TEAMSTERS' MANAGEMENT POLICIES AND POLITICS 1

Teamsters’ Management Policies and Politics That Influence the Union Today

Doreen E. Johnson University Community R. Richard Sabo Management and Human Resources

Over the last ten years American business has downsized, limited annual wage increases for its workers, and decreased workers’ health and welfare benefits, while the salaries of its management including their bonuses have continually increased. As a result, strikes by workers for their rights to jobs and benefits are on the rise with sympathy coming from the American public, many of whom are in the same position but without the support of a union.

To compete successfully in today's global marketplace an organization needs to have the support of a motivated, productive, and well-paid workforce. To accomplish this, labor needs a strong union that can provide such a workforce by negotiating return of respect for its members by employers. The management of the International Brotherhood of Teamsters, the largest private union in the , can do this because they did it before. Their management’s policies and politics brought about employers’ approval and respect of its members during the first half of the 20th century. This historical study shows how these policies and politics contributed to the organization that is present today and the opportunity it has to prove that unions are the cornerstones of a democratic society.

Introduction

In August 1997 the Teamsters led the United Parcel Services’ fifteen-day strike to a successful resolution for its members of the Los Angeles locals, affecting its worldwide operations. In 1998 the waged a successful strike against General Motors Corporation to save auto workers’ jobs from going overseas and plants from being shut down. In 1995 Boeing Company also found its workers out on strike for almost three months to save their jobs from going overseas. In each of these strikes the labor unions pointedly showed concern for their members’ well being. Is history repeating itself by forcing labor unions to fight employers for their rights just as was done in the 1930s and 1940s? Can the unions avoid another fight and take their place in the American business community alongside management and work together toward success in today’s global market place?

The International Brotherhood of Teamsters (IBT), the largest union in the United States with so much power and strength that it could almost shut down the nation’s economy if it so desired seemed to be the union to research for answers to these questions. Its management had been the center of violence, corruption, and racketeering for more than fifty years. How could such a powerful union come under the influence and direction of gangsters, yet have its members seemingly content with it? How did its management correct the perception of a gangster-influenced union so that during the 1997 UPS strike, the public became very sympathetic to their Teamsters union demands for its part-time members?

This research is a study of management policies and politics of the IBT, tracing the roots of the Teamsters’ organization through the time of James R. Hoffa, the policies and politics that follow Hoffa, and how the Teamsters union functions today.

The study was limited to policies and the politics of the International Brotherhood of Teamsters’ presidents (the term “president” is used throughout this article in place of the 2 JOHNSON, SABO Fall 1999

Teamsters official title of general president). It does not attempt to evaluate the ethical nature of the individual presidents’ policies and politics nor will it evaluate those of the International Brotherhood of Teamsters today.

This article makes the following assumptions:

¥ There are dissimilar influences and, hence, individual contributions among the management of the IBT throughout its past;

¥ The identified policies and politics of the individual presidents of the IBT can be analyzed and interpreted;

¥ The identified policies and politics of the individual presidents of the IBT can be related to each other;

¥ The management of the IBT did influence the policies and politics of the present day union.

Based on the above assumptions, the article shows that:

¥ Each change of management of the Teamsters resulted in individualized influence(s) and/or contribution(s) to the union;

¥ The policies and politics of the individual Teamster management can be determined;

¥ The policies and politics of the Teamsters’ management, particularly through the time of , can be related to each other; and

¥ These identified policies and politics of management, following the time of Jimmy Hoffa, do relate to the Teamsters’ present day union.

Teamsters’ Presidents

Early History 1899-1952

In 1899 John Callahan chartered the first Team Drivers International Union (TDIU) through the AFL and became its first president. The TDIU organized groups of drivers in who quickly became craftsmen of a sort and established some closed shops. Jasper Clark became the second president in 1901. The principles of wage unionism, including weekly and hourly pay, were established. Strikes were successfully used to achieve goals and increase wages. By 1902 the Teamster membership had almost doubled (Leiter, 1957). Chicago Teamster locals had numerous criminal associations, with corruption, racketeering, and collusion being common practices.

