Culture Clash: Labor’s Economic Agenda and Taft-Hartley Trustees’ Interpretation of ERISA
In the context of the increased importance of pension fund assets in the economy since WWII, the labor movement has repeatedly tried to articulate an economic agenda for labor and encourage union pension funds to invest in accord with this agenda. While recent academic interest has focused on the behavior of the large, highly visible, public pension funds, little is known about the investment practices of smaller funds. In this paper we analyze the investment practices of two Taft-Hartley pension funds in order to discover the extent, impacts, and limits of investments targeted to produce labor-friendly collateral benefits. We find trustees hesitant to target investments to produce desirable collateral benefits. Yet, the economically targeted investments actually engaged in by the funds have clear beneficial impacts. Comparing the practices of the two funds reveals room for more economically targeted investment, but organizational and legal factors tend to discourage consideration of collateral benefits by trustees. The cultural perspective on law and organizations (Edelman and Suchman, 1997) provides a framework for understanding these findings and a guide to further research.