Business leader says 95 percent of union-worker training money comes from employers

Listening to supporters and opponents of right to work laws talk about worker training -- and who pays for it -- can be a mind-bending experience. They talk right past each other.

That was the case at a Feb. 10, 2015, discussion about right to work sponsored by the Rotary Club of Milwaukee and the Milwaukee Press Club. The panel featured Kurt Bauer, leader of Wisconsin Manufacturers & Commerce, the state’s largest business lobby, and Steve Lyons, a spokesman for the Wisconsin Contractor Coalition.

Bauer and his group back right to work. Lyons and his group, which includes about 400 firms in construction contracting, are opposed.

Lyons noted that many skilled trades such as carpenters, plumbers and operating engineers provide training to their members at union-run centers across the state -- and argued such training would be hurt if the state passes a right-to-work law.

Union members "gave $30 million to these facilities," last year, Lyons said.

"From the training perspective, it’s great that some of these unions do train -- not all of them do -- the trades do," Bauer countered. "But it’s paid for by employers. That won’t change -- 95 percent comes from employers."

Bauer then added: "That’s one for PolitiFact."

Lyons replied: "Absolutely. Bring it on."

We are here to serve.

Is Bauer right that 95 percent of the money used for union-operated worker training centers comes from employers?

More about the programs

This is all tied into the right to work debate because worker training, particularly in the trades areas, is expensive. It’s also important to ensure that quality and safety standards are met and maintained. These are the folks building houses and highways, for instance.

And much of the training is done at union-operated worker training centers around the state.

Since trades workers are typically the ones affected by this provision, understanding how those unions work is key to this issue.

Picture a construction project that requires iron workers. Contractors on the project may tap a union to provide iron workers for the job, but those workers are not permanent employees of the contractor. They may work on a building project one day, and switch to a bridge project the next. Thus, training programs have grown up around the unions.

A right to work law would mean workers no longer would be required to pay dues to a union. The concern, as cited by Lyons, is that over time this could mean fewer union members and therefore less money available for training. He takes it a step further and notes the training would then have to be done by the state’s taxpayer-supported technical colleges.

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Bauer’s claim is that this is largely irrelevant, since nearly all the money for training comes not from unions, but employers.

The reality is more complicated.

Unions decide each year how to allocate the training money deducted from their paychecks.

Think of it in terms of a payroll deduction for, say, a flexible spending account, parking or some other item. It may be handled administratively by the employer, but the money is the employee’s to spend.

"The money is held by the companies and then given to the various union training funds," said Tim Peterson, vice president of James Peterson Sons Inc., a fourth-generation highway construction contractor based in Medford. "However, active members of the trade unions allocate money out of their negotiated pay to fund the training trust funds."

A member of the Contractor Coalition, Peterson agreed that the money starts with the employers, usually as a set amount per hour of pay. But the workers decide how the money is used, he said, adding:

"If employees elect to reduce or stop directing money to the training funds, those dollars will go to increase the employees’ wages and will not be redirected to the employers."

End of story? Not quite.

Scott Manley, vice president of governmental relations for WMC, said the best evidence the training money comes from employers is the tax returns filed by the nonprofit entities that the unions use to manage the training money.

"According to tax forms filed by unions with the IRS, businesses pay about 95% of the operating cost for union training programs," Manley said in an email. "Although the amount paid may be negotiated with the unions who do the training … it is businesses that actually make the payment."

Manley added: "Employers pay to have workers trained because it is in their best interest to have skilled employees." Right to work laws, he added, "will not change employers’ need for skilled labor or their willingness to pay for it."

Howard H. Simon, an accountant with the Chicago-based Calibre CPA Group, the company that prepared the tax returns for the job training fund, took a different view of the tax documents.

He provided a list of about three dozen state-based training funds, and the sources of the money. One example: The Appleton-Oshkosh Electrical Workers Joint Apprenticeship Training Committee.

The list "demonstrates that employees of the various trade organizations listed contributed over $31 million to their training funds (in a one-year period)," Simon said in a memo to Lyons.  

"It’s a private contract…between the private sector business and the private sector union," Lyons said. "And it’s a voluntary contract. And in those contracts ... the individual employees determine how much they’re going to give."

Our rating

Bauer says that employers pay 95 percent of the cost of union workers to receive training.

That may be true in a technical sense, and on an IRS form, but it’s not that simple. The money in question belongs to the workers -- it’s part of their compensation. And they decide how to allocate it each year.

The statement contains some element of truth but leaves out important information that would lead to a different impression. In our book, that’s Mostly False.