or, why does New York City have a housing
shortage, with so many vacant apartments?
As every poor or working class New Yorker knows, the city has a chronic shortage of decent affordable housing. Single poor or working class adults routinely live with roommates, many people live with relatives rather than setting up housekeeping on their own, families often live doubled up with distant relatives or even families they aren't related to because, in the words of populist former mayoral candidate Jimmy McMillan, "the rent is too damned high" in this city.
Indeed the rents are too damned high - an average 2 bedroom apartment in Upper Manhattan, Queens, the Bronx or Brooklyn rents for about $ 1,800 a month. In the rest of Manhattan, an average studio apartment (one big room with a kitchen off to one side and a bathroom) rents for around $ 2,500/mo. If you need a 2 bedroom, it's around $ 4,000/mo!
Those are the prices for "walkups" (apartments in buildings with no elevator, where you may have to walk up seven flights of stairs to get to your apartment). These apartments aren't that big either. The average studio is around 250 square feet - a "large" (by New York standards) 2 bedroom might be 1,400 square feet. Almost always, electricity and gas are extra.
In the newer luxury buildings with elevators and doormen, rents start at $ 3,000/mo for a studio and up to $ 6,400/mo for a two bedroom.
A lot of those apartments are co-ops or condominiums where tenants have to purchase their apartments - in Manhattan, that works out to $ 380,000 (plus interest, mortgage costs and legal fees) for a studio, and one and a quarter million dollars ($ 1,250,000) plus interest, costs and fees for a two bedroom. On top of that you still have to pay rent (called a "maintenance fee" in co-ops and condos) and, unlike rental apartments, you have to pay for any repair work needed in your apartment yourself.
That's a lot of money in a city where 10% of the workforce earn the minimum wage, $ 7.25/hr ($4.25/hr if you're a tipped restaurant worker, as many New Yorkers are), about 10% of the workforce make less than that working off the books and over 1.8 million people (a quarter of the city's population) are poor enough to be on food stamps.
This is a city of renters (70% of the population live in rental housing) and 45% of working class New Yorkers pay more than one third of their income for rent.
At the same time as there is a housing shortage for New York City's poor, and for the workers whose labor makes the city run, there is actually a surplus of vacant apartments.
New York real estate developers built 231,000 apartments during the 2000s and many of those units are sitting vacant and unrented. In Harlem, the Financial District and Williamsburg, the three city neighborhoods with the most housing construction in the 2000s, there are whole buildings that sit abandoned.
Because of this housing glut, the Real Estate Board of New York projects that only about 73,000 apartments will be built in this city in the next 10 years, or about the same number that were built in the 1990s. Over half of that - 40,000 units - will be in two luxury megadevelopments, Hudson Yards on the West Side of Manhattan and Atlantic Yards in Prospect Heights, Brooklyn.
Needless to say, not a one of the 20,000 apartments that billionaire Bruce Ratner is building in Prospect Heights will be affordable to the average working class or poor New Yorker, not even the so called "affordable" ones. The same goes for the 20,000 apartments that billionaire Steve Ross is building on the Far West Side (again, even the so called "affordable" apartments, which are only "affordable" to the minority of New Yorkers who make more than $ 64,000/yr)
Incidentally, nary a one of those projected 73,000 new units will be a New York City Housing Authority public housing project apartment, despite the fact that 161,000 New Yorkers poor enough to be eligible for public housing sit on NYCHA's waiting list.
NYCHA didn't build a single new unit during the 2000s either - the last new public housing project apartment building in the city was built in the mid 1990s, when the waiting list was about as long as it is now.
How can there be a housing glut and a housing shortage at the same time in the same place?
Especially since a lot of those apartments were built with taxpayer subsidies explicitly intended to pay for "affordable housing"?
It's also curious that a lot of that so called "affordable housing" can only be afforded by the rich and the upper middle classes, rather than the working class and poor folks that were supposed to benefit from those apartments.
