RACE TO THE BOTTOM
Columbia University, the Koch Brothers, New York's real estate billionaires and the attack on construction workers wages
It takes a certain special kind of arrogance for a university with a $ 6.5 billion endowment to claim that the middle income blue collar workers who build and maintain their Ivy covered towers are "overpaid".
In June 2012, Columbia University actually had the nerve to put forth that bald faced lie about the tradespeople and janitors who construct and service their world class facilities.
The university's Center for Urban Real Estate issued a report attacking prevailing wages. The report was funded by the New York State Association for Affordable Housing (a lobby for real estate developers that use low wage scab contractors to build government subsidized housing) and written by Manhattan Institute-trained anti union ideologue Julia Vitullo-Martin(we'll meet her again below).
It's actually rather odd to see the normally liberal Columbia University teaming up with the hard right conservative Koch Brothers-funded Manhattan Institute - but union busting makes strange bedfellows sometimes.
Columbia and Vitullo-Martin called for the state of New York to lower prevailing wages for workers in the construction industry. They also oppose the extending of prevailing wage protection to construction workers who build government subsidized housing and janitors and security guards working in buildings funded by city subsidies and on properties controlled by the city's electric and gas utility, Consolidated Edison.
According to this anti union propaganda report, those workers - many of whom earn poverty level wages and get no benefits - are "overpaid".
Vitullo-Martin and the university claim that the road to economic recovery, in the real estate sector and the broader economy, lies through reducing construction and building service worker wages to as low a pay scale as possible.
This dovetails nicely with the Manhattan Institute's broader agenda, which is basically Ronald Reagan-style "trickle down economics", union busting and elimination of any and all statutory protection of workers' rights, including prevailing wages.
Wait a minute - what exactly are "prevailing wages" anyway?
Prevailing wages are based on the average wages paid to workers in each particular construction craft in each particular labor market.
New York State passed one of the nation's first prevailing wage laws in 1894, mandating that all state funded construction jobs be built by workers receiving prevailing wages. The US government passed its prevailing wage law, the Davis Bacon Act, in 1930. Many state and local authorities enacted their own "little Davis Bacon laws" shortly thereafter.
In New York State, for many years, the state and the federal governments have determined Davis Bacon prevailing wages for most crafts based on union wage scales.
Columbia University and their hatchet woman Vitullo-Martin argue that, since large segments of the construction industry in New York State and New York City have been deunionized, prevailing wage scales should be reduced to reflect the wage and benefit cuts that have been inflicted on those workers by scab developers and contractors.
This would involve a substantial wage cut for construction workers.
In the case of this writer's craft, carpenters, the union scale and prevailing wage for New York City is $46.15/hr (plus benefits). The wage scale paid for carpenters on scab jobs, by contrast, ranges from a high of $25 an hour (and no benefits) on scab commercial jobs to as little as $7 an hour (often paid off the books - with no benefits, of course, not even unemployment or social security) on certain scab jobs.
In particular, the contractors employed by the members of the NYS Association for Affordable Housing are often those on the $7/hr off the books end of the compensation scale.
Yes, that is very blatantly illegal, since the state and federal minimum wage is $ 7.25/hr.
No, neither the city, state nor federal governments have ever done anything to stop these developers and their contractors from blatantly using public funds to pay illegally low wages.
The excuse these developers often use to justify the obscenely low wages on their projects is city, state and federal housing subsidy funding is limited, so they have to pay rock bottom wages to maximize the amount of work they can get done with the funding they have.
The NYS Association has never lobbied to get those subsidies increased so they could actually pay prevailing wages to the workers who build their buildings.
They have demanded, and gotten, an exemption from prevailing wage requirements for their housing construction projects. The NYS Association for Affordable Housing's member developers have enjoyed that exemption for the past 35 years, an exemption that the legislature extended last year by failing to pass a bill that would have required prevailing wages be paid on their larger development projects.
Currently, the association is lobbying to block a new bill that would extend prevailing wages to their industry - the attack on prevailing wages in this report is, without doubt, part of that effort.
Columbia University, on the other hand, is not exempt from prevailing wage laws - kind of a big deal since they are currently in the midst of a 20 year long $ 6.3 billion taxpayer funded campus expansion project.
That explains their motive for wanting to rollback the wages of building tradespeople.
The real estate scholars at Columbia argue that, since the construction industry statewide in New York is 70% non union, prevailing wage-bound employers should be allowed to benefit from the rock bottom wages of the scab sector by reducing their workers pay accordingly.
Basically, it's the logic of the race to the bottom.
Columbia University and the NYS Association for Affordable Housing's attack on prevailing wages is part of a general attack on construction workers standard of living by the real estate industry.
The Real Estate Board of New York, a body representing the city's big time real estate developers (including firms like The Related Companies, SL Green and CB Richard Ellis, who's CEOs are on the industry advisory board of Columbia University's Graduate School of Architecture, Planning and Preservation, the Center for Urban Real Estate's parent body) have been demanding a 20% pay and benefit reduction for unionized construction workers for the past 5 years.
Needless to say, the real estate moneymen aren't offering to reduce the extortionately high rents they charge New York City tenants, the highest in the nation, nor are billionaires like Stephen Ross, Stephen Green, Bernard Spitzer, Larry Silverstein, Sheldon Solow or the Zeckendorf brothers planning to reduce their incomes by 20%, or even 2%.
These guys expect the workers who made them rich to make all of the sacrifices to bail the real estate industry out of the crisis caused by the collapse of the real estate bubble in 2007.
