Taking on the Buyout Industry
Union Chief Pressing for Better Pay and Benefits at Private Firms

Monday, March 10, 2008

Andy Stern, 57, is president of the 1.9-million member Service Employees International Union, the fastest-growing union in North America.

He began working as a social service worker and member of SEIU Local 668 in 1973 and rose through the ranks before being elected SEIU president in 1996. He led SEIU out of the AFL-CIO and founded Change to Win, a 6-million member federation of seven major unions.

Stern is the author of "A Country That Works" and has a blog on the Huffington Post.

The SEIU, with headquarters on Massachusetts Avenue in the District, for the past year has been trying to force the private-equity industry, and the Carlyle Group of the District in particular, to increase pay and benefits at the companies they own.

Private-equity firms like Carlyle charge that the SEIU just wants to organize employees at those companies.

Staff writer Thomas Heath recently caught up with Stern.

Q: What do you think the next president should do to improve the economy?

A: Our country is living through the most profound, most significant and most transformative economic revolution in human history. We need an economic policy that rewards and values hard work again in this country. We need to end tax breaks for corporate CEOs and companies that move jobs overseas, and invest in the middle class. We need to create good jobs with wages that will support a family; make quality, affordable health care available to every man, woman and child; and ensure that working people are able to retire with dignity.

Why did you come out for Barack Obama over Hillary Clinton?

This is about more than one election. It's about building for the next generation of America. Barack Obama is creating a broad and deep coalition of voters that our members believe will change this country and create a new American Dream.

Why is SEIU so focused on the buyout industry?

The buyout industry is one of the most powerful forces in the economy today. Through their portfolio companies, buyout firms are five of our country's 10 largest private employers. After Wal-Mart, KKR is effectively the second largest U.S. employer. KKR has a responsibility to improve the lives of the hundreds of thousands of people who work at the companies it owns.

We can't solve the economic problems we have in this country without taking on the buyout industry and urging it to play a more proactive, constructive role when it comes to workers.

How can you criticize private-equity firms like Carlyle Group on the one hand while giving them your pension money to invest at the same time?

Decisions about where to invest or not invest pension money are not made by me or the union. Take the California Public Employees' Retirement System -- we have about 200,000 members whose retirement money is in CalPERS -- along with the money of hundreds of thousands of workers who are in other unions. The CalPERS board and officers make their investment decisions independent of SEIU or anyone else.

That said, our members are starting to ask whether or not it makes sense to put more of their money in private equity, given the collateral damage buyouts cause to workers, taxpayers and state budgets. Washington state investment board just upped its target allocation in private equity to 25 percent to 29 percent, with 25 percent of that allocated just to KKR. It's excessive.

Why does the SEIU criticize private-equity firms for lobbying when the SEIU itself spent $1,845,000 in federal lobbying in 2007?

SEIU members' money -- and we are talking about voluntary contributions of about $3 a paycheck -- goes to lobby Congress to reform our health-care system, to fix broken immigration laws, to provide health care for children through SCHIP. These issues will improve the lives of millions of people in this country. Carlyle lobbies to protect indefensible tax loopholes that benefit a handful of billionaires. Big difference.

Carlyle co-founder David Rubenstein and others say SEIU's motivation isn't really to improve care at Manor Care. They say you want to organize more members and get more dues. Are your critics right?

Workers at Manor Care should have the freedom to join a union. Workers at every other company owned by Carlyle and every other private-equity company should too. Unlike Carlyle, we have decades of experience working to improve care in the nursing-home industry. We know that when workers have a union, they stay on the job longer, there are fewer problems with short staffing and care improves. There is a direct relationship.

Long before Carlyle woke up one day and decided that nursing homes would make a good financial target, SEIU has fought for years to improve care in nursing homes. As the largest health-care workers union, SEIU has fought for and won hundreds of millions of dollars in funding to improve care in nursing homes over the last decade. Now David Rubenstein and friends want to come along and take hundreds of millions out for themselves.

What's your favorite movie? Last book you read?

Favorite movie: "Field of Dreams." Last book read: "The True Patriot," by Eric Liu and Nick Hanauer