It's even more curious, and downright offensive, that the highly skilled carpenters, electricians, plumbers, masons, painters and laborers who built many of those publicly subsidized so called "affordable" units were often brutally underpaid. Wages ranged from $ 4/hr to $ 10/hr for laborers and helpers, $ 7/hr to $ 15/hr for skilled trades workers, with no benefits, on jobs that were built with taxpayer subsidies and should have been covered by prevailing wage laws but due to a loophole were exempt.
Even the minority of those apartments that were built union were often built by workers paid less than full union scale. At the beginning of the decade, there were contractors who illegally paid their "company men" (steady employees) less than union scale in return for steady work. By the end of the decade, union contractors got most of the trades to openly impose 20% pay cuts on their workers on residential projects.
In other words, high rent housing built by underpaid labor, with all the extra profits from this double edged ripoff going into the hands of a few very rich men.
Let's take a look at how we got to that place and explore some ideas about what we can do about it.
19th century New York was a lot like the NYC of today. The rich lived in palaces while the poor and working class lived in overcrowded squalor. The tradesmen who built both tenements and mansions were brutally underpaid as well.
The construction workers organized - bricklayers and plasterers got unionized in the 1860s, carpenters in the 1870s, painters, boilermakers, sheet metal workers and plumbers in the 1880s, ironworkers, asbestos workers, lathers, operating engineers and electricians in the 1890s and roofers, elevator constructors, teamsters and laborers in the 1900s.
By 1903 the NYC Building & Construction Trades Council and the Building Trades Employers Association had signed a citywide agreement (the New York Plan) that required all builders in the city to use all union labor on their jobs, both commercial and residential and to only hire subcontractors that were also 100% union.
Under the umbrella of the New York Plan, the 16 unions in the Building & Construction Trades Council and the employers' associations in the BTEA signed trade agreements for each craft and each group of contractors, covering the entire construction industry in the city.
For the next 75 years, every building that was put up in the city, from Park Avenue mansions to Grand Street slum tenements, was built 100% union.
That was a great change in the working conditions of many New Yorkers, but it didn't change their living conditions.
Only the rich, the upper middle classes and the few workers lucky enough to own their own homes had good housing, in many cases enjoying some of the most beautiful, modern and stylish urban residences on the planet at the time.
The working classes, the poor and the lower middle classes (especially those who were Blacks or recent immigrants from Europe) lived in tenement squalor, paying high rents for substandard apartments in poorly maintained buildings.
By the mid 1920s, tenant activist groups, often led by members of the Communist Party, began to fight for better housing for New York's working classes. This struggle caught fire during the Great Depression, when many poor and working class tenants faced eviction because they just could not pay their rent. In many cases, evicted tenants and their neighbors would join forces with the tenant activists and forcibly prevent evictions.
These protests, and similar protests by communist or socialist led tenant and unemployed activists in other cities around the country, forced federal, state and local governments to actually do something about substandard housing for the working class and poor.
New York City was one of the first communities to act, when it created the New York City Housing Authority in 1934.
The NYCHA, using union contractors employing union labor paid for by funds from the federal Public Works Administration, began "slum clearance" projects in two of Manhattan's poorest ghettoes, East Harlem and the Lower East Side. Shortly thereafter, similar projects were built in slums in Brooklyn, the Bronx and Queens.
Dilapidated tenements were torn down and replaced by modern hirise apartment buildings with elevators to each floor and full kitchens and bathrooms in each apartment. Residents of the cleared slums got first priority for these apartments and their rent was fixed at 1/3rd of household income (the same policy is used to set NYCHA rents to this very day).
This was a big step forward for New York tenants - it was now possible for many poor and working class New Yorkers to get a reasonably priced high quality apartment, and the worst slum conditions were finally being dealt with.
Best of all these buildings were all being put up by unionized workers getting prevailing wages.
This didn't happen out of the goodness of the hearts of New York City's ruling business interests of course. They only built the projects because communist-led tenant activism forced them to.
After World War II, the same political pressures forced the city to improve conditions for the tenants in privately owned apartment buildings.
In 1947, Mayor William O'Dwyer signed the Rent Control Law into law. The new law sharply limited rent increases, made it very difficult for landlords to rent gouge tenants and made it possible for working class New Yorkers to have decent housing at affordable rents. It was a huge victory for poor, working class and lower middle class tenants in this city.