They want to push the compensation of the unionized workers who put up their commercial and luxury residential buildings down to the low wage level of the non union workers who toil for scab-contractor using developers like Shaya Boymelgreen, Dave Walentas, Sam Chang, Ken Haron, Eytan Benjamin and Steven Gaetano.
You would think that New York City's construction unions would be up in arms at this kind of massive attack on their members' standard of living, a wage scale that these unions had to fight for 109 years to achieve.
You would also think that the NYC building trades unions would be even more motivated by the fact that this demand for a pay cut is part of a nationwide attack on middle income union members' wages.
From the 50% pay cut that union autoworkers have endured at GM, Ford and Chrysler to the nationwide attacks on civil service pensions, its currently open season on organized labor, with millionaire governors and media pundits and billionaire CEOs calling $ 40,000 a year workers "overpaid".
The same race to the bottom-type arguments that Columbia and the Manhattan Institute have used here have often been used to justify these pay cuts.
When the auto industry was bailed out in 2009, the argument was made far and wide that unionized GM, Ford and Chrysler auto workers were "overpaid" at $ 29/hr plus pension and medical benefits and it was only "fair" to reduce their pay to the level of $ 14/hr non union auto workers at Toyota and Nissan's US plants and $ 10/hr auto workers at non union auto parts sweatshops in the slums of Detroit.
FIAT, Chrysler's current owner, has actually used the 50% pay cut American union auto workers had to take to bully unionized Italian auto workers to take a pay cut or their jobs will go to the now low wage Chrysler plants in the US!
Similar arguments have been made against unionized civil servants in many states, including New York.
Since most private sector employers don't bother to provide pensions or employer paid health coverage the claim is that it's only "fair" for civil servants to have those benefits taken away from them!
Labor needs to draw a line in the sand - it might as well be the New York construction unions, the oldest and (at least at one time) strongest group of local unions in the nation.
Unfortunately, that's not the case.
Just like the United Auto Workers and the public employee unions did when their members were put under the gun, the building trades have been rolling over in the face of every employer demand for wage and benefit cuts.
When REBNY first started making noises about wage cuts for unionized construction workers, the New York City Building and Construction Trades Council immediately set to the task of negotiating pay and benefit reductions with the Building Trades Employers Association (a General Contractors association that is closely allied to the big developers).
No attempt was made to attempt to organize worker resistance. Far from it - the NYCBCTC and the leaders of its affiliated unions began aggressively propagandizing their members that we had to make givebacks on some jobs "to keep our good union contractors competitive with the non union".
Initially, the "Market Recovery" concessions were very limited and were restricted to a few jobsites in lower and midtown Manhattan that, supposedly, would not be built if no concessions were made.
The fact that jobsites all over the city, union and scab alike, were being abandoned in mid-build as the real estate market melted down added some credence to that threat.
Unfortunately, those limited concessions on just a few sites emboldened the developers and the GCs to demand more concessions on more jobs.
Just about every major project got a Project Labor Agreement with special deals on wages and work rules. Columbia University was one of the deep pocketed clients that demanded and got concessions, along with Lincoln Center, Carnegie Tower, the Milford Plaza Hotel, the Metropolitan Museum, Sloan Kettering Hospital, the City University of New York, ABC, Marriot, Sheraton, the Resorts World casino at Aqueduct Racetrack, Fordham University, Queens West, Yankee Stadium, CitiField, the Javits Center, the United Nations, Delta Airlines, the Barclay's Center, Madison Square Garden, New School University and, last but certainly not least, the new World Trade Center.
Even one of the scab developers got in on the act.
Sam Chang, a developer who runs franchises of big name hotels built and staffed with cheap non union labor agreed to build some of his sweatshop labor hotels with union workers - but only if he got a cut rate PLA - while continuing to build the rest of his hotels using non union labor.
In for a dime, in for a dollar; the developers and the General Contractors, smelling blood in the water, came back and asked for even more concessions.
The next demand was a Market Retention rate on government subsidized housing jobs. Depending on the job the scale was between 20% and 40% less than union scale. Also, contractors were allowed to use large numbers of apprentices - basically because apprentices make less money than journeypeople.
The District Council of Carpenters was the first to agree to this lower pay scale although the other trades soon followed along.
In 2011, the Building Trades Employers Association, the mouthpiece of the General Contractors, called for an overall 20% pay cut on top of all of these concessions, along with a 26 point ultimatum calling for the elimination of many union work rules (down to and including the requirement that the GCs provide toilets on jobsites).
This demand was immediately embraced by the voice of the real estate developers, the Real Estate Board of New York.
Unfortunately, it was also embraced by the NYC Building and Construction Trades Council.
The BTEA and the NYCBCTC made plans to aggressively promote the 20% pay cut and the 26 point work rule repeal ultimatum to the city's 100,000 union tradespeople, through propaganda leaflets stapled to paychecks, subway ads and pro pay cut propaganda stories planted in the newspapers.
To further the media propaganda campaign, the Regional Plan Association (a Rockefeller Foundation funded group that promotes the interests of New York real estate developers) had a propaganda report drafted to justify their greed-inspired wage cut demands.
The Regional Plan Association went to a far right Koch Brothers-funded think tank, the Manhattan institute, and hired two of its right wing anti union professional ideologues, Julia Vitullo-Martin (the propaganda hack we met above) and Hope Cohen.
