Testimony of Jarol B. Manheim
Mr. Chairman and Distinguished Members of the Committee, thank you very much for inviting me to address you this afternoon.
For the past nine years or so, I have been examining the use of strategic political communication by organized labor and allied organizations as they attempt to recapture the positions of influence they occupied in earlier times through a package of strategies that have come to be known as the corporate campaign. That research has included interviews and conversations with a diversity of individuals who have conducted or experienced corporate campaigns as well as an extensive review and analysis of media coverage, news releases, union publications, campaign materials such as handbills and white-paper reports, correspondence, Internet postings, case law summaries, documents, videotapes and other materials. It has formed the basis for my recent book, The Death of a Thousand Cuts: Corporate Campaigns and the Attack on the Corporation, and for my testimony today.
"Corporate Campaigns" Defined
A corporate campaign is an organized assault – involving economic, political, legal, regulatory and psychological warfare – on a company that has offended a labor union or some other group. The attack usually centers around the media, where the protagonists attempt to redefine the image – and tarnish the reputation – of the target company until it yields on whatever the issue in dispute might be. The central idea is to undermine the company’s relationships with its key stakeholders: customers, employees, shareholders, bankers, insurers, regulators and the general public, among others. In effect, the goal of the campaign is to define the target company as a corporate outlaw – a pariah institution – that must be stopped before it does further damage to our society, and to make anyone who deals with the company feel a sense of personal embarrassment for having done so. I have identified and studied more than 200 such campaigns.
As a scholar, I find these campaigns to be exceptionally interesting because they represent what may be the least constrained application of pure communication strategy to be found anywhere in our political system. In contrast to campaigns for public office, for example, where some of the same strategies and tactics are widely employed, these corporate, or perhaps more appropriately, anti-corporate campaigns may be waged by principals who are hidden from public view and may be advanced by third parties whose real or apparent objectives may actually mask the true objectives of the campaign. There are no spending limits, no time limits, no sunshine laws. And where the public and the media both know that an electoral campaign with persuasive intent is underway and accept it as legitimate, in a corporate campaign the objective is often to hide the true nature and goals of the campaign precisely because doing so renders the public, public officials, the media and others more susceptible to influence. In the corporate campaign, more than in any other setting I can think of except perhaps wartime propaganda, strategy is king, and the freedom and willingness to do whatever works to obtain the desired end are paramount.
It is also important to understand that, in corporate campaigns, "communication" includes much more than simply issuing potentially persuasive messages. Identifying or creating events that highlight the campaign’s principal lines of attack or otherwise contribute to the general vulnerability of the target company are essential parts of the communication strategy. So in addition to carefully shaped messages, these campaigns rely heavily on litigation, legislative and regulatory activities, shareholder actions, boycotts and demonstrations, and the like. Lawsuits (including every allegation, filing, hearing and decision), regulatory proceedings (inquiries, investigations, routine inspections or even non-actions), congressional or state legislative hearings, action requests from key legislators to regulatory agencies, policy and issue conferences, letters to corporate officials, third-party research reports – these and other "events" become the focal points of efforts by its antagonists to distract corporate management from its day-to-day responsibilities of running the company and, in the process, to generate an image of risk and uncertainty associated with the target company. Collectively, they are designed to keep the pressure on. Some of these events are real and naturally occurring, but many of them are manufactured by or with the encouragement of those attacking the company. One early advocate of this technique, Robert Harbrant, at the time president of the AFL-CIO’s Food and Allied Service Trades Department, put it this way: "We think you can rewrite the rules of the game by creating circumstances and exploiting them."
An example of this strategy at work is provided by the campaign being waged by Local 250 of the Service Employees International Union (SEIU) against Sutter Health, a major West Coast hospital company targeted by the union in an ongoing organizing effort. Over the course of the last several years, Sutter has been drawn at the union’s initiative into proceedings with the Internal Revenue Service (audit of alleged violations of nonprofit status and union allegations of tax fraud), Department of Defense (investigation of billing practices), Department of Health and Human Services (investigation of billing practices), Health Care Finance Administration (allegations of Medicare fraud), Federal Trade Commission (antitrust investigation of a proposed merger) and the National Labor Relations Board (multiple unfair labor practice claims), as well as more than a dozen state and local legislative and regulatory proceedings on matters ranging from alleged campaign spending violations to licensing proceedings and the issuance of state healthcare contracts. More often than not, the agencies in question have sided with the company, but that does not mean the campaign has been unsuccessful – at least in its intermediate goals of claiming the attention of Sutter’s management and forcing the company to go to extraordinary lengths to justify and defend virtually every action that it takes.
The Challenge of Organizing Workers
As at Sutter Health, one of the most common applications of the corporate campaign, and the one that lies closest to the focus of this hearing, is to pressure nonunion companies to accept representation of their employees through means not anticipated under, or covered by, the National Labor Relations Act. The increasing reliance on such campaigns is explained by the recent history of the labor movement in the United States.
