U.S. pension funds are now worth more than $7 trillion, and many people believe that an important task for the labor movement is to harness their share of this capital and develop strategies that will help, rather than hurt, workers and unions.
Working Capital: The Power of Labor's Pensions challenges money managers and today's labor movement by asking how workers' hard-earned savings can be put to use in socially and economically progressive ways. Responsible management of pensions will create greater growth and prosperity in America, and the authors of Working Capital: The Power of Labor's Pensions show that the long-term interests of pension plan beneficiaries are well served through a "worker-owner" view of the economy.
Short-sighted Short Term Gains
A short-term mentality is gripping financial markets and workers' own pension funds are fueling the investment manias that undermine their very jobs. Working Capital: The Power of Labor's Pensions takes up the challenge posed by today's money management, providing thought-provoking insights on the potential impact of labor controlling its own capital.
Workers are looking beyond their workplaces, and beyond the defensive mind-sets impost by global capitalism and right-wing zealots. They are putting their money to use themselves, with a view to the long term; they want to know whether today's investments will mean jobs in the future for their children.
"We asked money managers what they were doing with our pension funds and our assets," said USWA President Leo Gerard, the driving force in the publication of this book. "Why do their decisions have such negative repercussions for the beneficiaries: working people? As it turns out, this question has become an increasingly important dividing line in terms of how labor's capital is managed." This book provides the hard research necessary to take on today's conventional thinking and challenges pension fund managers' narrow shareholder theory of value.
Funded by the Ford and Rockefeller Foundations, this collection of essays demonstrates not only how current market practices undermine investment and innovation in the economy, but also how labor is overcoming institutional barriers to take more control of its money. By developing its own capital strategies, labor is choosing to engage capital markets rather than simply to leave them to the barons of finance.
Short-circuiting Long Term Pain
As workers' financial assets swell, so too has the "collateral damage" of flawed investment assumptions and practices. Collateral damage by pension funds in the hands of Wall Street money managers includes the flood of "hot money" into East Asia's "Tiger" economies. Pension fund investments in overseas equities have doubled since 1993, contributing to destabilizing international money flows.
During this same period, corporate mergers and acquisitions quadrupled, growing from $500 billion to nearly $2 trillion, leading to the hollowing out of large and small companies alike. Pension fund financing fueled that trend.
However, for those concerned with labor's capital strategies, there is good news. Organized labor in the U.S. and Canada has made dramatic headway in the stewardship of workers' capital for productive, long-term investment in domestic prosperity. Working Capital: The Power of Labor's Pensions shows that the long-term interests of pension plan beneficiaries are well served through a "worker-owner" view of the economy. This view recognizes that collateral benefits and market-based rates of return are not mutually exclusive.
Increasingly, unions and their advisors are recommending that workers' pension funds commit to greater investment in the 'real' economy. Such portfolio decisions enhance diversification, support Economically Targeted Investments, promote good jobs, and foster a wider distribution of economic gains.
Democratizing Investment
With leadership from the Office of Investment and the new Center for Working Capital, the AFL-CIO has moved to defend the interests of worker-owners through shareholder campaigns, trustee education, and advocacy.
Socially responsible investing is another powerful tool in control of workers' financial assets. These funds demonstrate that 'doing well' and 'doing good' are not mutually exclusive in the investment world.
International models of labor's control of capital are explored through Canadian Labor Sponsored Investment Funds. These labor vehicles now account for almost 50% of the available venture capital in Canada and offer important new models for worker-stakeholder education.
Working Capital: The Power of Labor's Pensions serves as a challenge to both money managers and today's labor movement. How can workers' deferred wages be used to create greater long-term growth and prosperity in America? What are the real long-term interests of plan beneficiaries and how are they best served?
Whose money is it anyway? In this book a group of America's leading experts present a bold study of how the hard-earned savings of ordinary people can be put to use in socially and economically progressive ways. This book provides a genuine first step towards democratizing investment.