Cornelius Shea, president from 1903-1907, allowed the collusion of labor with manage- ment, resulting in substantial wage increases for union members and large profits for employers. Negotiations resulted in shorter hours and time-and-one-half pay from 6 p.m. to 6 a.m. Contacts with racketeers continued with Shea’s approval until he was indicted in 1905 for collusion with employers. This resulted in a number of locals seceding, a considerable decline in membership, and a dwindling Teamster treasury (Leiter, 1957). TEAMSTERS' MANAGEMENT POLICIES AND POLITICS 3

At the 1907 convention of the IBT, Daniel J. Tobin became president, winning by just 12 votes. To assure a lasting presidency, Tobin in 1915 changed the presidential election to once every five years (Leiter, 1957). This worked very well for him for he held office until 1952. He was very hostile toward Communists, actually having a clause barring Communists from membership inserted in the Teamster Constitution (James and James, 1965). Tobin’s avoidance of sympathy strikes and boycotts as well as careful expenditures of union funds accounted for his success in rebuilding the Teamsters. After almost twenty years of requests, he finally obtained an increase in the per capita tax and strike fund in 1920 and again in 1952 (Leiter, 1957). Tobin had no influence to rid the union of racketeers, so he turned his head “the other way,” leaving them to their own devices. He became very influential in the labor movement, particularly in the AFL where he rose to third vice president (Leiter, 1957). Tobin turned down an increase in salary in 1947, but accepted perks that totaled much more.

Tobin’s politics favored the Democrats, especially President Roosevelt. The IBT’s main objectives during Tobin’s reign were economic, not political. To achieve his goals within the union Tobin asked others to follow through, knowing he would not need to be advised of how they reached their goals (Sloan, 1991). In the early 1940s, the pressures within the union for major changes in the administrative machinery began to mount as a result of the rise of a new generation of local leaders more dynamic and aggressive than the older men who were still holding power. Also, changes in industrial processes and organization began to affect the IBT. Tobin made Dave Beck his executive vice president in 1948, as a result of his successful organizing practices in the West.

Leadership and Corruption, 1952-1967

In 1952 Beck became the fifth president of the IBT. He immediately moved Teamster headquarters to D.C. and built a $5 million headquarters. Under Beck’s leadership and through his techniques of organizing from above, Teamsters’ national membership increased from 890,000 in 1948 to 1,120,000 by 1952 (Romer, 1962). The IBT became an industrial union, organizing workers from industries such as trucking, warehousing and food processing. To deal with the new industrial organization, Beck reorganized the union’s structure, creating the conferences and trade divisions. His ability to find new methods of organizing was extraordinary. He influenced the union to support Republican candidates for president in 1948 and again 1952 (Romer, 1962).

Beck’s biggest problem was his innate interest in power and his desire to win the esteem of Teamster employers. As a Teamster leader, Beck set out to establish a kind of partnership with employers with the intention of stabilizing the industry, raising profits, and thus raising wages for some of the Teamster members. Teamsters became the “friendly” union that the employers “could live with.” Beck and other Teamster officials came to identify with the employers and their problems, to share the employers’ concerns, to adopt their lifestyles, and ultimately to become businessmen themselves, forgetting the rank-and-file Teamsters in many cases (LaBotz, 1990).

Beck’s power and reputation vanished completely when he fled to Europe on “urgent business” as soon as the McClellan committee began looking into his affairs. On his return he took the Fifth Amendment when called to testify (Romer, 1962). Beck was indited on tax evasion and withdrew his presidential candidacy in 1957, leaving it to Jimmy Hoffa.

