“When you face a crisis, you know who your true friends are.”
The quote, attributed to basketball legend Magic Johnson, also pertains to how Kansas City, Kan.-based Bank of Labor, the nation’s only majority union-owned and labor-focused financial institution, has done business over nearly a century.
It’s been a successful approach with far-reaching impact.
Consider the Maine lobstermen, who were at a breaking point in 2012. Enduring long hours and at-times grueling conditions for the industry they loved, the non-union workers earned a small percentage of their lobster catch as most of the revenues went to lobster wholesalers.
Seeking greater pay, the lobstermen turned to the Machinists Union for help organizing. An initial meeting attracted nearly 40 lobstermen and led to the creation of the Maine Lobstering Union with members located all along the East Coast. The newly-formed union wanted to purchase a wholesale business to control its operation — indoor and outdoor lobster pounds (distributorships) along with trucking operations. The union’s plans were rejected by multiple banks. In 2016, the union found financing through the Bank of Labor.
BOL provided the necessary financing to purchase Trenton Bridge Lobster Pound, where the union opened its first wholesale operation in 2017. Lobstering Union members can now buy and sell their own lobsters, which revitalized their industry. They’re “giving us a second chance at life,” Maine Lobstering Union President Rocky Alley said of the Bank of Labor.
A march through history
Founded by the International Brotherhood of Boilermakers in 1924, the Bank of Labor (originally Brotherhood State Bank), immediately developed a strong footing within the greater Kansas City labor community. Brotherhood State Bank was a refuge for many organized labor unions that were having trouble obtaining credit from more traditional banks.
Across the country, 5 million Americans claimed union membership during the 1920s. But organized labor struggled during the Great Depression when unemployment surged to 25 percent. By 1933, the number of union members declined to 3 million.
The resurgence for labor unions came about after the 1933 National Industrial Recovery Act, which allowed for collective bargaining, and the 1935 National Labor Relations Act, which required businesses to bargain in good faith with any union supported by a majority of its employees.
In 1938, the Congress of Industrial Organizations was formally established. By the end of World War II, more than 12 million workers belonged to unions, and collective bargaining was commonplace throughout the industrial sector.
The Bank of Labor flourished during these years even though there were more than 50 labor-focused banks operating in the United States. Organized labor remained strong in the post-World War II years. Collective bargaining is credited with more than tripling weekly earnings between 1945 and 1970 for union workers engaged in manufacturing.
But the deregulation of communications and transportation industries, industrial restructuring, and the massive shift to foreign-made goods contributed to the decline in organized labor since the 1970s. By the end of the 1980s, less than 17 percent of American workers belonged to a union, a reduction by half from the 1950s. The trendline was set. In 2020, roughly 10.5 percent of American workers belong to a labor union.
Despite those headwinds, BOL President Bob McCall said the Bank of Labor has grown its assets to $910 million over the last several years and is the last union-owned and operated bank in the country because of its company-wide commitment to supporting the labor movement. The bank’s extensive focus on local community banking, and its appeal to blue-collar workers, has helped BOL navigate economic downturns, including the Great Recession, said Labor Division President Mike Snowden.
How it supports labor
Bank of Labor continues to serve organized labor with banking, investment and lending services. It shares the values and causes of the AFL-CIO, its affiliate unions and other members.
Its employees are represented by the United Mine Workers of America, a union considered one of the most storied in the United States. Several years ago, Bank of Labor became one of the first U.S. banks to offer its employees $15 per hour as a minimum wage. “We’ve got a great success story here in what we’re doing,” noted Boilermakers International Union President Newton B. Jones.
The Bank of Labor employs client managers and people in other roles who focus on working with unions that represent pilots, artists and first responders to name a few. Unions flourish in certain industries, such as construction and machining. Companies utilize a unionized workforce because membership conveys competency, McCall noted.
Since 2017, the bank implemented youth and college financial education programs and helped protect seniors against financial fraud. Mary Buche, senior vice president and relationship manager, helped to create employee resource opportunities through partnerships with the National Asian American Professionals Kansas City and Young Latino Professionals. She has also helped to implement a Small Business Lunch & Learn education program.
The beginning of the pandemic brought hard times for unions across the country, including the Greater Kansas City Building & Construction Trades Council. The Bank of Labor helped the Trades Council, which represents union construction trade employees within Kansas City and the surrounding area, secure nearly $40,000 in Paycheck Protection Program funding. During the pandemic, BOL helped allocate 600 PPP loans with a total value of $128 million, and it did not turn away non-customers. Also, perhaps even more importantly, the bank highlighted to developers the need to hire Trades Council members, part of the bank’s hands-on approach to spotlight the importance of hiring unionized labor for projects. “They understand the beating pulse of labor,” said Trades Council Business Manager Alise Martiny.
This approach is intended to separate the Bank of Labor from large bank competitors.
“With the Bank of Labor, North America’s labor movement now has the option of using a financial institution… that can work hand-in-hand with labor to manage a consolidation of its hard-earned capital into programs that support organized labor and our values, rather than undermining our causes and our movement,” the bank states on its website.
Despite the challenges organized labor has faced during the decades, Jones expects the bank will maintain a strong footprint and continue serving organized labor in spite of the pressure on labor-dependent industries from business and political interests.
“We’re going to be around for a long time,” Jones said, but unions will “always be under attack.”
This article originally featured in featured on BankBeat magazine.