‘Soda Tax’ Has Teamsters, Corporations Sticking Together

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By Jacquie Lee

Unions and corporations are often at odds with one another: From overtime rules to minimum wage, the two typically take opposing sides on big-picture issues.

But a rally last week provides a window into how unions and corporations can play nice. They are part of a coalition in Philadelphia that’s fighting a 1.5 cent-per-ounce tax on sugary drinks.

“A lot of people would normally think ‘Why would working class people—truck drivers and grocery store stock people—be working with a corporation?’” William Dermody, vice president of media for the American Beverage Association, told Bloomberg Law. “It’s because of the nature of this tax. This tax targets working class people most of all.”

Colloquially, Philadelphians call it the “soda tax.” Advocates say it funds government programs and encourages shoppers to cut down on unhealthy sugary beverages. Critics say it hurts small businesses, leads to job loss, and is targeted at poor consumers, who typically drink more soda.

Trouble Bubbled Up in Chicago Region

A soda tax passed in Cook County, Ill., was so unpopular it was repealed two months after it took effect on Aug. 2. The Philadelphia tax passed in June 2016 and has been in effect since January.

Soda taxes have sprung up in six other cities across the U.S., including Seattle, Boulder, Colo., San Francisco, and three other California municipalities.

Collaboration between big business and workers is not new, but the soda tax is the most recent highlight of the hot-and-cold relationship between organized labor and corporations. That relationship is made even more complicated by the fact that not all labor unions oppose this tax.

Locals of the Service Employees International Union have been staunchly supportive of soda taxes. They typically represent public sector workers whose paychecks are funded by tax revenue.

“Unions have always been pragmatic in joining with management in promoting the kinds of conditions that allow their members to prosper,” Francis Ryan, a professor at Rutgers University, said. He specializes in the history of organized labor in the U.S.

For example, in the 1960s Teamsters joined beer brewers in Philadelphia to fight increased taxes on alcohol, Ryan said. Now, the Teamsters are pairing up with the American Beverage Association in anti-soda-tax coalitions across the country, including Ax the Tax in Philadelphia, Dermody said.

Unions Conflicted

On the surface, the collaboration makes perfect sense, Ryan said. A blow to soda sales means soda industry workers, who are largely represented by the Teamsters, lose their jobs. And lower sales mean less profit for soda companies.

But for public sector employees, higher local taxes mean more dough to fund their jobs.

“Our members supported the sweetened beverage tax because it supports the services they provide,” John Kohlhepp, the political director for SEIU Local 73 in Illinois, told Bloomberg Law.

Local 73 is located in Cook County, which repealed its soda tax Oct. 11. The tax had been in effect for 10 weeks.

Local officials received immediate backlash for passing the tax from restaurant heads, small business owners, and soda tycoons.

“They couldn’t walk their districts without being confronted about this tax,” Dermody from the Beverage Association said.

Former New York Mayor Michael Bloomberg, a long-time critic of the health effects of sweetened beverages, invested in political messaging supporting the Cook County tax. Bloomberg is the founder of the financial data and media company Bloomberg L.P. Bloomberg Law is an affiliate of Bloomberg L.P.

Cook County will continue to collect the soda tax through November and is scrambling to fill a new budget hole. Local 73 is anticipating job losses now that the tax has been repealed. Government officials are meeting throughout the week to determine which areas of the budget will be cut, Kohlhepp said.

“Those cuts lead to layoffs, forced early retirement and service cuts,” particularly in the county’s judicial and health-care systems, Kohlhepp said.

Meanwhile, more than 150 jobs have been lost in Philadelphia because drivers and other workers in the soda industry have been laid off, Daniel Grace, the secretary treasurer of Teamsters Local 830, told Bloomberg Law. Coke, Pepsi, and Canada Dry told the local that those job cuts are a direct result of the tax, he said. Local 830 membership declined by about 150 as well.

“The effects of this tax are devastating,” Grace said.

Modern Union, Different Mission

But the beverage tax highlights a difference between traditional unions, like the Teamsters, and unions that brand themselves as progressive, like the SEIU, Ryan from Rutgers said.

“The Teamsters represent a classic kind of Business Unionism, one that understands the role of unions as advancing and defending the economic interests of its members on the job, period,” Ryan wrote.

For example, not all Teamsters locals are opposed to the tax because different locals have different needs. Teamsters Local 700 represents public sector workers who benefited from the tax money. It supported the legislation when it was first proposed in 2016.

“Other unions, like the SEIU represent a kind of Social Justice Unionism, which sees the role of unions as advocating for their members, but also in forming coalitions with other groups to advance broader community interests,” Ryan said.

SEIU locals support the soda tax because it benefits their members as well, Ryan said. But the government programs that taxes like this fund—like pre-K in Philadelphia or general health and nutrition efforts in other cities—are important factors in their support, he said.

“SEIU is a progressive organization.” Kohlhepp from Local 73 said. “We support services that help everyday people and working families cope. We support the services which working families use.”

To contact the reporter on this story: Jacquie Lee in Washington at jlee1@bna.com

To contact the editor responsible for this story: Peggy Aulino at maulino@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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