At the same time as Rent Control was being enacted, there was a rapid expansion of decent apartments rented out at reasonable rates across the city.
The NYCHA had housing projects going up all over the city, both in Manhattan and the Outer Boroughs.
There were also a number of labor unions who got into the apartment house business, in particular manufacturing workers unions.
The Amalgamated Clothing Workers and the International Ladies Garment Workers Union both built large hirise apartment house developments in Manhattan, while the Typographical Union built a similar development in Woodside, Queens and a construction union, the International Brotherhood of Electrical Workers, built a housing development in Flushing, Queens.
There were also private developers who built large apartment complexes - Walter LeFrak in Queens, Fred Trump in Brooklyn, the Metropolitan Life Insurance Company's Stuyvesant Town and Peter Cooper Village in Manhattan.
These developments weren't perfect - many of them only rented to White tenants and a fierce struggle had to be waged to force the developers and the NYCHA to let Blacks and Latinos rent wherever they wanted to.
However, it was a time when most New Yorkers could get a decent apartment for a reasonable rent. Coupled with rising wages in a city with a mostly unionized workforce, Rent Control made life a lot better for New York City's poor and working class.
The thing was, as good as Rent Control was for tenants, it was just as bad for landlords.
Low income housing is only profitable if you charge relatively high rents for really abominable conditions in dilapidated buildings. Rent Control made that classic New York tenement business model very difficult to sustain here anymore.
The landlords saw that their only way out was to either force out poor, working class or lower middle class tenants and replace them with upper middle class or wealthy tenants that could pay higher rents or outright destroy their units
The big real estate developers and their lobbying organizations, the Realty Advisory Board, the Real Estate Board of New York and the New York Building Congress, would spend the next 25 years fiercely fighting for the abolition of Rent Control, and they would also carry out a just as fierce and often implicitly racist campaign against the NYCHA and public housing.
The small landlords and slumlords were used as the foot soldiers of this lobbying campaign for higher rents and less public housing by the big developers who hid their millions behind the so called "mom and pop landlords" who to this day are the public face of landlord lobbying in this city.
In the 1960s, the city tried to placate the developers with government subsidies. The City took out a $ 784 million high interest short term loan from a consortium of Wall Street banks and lent those funds out, long term at low interest, to real estate developers.
The City also gave the same builders property tax abatements on the housing developments they built. Some of the apartments were for middle income workers and middle class folks, however, the great bulk of the new development were luxury apartment buildings.
That corporate welfare giveaway wasn't good enough for the real estate interests.
They wanted more.
They wanted the abolition of Rent Control.
Unfortunately, while Rent Control benefited the vast majority of the 80% of New Yorkers who lived in rented apartments, there was nobody actively lobbying for the law. The communist led tenants rights groups that had originally fought for Rent Control were all but defunct, so they weren't in a position to fight for the law. None of New York City's trade unions defended Rent Control either, even though most of their members benefited from it. Even unions that ran their own housing programs (Amalgamated Clothing Workers, ILGWU, Typographers and the Electricians) didn't defend Rent Control.
There was nobody to fight for public housing either, even though 700,000 New Yorkers - 10% of the city - directly benefited from the projects because they lived there and the rest of the city's tenants indirectly benefited by the downward pull on rents exercised by the existence of a large stock of high quality low cost apartments. Not even the union that had just unionized the 10,000 civil service workers at the NYCHA, Teamsters local 237, would actively lobby in favor of public housing.
By contrast, the real estate developers had three separate lobbying groups of their own - RAB, REBNY and the NY Building Congress - and they had lots of small landlords who they could use for protests and letter writing campaigns.
The developers also had the active support of the NYC Building & Construction Trades Council, the NY Hotel & Motel Trades Council and Service Employees International Union locals 32b-32j and 32e. The leaders of those unions would actively support the interests of real estate bosses, in the incorrect belief that there was a common interest between the real estate interests and the 400,000 men and women (10% of the city's labor force) who worked for them.
Of course, at the time, those workers had damned little to say about the policies of any of those unions, since most of them were run by leaders who subordinated themselves to the Genovese crime family.