The two academic labor haters drafted a "study" claiming the only road to economic recovery in the construction industry was massive pay and benefit cuts inflicted on union tradespeople.
The Regional Plan Association arranged for the report to be popularized in the New York Times (a paper widely read by the educated middle classes in this region) and the New York Daily News (a publication read by the city's blue collar and service sector working class, including many construction workers both union and non union).
At this point, grassroots resistance began to emerge for the pay cut plan from New York union tradespeople.
Despite the lack of any official leadership from the unions, or any other group or caucus, this opposition soon became so widespread that the Building and Construction Trades Council had to abandon its public support for the BTEA/REBNY/Regional Plan Association's pay cut demands.
The General Contractors and the developers continued their campaign, but it was far more difficult once the union leaders could no longer openly support them.
At least one union, Painters District Council # 9, completely rolled over to the BTEA. DC 9 gave up rules that protected shop stewards from arbitrary discharge and allowed contractors to blacklist members from union membership if they get fired 3 times. The Painters Union leaders left open the possibility of a pay cut for commercial painters at a future date, but gave up massive pay cuts for residential painters - 20% on jobs in Manhattan and an astounding 67% pay cut for residential painters in Upper Manhattan and the outer boroughs.
They were the outlier - other unions couldn't go that far, especially once word got around of how deep the DC 9 cutbacks were. Protests organized by union members acting independently of their unions (this writer was one of those members) also made giving in on the 20% very difficult for the union leaders.
The leaders of the Cement Workers District Council, a Laborers Union affiliate representing cement workers on hirise construction jobs, found themselves actually having to lead a wildcat strike at the World Trade Center jobsite to block the pay cuts.
The District Council of Carpenters, the largest building trades union in NYC - and the union that, other than the Painters, had made the most concessions - actually put the concessionary contract to a one member one vote ballot, the first time union carpenters had been able to vote on a contract in the 162 year history of the union.
The Carpenters voted the agreements down by a three to one margin - mainly because the contract also included a plan to gut the union's Out of Work List job referral system, the means by which 2/3rds of the members of that union get their jobs.
That doesn't mean the concessions are dead - in the months since the carpenters rejected the givebacks local 1 Plumbers and local 46 Lathers have taken major pay cuts and made significant other givebacks.
The thing is, since these concessions were so wildly unpopular among the members, why were the leaders of these unions initially so supportive of them?
Why didn't the unions organize any kind of resistance?
Considering the political climate in New York, with the large scale anti capitalist protests of Occupy Wall Street being such a part of the fabric of public life in this town for the last year or so, it would have been a perfect time for the Building and Construction Trades Council to stand up and fight back.
Why didn't their leadership do that?
To answer those questions, we have to take a look at the history of the New York building trades unions.
We have come to think of construction as a good paying middle income job - a perception that, these days, is often at odds with the reality of low paid off the books employment for the low wage immigrant majority of the construction trades workforce.
However, prior to the 20th century, construction in New York City was a sweatshop job, done by grossly underpaid superexploited immigrant workers.
For the first two centuries of New York's existence as a city (1625-1827), much of the city's construction workforce were Black slaves, outright owned by the contractors (or "masters" as the contractors of the day blatantly called themselves). Prior to the triumph of the American Revolution in 1791, most White tradesmen in the city were indentured servants, bound by 7 year contracts to the masters (the abolition of indentured servitude was one of the greatest victories of the revolution for American workers).
The abolition of African slavery in New York State in 1827 was a great step forward, for as long as part of the workforce was outright owned by the bosses, worker organization was impossible.
However, the building industry remained a low paying occupation with a 6 day workweek and sunrise to sunset working hours Monday through Friday and a "half day"(dawn til noon) on Saturday.
These harsh conditions naturally bred worker resistance, with periodic strikes, usually at the beginning of the building season in April. Occasionally the strikes would succeed and raise wages for a time, often the strikes would be broken and their leaders fired and, in some cases, blacklisted from working in their trade in the city.
Eventually, after about 25 years of struggle, bricklayers, carpenters and plasterers (the three largest trades in the construction industry of the era) were able to establish more or less permanent unions in Manhattan and Brooklyn (which were still separate cities at that time - New York City didn't become a 5 borough unified city until 1898).
The bricklayers, carpenters and plasterers unions of that era (direct ancestors of the present day NYC District Council of Carpenters, Bricklayers New York local 1 and Plasterers local 262) were led by very militant workers, many of whom were socialists, anarchists or communists.
They saw unions as not just a means of raising wages but as a step towards building a "cooperative commonwealth" where workers rather than bankers and businessmen controlled the economy and society.
The General Contractors of the day hated unions and did everything they could to resist unionization - including breaking strikes and firing and blacklisting the leaders of these unions.
However, it soon became impossible for the GCs to get rid of the unions.
Unions became a permanent part of the industry after another 30 years of craft strikes (called "trade movements") and construction worker participation in broader all trade nationwide strike waves (the Great Upheaval of 1877 and the nationwide strikes for the 8 hour day on May Day in 1886 and 1890).
New York in particular also saw the rise of borough-based Boards of Business Agents that unified construction unions locally. "Business agents" were full time union officials, paid by member dues, replacing the part time volunteers who had led construction unions in prior years.
There were now also national craft unions that united each trade and, as building technology changed, new unions emerged in other crafts (electricians, plumbers, iron workers, painters, operating engineers ect) and among unskilled laborers and construction teamster wagon drivers alongside the longstanding unions of bricklayers, carpenters and plasterers.
