While U.S. House Democrats were in April of this year lobbying to have labor unions officially listed as entities qualifying for funds from the federal Paycheck Protection Program (PPP) intended to provide financial aid to businesses pushed to the brink by COVID-19 pandemic lockdowns, the managers of at least one 49th state union found a workaround.
The Alaska State Employees Association (ASEA) – the union for state government workers – simply applied for one of the loans as an unspecified “non-profit organization.”
The union has since received a loan reported to be worth slightly more than $500,000. The loans are expected to be forgiven, making for free money.
The ASEA’s application for PPP funds was submitted only two days before the House Democrats complained unions were prohibited from accepting such funds.
More than 100 members of the House, according to a media release at the time, “sent a letter to House Democratic and Republican leadership urging that labor unions be made eligible to access to recovery funds made possible under the CARES Act, including the Paycheck Protection Program. The letter notes that while faith-based nonprofit institutions and other 501(c)(3) nonprofits are able to benefit from the PPP, 501(c)(5) organizations, like labor unions, were excluded.
“The exclusion of labor unions is a serious impediment to achieving the main goal of the CARES Act – to help workers weather the economic effects of the crisis.”
The ASEA was facing no economic crisis when it applied for the loan and still isn’t. State employees remain at work, and their dues continue to flow to the union. Congress never added unions to the list of qualifying businesses.
Despite all of this, ASEA minutes reflect that its executive board on May 13 voted 6-to-4 to accept the loan and use the money.
PPP loan recipient data lists the union as the beneficiary of somewhere between $350,000 and $1 million. The paperwork identifies the union as a “non-profit organization.”
At least one member of the ASEA board was reported to have resigned after that action. Most board members ignored requests for on-the-record comments about the PPP loan, but John White, the former treasurer, admitted when contacted that he quit the board.
He wouldn’t, however, say much more. He said only that taking the loan violated his personal moral beliefs and that he couldn’t in good conscience approve the union accepting the money when others in Alaska had greater needs.
Tens of thousands of Alaskans have been put out of the work by the pandemic in the 49th state, and many businesses – especially in service industries – are facing possible bankruptcy.
ASEA executive director Jake Metcalfe directed board members not to talk about the organization’s vote on taking the PPP money. Metcalfe later emailed a statement on the subject. It said this in its entirety:
“The federal government created a program for which we were eligible. Due to the economic uncertainty, the ASEA applied for the program. We were approved and accepted the funds so that we can keep our staffing members.
“At the time, the impact and breadth of the pandemic was unknown and is still unknown. There are companies in this state (Alaska Airlines, Providence, Wells Fargo) laying off staff. We want to maintain staff levels to support our members and provide services that are necessary for the safety and well being of our members.”
Whether the ASEA was eligible for the program is unclear. When the loans were offered, the SBA said, “The following entities affected by Coronavirus (COVID-19) may be eligible:
- “Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
- “Sole proprietors, independent contractors, and self-employed persons
- “Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- “Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of 500 employees, or that meets the SBA industry size standard if more than 500.”
Lack of oversight of the distribution of $650 billion in federal PPP spending has become a national issue.
“The PPP, which passed with broad bipartisan support in March and was bolstered by an infusion of $320 billion in April, is likely to receive renewed scrutiny following a series of negative headlines,” The Hill reported last month.
“Recently released government data shows that lobbying and law firms and special interest groups in Washington received the small-business loans. Americans for Tax Reform, a special interest group that promotes smaller government, received between $150,000 and $350,000, while APCO WorldWide, a lobbying firm, received more than $5 million.”
Metcalfe, according to a message to board members a copy of which was obtained by this website, told the ASEA executive board not to talk about the ethics of the union taking this money because “Medred is associated with Suzanne Downing, an extremist, anti-union blogger.”
The claim is fraudulent.
Downing is the publisher and editor of Must Read Alaska. There is no association between Must Read and craigmedred.news although that website has shared stories published here as have other websites across the country.
The accusation leveled by Metcalfe is part of a tactic that has come to be used all too often these days by those wishing to avoid legitimate questions of public policy in a media world increasingly split along partisan political lines.
Ethics and morality are increasingly being determined by tribal associations rather than by standards of what is right or wrong. In this case, there appears to be a legitimate question as to whether White and ASEA board members who voted not to take the money had a legitimate reason to believe the union didn’t need it or wasn’t legally entitled to ask for it.
And that raises a significant ethical question of whether it is OK to take government money you don’t need just because you’ve figured out a way to tap a particular financial pipeline.