Big Labor influencing state investment decisions

Governor Dayton has ordered a review of the state’s investment in Wayzata Investment Partners following criticism of the company’s labor practices by labor union UNITE HERE. The decision came at Wednesday’s meeting of the State Board of Investment, the agency responsible for managing more than $68 billion in state assets, including retirement funds. According to the Star Tribune, representatives from UNITE HERE who are employed by Majestic Star Casino in Indiana "complained of layoffs, frozen wages and difficulty in negotiating a new contract [with Wayzata Business Partners]."

While the details remain unclear, and the company was not on hand to respond, even UNITE HERE’s account does not allege anything illegal or, frankly, unusual. Nonetheless, the union wants the governor and State Board of Investment to intervene on their behalf by using state investments (or disinvestment) as a cudgel to settle a private labor dispute.

Heavy-handed tactics are nothing new to UNITE HERE. The union’s Minneapolis chapter has been the subject of several unfair labor practices complaints filed with the National Labor Relations Board (NLRB), including allegations of coercive statements and activities. Elsewhere, courts have issued multimillion dollar judgments against UNITE HERE for violating federal privacy laws and sending false and defamatory mailers about an employer, while the NLRB has brought legal action against the union for improperly diverting union funds that were intended for childcare and elder care.

So it is hardly surprising that UNITE HERE would ask Governor Dayton to use state investment authority to intercede on their behalf in this on-going labor dispute. It is disheartening, however, that the governor complied. Based on nothing but a cursory and one-sided overview of the situation, Dayton directed state staff to investigate the situation and also offered a scathing indictment of Wayzata Investment Partners: "If this is their practice, I don’t want us to invest with them. I would want us to divest all of our investment in them as soon as we could do so practically and legally, and disassociate ourselves from these practices."

The governor’s actions are not only highly unusual; they may set a dangerous precedent of allowing powerful special interests dictate how, where, and with whom the state invests public resources, including retirement funds.

Why would the governor even entertain such an unusual request and involve state investments in a private labor dispute in Indiana? The likely answer can be found by following the money trail.

In 2012, the Minnesota State Council of UNITE HERE gave at least $28,500 to the DFL House and Senate caucuses, $13,000 to the DFL State Party, and $25,000 to liberal WIN Minnesota. In 2010, the union gave upwards of $80,000 to DFL Party units, more than $8,000 to DFL legislative and statewide constitutional candidates, and $2,000 to the Dayton and campaign. And the UNITE HERE TIP State and Local Fund was one of just a handful of contributors to the Dayton Recount Fund in 2010, donating $10,000. According to financial disclosure forms filed with the U.S. Department of Labor, UNITE HERE Local 17, based in Minneapolis, spent $131,539 on political activities and lobbying in Minnesota last year and $94,422 the year prior.

It’s also worth noting that Minnesota’s four constitutional officers serve on the Board of Investment: Governor Dayton, State Auditor Rebecca Otto, Secretary of State Mark Ritchie, and Attorney General Lori Swanson. All four have taken campaign cash from UNITE HERE.

It remains to be seen what action, if any, the Board of Investment will take in response to the union’s complaint. Regardless, this episode once again demonstrates the strength of organized labor’s stranglehold over our state’s politicians and public policy. While union money can buy a lot of things, control over state investments should not be one of them.

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