(Service Employees’ International which is designed for relatively low-level health-care, clerical, and janitorial employees. This effort, too, began dried up under the Reagan administration. Much of the management personnel literature concludes that few companies pay systematic attention to their “internal labor markets,” that is, efforts to encourage their low-level employees to advance. Fulfilling this function is a very natural role for trade unions, one that can improve both their image and the substance of their activities with the broad public and the rank and file. It is another case where the union must do the job, but the state must provide extra resources. One could imagine a pool of public money reserved for joint labor-management projects of career upgrading and lifetime learning. In some future administration, one could also imagine job-training money being targeted to employee-run ventures, or used to teach co-determination to trade unionists. I know of one worker-run enterprise that actually managed to get some JTPA training slots, but this was because of some clever local grantmanship, not thanks to a policy priority. Finally, there is a whole range of laws that function as de facto obstacles to co-determination and capital strategies on the part of labor. Unions have only limited authority over pension funds. The Employee Stock nies to set up ESOPs that nominally confer a degree of worker ownership, without passing through voting rights in the stock. ESOPs are now notoriously unregulated with regard to their governance structure; it is possible for management to manipulate an ESOP in order to take a company private; management can also use an ESOP to give different classes of shareholders different voting power, and even to terminate a regular pension plan. The basic problem with the ESOP legislation is that it was never intended to bring about broad worker ownership, let alone worker empowerment, but only a very mild form of token profit sharing coupled with a tax preference to lower management’s cost of capital. That tax preference will cost the other taxpayers $2.5 billion in 1986, and an estimated $4.4 billion by 1991. This amount of tax subsidy, if it is continued, ought to be used to promote authentic worker ownership, preferably with direct union involvement; reform is indicated. In general, American labor law presumes an adversary relationship that precludes unions playing a role in management. The “duty of fair representation” doctrine places the unionist who serves on a company board in a conflict of interest, and actually makes him vulnerable to worker lawsuits. There is no legal structure for codetermination in American labor law, and such deals as the Eastern Airlines contract with the Machinists must be handcrafted, one company at a time. Even fairly modest qualify-of-worklife programs risk falling afoul of the Wagner Act, whose prohibition of company unions limits management involvement in any “labor organization.” \(See Donna Sockell, “The Legality of EmployeeParticipation Programs in Unionized Firms,” Industrial and Labor Relations Review, The law is also very murky on the issue of how unions may wield their economic power. There is one loophole in the Taft-Hartley Act’s ban on secondary boycotts. Nothing in the act may interfere with free speech, and the “corporate campaign,” so far, has been able to crawl through this loophole. A union campaign against an insurance company that is financing a law-breaking employer is not considered a secondary boycott under Taft-Hartley. On the other hand, union pension funds are subject to strict “prudent-man” rules under the and unions are not supposed to use pension funds for purposes other than maximization of return. When the Steelworkers, for example, as part of the campaign against Phelps Dodge, urged other unions to fire Manufacturers Hanover as their pension-fund manager, brother and sister unions were advised by counsel not to declare they were replacing Manny Hanny because of the bank’s ties to Phelps Dodge. They could only point to the bank’s pension-fund management performance, which was conveniently mediocre. A national administration serious about a new unionism would reform the law to allow greater union use of union economic resources, and would use public resources to help engender a broader labor role. Obviously, most of the rejuvenation of the labor movement will begin in that movement itself. It will include both new strategies for organizing the unorganized, and for strategically wielding the economic power that labor has but does not use. The combination of these twin approaches will produce something very different from the business unionism that flourished for three decades after World War II. It will involve a new generation of trade unionists, and there are some hopeful signs that the entrenched leaders in at least some unions are making room for new leadership. If nothing else, circumstances are forcing experimentation. The state, I have argued, also has a very important role to play, as a midwife. Elsewhere in the industrial world, unions have relied on the state to give them some institutional legitimacy but not to do their bargaining for them. In several of the nations with the most effective union movements, such as Sweden, Austria, and West Germany, unions have preferred to work out their bargains with industry directly, without a strong bargaining role for the state, which enters only when there are bargaining impasses. But the state does play a crucial role, via public policy and legal framework, in creating institutions that allow labor to function as a fruitful social partner. In Germany, where works councils are a wellestablished part of the industrial system, it would be inconceivable for public debate to recognize only two parties to a takeover dispute, management and shareholders. Fifty years ago, when President Roosevelt signed the Wagner Act, it provided an already resurgent labor movement with legal standing and political running room. John L. Lewis could say, with only slight exaggeration, “President Roosevelt wants you to join the union.” The task today is harder; it is not to legally recognize and channel a power that has established itself de facto, but to help rebuild the movement itself. Yet the re-creation of a social contract between industry, labor, government, and society is essential, not just to build industrial democracy, but to assure that industrial nations remain democracies. THE TEXAS OBSERVER 21