The unions had changed too - the business agents , even the ones who shared the radical politics of the volunteer union activists they replaced, tempered their militancy with a desire to make unions a stable part of the industry and to collaborate with the contractors as long as workers were paid decent wages.
Also, many of the newer contractors had themselves been union members when they were on their tools, making them far less willing than earlier generations of contractors to go for open unionbusting.
Some of the more foresighted contractors saw how they could bring stability to their very competitive and unstable industry and increase the share of building industry profits that went to contractors rather than to bankers and real estate developers by collaborating with the unions.
Unions could guarantee labor market stability and prevent upstart contractors from undercutting the wages paid by their more established competitors. This could be the basis for price fixing, where the contractors would agree not to undercharge each other, and even to divide work among themselves rather than competing with and underbidding each other.
That last idea happened to be an illegal restraint of trade.
However, there were also rising criminal gangs in New York who'd be more than willing to help the contractors regulate both labor unions and inter contractor competition - in return for payoffs which could be passed along to the clients in the form of higher prices.
Facing the threat of continued strikes and labor strife and enticed by the promise of the benefits of long term labor/management/organized crime cooperation, the contractors eventually decided that they'd be better off dealing with the unions rather than fighting them.
To that end, the contractors associations in the various trades set up an umbrella group, the Building Trades Employers Association (we met them earlier in this article) and in 1903 the BTEA and the NYC Building & Construction Trades Council (an umbrella body the construction unions had formed) signed an agreement called the New York Plan.
The New York Plan required all of the General Contractors in the BTEA's member associations to only hire union labor and to only hire subcontractors that only hired union labor.
That agreement unionized virtually the entire construction industry in New York City. To this day, the New York Plan ensures that most of the major commerical construction here is done union, and from 1903 to the late 1970s it also kept most of the apartment house construction here union too.
This partnership didn't go smoothly at first.
In 1916, in the midst of a citywide strike wave, the Carpenters and Bricklayers called citywide strikes, fueled by demands by outer borough tradesmen to be paid at the same scale as their counterparts on Manhattan jobsites.
Those strikes won on the picketline but were subverted when conservative forces in the Carpenters Union overthrew the District Council of Carpenters elected leadership, replacing it with a gangster run administration (that was the beginning of 78 years of gangster domination of the city's largest building trades union).
With gangsters in power in the District Council of Carpenters, this alliance between union business agents, contractors and the criminal underworld was solidly in place. The unions guaranteed labor peace, the gangsters regulated price competition between contractors and the contractors profited handsomely from this arrangement.
This partnership was contested only by a failed 1921 attempt by real estate developers to deunionize the NYC building trades (it failed because the General Contractors and the subcontractors refused to go along).
There was a political price for the unions - they were very much the junior partner in this alliance, with little to no room for the unions to have an independent agenda.
Longstanding union goals like equal distribution of work were abandoned. Job security, seniority and a union's right to contest unfair firing - things that other unions were just beginning to fight for in those days - were never established in the construction industry.
Instead, the employers could hire and fire as they saw fit. They had a right to play favorites, with steady jobs for some and sporadic employment by the day for the majority. They were also free to discriminate - many trades had an outright ban on the hiring of Black workers, a form of open racial discrimination that the unions actively participated in enforcing.
Above all, the once core union ideas of building a construction industry and a society ruled by workers instead of by bosses and bankers was abandoned, totally and absolutely. That goal was replaced with the idea of labor management partnership - a partnership based on labor's permanent subordination to management, on the job and in the broader society beyond the jobsite.
The contractors, by far, were the biggest beneficiaries of this alliance. They got a steady supply of skilled workers, at the modest cost of paying their workers decent wages. With everybody paying the same pay scale, they also didn't have to worry about their competitors underbidding them by hiring cheap labor.
Thanks to the gangsters, the contractors kept construction prices high and limited competition between firms, which helped the contractors take a much larger share of real estate profits then they would have if they had to compete in an unregulated market.
As for the workers, as long as there was work to be had, money was good and, as long as a tradesman didn't challenge the power of the business agents and the wiseguys, he could make a very good living.
The alliance was shaken briefly during the 1930s - mainly because half the construction workforce was unemployed. Since the subordination of the unions to the contractors and the mob had been justified to the members by the business agents based on the good paying jobs that resulted, the lack of jobs made that collaboration very unpopular - especially among the less well connected members who got little to no work.
This led to a brief upsurge in construction worker radicalism in New York City. A few communists were elected to business agent posts (for a time communists even ran Painters District Council 9), and thanks to renewed worker militancy, the contractors were forced to concede the 7 hour day and the 5 day work week.
The renewed prosperity generated by the construction boom during World War II and the even bigger post war building boom made it possible for the contractors, the business agents and the gangsters to bring back the old alliance between unions, bosses and the mafia.
Contractors in two sectors - hirise concrete and a recently developed plaster substitute called drywall - actually developed full blown cartels (the "concrete club" and "the wheel", respectively), where the Genovese family of the mafia determined which contractors were allowed to bid on particular jobs.
Contractors who tried to underbid the contractors picked by the Genoveses found themselves having problems with the District Council of Carpenters and the Cement Workers District Council, unions whose leaders were subordinated to that crime family.
This labor-management-underworld alliance ruled the construction industry In New York City uncontested into the 1960s.
On the labor side, it built up the strongest local labor bodies in the world. However their strength was undermined by their domination by employers and organized crime, an underlying weakness that would begin to be exposed later in that decade.
