Lost in Transition: Plus Ça Change RI Labor Unions!
Big Change at RI AFL-CIO!
In Rhode Island, the unions are seeing two major leadership changes owing to retirement. George Nee of the RI AFL-CIO published his announcement letter recently in the press, news quickly followed describing his impending replacement by Patrick Crowley. Meanwhile, Maribeth Calabro of the Providence Teachers Union has announced plans to run for President of the Rhode Island Federation of Teachers, an office currently held by Frank Flynn, while Cynthia Robles will take over PTU.
This means the Rhode Island labor movement is now going to be dominated by the Irish and Italians.
Pat Crowley comes out of the progressive groupings that emerged in Rhode Island during the George W. Bush administration. He helped found the blog RIFuture, served as the Legislative Committee Chair of Marriage Equality RI (MERI), held positions in the New England labor bureaucracy, and became a major leader in the National Educators Association of RI (NEARI) (for those keeping score, NEA represents the suburban school districts and the American Federation of Teachers (AFT) represents the urban core and ring districts). It is difficult to assail his ethics, even if one disagrees with his particular tactics. Rhode Island’s labor movement exists in a post-COVID economy and key decisions on which projects to endorse or reject could be pivotal in pulling the entire state out of the recession. Crowley will seek first and foremost to increase the levels of consumption in the economy by getting more jobs for his membership. By amplifying their levels of disposable income, labor would be revitalizing important consumer sectors.
Here’s a quote he gave the ProJo for a recent profile:
"We can't let a fight that we lost in 2011 [regarding the public pension fund] determine what we do in 2023 and 2024… That's why I was proud of the members of NEA Rhode Island when they endorsed [then-Gov. Raimondo] for reelection, because I thought that helped change the tone of what we were able to even just talk about… There's still people out there that are angry with us at NEA about that. And that's OK. But when you look at what our job is in the labor movement, it's not to complain about lost battles, it's to win the next battle."
I have done my own fair share of journalism about the Raimondo’s pension policies. She invested the pension into Wall Street hedge funds, which inadvertently caused the local economy to plummet.
Hedge funds are, for our purposes, Wall Street investment devices that serve as pools of large capital that are used by their Managers for a whole range of purposes, including financing public utility privatization campaigns. Gina Raimondo as Rhode Island Treasurer selected for the pension investment portfolio hedge funds that were owned by longtime opponents of public education and defined-benefit public pension plans. Rather than supporting the traditional defined-benefit public pension plan, they endorse the 401k-style “defined-contribution plan,” which is more risky and has lower return yields than defined-benefit.
These hedge fund oligarchs, who just coincidentally donated to Gina Raimondo’s first campaign for State Treasurer, included:
Paul Tudor Jones: Co-Founder of the pro-charter school Robin Hood Foundation, owner of Tudor Investment Corporation.
John Arnold: Formerly of Enron, Arnold financed a nationwide campaign falsely claiming there was a public pension crisis on the horizon following the 2008 economic crash.
After investing the pension in these hedge funds, Raimondo forced the General Assembly to cut off the annual pensioner cost-of-living adjustment (COLA). In that sense, retirees were permanently frozen out of any economic recovery. I have seen many retired teachers return to work in Providence as subs so as to support themselves in lieu of that COLA payment’s provision by the Treasury.
There never was a pension crisis in the Rhode Island Treasury, only a criminal stick-up by Raimondo and her donors. In October 2016, the ProJo published my Letter to the Editor saying:
Michael Hudson writes in his book, Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy, that hedge funds like the ones then-Rhode Island Treasurer Gina Raimondo invested in are nothing but “collections of wealth for raiders to use as a basis for borrowing to take over companies.”
He explains elsewhere that, despite testifying to the contrary with regard to the 2008 economic crash, "bankers and hedge fund managers knew quite well what was coming, and they had the foresight to put in place a political strategy to make the government bail them out when the crash did hit. But for the losses to be borne by ‘taxpayers,’ the collapse had to seem as if it all were a surprise, an act of nature rather than bad policy and outright fraud."
While any financial instrument is by nature neutral, the ones Raimondo selected were the same as those that caused the 2008 crash, meaning that the pensioners and taxpayers both rewarded these people for bad behavior.
I bring this forward to emphasize the import of the pension plan for the economy in the coming years.
Rhode Island is a service-sector economy, meaning it is more heavily reliant upon streams of capital injections into the local economy so as to maintain the purchasing power of consumers. Monetary distribution mechanisms embedded in the economy, from Food Stamps to Medicaid, provide a baseline of certainty for business owners. (It is in this sense, among many others, that we see how President Obama’s Affordable Care Act (ACA) does not insure health so much as cash flows.)
Pensioners as economic agents traditionally were responsible in Rhode Island for being the major customers at local restaurants and shops. Their reduced purchasing power began a rippling effect across the larger economic landscape of the state. Indeed, the only post-2008 economic sector that saw true growth was healthcare. This can be attributed to the Medicaid expansion under the ACA, which thereby increased the purchasing power of healthcare consumers in such a fashion that the blossoming demand required a higher supply of healthcare workers, such as CNAs and nurses, a job creation program if there ever was one.