James R. Hoffa, president from 1957-1967, sought influence and power in everything he did. He centralized of wages into a National Master Freight Contract. He earned the respect of all employers with whom he negotiated, frequently knowing more about their companies than their negotiators did. Since Hoffa had a wonderful memory for thousands of details, he preferred to be in complete charge and was (Clay, 1965). 4 JOHNSON, SABO Fall 1999

Hoffa endeared himself to all the Teamster members across the country, calling many by name. He grew with the union, becoming an organizer in his early twenties. He understood the rank-and-file problems and the members knew it. They never vacillated in their loyalty to him and the Teamsters, regardless of his bad publicity, even voted him into office while Hoffa fought a prison sentence. Through DRIVE (Democratic-Republican-Independent-Voter- Education) Hoffa set up political contributions and direct support for Republican candidates. He in turn called upon candidates to help the Teamsters when necessary. He believed that “life is a jungle” where one must constantly fight to survive, which he did (Sloan, 1991). He was always partial to his friends. This got him into trouble when he invested Central States Pension Fund monies in bad real estate deals with his Mob “friends” (James and James, 1965).

Hoffa made no more mistakes then many great men but his were marched before judges, juries, and media audiences. It was through his indictments with the Justice Department and the news media that he and the Teamsters became known as “friends of the Mob.” (Sloan, 1991). When the McClellan Committee investigations finally put Hoffa in prison in December 1965, he appointed Frank Fitzsimmons, his “friend,” to hold his general presidential position for him until he returned.

Continued Corruption 1967-1990

Frank Fitzsimmons took over the Teamster presidency for Hoffa temporarily in 1966. After finding he enjoyed being president and the power that came with it, he decided to keep the office. He was elected president in 1967. He changed the president’s procedures, decentralizing power among the General Executive Board’s (GEB) vice presidents (Brill, 1978). Everybody but Fitzsimmons did union work.

Fitzsimmons alone had power over the locals. He approved by-laws, made loans to locals, gave organizing grants, approved or rejected a strike, ordered locals into trusteeship, and investigated alleged raids on other unions. Fitzsimmons decided on money for political contributions. He controlled the union’s communications, lobbying, and public-education efforts. He gave out special appointments in return for presidential votes, encouraging team play (Brill, 1978).

He arranged for the union buy his home and lived in it rent free (as had Tobin and Beck) and had use of the union jet to fly him around the country, with his salary and travel expense accounts equaling those of any corporate executive. He employed his family members in the Teamsters which resulted in many investigations into their business dealings with gangsters. A suit was filed under the Employees Retirement Income Security Act (ERISA) for squander- ing the Central States Pension Fund on bad loans. As these investigations proceeded it became very clear that Fitzsimmons was owned by gangsters (Brill, 1978). Because he could not handle these problems and became very ill, in May 1981 Frank Fitzsimmons died of lung cancer. A week later the union’s GEB chose Roy Williams as interim president.

Roy Williams, interim president from 1981-1983, was aided by President Ronald Reagan to become the eighth president, but not for long. He was indicted immediately for conspiring to bribe a U.S. Senator to stop the passage of the trucking bill. In December 1982 Williams was convicted of attempted bribery of an U.S. Senator as well as for extortion of union funds and a Kansas City shooting in 1959. The government also tied him to the Kansas City Mafia. He had become the third Teamster president in a quarter century to be convicted of a serious crime in a federal court, Beck and Hoffa being the other two (Crowe, 1993). Two years later Williams testified in a federal case that mobster Nick Civella paid him $1,500 a month for seven years in return for helping him get $87.75 million in loans from the Central States Pension Fund. He stated, “I make no bones about it. I was controlled by Nick Civella” (LaBotz, 1990). TEAMSTERS' MANAGEMENT POLICIES AND POLITICS 5

Two weeks after Roy Williams’ resignation in 1983, was chosen by the GEB to serve as president. Presser continued union policy of concessions to employers. He weakened the union’s key trucking contracts by accepting four specific policies set forth by the freight companies. The first was ‘double breasting;’ the second was creation of Employee Stock Ownership Plans (ESOPs) while cutting wages; the third was approval of the two-tier contracts; and the fourth was use of casual workers. He tried to increase membership unsuccessfully through mergers and raids of not only other unions but also some surrounding locals. Being an FBI informant for thirteen years saved him from indictment on a “ghost employee” scam which included indictments from racketeering to embezzling (LaBotz, 1990).

