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Union Officer to Run Federal Reserve Bank of New York

The Tender Trap

by DAVID MACARAY

“The saddest day of your life isn’t when you decide to sell out.  It’s when you decide to sell out and nobody wants to buy.”

—Mickey Spillane

Last week it was announced that Denis Hughes, head of the New York State AFL-CIO, was named interim chairman of the Federal Reserve Bank of New York.  While serving as bank chief he’ll be allowed to retain his position with the state AFL-CIO. 

This means that Hughes, former officer of Local 3 of the IBEW (International Brotherhood of Electrical Workers) in New York City, will finally be running with the big dogs—JP Morgan Chase chairman, James Dimon, and General Electric CEO, Jeffrey Immelt—both members of the NY Federal Reserve Bank’s board of directors. 

Those with a weakness for nostalgia will recall that Wall Street and Big Labor were, as recently as the 1950s, formidable enemies.  It will also be recalled that the 1950s were the most prosperous period in American history—a period when union membership was at a record 35-percent, confidence was sky-high, and the middle-class, by all accounts and measurements, was positively thriving. 

Back then, Wall Street and Big Labor each had its own unique world view and its own single-minded agenda; and because each was powerful enough to have carved out and maintained a separate niche, an equilibrium was reached.  You have yours, we have ours.  Neither was big enough to dominate the other, neither was small enough to be dominated.

Then, in the wake of the Reagan Revolution, Wall Street somehow convinced labor that in order to “succeed,” America’s unions needed to abandon the silly notion that management and labor were adversaries, and, as preposterous as this sounds, learn to work together as Teammates.

For many reasons (some fairly reasonable, others as dumb as dirt) organized labor bought into this nutty proposal, and, as we’ve all witnessed, it’s been downhill ever since.  Union membership has plummeted, wages, benefits and working conditions have declined, the middle-class is in free-fall, and the disparity between the wealthiest and poorest is greater than at any time since the 1870s.  Polls show consumer confidence to be at its lowest point since the Great Depression.

As for Denis Hughes, the only thing more astonishing than the appointment itself, has been the response.  Organized labor, by and large, seems to think it’s an extraordinarily good thing.  They’re touting having Hughes as head of the Fed as something on the order of having a fox in the hen house.  Well, maybe a decrepit, enfeebled and disoriented fox, surrounded by steroid-inflated mega-hens. (Or more accurately:  A fox voted by the hens as Most Qualified to enter the hen house).

The other astonishing response was the faux-outrage shown by the Wall Street Journal, which speculated with faux-alarm that the appointment indicates that the Obama administration is determined to give labor “more power.”  The WSJ was blowing smoke and they knew it.  This appointment was a public gesture, an “ornament,” no more, no less—a bone thrown to labor, most likely in return for the administration having jettisoned the EFCA, hoping labor won’t hold a grudge.   

First of all, Hughes will be in the job only until the end of the year; so unless he can foment a revolution in four months, he’s no threat.  Second, given his track record as a corporate lackey (a one-time crony of financier Felix Rohytan), he’s nothing resembling a labor “activist.”  The man is a professional bureaucrat, an AFL-CIO mandarin, so far up the chain of command he wouldn’t recognize a first-step grievance if it landed on his lap. 

And third, even if, hypothetically, Denis Hughes were a genuine, take-no-prisoners union radical—even if he came in with a wildly ambitious pro-labor agenda—what could he do with a bank?  It’s a bank, not the U.S. Congress.  And more to the point, what are the chances an institution as tradition-bound and anti-egalitarian as the Federal Reserve Bank of New York (previously headed by Stephen Friedman, former chairman of Goldman Sachs) would allow a union goon to get to first base? 

* * *

The history of organized labor is cluttered with examples of union officials being induced, recruited or otherwise sweet-talked into defecting to the management side, usually as front-line supervisors, schedulers or other low-level administrators. 

Night-shift workers accept the position because it’s usually a day job; and day-shift workers take it because it’s an office job, a “clean” job, a change of pace, and, undeniably, a bump upwards in “social prestige” (although, alas, usually a decrease in pay). 

Oddly, the four or five guys I bluntly asked about it (all former union officers) more or less blamed their wives.  Whether that was the truth or a cowardly lie, these men told me that their wives had been nagging them to “improve themselves,” and that once the opportunity to “enter management” presented itself, they had no choice but to accept.  As much as I hated seeing them cross over, I couldn’t quarrel with their explanation.  It was what it was.

Occasionally, a ranking executive board member (president or VP) will be sweet-talked into a Human Resources (formerly “Labor Relations”) position and asked to help the company crush the very union he just came from.  The assumption is that this ambitious ex-officer will know the union’s vulnerabilities and weaknesses and, accordingly, be able to exploit them. This has to be assumption.

They couldn’t possibly think otherwise.  They couldn’t possibly believe that the union would view a former E-board member who became a company enforcer as anything other than a quisling.  The guy who, on Friday, was screaming at the HR rep for not moving on a grievance, cannot be the same guy who, on Monday, is sitting in that office denying the identical grievance.  He cannot be that guy.  And if management thinks the rank-and-file will accept him as that guy, they’re woefully mistaken, as history has confirmed. 

There have even been a few International officers who’ve hit the jackpot by being installed as corporate executives.  Douglas Fraser, former president of the UAW, was famously given a token seat on Chrysler’s board of directors, and there were a handful of AWPPW (Assoc. of Western Pulp and Paper Workers) officers who became HR executives with west coast paper companies (James River, Georgia-Pacific, Crown-Zellerbach).  While Fraser’s appointment turned out to be little more than a bad joke, the AWPPW guys went on to have productive careers, albeit at the expense of their former union.

As for the lesser defections—the guys who became supervisors or entry-level HR people—the majority of those promotions didn’t turn out well, at least the dozen or so I’m familiar with.  The main problem?  The job wasn’t what they hoped it would be.  Not only did it require more work for equal or even less pay, but the management people who showered them with flattery while courting them, all but snubbed them once they were hired. 

Worse, many of the bosses who “sponsored” these former union officers eventually moved on, leaving them at the mercy of new bosses, many of whom who didn’t like them or want them.   And when the first wave of layoffs hit the facility (the mantra of day: “More With Less”), these management newbees were first to go.  Many tried to get back in as union hires, but the company wouldn’t accept them, fearing hard feelings and possible retribution (I was personally told this by a company HR rep).

A former shop steward who’d taken an entry-level job in management approached the union privately and attempted to “buy” his way back in.  He offered to repay 17 months of back union dues—the entire period he’d been gone.  Although he had a college degree and high hopes for advancement, the job turned out to be a nightmare.  He missed everything about his union job—the camaraderie, the nonconformity, the overtime, the “work hard, play hard” mentality, all of it, everything.

Unfortunately, you cannot “buy back” your union seniority any more than you can buy back your virginity.  There’s no provision in the by-laws for it and no willingness on behalf of the International to even consider it, which is why people are cautioned to think twice before leaving the union.

The last time I spoke to this fellow was on the telephone, more than ten years ago, but people who stayed in touch with him have told me that he’s still there, still doing the identical job he was doing ten years ago, still miserable. 

Still there and still miserable.  I wonder what his wife thinks.

DAVID MACARAY, a Los Angeles playwright (“Larva Boy,” “Americana”) and writer, was a former union rep.  He can be reached at dmacaray@earthlink.net