As a percentage of the workforce – or what the unions term "labor density" – membership in unions peaked around the middle of the last century and has been declining more or less steadily ever since. Today labor density in the economy overall stands in the vicinity of 14 percent, and in the private sector at less than ten percent. Understandably, this is a matter of great concern to organized labor… philosophically – because too few workers are protected by union membership – economically – because the unions as de facto businesses are losing market share and sources of income – and politically – because along with lost market share and income comes loss of political influence. For all of these reasons, since at least 1995 with the election of John Sweeney as President of the AFL-CIO, the labor movement and many of the nation’s leading unions have committed themselves to energetic efforts at rebuilding their movement through increased organizing.
Traditionally, organizing has been accomplished through secret-ballot elections in which workers are offered the opportunity to select a union to represent them. But where the unions once claimed victory in a solid majority of such elections, today their chances of winning are at best even, and perhaps less than that. And the costs of such organizing drives are high – estimated by some union officials at as much as $1000 a head. The unions attribute their reduced success rate in part to the increasing sophistication of so-called union-avoidance strategies by companies where they seek to organize workers. It is also the case that unions share with the corporations themselves a relatively low standing in public esteem as indicated by various public opinion surveys, and that may be a factor as well. But whatever the cause, it is clear that the risk entailed in a union’s investing significant time and resources in a traditional organizing drive at a nonunion company is higher today than in years past.
This challenge of declining density and low public esteem, together with the trend toward globalization of the workforce and the virtual elimination of the strike as a useful weapon in the early 1980s, led labor leaders to seek an innovative strategy for organizing workers and rebuilding their movement. During the 1980s and 1990s, these leaders turned increasingly to the pressure tactics of the corporate campaign as one component of such a strategy. In a series of corporate campaigns at such companies as AT&T, Baltimore Gas & Electric, Beverly Enterprises, Blue Cross, Catholic Healthcare West, Federated Stores, IBM, K-Mart, Marriott International, Microsoft, New Otani Hotel, Nordstrom, Overnite Transportation, Perdue Farms, Sprint, Sutter Health and Wal-Mart, the unions developed a methodology of attack which they consolidated in a series of how-to manuals that covered such topics as researching the target company to identify its vulnerabilities, building coalitions with civic and religious leaders and various progressive advocacy groups who would legitimize the union’s message, and managing media coverage of the company and the campaign to advantage. One of the early and most influential advocates of this effort was John Sweeney, then president of the Service Employees International Union (SEIU).
In a real sense, the 1995 contest for control of the AFL-CIO was a battle between advocates of traditional labor organizing and advocates of this new style of organizing. Mr. Sweeney’s victory in that contest marked the ascendancy of the innovators, and a new focus on labor as a social cause and social movement. As Mr. Sweeney put it in his inaugural address that year, "We will use old fashioned demonstrations, as well as sophisticated corporate campaigns, to make worker rights the civil rights issue of the 1990s." Another labor leader, Monica Russo, now president of SEIU’s District 1199 in Florida, put it more bluntly a few years later when she observed that "Organizing is about power, not a 50 cent per hour wage increase."
"Card Check" and "Neutrality"
While corporate campaigns gave labor a new and coherent approach to organizing at nonunion companies by generating immense pressure on management, they did not in and of themselves accomplish unionization or address the problem presented by the relatively low success rate the unions were experiencing in NLRB-supervised elections. For that, the unions decided to marry their campaigns to a tandem of organizing demands – card check and neutrality – on which they would insist as an alternative to any secret-ballot vote by workers.
Card check refers to a procedure in which workers are encouraged to sign cards expressing their desire to be represented by the union and in which the company agrees to recognize the union when a majority of workers has signed such cards. When successfully employed, card check legitimizes recognition of the union without the need for an election. In that way, it eliminates much of the cost and risk of an organizing campaign. More than that, it takes the campaign out of public view and outside of the process anticipated in the National Labor Relations Act. Elections must be conducted according to certain rules, the violation of which can constitute an unfair labor practice. In a card check procedure, these rules do not generally apply. The union’s representatives can visit employees in their homes or elsewhere and can obtain signatures under a variety of circumstances that might not be permitted in a secret-ballot election. Thus, the union can avoid delays, and faces fewer barriers in contacting workers. Mirroring the union’s claims about corporate union-avoidance activity, management often claims that card check procedures can lead to intimidation of workers, especially recent immigrants.
Whatever one’s view of the dynamics, card check does increase the likelihood that organizing efforts will be successful. In a 1999 analysis prepared for the George Meany Center for Labor Studies, for example, Adrienne Eaton and Jill Kriesky reported that more than 70 percent of card-check organizing campaigns were successful – significantly better from labor’s perspective than the outcomes of secret-ballot elections.