Basically, as long as the developers and their contractors paid a 2% "tribute" (a polite way of saying bribe) to East Harlem pizza shop owner Anthony "Fat Tony" Salerno (who in his spare time ran the Genovese family from the back room of his pizzeria) he and his wiseguys would keep the unions and their members in their place.
The developers didn't particularly care for having to share 2% of the construction costs of their properties with a bunch of random thugs just to get labor peace, but they tolerated it, at least for the moment, because it made sure the unions were on their side and the workers were kept quiet.
In any event, the real estate developers' one sided war against Rent Control finally bore fruit in 1971, when Mayor John Lindsay repealed the law. He replaced it with a much weaker law, the Rent Stabilization Law, that remains in effect to this day.
Under Rent Stabilization, landlords and developers wouldn't be allowed to jack up the rents of current Rent Control tenants and would have to grant them permanent leases at their current rent, which they would be able to transfer to their relatives after their deaths.
New tenants would be covered under Rent Stabilization and their apartments would have one or two year leases. When those leases were renewed, the landlords could increase the rent, if a new City government body, the Rent Guidelines Board, had approved an across the board rent increase for all Rent Stabilized tenants.
That Rent Guidelines Board was composed of two landlord representatives, selected by yet another landlord lobbying body, the newly created Rent Stabilization Association, two "tenant representatives" appointed by Mayor Lindsay and five "public representatives" also handpicked by the mayor.
Predictably, the Rent Guidelines Board agreed to a rent increase for the landlords the first time it met. Every two years since then, the Rent Guidelines Board has given landlords rent increases every time they've asked for them. The RGB goes through the motion of having public hearings where there are colorful protests by tenant's rights groups and by small landlords brought in by the four big landlord lobbies (RSA, RAB, the Real Estate Board and the Building Congress). The results are, always, a foregone conclusion - a rent increase for the landlords, just a few dollars less than what they asked for.
This was all well and good with the new tenants, but the landlords still wanted to raise the rents on the existing tenants, or drive them out and bring in new tenants.
To achieve that goal, the landlords of New York crossed the line over into outright criminal conduct and terrorism on a mass scale.
The methods used by particular landlords varied depending on what part of the city they were located in.
In Manhattan's Lower East Side, West Side and Upper West Side and in the downtown areas of Brooklyn, many landlords tried to force tenants out by denial of services like heat, hot water, repairs and locked exterior doors. Some even encouraged criminals to come into their buildings and prey on tenants or even hired them for that purpose.
Those areas were predominantly White neighborhoods that were close to Manhattan's two main business districts, Midtown and Downtown. The goal was to "gentrify" those areas - to drive out working class tenants and replace them with upper middle class and rich folks who could pay higher rents.
In some cases, this meant driving tenants out of existing buildings, doing modest renovations, collecting a J51 Major Capital Improvement tax credit and then renting out the building at the new higher Rent Stabilization Law rents.
In other cases, it meant driving out the tenants, tearing down the existing building and using that city low interest loan and tax credit program that I described earlier to build luxury hirise apartment buildings in the place of the older buildings.
In Manhattan's Harlem, the Bronx' South Bronx, Morrisania and University Heights, Brooklyn's Bedford Stuyvesant, Brownsville and East New York and Queens' Far Rockaway, landlords had a different strategy.
These areas couldn't be gentrified - either they were too heavily Black or Latino or, in Far Rocakway's case, they were White neighborhoods that were just too far from Manhattan.
Bringing in wealthy new tenants wasn't an option in those areas.
Many of those landlords just struck a match.
Or, more accurately, they paid a new breed of criminal, "torches" (professional arsonists), to strike that match for them, and burn their buildings down for the insurance.
The resulting wave of arson was devastating. Between 1971 and 1980, over 200,000 New Yorkers, mostly poor or working class Blacks or Latinos, were burned out of their homes.
Some escaped with their lives and health intact (often because some of the more thoughtful torches would warn tenants before burning the building).
The hundreds of tenants and several dozen New York City firefighters who died were not so lucky.
Nor were the thousands of tenants and hundreds of firemen burned or otherwise injured by the fires.
