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April 28, 2005
AFL-CIO Finances: Betting the Farm?
Right after my previous report on the AFL-CIO's finances <http://workinglife.typepad.com/daily_blog/2005/04/aflcio_finances.html>, I got a call from Joe Hill (uh, yeah, a pseudonym), an AFL-CIO insider who told me "it's quite worse than what you wrote." Hill pointed out that when John Sweeney took over, the AFL-CIO had no debt; now the debt stands at $28.5 million dollars. At the end of 1996, after one full year of the Sweeney Administration, the reserve fund was 56 million (I've been told by others it was upwards of $60 million but let's just agree here it was large); at the end of 2003, the reserve fund was down to $28 million.
The AFL also took out a $25 million mortgage on its building to finance the broad renovation. As Hill pointed out, while the building is worth more (and certainly feels more modern), the building is no longer a liquid asset. In addition, though this is run out of a different budget, an additional $20 million mortgage was taken out on the George Meany Center (the Federation's education and training center) to construct a new building.
As Hill observes, "These guys have spent money like no one I've seen in my life. Whatever happens [at the AFL-CIO convention] in July, and if there is a new president, the new team is going to inherit a very difficult situation financially. If you put the best face on it, our guys could argue that they were laying it out on the line and bet the farm. But, they bet the farm and it didn't happen."
I'm told that this coming Tuesday, the word will come down on the much-anticipated and much-feared lay-offs rumored at the AFL-CIO. It will be brutal--more than 100 people out of about 425 will be axed (it's interesting to note that those layoffs would take the Federation staff down to about the levels of the Lane Kirkland era, when about 300 people worked for 16th Street, from a high of over 500 about two years ago). The mood is downright awful at 16th Street.
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