Elaine Chao

Readers of Union Corruption Update may have noticed something recently: a shortage of references to criminal investigations by the Labor Department's Office of Labor-Management Standards (OLMS). That's not a figment of the imagination. The main source of these references - the OLMS website - hasn't been updated in at least three months; the most recent posting concerned a guilty plea entered on March 8. This may well be part of a larger strategy to restrict the flow of information to NLPC and other organizations dedicated to promoting union accountability. Organized labor, after all, is a key source of support for President Obama. And given that knowledge is power, it follows that the less the public knows about labor corruption, the more likely it will flourish. The current administration doesn't want to be on the wrong side of union power.

Even before assuming power, the Obama administration had given signs of wanting to undo certain Department of Labor regulations written during the Bush years.  But that didn’t stop the old regime under Labor Secretary Elaine Chao from getting in a few last blows for union transparency.  On January 16, the department’s Office of Labor-Management Standards announced that it would publish a final rule in the January 21 Federal Register updating Form LM-2 for larger unions and restricting the circumstances under which smaller unions could file the simpler Form LM-3.  The regulation, developed pursuant to the Labor-Management Reporting and Disclosure Act of 1959 (i.e., the Landrum-Griffin Act), subsequently appeared on the latter date, the day after President Obama’s inauguration.

Experience has shown that America’s labor unions, in absence of mechanisms to enforce accountability, have a penchant for disguising how they derive and spend their money.  The Bush administration, led by Labor Secretary Elaine Chao, from the start has been engaged in an ongoing effort to combat union corruption before it happens.  The centerpiece of that effort for several years has been an expanded, more detailed version of the “LM-2” annual financial reporting form for decades required of larger unions.  The AFL-CIO went to U.S. District Court late in 2003 to block implementation of the new rule, but lost in federal appeals court a year and a half later.  But many have wondered since:  What effect is the new regime having on the way unions operate?  A new report by Hudson Institute scholar Diana Furchtgott-Roth gives more than a few answers.  Using extensive charts as well as narratives, she argues that unions have made some progress in improving their public transparency, but that this is primarily the result of government pressure.