AFL-CIO Has Money Problems

Labor Federation Could Be Forced to Lay Off Staff, President Acknowledges

AFL-CIO President John J. Sweeney, who is facing challenges from some of the labor federation's largest member unions, yesterday acknowledged that the organization is financially squeezed and may have to lay off a quarter of its workforce.

Sweeney, who was first elected in 1995 as an insurgent who promised to increase the percentage of the workforce represented by unions, has presided over a decade of union decline. Signs of the AFL-CIO's precarious financial condition could make Sweeney more vulnerable to challenges to his leadership at the federation's July convention in Chicago.

Sweeney's goal in a teleconference with reporters was to focus on efforts by the AFL-CIO to halt the decline in union membership. "We must increase the size of our membership and restore union density -- especially in key industries -- or no other strategies to strengthen our movement will work," the federation said in a report released yesterday.

In the nearly 50 years since the AFL-CIO was created by a merger of two labor federations, union membership fell from about 33 percent of the workforce to 12.5 percent. The decline of organized labor has a ripple effect in the economy because union members usually receive higher pay and better benefits than unorganized workers in their industries. Labor's weakness has damaged the strength of its ally, the Democratic Party, and weakened the lobbying muscle of labor in Washington and in state capitals.

But the focus of the news conference shifted from organizing to questions about financial weakness and layoffs at the federation, highlighting the growing rift within the AFL-CIO.

"The labor movement needs new direction and new leadership," Bruce S. Raynor, president of Unite Here (the result of a merger of unions representing textile and hotel workers) and one of Sweeney's most outspoken detractors, said yesterday. Raynor, who is on the AFL-CIO finance committee, said "assets have declined dramatically." From 1995, when Sweeney took office, to the present, the AFL-CIO's reserve fund has dropped from $61 million to $31 million.

In addition, Raynor said, the AFL-CIO funds an employee retirement health care program out of general revenue. The cost of the program is rising significantly and would grow even more with layoffs, while the total number of union members who pay dues for operating expenses is declining, Raynor said.

Sweeney became increasingly testy during the question-and-answer period of the teleconference, dismissing warnings of deteriorating finances that have begun to appear on union Web sites as "rumors . . . ridiculous and irresponsible."

Sweeney said reluctantly that he will meet with unions representing AFL-CIO staff members to discuss layoffs. "We are looking at every department and every program of the AFL-CIO," he said.

"I really can't be too specific about reorganization plans," he said, and when pressed further, he declared: "The bottom line is I will not give you any more information."

Six union presidents, including Raynor, said in a statement issued after Sweeney's teleconference that "there remain many unanswered questions."

"We continue to call on the Sweeney Administration to provide complete information regarding its programming and operational budget," the statement said.