Even the folks who escaped unscathed physically often lost belongings and important documents and, of course, were also now homeless.
Prior to this point, the entire homeless population of New York City consisted of a few hundred elderly alcoholic males, mostly White, in the flophouses and shelters of the Bowery.
After the destruction of Rent Control, New Yorkers began to see people sleeping on subways or in church doorways. The homeless population became younger, almost entirely Black or Latino, and began to include women and children and there were a whole lot more of them, as many as 20,000 by the early 1980s.
With depressing speed, this became a normal sight - the official media line was that all of these newly homeless people were "mentally ill". The new wave of mass homelessness was blamed not on landlords that burned apartment buildings; instead, mass homelessness was the fault of disability rights activists for fighting for improvements in the state's abysmal mental hospitals!
Despite the fact that it was plainly obvious that these fires were deliberately set, a fact well documented by the FDNY's special "red cap" squad of fire marshals who specialized in arson investigation, very few of the landlords did any jail time. Only the torches did time, and the way the media spun the story, it was a question of "crazy Puerto Ricans setting fires" not a systematic campaign of terrorism by landlords.
The insurance companies wrote their checks no matter what the fire marshals said and the crime went unpunished as a city burned.
Unfortunately, there was no organized resistance to this mass displacement which, including the forced out tenants and the burned out ones, affected about 5% of the city's population.
To make matters worse, that $ 784 million loan package finally came due in the spring of 1975. As I mentioned above, the City had borrowed that money long term at high interest and lent it to the developers long term at low interest.
That was a spectacularly bad business decision by the City and led to the consortium of banks that held the city's debt staging what amounted to a banker's coup d'état in June, 1975.
They installed Felix Rohatyn of Lazard Frères as the head of a bankers junta called the Municipal Assistance Corporation (MAC) and he became the de facto financial dictator of the city.
Despite the fact that MAC laid off 50,000 of the City's 200,000 municipal workers and caused the layoffs of tens of thousands of union construction workers by abandoning hundreds of City funded jobs across the city, Rohatyn and MAC faced surprisingly little labor resistance.
Two municipal unions - the United Federation of Teachers and the Uniformed Sanitationmen's Association - did carry out brief strikes in protest. However, the two biggest municipal unions, American Federation of State, County and Municipal Employees District Council 37 and local 237 of the Teamsters, scabbed on their strikes. The rest of the City worker unions, including Transport Workers Union local 100 in the city's all-important subway and bus system, followed DC 37 and local 237's lead and stayed on the job as well
As for the private sector unions, the Teamsters, the Longshoremen on the docks, the railroad unions, the Machinists at the airports, the building trades, the Utility Workers at Con Edison, the Communications Workers at AT&T and the then still very strong garment district unions did nothing at all.
The City of New York was a wreck for the next couple of years, and, after the 1977 mayoral elections, newly elected Mayor Ed Koch had to clean up the mess.
New York was in such bad shape that Koch had to hire back those 50,000 laid off municipal workers and add another 130,000 new workers to the City payroll to restore things back to normal.
After restoring public services to pre crisis levels, Koch had to deal with all those vacant lots that once were apartment houses - and he had to deal with that crisis as cheaply as possible, because Mr. Rohatyn and MAC still controlled the City's finances.
So the mayor had an idea. He had created a new city agency, the NYC Department of Housing Preservation and Development [HPD] to deal with the abandoned building crisis. If HPD did the work on these buildings itself, it would be bound by federal, state and city prevailing wage laws that would mandate HPD to only use contractors that paid "area standard wages" to all of the construction workers on the site.
In New York, then as now, "area standard wages" are pegged dollar for dollar to union pay and benefit scales for each trade.
The Koch Administration came up with a loophole to evade paying area standard wages.
Sell the vacant lots and abandoned buildings to not for profit Community Based Organizations, give them the funds to renovate those buildings in the form of grants, set the amount of those grants so low that it would be impossible for the CBOs to hire contractors that actually paid area standard wages and take advantage of the fact that, since the CBOs were having the work done instead of HPD, everybody involved could pretend these were private funds and prevailing wage laws did not apply.