The first cracks in the labor-management-mafia alliance began to appear in 1965, in the form of civil rights protests.
Contractors had practiced de facto Jim Crow segregation in the New York building trade for decades. Limited numbers of Black men and Puerto Ricans were allowed to be carpenters in Harlem or mason tenders and demolition laborers. Other than that, contractors in the various trades openly refused to hire qualified men of color to work in the industry.
With the rise of the Civil Rights Movement protests, and the federal government's outlawing of race discrimination in 1965, minority communities refused to accept their blatant exclusion from those jobs.
Initially, mainstream civil rights groups like the NAACP carried out peaceful protests, and the City of New York launched a small scale tokenistic integration program at one jobsite, the Hunts Point Market in the South Bronx.
However, Plumbers local 2 balked at letting 4 Puerto Ricans and a Black man join their union and called their first citywide strike in 70 years to keep men of color out of their union.
That kind of union intransigence in defense of employer racism enraged Black and Latino workers and the civil rights moderates leading the protests were soon displaced by Maoist revolutionary communists
The radical protests escalated to invasions of segregated jobsites in Black and Latino neighborhoods by minority workers (often armed with pipes and baseball bats).
This led to the creation of minority construction worker organizations called Coalitions that within a few years spread throughout the city.
The Coalitions, with bats and pipes in hand, eventually forced the contractors and the unions to give in on racial segregation and to open the trades to workers of all races, not just White men (although race discrimination in the unions would continue for decades after desegregation).
That was only the first crack in the foundation - there would soon be others.
The next blow was the destruction of Rent Control.
The Rent Control Law had been passed in 1947, in the wake of almost a quarter century of struggles for tenants rights in New York City.
The law kept rents low and, alongside the large number of high quality low rent apartments in the NYC Housing Authority's public housing projects, made it possible for poor and working class people to have decent affordable housing in the city.
Real estate developers and bankers hated Rent Control and the projects, because their existence put a limit on the profiteering and rent gouging that the financiers wanted to inflict on their tenants.
In 1971, after 24 years of landlord lobbying, Mayor John Lindsay repealed the Rent Control Law. It was replaced with the Rent Stabilization Law. The new law allowed landlords to raise their rents every year, as long as those rent increases were approved by the Rent Guidelines Board, a body appointed by the mayor and made up largely of landlord representatives.
Predictably, the RGB has authorized rent increases every year from 1972 to date.
Tenants who were already living in their apartments in 1971 were allowed to keep their old Rent Control Law determined rents, as long as their or their heirs continued to live in the apartment.
If the tenants gave up the apartment for any reason, the landlord could raise the rents to the higher levels authorized by the Rent Stabilization Law.
This loophole was brutally exploited by landlords.
In large areas of Manhattan and Downtown Brooklyn, landlords began systematically denying services to tenants to force them to leave, so the apartments could be rented at the new higher rents.
Many of those landlords took advantage of a $ 784 million dollar long term low interest loan package offered by the City to landlords looking to renovate old law apartments into luxury apartments, or to tear down the old buildings and replace them with luxury hirise apartment houses.
In many areas of Upper Manhattan, the Bronx, Central Brooklyn and Far Rockaway, Queens, landlords went so far as to hire arsonists to burn their buildings down, removing the Rent Control Tenants by outright destroying the buildings.
Over 200,000 tenants lost their homes to the fires.
None of the landlords went to prison for their crimes against the tenants of the city.
The NYC Building and Construction Trades Council supported the Rent Stabilization Law and the $ 784 million in subsidies for luxury housing construction, as did the building service workers unions, locals 32E and 32B-32J of the Service Employees International Union, and the rest of the labor movement.
As long as the new buildings were built union and had union supers and porters once they were built, it didn't matter that this process of "gentrification" hurt the working class as a whole.
That labor support for this attack on the working class as a whole would turn around to bite labor in the ass in the summer of 1975.
The City's $ 784 million in luxury housing subsidies, lent out long term at low interest to developers, had been borrowed short term at high interest from a consortium of Wall Street banks.
When the loans came due in the spring of 1975, the City didn't have the money.
So, the bankers appointed a junta, called the "Municipal Assistance Corporation" and seized control of the city's finances in what amounted to a bloodless coup d'état.
The bankers demanded, and got, the City to lay off 25% of its workforce - 50,000+ workers - including many in essential services like police, fire, education, health care, garbage collection and mass transit, and to immediately cancel hundreds of construction jobs (literally leaving the buildings abandoned and open to the elements).
Resistance from the civil service unions was uncoordinated and sporadic. Firefighters, police officers, sanitation workers and teachers briefly struck, but the transport workers union stayed neutral and the two largest municipal unions, Teamsters local 237 and AFSCME District Council 37, actively helped the bankers carry out their mass layoffs.
That was better than the response of the leaders of the private sector unions, including the Building & Construction Trades Council, who did absolutely nothing and let these attacks on the working class of New York City go unresisted (even when union construction jobs were lost).
Three years later, in 1978, the newly elected Koch Administration had to make some concessions to the civil service unions - basically, they had to rehire the laid off workers, to keep the city livable. Even then, the rehired city workers often came back to their jobs with lower salaries and pension benefits, with the full support of the municipal union leaders.
The Koch Administration also launched an attack directly on the building trades, knowing that they could get away with that because the labor leadership had so passively accepted the attacks of 1975.
