The Democrats’ Charlotte Convention: Opportunity Costs?

With eleven months to go before the start of the 2012 Democratic National Convention (Convention) in Charlotte, many questions remain to be answered. The Convention has been sold to the public as a win-win for North Carolina where national attention and money will be showered on the state with little to no cost to the taxpayers. However, the hidden costs of this event may be more than Convention boosters are letting on.

One important question that still needs an answer is what effect the union labor contract provisions will have. The contract between the City of Charlotte and the Democratic National Committee (DNC) calls for the Convention to use union labor for all goods and services, “to the extent, if any, such labor is available in the region.” North Carolina, due to strong right to work laws, is one of the least unionized states in the nation. Most estimates suggest that union labor accounts for about 3 percent of North Carolina’s workforce compared to 11.9 percent nationally.

Labor support has been critical to past Democratic Conventions. Unions have provided both paid workers and thousands of volunteers for the Convention. They have also been major financial contributors to previous Conventions, though new rules recently passed by the Democratic National Committee will likely limit their contributions this time around.

Unfortunately, there is trouble in paradise between the DNC and organized labor over the selection of Charlotte as the Convention city. Over a dozen national unions have already expressed intentions to skip the Charlotte Convention. If union concerns remain unaddressed, they are likely to make their unhappiness known in Charlotte. Before the 2008 Convention, union leader James Hoffa Jr. threatened that unions would “blow up” the Convention if their demands were not met. Given the importance of unions in the Democratic Party, it is almost certain that the DNC will make efforts to appease the unions and bring them back into the Convention.

What the unions will demand in exchange for their participation, or even begrudging acquiescence, is an open question. Some observers suspect union interests will push the Host Committee to bring in union workers from outside the state in order to fulfill the contract. Bringing in outside union workers would direct jobs away from North Carolinians and blunt many of the possible positive economic benefits of the Convention. Scott Stone, the Republican nominee for Mayor of Charlotte, has called for the incumbent Democratic Mayor Anthony Foxx to pledge that all Convention jobs go to in-state workers, a call that Mayor Foxx has dodged.

The obfuscation over how much work will be done by unions has already begun. The DNC recently released the first round of contracts for the convention, totaling over $7 million dollars. Two of the largest contracts went to out-of-state firms, though the firms have local partners. Notably, only one went to a unionized company. Convention CEO Steve Kerrigan told the Charlotte Observer contracts would “maximize union labor,” but declined to give specifics stating only that there was no “quota” for union labor. This answer has pleased neither side.   Stone called on the DNC to release the details of contracts calling for union labor, and NC AFL-CIO Secretary told the Observer, “I am not advocating for a quota for Union labor. But I believe that folks in the labor movement and in the local community will eventually want to know how many jobs went to union members…”

Unions may also use the upcoming Convention in order to push workers and business owners in North Carolina to accept collective bargaining agreements. “People are thinking that we may be low hanging fruit,” Kenny Colbert, president of The Employers Association, stated to the Charlotte Observer.  In 2008, labor unions used the Convention in Denver as a tool to unionize at least one of the city’s hotels before the Convention. Unions might use the potential for preferential treatment in bidding for contracts in order to entice employers into supporting union efforts.

Despite the symbiotic relationship between the Democratic Party and labor unions, the contract for the Charlotte Convention does have one surprising anti-union provision. The host committee is required to get agreements from local unions to “refrain from supporting, participating in or sanctioning any strike, sympathy strike, walkout, work stoppage or other labor action” that would interfere with the Convention.

Apparently, the Democratic Party supports labor actions only when they are conducted on someone else’s time.

The Convention and accompanying security requirements have raised many eyebrows. Residents of previous host cities like Denver have complained that the heavy security presence made the city feel like it was under occupation. Security will likely be even tighter in Charlotte given that Obama is the sitting President, not just the party’s nominee. Security also led to long- term legal trouble for the city of Denver, which just recently settled a lawsuit with a group of protesters that were arrested during the 2008 Convention.

While protests remained generally peaceful at the 2008 Denver Convention, Charlotte could be another story. Both Tea Party and Occupy Wall Street protesters are likely to show up en masse. Conflicts between protesters with differing ideological agendas could become messy.

Security concerns may also cause problems for the city’s public transportation system. Currently, city buses route through a central terminal downtown. Unfortunately, the downtown terminal will likely be inside a restricted security zone, requiring buses to use a secondary hub further from the center of downtown. The Convention will likely close down several stops on the city’s light rail transportation system, most notably the stop at the Convention center. Both of these restrictions will undoubtedly add time and frustration to commuter’s day.

Lastly, the Convention has been plagued by questions regarding a $10 million guaranty loan made by Duke Energy through Fifth Third Bank. Duke Energy is also pursuing a merger with Progress Energy, which would create the country’s largest energy utility.  The merger is currently before both federal and state regulatory agencies. Duke Energy’s CEO Jim Rogers says that customers would not be forced to pay for the loan in the event of DNC default, but that the burden would be picked up by shareholders.

The Charlotte Convention will provide a unique opportunity for the City to showcase itself before the nation as a modern city. However, this opportunity could be fraught with peril if close attention is not paid to the details of the Convention. If unions are able to use the Convention to mount successful challenges to the right-to-work atmosphere in the state, the damage to our economy could be long term.