The NYC Building & Construction Trades Council could have tried to fight this. The main unions in residential construction - Carpenters, Bricklayers, Plasterers, Laborers, Painters, Electricians, Plumbers - could also have fought this move.
This was probably because of the Genovese family connections of the leaders of many of those unions.
The Building Trades Employers Association didn't object either, nor did the trade associations representing the General Contractors and the concrete, drywall & ceilings, painting, masonry, electrical and plumbing subcontractors involved in residential work.
The Genovese connection also was relevant here - as well as the fact that some of these companies planned to cash in on this new opportunity and were prepared to do whatever needed to be done to batter down workers wages to fit HPD's budget.
This was especially true of the Metropolitan New York Drywall Association, and its leader, Vincent Di Napoli, the owner of Inner City Drywall and, in his spare time, a captain in the Genovese crime family. Coincidentally (or perhaps not so coincidentally) Inner City was the biggest union carpentry contractor in the city and a major player in residential drywall.
Di Napoli followed a two track strategy of getting formal wage and benefit reductions from the Carpenters Union (the union representing the largest craft in residential construction work) side by side with informally persuading individual union carpenters to work for less than union scale in return for getting frequent employment.
A steady job is kind of a big deal in construction, where work can often be sporadic, especially when times are hard as they were in the late 1970s. There were lots of desperate out of work carpenters who had little choice but to take Di Napoli's deal and become "lumpers" and work off the books for less than union scale.
The other major unions in residential construction (Bricklayers, Laborers, Plasterers) went along with this program - basically because the wiseguys told them to.
The Painters weren't so cooperative - in large part because the Painters Union's leaders answered to another mafia family, the Luccheses.
A small Painters Union affiliate, Drywall Tapers local 1974, actually went out on strike against the wage concessions and a demand that drywall tapers be forced to work on stilts instead of using ladders and scaffolds (a very hazardous practice).
Di Napoli and another Genovese family captain, Bronx real estate agent Louis Moscatiello, Sr, arranged for the Carpenters to scab on the strike and for the Plasterers to charter a scab tapers local to be run by Moscatiello (a man who had never worked in any construction craft in life).
With the resistance of the unions broken, it became possible for openly non union contractors to enter residential construction. It also became possible for union contractors to go scab and stay in business. One such firm was a company called Flintlock, which by the 2010s would be the largest scab general contractor in New York City.
While residential construction workers were having their wages forced down, tenants were having their rents jacked up.
Landlords began to really take advantage of Rent Stabilization and the guaranteed rent increases every year.
Some landlords converted their buildings into co-ops or condos. The tenants had to buy their apartments. This did give them the advantage of owning their own home and earning equity in their apartments, but they still had to pay rent (known as "maintenance fees") and they had to make mortgage payments on top of that.
Co-op and condo conversion were very lucrative because these apartments were exempt from the Rent Stabilization Law and landlords and developers could charge whatever they wanted.
Many developers began building new all co-op or condo buildings where every tenant had to buy their apartment up front. The wave of new co-op and condo construction, along with a large number of new office buildings being constructed in Downtown and Midtown Manhattan, touched off a huge building boom in the city in the early 1980s.
Almost all of these new luxury buildings and all of the office buildings were built union. With so many union members employed on those jobs, the leaders of the unions were able to avoid dealing with the fact that about a quarter of the industry - the HPD renovation jobs - had been deunionized. No attempt at all was made to reunionize that work or to organize those workers.
Meanwhile rents were skyrocketing for the common people of New York. Rents soared and the poor, the working class and even the middle class found it hard to make ends meet. Many of the handful of garment factories remaining in New York City finally left town in the face of high rents, causing the elimination of 20,000 unionized factory jobs.
Unfortunately, the labor movement didn't do anything to protest the skyrocketing rents that were impoverishing their members - and in the case of garment workers, actually taking away their jobs!
The tenant movement in the city, a pale reflection of the militant groups that had won Rent Control two generations before, confined themselves to the biennial ritual of protesting at hearings of the Rent Guidelines Board and did nothing to take the fight to the streets and the neighborhoods where they might have actually done some good.
Despite the urgent shortage of high quality low cost housing for the poor and working class in New York, there was no attempt to demand that the city build more public housing.