These economic programs that redistribute funds into the local economy are not socialism by any stretch of the imagination. Instead, they are grounded precisely in the opposite impulse, the understanding that social hegemony within liberal democracy can only be fostered by the superstructure via methods to alleviate the externalities hindering domestic accord. The level of consumption and discretionary spending dollars held in the economy are the two key elements requisite for the magic spell of economic recovery and the welfare state serves as such a device in periods of slump.
The Medicaid expansion in Rhode Island increased the aggregate of purchasing power in the local economy but it was far from a truly viable post-2008 recovery. Healthcare is a market with regulatory devices and so it functions essentially as a targeted economic program, insofar as I am authorized to use my Medicaid plan at the offices of a licensed provider and not with quacks trying to cure cancer with magic beans, which therefore stymies certain types of economic growth while favoring other types (as it should).
But pensions, unlike Food Stamps, redistribute cash already earned to the constituent members of the plan without hindrance upon how the cash shall or shall not be spent, a matter of discretion not granted other consumers using non-cash assistance programs. The absence of state pensions in the local economy reduced the number of pensioners that could patronize local restaurants and diners, a serious blow to a pillar of the Ocean State’s economy. Their nondiscretionary spending dollars had traditionally maintained the food and hospitality sector during the off-season winter months. Those nondiscretionary dollars had financed regular, reliable customer trends at businesses that flourish in summertime but struggle in the period between January and May, the span of Christmas to Easter and the reopening of beaches. When retirees stopped having the money to go to their weekly Red Hat Lady luncheons at Gregg’s because Treasurer Raimondo had stripped them of their pension COLA, it wasn’t long before the waitstaff also started to feel that pinch.
Meanwhile, the COVID-19 lockdown and now the Washington Bridge fiasco hath wrought further chaos for local businesses.
Disgraced Rhode Island Department of Transportation (RIDOT) Director Peter Alviti was appointed by Gov. Raimondo in deep collaboration with Michael Sabitoni, himself a family relation of national power-player Armand and, since 2023, General Secretary-Treasurer of the Laborers’ International Union of North America (LIUNA). Sabitoni comes out of the Building and Trade Unions, which have relied steadily on highway construction projects statewide as a consistent source of jobs, and the nebulous world of contractors, cement/asphalt companies, and equipment suppliers have always been a source of humor for those who recognize the legal graft at work.
When push comes to shove, the Building and Trades have the lion’s share of power in the Rhode Island AFL-CIO. Though Pat Crowley is ostensibly taking on a leadership position, Sabitoni and his membership will exert tremendous influence upon the direction of the Rhode Island labor movement in the years to come.
The particular challenge they face exists in this scenario:
Crowley’s main constituency is public sector employees. One of Sabitoni’s major contractors for jobs is the nonprofit industrial complex, in particular the private universities that are expanding their campuses further into Downtown Providence. In essence, those buildings reduce the revenues that the tax collector uses to pay municipal public sector workers, meaning that Sabitoni’s buildings end up getting Providence school teachers and librarians fired owing to budget cuts.
What seems logical is that those two should pursue economic stabilization through policy discussions regarding welfare programs. In the aforementioned interview with the ProJo, Crowley offers important thoughts one the pension
He thinks the state needs to lower the minimum retirement age and ratchet up the "accrual rate," which is pension-speak for the value of each year of work toward a pension. The current accrual rate is 1% of a salary for each year of work. "So after a 40-year career, their pension benefit would be 40% of their salary. It's not enough to live on," he said. He suggests increasing the rate gradually, to give the state enough time to adjust the [required] contribution for the active workers without adding time to the projected 2031 date when annual COLAs return. He also questions why the COLA return date has to wait until the state-run pension system is 80% funded? "Why not 70%?" he asks.
Will Sabitoni play a positive role in those discussions?
When the pension reform was first floated locally, John Arnold and Paul Tudor Jones created an astro-turfed 501c4 nonprofit advocacy group called EngageRI (see their archived webpage here), consisting of the following membership:
Board of Directors
–President & Co-Chairperson
Ed Cooney
Senior Vice President, Nortek, Inc.
–Vice President
Constance Pemmerl
Retired Financial Executive
–Secretary
Ted Long
Partner, Holland & Knight LLP
–Treasurer
John Galvin
Chief Financial Officer, Collette Vacations
Paul J. Choquette, Jr.
Vice Chairman, Gilbane Inc.
Susan Arnold
CEO and General Counsel, Rhode Island Association of REALTORS, Inc.
Kas DeCarvalho
Partner, Fontaine, DeCarvalho & Bell LLP
Bradford S. Dimeo
Dimeo Construction Company
James Diossa
Councilman, Ward 4, Central Falls City Council
Michael McMahon
Founding Partner, Pine Brook Road Partners
Dan Sullivan
CEO and President, Collette Vacations
The wary reader will recognize the importance of Dimeo and Gilbane, who both are major contractors in the public sector construction business. To suggest labor’s membership was unified in opposing Raimondo’s pension heist would be a stretch. These contractors exerted their own role in the debate about the pension reform and it has done serious damage to the local economy.
Which is another way of asking the following:
When Pat Crowley says "We can't let a fight that we lost in 2011 determine what we do in 2023 and 2024,” is he speaking for how Michael Sabitoni and his members will influence policy discussions of the pension? Or will Dimeo and Gilbane exert further pressure over the debate?