To enhance the effectiveness of a card-check drive, unions generally insist that management adopt a position of neutrality, which is to say, that the company promises that it will not communicate to its workers any indication that it opposes the union. This demand represents the unions’ direct response to the union-avoidance efforts of management, and is crucial to their success. In their 1999 analysis, Eaton and Kriesky found various implementations of neutrality including, among others,
Neutrality is clearly a device meant to freeze companies’ ability to resist the union, with the result that workers will hear only one voice. It is the labor-management equivalent of unilateral disarmament. Together with card check, it effectively deprives companies of two key lines of defense against unwanted unionization – an open and balanced competition of ideas and a secret-ballot election.
The importance the unions attach to this one-two combination was evident as recently as June of this year when Ron Gettelfinger, the newly-elected president of the United Auto Workers Union, which has lost more than 700,000 members in the last twenty years, told his members at their annual convention that the union would emphasize card checks in its organizing drives and would use whatever leverage possible to pressure employers to remain neutral during these efforts.
Role of Corporate Campaigns in Organizing Workers
The question then arises: Why would a company that does not favor unionization of its employees agree to card check and neutrality?
That is where the corporate campaign comes in. There are things that companies fear more than unionization of their workforce – loss of customers, loss of financing or insurance, balky institutional shareholders, overly zealous regulators and querulous media are but a few. The corporate campaign is designed to stimulate some number of these stakeholders to question their relationship with the company, and to convert them from supporters of the company into pressure points against it. To accomplish this, the unions often rely on a mixture of truth, allegation and hyperbole intended to raise the risk – whether economic, political or even psychological – of doing routine business with the company.
In the SEIU’s Sutter Health campaign, for example, the union proffered the following statement in the first issue of its Sutter Scam Sheet – a broadsheet it distributed to the media, analysts, management and others: "What kind of care do patients get? Sutter was cited by the state [of California] 26 times for patient care violations in intensive care units."
Corporate campaigns are based on extensive "opposition research", and this statement is very likely true. But it omits some key facts – among them the time period in question, the nature or severity of the violations, and the fact that at the time Sutter operated 26 hospitals in California. Thus an equally true statement might have been that, over the course of one year (or five?), Sutter experienced an incidence of ICU violations of one per hospital (of which only X were deemed to be serious or life-threatening?). As a result, the union’s true and accurate, but incomplete, statement communicates a sense of urgency and outrage that may not be appropriate or proportionate. A steady drumbeat of such hyperbole and extreme claims designed to appeal to the sensation-oriented media, to turn the public and others against the company in question, and to keep management on the defensive, is a commonplace of the corporate campaign.
The core message from the union to the company is straightforward: Give us what we want and all of these "troubles" you are experiencing will end. Bruce Raynor, who now serves as President of UNITE, the clothing and textile workers union, made the point when he said that "[e]mployers think we are out of our minds and the result is we win… because we’re willing to do what’s necessary. We’re not businessmen, and at the end of the day, they are. If we’re willing to cost them enough, they’ll give in."
"Wholesale" versus "Retail" Organizing
In effect, elections administered by the NLRB are a form of what we might term "retail" organizing. That is to say, in a competitive marketplace of competing ideas, the union must convince each individual worker of the merits of voting for representation, and those votes must be cast by a majority of workers in a secret ballot election before the union achieves its objective. Workers are organized from the bottom up, one by one. Card check and neutrality, on the other hand, can be thought of as a form of "wholesale" organizing, in which the union needs to convince the company itself, in a sense, to turn over its workers – which is to say, to withdraw from the contest. Individual workers must still sign pro-union cards in this setting, but not in a regulated and competitive environment. In this model, workers are organized from the top down in a process facilitated by management. This process was aptly summarized about ten years ago by Joe Crump, an official of a local of the United Food and Commercial Workers, when he said, "Employees are complex and unpredictable. Employers are simple and predictable. Organize employers, not employees."
In my view, the issue before this subcommittee is simply this: Does the reliance on card check, neutrality and corporate campaigns that attack corporate reputations and stakeholder relationships for the purpose of pressuring nonunion employers into facilitating unionization protect and advance the interests of workers, as the unions argue, or does it deprive those workers and the companies that employ them of the rights and protections afforded them under the National Labor Relations Act? My research does not provide an answer to that question itself. Based on that research, however, I can attest that nonunion companies which have been targeted in corporate campaigns aimed at organizing workers have, in fact, felt considerable pressure to forgo their rights under that law in return for being permitted simply to conduct their daily business without the threat of continued damage to their reputations and financial well-being. Thus, whether it is legitimate or not, the corporate campaign as a pressure device to advance union organizing is certainly effective.