When the Justice Department indicated that it would file a civil suit against the Teamsters under the Racketeering Influenced and Corrupt Organization (RICO) Act to remove the GEB and put the union under federal trusteeship, Presser launched a campaign to stop the filing of this suit. He convinced the AFL-CIO to help with the Teamsters’ fight; however, it was to no avail. The suit was filed anyway (LaBotz, 1990). During his 120-day leave-of-absence from the presidency due to bad health, Jackie Presser passed away before the Justice Department could confirm information about Presser’s being a FBI informant for .

William McCarthy became interim president in 1988, winning by one vote over . McCarthy, a rough, rude, and short-tempered person, did not really belong in the presidential position, although he represented the Teamster leadership set up by Beck and Hoffa in the 1950s (Crowe, 1993).

McCarthy continued Presser’s fight against the RICO Act suit, but lost. He made the usual announcements about doing away with concessionary bargaining and even double breasting. He continued the policy of the Teamsters backing Republicans. He replaced corrupt vice presidents with his own friends, who were probably more corrupt. His rude remarks regarding women and Jews as well as his racketeering suit regarding nepotism caused McCarthy to lose his Local’s presidential election in 1991 (Crowe, 1993).

In 1990 McCarthy withdrew from the race for president. This left the field of candidates to three front runners: R. V. Durham, president of Local 93 in North Carolina; Walter Shea, presidential assistant; and Ron Carey, president of Local 804 in the Bronx. James P. Hoffa, son of Jimmy Hoffa, was disqualified, as he had not worked two years as a Teamster.

Teamster Reform 1991-1998

In 1990 the three candidates began setting up their campaigns for the Teamsters’ presidency in 1991. All three were elected as candidates at the IBT’s July 1991 convention. Then began a political battle as they worked toward the December presidential election. Carey, believed to be the best reformer for the union, easily won the election, receiving 48.48% of the votes, Durham received 33.24% and Shea 18.28% (Crowe, 1993).

Carey immediately set up an organization to increase the declining membership; vowed to counter concessionary bargaining; stopped raiding of other unions and locals; put together the Teamsters’ first budget; and closed the four regional conferences—Southern, Eastern, Central and Western, saving the union $14 million (Bernstein, 1994). Following through with the constitutional changes from the Delegates Convention, Carey put a maximum on the General President’s salary of $225,000 (and for any other International officers); sold the union’s airplanes for $11 million; increased the strike fund from $50 to $200 per week; and extended the secret ballot to delegates voting for the officers of the joint councils and one remaining conference (Crowe, 1993). 6 JOHNSON, SABO Fall 1999

Politically Carey returned the union to the Democratic Party and led a battle for labor and environmental protections in the NAFTA agreement but lost (Crowe, 1993). He negotiated a bad freight contract in 1994 for 70,000 striking workers which ended with the use of “casual workers,” not part-time (the difference is hardly noticeable). He relinquished the right to strike over grievances and allowed more freight to be shipped by rail (Behar 1993). This contract appeared to include concessions to management. In 1997 he negotiated a very good UPS strike, enabling some 10,000 part-time workers to become full-time with benefits if the company’s volume of business increased. The strike caught the public sympathy for unions (Shriver, 1997).

It became evident in 1992 that Carey was receiving money from somewhere in addition to his salary when it was learned that he had purchased four or five condos and homes in sunny vacation areas between 1983 and 1992 (Barnes and Behar, 1994). He tried to put some corrupt Teamsters into office on the GEB, which the Investigative Officer quickly vetoed. The Teamsters lost 68,000 members during Carey’s first presidency. He spent more than the union took in on organizing and strike benefits. The $14 million from cutting the four conference offices also disappeared (Behar, 1997).