The City had to rebuild the 50,000+ apartments that had been burned out by the landlords earlier in the decade. However, due to the financial restrictions imposed by the bankers junta MAC, they had to build these units as cheaply as possible.
The City's answer was to have the NYC Department of Housing Preservation & Development (HPD), the newly created city agency overseeing and funding the work, transfer all of the funding for these jobs to not for profit Community Based Organizations.
The City's lawyers claimed that, since the CBOs were, technically, private corporations, they were not bound by city or state Davis Bacon prevailing wage laws.
This opened the door to the first large scale deunionization of a major construction market segment in New York City in 75 years.
Considering this was coming at a time when construction unions were under attack nationwide, you would think that this would have provoked a major counteroffensive by the NYC building trades.
That didn't happen.
The leadership of the building trades, instead of organizing their then 250,000 strong membership to resist this attack, deferred to their "partners" the contractors and the mafia bosses.
That was a problem, because the contractors and the mafia were very happy with Mayor Koch's low wage residential construction program and planned to take full advantage of it, by cutting the wages and benefits of their workers, one way or the other.
This was especially true of the two main groups of subcontractors in residential construction, the drywall & ceiling contractors and the hirise concrete contractors.
The two drywall contractor associations - the Association of Wall, Ceiling and Carpentry Industries and the Metropolitan Drywall Association - and the Cement League negotiated a contract with the District Council of Carpenters, the largest union in residential construction, calling for a lower renovation wage scale.
Parallel to those open legal wage cuts, Vinnie Di Napoli, the Genovese family captain who ran the MDA and owned Inner City Drywall, the largest drywall contractor in the city at the time, imposed a second set of secret illegal wage cuts.
Di Napoli began paying some of his company man (full time employee) carpenters based on a lump sum fee instead of an hourly wage, a practice known as "lumping". It amounted to a pay cut but the District Council did nothing to stop him - basically because, in the Genovese family hierarchy, their union was subordinated to him and his crew.
Side by side with this, openly non union contractors began bidding on these inner city renovation jobs, with little to no resistance from the union. This lack of union resistance had a lot to do with the fact that many of these scab contractors were paying protection money to the Genoveses, or one of the other 4 mafia families in the city.
Scab contractors that didn't pay off Di Napoli or one of the other wiseguys did get picketed, often quite violently, and were shut down, or allowed to continue operating if they bribed the right people.
The leaders of the Cement Workers, Mason Tenders, Bricklayers, Plasterers & Cement Masons, Teamsters and Operating Engineers all similarly subordinated themselves to the attacks on their members standard of living by the contractors, the wiseguys and the city.
The only exception was Drywall Tapers local 1974, a small local of Painters District Council 9 that represented the workers who taped over the joints and screw holes in the drywall installed by the carpenters.
Unlike most of the rest of the trades, which were dominated by the Genovese family, Painters District Council 9 was subordinated to the Lucchese family, one of the smaller New York mafia families.
The bosses of these two families didn't necessarily see eye to eye on exactly how to attack construction workers standard of living, nor would the Lucchese bosses get a cut of the extra profits that Genovese family protected contractors would be getting.
Also, from the perspective of the members of the tapers union, the concessions they were being asked to give up were much steeper. Not only were they expected to take an official pay cut and be unofficially expected to submit to lumping, they were also going to be asked to work on stilts rather than on ladders or scaffolds.
Stilts are a lot more dangerous to work off of than ladders or scaffolds are - but a taper on stilts can work a whole lot faster than one using a ladder or scaffold.
So, to stop the stilts, the leaders of the tapers union went on strike in 1978.
All the other trades scabbed on them, working behind their picketlines, side by side with the scab tapers recruited by Di Napoli and the other contractors.
Worse yet, the Plasterers & Cement Masons union, acting under the direction of Di Napoli and the Genovese family, actually chartered a scab local, Drywall Tapers & Plasterers local 530, to "represent" the scabs!
The scab tapers union was run by a Bronx real estate agent named Louis Moscatiello, Sr, a Genovese family captain who, as it happened, had never worked a day in his life as a taper or in any other trade.
The legitimate tapers union was unable to hold out and the strike was broken.
Meanwhile, while the unions were retreating in the unionized residential sector, the non union sector continued its growth in the face of union weakness.
The total construction workforce had been cut from 250,000 to only 200,000, with only 150,000 of them unionized. A quarter of the industry had been deunionized (a big deal in a city that had built 100% union for the previous 75 years) and almost 100,000 union members had been driven out of the union trades.
The rise of the Coalitions - a result of longstanding contractor and union racial discrimination - provided an alternative source of labor to the scab contractors, enabling them to man all the new jobs they were getting in residential.
Also, the wiseguys who the unions had become so deeply subordinated to were facing a severe threat from city, state and federal investigators.
The reason for this was because the real estate developers and the bankers had gotten sick and tired of paying off the Genoveses and the other wiseguys.
The gangsters had, for the previous 30 years, extracted a "tribute" (their euphemism for a bribe) of 2% of the total cost of each job, plus the right to place no-show employees on certain jobs and the right to steal "mongo" (scrap metal) from jobsites.
Above and beyond that "mob tax" (as the prosecutors would later come to call it) - a longstanding irritation for the developers and the bankers - was Di Napoli's lumping.
The developers and the bankers didn't mind the open and legal pay cuts. Actually, they welcomed them, since the cost savings got passed on to them through price cuts.
They very much did mind the lumping because the contractors and the wiseguys got all that money, which the developers and their bankers thought should go to them.
