The history of organized labor is intrinsically tied to that of the state of Michigan. Its role in the political and social life of Michiganders is large, and both its accomplishments and mistakes are great.

Union members pay mandatory dues to their local and national chapters, and receive collective bargaining and other representation in return. Labor organizations, however, have a vastly larger goal than just representing their members in disputes. Their political influence has gone mostly unchecked for much of the last century. Recently, the federal government has asked labor unions for detailed accounting of their expenditures in the form of an LM-2 report so that the membership and public can see what exact purpose the unions are serving and how they are spending mandatory dues money. This is a huge step in the right direction towards clamping down on union power. While the first attempt was not perfect, a revision is currently being considered. Given the loopholes and abuses seen in the following examples, such a revision is sorely needed.

Stay Engaged

Receive our weekly emails!

The LM-2 asks unions to list all specific expenditures over $5,000. This includes officer and staff salaries, and categories labeled "other receipts, representational activities, political activities and lobbying, contributions, gifts, and grants, general overhead, and union administration." According to the instructions provided by the Department of Labor, most expenses should fall into one of these categories. Leaving the categorization of expenditures to these general labels is the downfall of the system.

According to the Department of Labor, all expenses over $5,000 "associated with preparation for, and participation in, the negotiation of collective bargaining agreements and the administration and enforcement of the agreements made by the labor organization," must also be reported. This also allows for expenses that are used for recruiting, organizing and protecting their status within a business. Unions have interpreted this to include money given to various political organizations. For example, the Teamsters International Union called a $12,200 donation to the organization "Jobs with Justice" a representational expense. While Jobs with Justice is an organization that shares similar goals with that of the Teamsters, Jobs with Justice also acts as a political organization that openly encourages its members to campaign for legislative and social issues.

Labor organizations across the board use this classifying technique to varying degrees. There is a separate column on the LM-2 for political activities and lobbying, and each union has separate PACs for this purpose. Union members should not be forced to give dues that go towards political goals. Representational costs should be strictly interpreted as costs associated with collective bargaining.

A second problem with the LM-2 is that of how organizing costs are reported. Unions are generally involved in two types of organizing. The first type, which is critical to the life of a union, is done for recruiting purposes to convince employees to organize under a specific union. The second type, a specialty of the Service Employees International Union, is "community organizing," which tends to be political in nature and is very different than organizing for growth. Community organizing lends itself to "corporate campaigns," which are public relations schemes that make companies look bad and in some cases even force corporations out of business. These differences in organizing are not addressed in the LM-2 and are both reported as representational costs. This discrepancy leads to members and interested parties reading the report and believing the union spends more on representation than it actually does. Organizing for political gain needs to be separated from recruitment and retention in the LM-2, which will lead to a more transparent picture on the actual work of labor unions.

Finally, the category titled "contributions, gifts and grants" is a broad umbrella name for money given to any organization. This leads to several contributions to political organizations and various consultants that can be misinterpreted as charitable and civic donations. This category should be defined more closely to reflect this difference, and would lead to a much more educated public.

The LM-2 is a valid first attempt at forcing organized labor to think twice about its spending and to limit corruption and embezzlement. The system still needs revision and, more importantly, enforcement, in order to truly accomplish this monumental task.


Jim Vote is a graduate student at Wayne State University and a labor policy intern at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

Post a public comment on this.
View all comments on Mackinac Center articles.