Labor unions and private equity firms
The Steelworkers union has an investment banker working down the hall from its president. A Service Employees International Union organizer is becoming an expert on leveraged buyouts. The Machinists are loading up their research department with MBAs.
The embattled labor movement is learning to think like capitalists, but not by choice. As burgeoning private equity funds bought U.S. companies last year worth more than half a trillion dollars -- a tenfold increase in only three years -- unions are shoring up their diminished bargaining power to try to negotiate worker-friendly financial deals with these new masters of the universe. [WaPo]
It's great that unions are training their own financial wizards to broker more sophisticated deals on behalf of their membership.
Strategies are evolving as fast as the deals. The strongest unions have traded concessions for a share of eventual profits and for limits on how much money investors can take out of a business. Others have formed alliances with investors who honored labor commitments, becoming finders for potentially lucrative deals elsewhere. [...]
Other unions have adopted tactics as diverse as the industries they work in. The United Food and Commercial Workers union now routinely negotiates language requiring new grocery store owners to restore any initial wage concessions over the life of a contract. If investors cash out early, a poison-pill clause requires the new owners to make workers whole. The effect, according to UFCW research director Howie Forman, is to give the union leverage to force prospective buyers to the bargaining table. [WaPo]
The article paints a pretty rosy picture. Intuitively, it seems like a good idea for unions to get involved in these high-level deals. The most important concessions for workers may be won in the board room, rather than on the picket line. Unions have already become sophisticated political actors, why not extend their reach in the financial sphere?
I'm sure there are many potential pitfalls and lots of devils in the details.
So, is the rapprochement between big labor and private equity good for the labor movement? Have at it, hivemind.