Quiet Power: How Labor Unions Came to Dominate Politics

By deploying their vast wealth, labor unions now rank among the most powerful forces in modern politics

When we talk about 21st Century political power we tend to visualize Silicon Valley oligarchs or the hedge fund crowd on Wall Street. They’re the ones with big bucks and matching ambitions.

But, dollar-for-dollar, the modern labor union movement might be making even more of a splash in the world of high stakes advocacy. That’s because their business model generates profits at levels that would make the most unrepentant venture capitalist blush. And because all that money is effectively controlled by small groups of politically engaged union bosses.

When many people hear the phrase “labor union” they immediately imagine truck drivers and steel workers. In fact two of America’s largest unions right now are the 1.7 million member American Federation of Teachers (AFT) and the American Federation of State, County and Municipal Employees (AFSCME) with a membership of 1.4 million. Today’s labor movement has a decidedly white collar dress code.

How Big Are the Unions?

Just to give you a sense of the scope of the union industry, the 600+ affiliates of the AFSCME reported more than a billion dollars in receipts over 2022. And that’s besides the $191 million earned by their national headquarters.

Most of the data in this article comes from the United States Department of Labor Online Public Disclosure Room.

Where did all that money come from? More than $177 million of the $191 million of income reported in 2022 by the AFSCME headquarters was a “per capita tax”. Union dues, in other words.

On paper, labor unions primarily exist to facilitate collective bargaining on behalf of their members. Collective bargaining can only be effective if the threat of labor disruption through strikes is credible. And, in most cases, strikes will only happen if striking workers’ lost wages are covered. Union members contribute dues through regular payroll deductions as insurance against potential wage losses.

But even when strikes happen, the big unions are able to cover the costs without breaking into a sweat. The United Auto Workers reported paying out $46 million in strike benefit costs in 2022, but that was against $305 million in total receipts. And the payment nearly disappeared next to the union’s billion dollars in total assets.

Assets? I exaggerate only slightly when I say that some of these unions appear to pay their fund managers more each year than smaller Fortune 500 companies take in net revenues.

What Do They Do With All Their Money?

The AFSCME with its $191 million dollars in 2022 receipts is far from alone. The AFT reported receipts of $283 million dollars in that year. Neither union had to pay out even a single dollar in strike benefits that year.

For Federal filings, spending is categorized as disbursements. AFSCME reported $255 million worth and AFT shook the cobwebs out of their wallets to the tune of $339 million. But if there weren’t any strikes, where did it all go?

For the AFSCME, the largest single disbursement category was Political Activities and Lobbying (appearing in Schedule 16 of their LM-2 filing). The total? A cool $60 million. The AFT's Schedule 16 total contained a relatively anemic $47 million - lagging behind Representational Activities ($93 million) and Purchase of Investments and Fixed Assets ($73 million).

Now it’s hardly breaking news to say that American unions tend to lean to the political left. But as it turns out, they’re also funding it.

Just the top 20 recipients of political and lobbying disbursements from the AFSCME totaled nearly $22 million. Which was just a few hundred thousand dollars more than the AFT shoveled out to its 20 best friends. And as far as I could tell by checking (before my eyes nearly fell out from boredom), all 40 of those organizations exist to promote left-leaning and progressive causes or support left-leaning and progressive political candidates.

I should note that much of the unions’ investment purchases would also have political significance, as they almost certainly went into assets seen as politically allied.

This is certainly not the case for all unions. Based on their filings, the United Auto Workers organization doesn’t seem to spend all that much of their money on political causes - either to the left or right. But the overall trend is significant, and it’s worth a serious discussion.

Here’s one more revealing data point. Looking at the AFT, we can see there were 339 people employed by the national office. Those employees earned a total gross salary payout of more than $42 million, which means the average employee took home $123,695. Nice work if you can get it.

But here’s the really interesting number: