The U.S. Chamber of Commerce and the AFL-CIO do not agree on much. But they have joined forces to persuade Congress to spend more on infrastructure.
On the surface it looks like a story of right and left uniting for the common good. As AFL-CIO President Richard Trumka told the Chamber’s board of directors: “We’re pretty strange bedfellows. There have been many times we haven’t agreed, and I’m sure there will be many more. But in the end, I think we all want the same thing: productive and profitable businesses, prosperous families and thriving communities.” What else could unite America’s leading business lobby and America’s largest labor federation?
Self-interest. Both the Chamber of Commerce and the AFL-CIO will gain tremendously if Congress goes on a transportation spending spree.
The Chamber of Commerce is a business lobby, not a conservative lobby. The Chamber has no principled opposition to government spending. It happily lobbies for government spending—such as the stimulus—when that spending goes to its members. Many corporations in the Chamber build infrastructure or the machines necessary to build infrastructure. The president of Caterpiller, for example, sits on the Chamber’s board of directors. The more Congress spends on transportation projects, the more these companies profit—whether or not those projects provide value to the taxpayer.
The union movement also gains from federal construction spending. Union density has plummeted to just 13 percent of the construction industry. Unionized companies have proven unable to compete with more efficient nonunion operations. However, unions do not have to worry about nonunion competition for federal projects. The Davis-Bacon Act requires federal contractors to pay the “prevailing” wage. Thanks to flaws in how the Department of Labor estimates these prevailing wages they usually wind up being union rates and require union job classifications. So all federal contractors must accept the same high costs and inefficient work rules unionized firms do. This requirement cost taxpayers an extra $11 billion this year.
More federal construction spending means more jobs set aside for union members and more dues flowing into union coffers—whether or not those projects provide value to the taxpayer.
The joint lobbying by the Chamber of Commerce and the AFL-CIO does not, as Trumka put it, “mean that hell has frozen over or that unicorns are now roaming the land.” It just means that they both want to get their hands in taxpayer’s wallets.