Carey’s schemes to receive last-minute money to assure his 1996 presidential win led to his demise and loss of the presidency in 1997. He and his election committee were found to have laundered union money through the Democratic National Committee (Goldman and Silverstein, 1997). With Carey losing the presidency, this has left the race open for James P. Hoffa, George Cashman (from a large Boston local), Ken Hall (the chief negotiator for the UPS strike last summer), and Tom Leedham (head of the Teamsters’ warehouse division).

Path to Teamsters’ Present-Day Policies and Politics

Corruption in the Teamsters began upon its inception as a union in 1899. Cart drivers were big men who lifted heavy loads on and off their carts. They had to protect their loads and were therefore accustomed to fighting to do so. By 1902 gangsters found that there was graft money and power to be had by controlling trucking in Chicago because employers could be shut down if drivers did not deliver to them. With such easy access to profits, the gangsters decided to use the Teamsters and did so from 1900 until 1989 when, under the RICO Act, the federal government gave them the choice of leaving the Teamsters or going to prison.

Dave Beck, Jimmy Hoffa, and Roy Williams were all indicted for corruption of one kind or another by the federal government, from tax evasion, to jury tampering, and finally to bribing a U.S. Senator. The news media publicized this information at the direction of the McClellan Investigations and Bobby Kennedy so the world would believe that the Teamsters were a corrupt union. The presidents, Frank Fitzsimmons and Billie McCarthy, were charged with insurance fraud and racketeering, both as a result of employing their relatives

Solidarity and union membership declined after the years of Dan Tobin, Dave Beck, and Jimmy Hoffa. Bad publicity from the McClellan investigations, the 1974-1975 and 1979-1980 economic depressions, and the deregulation of the trucking industry contributed to this decline. Then came concessionary bargaining with employers demanding, and in most cases obtaining, wages freezes, payment of fewer benefits, and changes in working conditions. Today Teamster membership is slightly over 1.4 million. The Teamsters first increase in membership after the government takeover occurred in 1997 when 30,000 new members joined (Internet, 1998). Renewed public sympathy for the Teamsters owing to the Los Angeles locals’ UPS strike was considered partially responsible for this increase. TEAMSTERS' MANAGEMENT POLICIES AND POLITICS 7

Early during Dan Tobin’s reign in order to assure his job, he changed the Teamsters’ convention schedule from once a year to once every five years which has continued ever since. Delegates were sent from all locals to amend the constitution and elect officers, but the rank-and-file members had no input as to who their delegates would be or how those delegates would vote. The present officers decided this so that they could continue their present policies and politics.

Things changed with the RICO Act. Delegates were elected by the members of each local to represent them when they voted. All international trustees were elected and amendments to the constitution voted on at the Delegates’ Convention. Candidates for the office of president and other officer positions were nominated here. Five months later another convention to elect the president and officers through a secret ballot took place. The federal government’s election committee controlled everything. This gave each candidate time to campaign for office—a more democratic method.

During Dan Tobin’s presidency the Teamsters favored and worked with the Democrats. Dave Beck then changed the Teamsters’ affiliation to the Republican Party. Hoffa, Fitzsimmons and Williams all used the Republicans to help them while in office. In 1991 Ron Carey returned the Teamsters’ affiliation to the Democrats. Carey used the Democratic National Party to help him win his 1996 presidential election.

At the 1991 convention the delegates increased the weekly strike fund benefits to $200. Even with his expertise in accounting, Carey let the strike fund run dry. He requested a 25% increase in weekly strike fund tax that was denied by the membership. Under false pretenses Carey used his authority as general president to increase the members’ per capita tax, using the monies for his election campaign in 1996 by means of fund diversion. Today the fund is again defunct!

The high expectations of the membership that Carey, who came into office under the RICO Act, would be a true reformer were not fulfilled. Instead, it became immediately evident that he had had connections with the Mob in New York for many years. Because the federal administrator apparently felt that Carey was more principled than his predecessors were, Carey stayed in office until 1997 when he was charged with involvement in a money- laundering scheme with his campaign committee members. They and Carey have been ordered to pay fines totaling more than $900,000, which will help pay for a new Teamster presidential election in December 1998 (Goldman and Silverstein, 1997).

