The House of Labor Divides


By Aaron Bernstein There was very little to celebrate as labor leaders gathered in Chicago on July 25 for the 50th anniversary of the AFL-CIO's founding. Instead, the mood was one of grim determination in the face of the partial breakup of the labor movement. And worse days may be ahead yet for organized labor.

For months, as several large unions challenged the leadership of AFL-CIO President John Sweeney, both sides expected the other to give a little in the interests of keeping the federation intact (see BW, 5/25/05, "Is Labor Headed for Splitsville?")

As recently as a few days ago, AFL-CIO officials and Sweeney backers were convinced that no one would really quit the house of labor except for the Service Employees International Union (SEIU) under President Andy Stern. He has led the dissidents from the beginning.

BLUFFS CALLED. Yet the 70-year-old Sweeney refused to step aside and decline to run for re-election on July 27 -- the one step that likely would have kept his organization together. Likewise, Stern & Co. were convinced that Sweeney wouldn't want his legacy to be labor's breakup. They thought that if they could show they weren't bluffing about leaving, Sweeney and his allies wouldn't force the issue.

In the end, each side called the other's bluff. Two of the 13 million-member federation's largest unions, the 1.8-million-member SEIU and 1.3-million-member International Brotherhood of Teamsters announced that it had formally quit effective July 25. Sweeney vowed to do what he could to heal the breach in the midst of the group's quadrennial convention -- but he also made it clear that he wasn't about to resign as his opponents have demanded.

The dissidents seem equally adamant that the point of compromise has been passed. "Today, SEIU is respectfully making a choice to go in a different direction," Stern told a press conference packed with more reporters than the labor movement has attracted in years. "We wish the AFL-CIO well and hope they are successful. But we know that working people in America can't afford to wait any longer."

DOMINO EFFECT? No one here is quite sure what the long-term consequences will be. Some Sweeney backers seemed almost glad to be rid of what they've come to see as troublemakers. But the split creates two immediate problems.

For starters, the two departing unions contribute $20 million a year out of the federation's $126 million budget -- almost 18%. The implication: More painful cutbacks are in store, on top of a 25% staff reduction Sweeney already had put in place this year in an effort to appease the dissidents.

Then there's the big question: How many more defections there will be? The SEIU and the Teamsters recently formed the Change to Win Coalition with four other unions unhappy with labor's continuing decline under Sweeney's 10 years in office.

The United Food & Commercial Workers may follow the first two out the door later this week. Another group, Unite Here, which represents the needle trades and hotel workers, is contemplating departure as well. If they leave, the AFL-CIO's budget hole will only grow.

"INSULT TO THEIR UNION." Even if Sweeney can keep them under labor's tent, the fractiousness seems sure to worsen in the days ahead. The other dissident unions that haven't formally quit have said that they will no longer participate in AFL-CIO meetings or sit on its committees. In the eyes of those who back Sweeney, that's a betrayal even if they keep paying dues to the federation.

For the dissident unions to decline to participate in the AFL-CIO "is an insult to their union brothers and sisters, and to all working people," Sweeney said. But the biggest test may come next, if the anger evident among both camps leads to bitter infighting, distracting both sides and weakening the union movement politically.

Leaders from each side vowed to refrain from recruiting members from opposing unions in overlapping industries. "We're not setting up the federation to go raid and undermine what has been accomplished [by other unions]," said Teamsters President James Hoffa.

But such internecine warfare has long been a part of organized labor (see BW, 7/25/05, "This Would Be a Very Painful Divorce"). And without the umbrella infrastructure of the AFL-CIO to adjudicate, such battles could intensify.

Bernstein is a senior writer in BusinessWeek's Washington bureau


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