Basically, the billionaires felt like they had been ripped off by the contractors and the gangsters.
When rich people get ripped off, or even think they've been ripped off, then somebody has got to go to jail.
Unfortunately for the building trades, their decades long one sided alliance with the gangsters meant that when the feds came after the mob, they'd come after the unions too. The FBI intervention into the internal affairs of the New York building trades that begins in this era continues to this very day, due to the longstanding mob ties of building trades leaders.
The District Council of Carpenters, the biggest and, after the Cement Workers District Council and Plasterers local 530, the most mafia dominated, was the union that suffered the greatest decay.
The Carpenters membership fell from 40,000 to 25,000, three District Council officials - including the president of the council, Teddy Maritas - were murdered by the mafia, the DC's parent union took the Council into trusteeship and half of its locals were disbanded, due to membership loss.
The commercial and luxury housing boom in Manhattan in the mid 1980s somewhat concealed the decay, at least for the moment. Virtually all of this work was union, so it was easy to overlook the market areas that had been lost to the scab sector - at least for the moment.
Much of the apartment house sector had gone non union in Upper Manhattan and the outer boroughs, but there were so many office buildings and luxury apartment houses going up in Manhattan below 96th St that most of the remaining union members were working steady on those jobs. Some trades, like the Electricians, actually brought in members from out of town to work on these jobs.
However, when the real estate bubble burst in 1989, the dimensions of the crisis became very clear.
The leaders of the building trades unions didn't have an answer to this crisis, other than echoing the demands of the developers and the contractors for "more jobs" (with no guarantee that they would necessarily be union jobs).
Ninety years of subordination to the bosses and the criminals had robbed the unions of any capacity to develop an independent strategy.
Not to mention the fact that a substantial section of union leaders were on the take, and were being paid off to look the other way while the union sector shrank and the scab sector expanded.
The latter factor led to government intervention in the two largest, and most corrupt, construction unions in the city, the Mason Tenders District Council and the District Council of Carpenters.
The feds had a twofold agenda. On the one hand, they wanted to eliminate the illegal under the table deals where mafia connected contractors illegally paid substandard wages and cheated the developers and the General Contractors out of those labor cost savings. On the other hand, the feds also wanted to legally and openly reduce union wages - with the benefits passed on to the developers and the GCs.
This was a low point for the New York building trades.
They were down to only 120,000 members and there were over 80,000 non union workers in the industry - some making as little as $ 4 an hour off the books.
The only silver lining in this dark cloud was that the new leaderships of the Mason Tenders and the Carpenters ended up setting up organizing departments, the first time that any NYC building trades union had done organizing work in a systematic way since the 1930s.
The Mason Tenders had the most success, with the union able to reorganize its asbestos abatement worker and demolition worker jurisdictions, market segments that had been deunionized, with much assistance from the Genoveses, in the 1980s.
The MTDC would be the most successfully reformed New York construction union, in large part because its close ties with the GCs that, along with the developers, were the driving force behind intervention by the feds in the industry.
In the Carpenters, the close ties between the union leadership and the subcontractors (and the gangsters who stood behind them) made the federal intervention very difficult and made lasting changes hard to come by.
Similar problems would be experienced in every other construction union the feds would end up cleaning out.
Making matters worse, the City of New York was going out of its way to direct housing funds to developers who used low wage non union labor.
The NYC Department of Housing Preservation and Development was by far the worst offender. The GCs hired by the not for profit Community Based Organization to build housing with HPD funds tended to be the lowest paying firms available. Carpenters and masons received as little as $ 7 an hour - laborers and helpers often got as little as $ 4/hr. Wages were paid in cash, off the books, with no payroll taxes paid, not even unemployment, workers comp, disability or social security.
Blatantly illegal labor practices were being financed with public funds - needless to say, the feds did NOT investigate any of this!
This of course created a downward pull on union wages - particularly in hirise luxury residential, the one market segment of residential that had stayed union.
This economic pressure was the reason that some mafia connected bricklaying, hirise concrete, drywall & ceilings and drywall taping contractors began to look for ways to illegally pay substandard wages to a portion of their workforce.
Some office furniture installation, venetian blind and drywall & ceilings contractors in the office interior renovation sector also began looking for ways to illegally pay substandard wages as well.
A commonly used method was called "working for cash".
This often involved a union worker - usually a carpenter, cement worker, bricklayer or drywall taper - would work part of the week for union scale, and part of the week for cash off the books. Some guys had to work the whole week off the books, some other guys worked the regular work week on the books but overtime was all in cash.
In return for taking cash, the worker got steady employment (a rare privilege in the construction industry) and, in some cases, a way to evade alimony and child support payments.
Often, the GC and the developer were billed as if all of the subcontractor's workers were getting paid union scale.
This systematic undermining of union pay scales happened in the context of a residential apartment house building boom in the early 2000s, centered in Harlem, the West Side and Williamsburg.
Most of this development was non union - the few buildings that were built union often had cash contractors who didn't actually pay the official union scale.
The decay of union wage scales set the tone for a general downward mobility, with the scab outfits paying very low wages (in some cases segregated by race - one scab outfit, EMC Construction, paid it's White carpenters $ 25/hr, it's Black carpenters $ 15/hr and it's Latino carpenters $ 11/hr)
In June 2001, the District Council of Carpenters made it easier for dirty contractors to pay cash by changing the union's job referral system, so a contractor could partially evade using the union's job referral system.