It is easy to understand how the path taken by these Teamster presidents led the union to its present-day policies and politics under the control of the federal government’s RICO Act. Although the federal administrators have made some mistakes, they have done an excellent job of returning the union back to its members and eliminating most of its corruption.

The Future of the Teamsters

The success of the American economy in the 20th century has depended, in part, upon the ability of workers to purchase the products they produced. The idea of linking rising productivity to rising wages emerged in the 1930s with Henry Ford and unions such as the Teamsters and led the American economy right into its golden years of the 1950s and 1960s. Union leaders like Dave Beck and Jimmy Hoffa worked hard during these years to ensure that the standard of living for the American worker would increase. 8 JOHNSON, SABO Fall 1999

However, from the early 1970s on, the Teamster membership has declined along with real wages. Union membership has declined from 40% of the private sector workforce in the late 1950s to just 9.8% in 1997, the first time it has sunk to single digits since the 1930s (Shaiken, 1998). The distribution of income has become very unequal in U.S. industries during the past ten years, with top management receiving large salaries and bonuses while the workers’ salaries have decreased. Industries, through downsizing and cutting wages, apparently felt they would succeed in the short run, but in the long run this is a disastrous direction for the country’s economy. Workers are just as important in business today as they were in the 18th century when they helped the emergence of the Industrial Revolution.

At the end of the 17th century, the Royal Society of England discussed the laborsaving importance of machines but only if such devices would enhance profits by reducing labor costs would business consider them. It was not until the success of Isaac Newton’s science of the steam engine in the 1740s that it became clear that mechanization undertaken by engineers could enhance profits precisely by reducing labor costs (similar to our 1990s downsizing). The engineers and entrepreneurs, as inventors were called, had only theories to rely upon. They had to be taught the practical skills by the uneducated workers. Through a trial-and-error process, the mechanization of manufacturing, of transportation, and of water and steam power emerged—like our technological changes today. In turn the engineers educated the workers to become craftsmen by applying theories to their skills, a trade-off through teamwork which many companies are doing today to survive in the global marketplace (Dobbs and Jacob, 1995). This process culminated in the Industrial Revolution, which has led to today’s modernization.

Ownership and manipulation of goods or objects by employers represented choice in the 18th century, the natural activity of free men, and has continued through the 20th century as our industrial culture (Dobbs and Jacob, 1995). Through strikes, strong negotiations, and federal laws, unions improved their members’ standard of living continually through the 1950s.

Upon entering the global marketplace in the late 1980s and 1990s, employers experi- enced the fear of profit loss. Instead of seeking ideas from the laborers who performed the work, employers downsized, in effect telling their workers that their knowledge and skills were not as important as reducing costs to maintain profit margins and enhance stockholders’ interests. Although the contributions of labor go far beyond a company’s profits, the Teamster management during these years accepted such decisions by employers, seeming more concerned with their own interests than that of their rank-and-file members.

To compete successfully in today’s global marketplace a company needs to have the support of a motivated, engaged, productive, and well-paid work force. The International Brotherhood of Teamsters can assist its employers by providing such a workforce, supported wholeheartedly by the union and respected by its employers. Through checks and balances the federal administrators have now assured the Teamster membership of the integrity of its management. With this inner solidarity, the Teamsters’ new leadership must negotiate the return to its members of all the rights and benefits to which middle class Americans are entitled. If the Teamsters allow the continuation of the current unequal distribution of income, American labor could be turned back in time to the late 19th century.

As former Secretary of State George Schultz stated, “Free societies and free trade unions go together” (Shaiken, 1998). With the International Brotherhood of Teamsters now free of most of its corruption, its new president holds the future, not only of the Teamsters but also of the US economy in his hands. Labor, if allowed, can make a difference to business including its profits. Labor can again demonstrate that unions are the cornerstones of a democratic society. TEAMSTERS' MANAGEMENT POLICIES AND POLITICS 9

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