June 11, 2018
Rule of Law

Union doesn’t deserve credit for caregivers’ pay hike

John Horak

In a typical labor dispute, the tug of war over wages is between management and the union, with the union using its ability to strike to wrest higher wages from management.

Accordingly, if you read the accounts of the recently averted strike at state nonprofit organizations caring for the intellectually disabled (see "Senate approves raises to avert group home strikes," in the May 7 edition of the Hartford Business Journal), you might think the union (SEIU 1199) deserves a victory lap.

As the May 7 story puts it, the strike was averted when the legislature agreed to allocate funds sufficient to give the nonprofit workers their first raise in over 10 years (minimum wages of $11.20 per hour will rise to $ 14.75 in 2019).

However, if you scratch below the surface of the story a different picture emerges. This long overdue and too modest wage increase isn't the result of the choreographed pas de deux between the union's strike threat and the legislature's acquiescence, but the consequence of nonprofit management (and the families of the disabled) tirelessly advocating for higher wages for their employees for years.

In fact, the union with a compliant legislature tacitly enabled the 10-year nonprofit wage drought (for reasons explained below) in a bizarre role reversal of the labor-management paradigm — an example of what the April 25 Wall Street Journal referred to as our progressive "experiment in public-union governance."

The backstory is as follows: Connecticut has an unusual system for the care of the intellectually disabled. There is a class of dues-paying union members employed by the Department of Developmental Services (DDS) who are paid at state wage rates, and a second class of dues-paying union members who work at the nonprofits at considerably lower rates (about 40 percent lower by my estimate after the increase).

This anomaly exists because the nonprofits are effectively 100 percent funded by the DDS, so there is only one paymaster (the state), one union (SEIU), but two classes of employees — and the nonprofits are able to pay their employees only what the DDS allots to them.

In a common-sense world the people hired to do this work with state funds would be paid the same amount, but this has not happened because money is tight and the union, favoring members working at the DDS, has not only refused to make concessions, but has actually brought litigation to stop DDS from shifting more work to the nonprofits to save money and set the stage for wage equalization between the two classes of unionized employees.

The nonprofit employees also suffer the indignity of paying union dues at the same rates as their higher-paid counterparts at the DDS. According to reports on file with the state Comptroller, the minimum biweekly rate is $11.54, and the maximum is $36.46. The dues paid by the nonprofit employees basically subsidize union efforts to protect the wages and benefits of the union members employed by the DDS.

In its national charter, the SEIU describes itself as a "leading advocacy organization for working people with the responsibility to pursue justice for all," with a goal of a "more equal world for generations to come." The union owes the nonprofit employees an apology for violating its charter and to affirm their dignity as working people.

Readers may not realize that labor unions are essentially nonprofit tax-exempt organizations, with separate federal and state statutory exemptions. Given the union's inability to live up to the promises in its charter, the legislature could help it do so by imposing an income tax on the union's Connecticut dues revenue. The tax revenue could be allocated to the nonprofits to bring their wages to where they should be, if not to fund the state's unfunded pension liabilities.

John M. Horak is the director of TANGO Nonprofit Education and Consulting.

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