This meant that if a carpenter wanted to work steady, instead of sitting home by the phone waiting for a call from the union (which was a lot less likely to come because the union had surrendered control of a lot of the jobs to the contractors), he or she might find that they'd have to work for cash to do so.
This made it a lot easier for contractors that hired carpenters to pay cash if they choose to do so. On paper, they still paid the union scale (and billed accordingly) but in the real world they paid a lot less.
Preventing this kind of under the table illegal arrangement, and forcing contractors to openly impose their pay cuts and pass the savings up the food chain to the developers and the GCs was precisely why the feds had come into the building trades unions in the first place.
This led to a second wave of prosecutions of labor leaders, racketeers and even a few contractors in the New York building trades (again, when rich people get ripped off, somebody has got to get locked up!)
Genovese family captain Louis Moscatiello, Sr (the drywall tapers strikebreaker we met earlier in this essay), his son and fellow labor racketeer Louis, Jr, a half dozen drywall taping contractors and the scab tapers union they controlled, Plasterers local 530, were hit with multiple charges.
Both Moscatiellos were among those who went to jail (the father ended up dying of natural causes behind bars) and local 530 was kicked out of the industry.
The District Council of Carpenters was also hit by multiple prosecutions. DC Executive Secretary Treasurer Mike Forde ended up being one of those who went to jail. A number of other Carpenters Union officials got locked up as well. Also, the head of the biggest carpenter employers association, Association of Wall Ceiling and Carpentry Industries chief Joseph Olivieri, found himself behind bars.
A lot of this was due to the testimony of one James Murray. He was the owner of one of the biggest union drywall contractors in the city (and also one of the dirtiest), On-Par Contracting. As is common in racketeering cases, he turned state's evidence to keep himself out of prison.
Unfortunately, alongside this attack on illegal under the table wage cuts (the kind that don't get passed along up the food chain to the GCs, developers and bankers) were increasing demands that union trades take deep pay cuts, alongside a continued aggressive expansion of the scab sector of the industry.
Of the city's total of 200,000 construction workers, only 100,000 worked union. Of the 100,000 on the scab side, 50,000 were paid off the books, in some cases receiving wages that were below minimum wage with absolutely no benefits, not even social security or unemployment.
The residential building boom of the early 2000s was overwhelmingly non union, with the great bulk of lowrise apartment houses built scab (and even some hirises).
By the mid 2000s, developers Ken Haron and Eytan Benyamin did agree to build their buildings open shop instead of 100% scab. The concrete, plumbing and electrical were done union, but the drywall, brickwork, windows and interior finish work continued to be done scab.
Shaya Boymelgreen consented to build one of his buildings union - but with a special project labor agreement with lower wages.
Sam Chang would later make a similar deal - and end up going back on the deal and building scab anyway.
As limited as this headway was, it all came to a stop when the housing bubble popped in 2007 and the economy melted down.
Jobs that were on the drawing board got cancelled and even some projects that were already in mid build had work stopped and the structures were abandoned.
This made organizing very difficult - after all, how can you take in new members if you can't keep your existing membership employed?
Also, this was the climate in which the GCs and the developers on the union side began to demand deep concessions - above all, a 20% pay cut.
Initially it was only supposed to cover a few jobs and the excuse was if the developers didn't get the special market recovery deal, they wouldn't go forward with building.
Later, this generalized into a general demand for industrywide pay cuts, a demand that continues down to this day, with wealthy institutions like Columbia and billionaire developers like Larry Silverstein calling for deep wage and benefit cuts for the skilled workers whose labor makes them rich.
As I described at the top of this article, while the general reaction by construction workers has been outrage and stubborn opposition, the leadership of the building trades unions have, at best, put up limited resistance and, more commonly, to actually support the demands of the developers.
This is exactly the wrong strategy.
We need to fight to preserve what we have, and to attempt to extend our standard of living to the workers in the scab sector, by helping them to fight their bosses and the scab developers.
This won't be easy. However, considering the present political climate of unrest and anticapitalist Occupy protests by underemployed college educated youth, we can, and should, forge alliances to enable us to carry out these struggles.
We also can, and should, reach out and jointly struggle with our fellow unionists who also face attacks on their living standards - like public employees, or the currently locked out Con Edison utility workers.
We should also reach out to the janitors and other building service workers in the buildings owned by these developers - both the unionized workers in the Hotel Trades Council and local 32bj of the Service Employees International Union and the non union workers (in particular the grossly underpaid workers at Sam Chang's scab franchise hotels)
Bottom line, there is no way that middle income tradespeople should take a pay cut for the benefit of millionaires and billionaires.
There's a slogan that the District Council of Carpenters organizing department uses on its informational picket lines in front of jobsites that don't pay prevailing wages - "Same Work! Same Pay!"
There was another slogan, chanted by the striking cement workers at the World Trade Center and the workers at the bootleg unofficial protests against the pay cuts - "We Built This City! Don't Cut Our Pay!"
That's basically what this boils down to - and that simple idea that tradespeople with the same skills doing the same work deserve equal pay could, if presented properly, resonate with workers in other industries, the poor and the middle class.
- commentary by GREGORY A. BUTLER, LOCAL 157 CARPENTER
FOR GANGBOX: CONSTRUCTION WORKERS NEWS SERVICE
"UNION NOW, UNION FOREVER"
Originally published on Thursday, July 5, 2012
© 2012 Gregory A. Butler, all rights reserved.