On the contrary, the few public housing developments under construction by the NYCHA were often met by thinly veiled racist-inspired opposition from Whites who didn't want Blacks and Latinos living in their neighborhoods.
The real estate interests just loved this and actively supported these protests. They loved to keep tenants divided along racial lines, in part for the crudely simple reason that limiting the housing choices of Blacks and Latinos allowed landlords to charge them high rents for low quality housing in the ghettoes and that the same landlords could charge racist White tenants premium rents to live in all-White buildings.
Also, if the expansion of the housing projects was blocked, that took away a major low rent competitor from the landlords, making it possible for them to rent gouge even more.
By 1989, the building boom had ended. So much office space and luxury housing had been built - including a whole new neighborhood, Battery Park City, built on landfill in the Hudson River - that the market was glutted.
Of course, there were people who still needed housing - problem was, they were poor and working class folks who couldn't afford to live in the luxury units the developers had built.
The sudden lack of construction activity and the resultant mass unemployment for construction workers finally pushed the building trades into action. They called a joint rally in front of City Hall with the developers, demanding more public funding for those developers to create jobs.
The rally organizers weren't specific about if those "jobs" were going to be union jobs, unfortunately.
That's the price of workers and our unions marching under the same banner as the bosses - we end up fighting for their agenda, instead of ours.
Of course, the construction union leaders had good cause to be distracted.
The real estate developers had begun to tire of having to pay that 2% "tribute" (bribe) to the Genovese family in return for getting passive and docile unions.
They liked the union passivity part, of course - they just didn't like having to pay a bunch of thugs a huge amount of money for it.
Starting in the late 1970s more and more developers began appealing to the authorities to do something about cosa nostra.
The government began to listen - in particular the FBI, the US Attorney for the Southern District of New York, the New York State Organized Crime Task Force and the New York County District Attorney, Robert Morgenthau - and they began to take action.
The government had an agenda - to stop the gangsters from taking payoffs from contractors and developers and to weaken the construction unions. The New York State Organized Crime Task Force was pretty explicit about the anti union agenda.
The leaders of that task force wrote two books "Corruption and Racketeering in the New York City Construction Unions" and the provocatively titled "Gotham Unbound" where they made it crystal clear that they wanted to tame and weaken the New York construction unions and the Teamsters locals in the city and reduce wages in construction and trucking to non union levels.
By 1994, the two biggest construction unions in New York City, the New York City District Council of Carpenters and the Laborers Union's Mason Tenders District Council, were under government supervision, where they remain to this very day.
The government's task of weakening the unions was eased by the fact that the unions had lost about half their market share. From 250,000 members in a 250,000 worker industry in 1968 the New York building trades had shrunk to 120,000 members in a 200,000 worker industry in 1990.
Those 80,000 non union construction workers did half the work in the city at that time - including 100% of HPD subsidized residential construction.
One of the few good effects of the federal takeover was that the District Council of Carpenters and the Mason Tenders District Council set up organizing departments. It also helped that both of the parent unions of those councils, the United Brotherhood of Carpenters and the Laborers International Union, were both launching large scale organizing programs nationwide at that time which the New York programs fit in with nicely.
The Carpenters and Mason Tenders organizing departments promptly set to the task of trying to unionize those thousands of non union tradespeople.
Considering the gap between union and non union wages (in 1994 $ 28/hr for union carpenters vs as little as $ 7/hr for non union) it was a hard task.
It also didn't help that, except for a few pockets in luxury hirise work, residential construction was overwhelmingly non union.
As landlords and developers paid lower and lower wages to the workers who built their buildings they demanded more and more rents from their tenants.
In 1994 the Rent Stabilization Association demanded that all rents over $ 2,000 a month be exempt from Rent Stabilization.
The four landlord lobbies launched a massive public relations campaign in favor of this "luxury decontrol" exemption. The landlord propagandists claimed that it was somehow unfair that "rich people" were benefiting from Rent Stabilization and it was only "fair" to let landlords jack up those tenants rent.
Sadly, the SEIU, the Hotel & Motel Trades Council and the Building & Construction Trades Council all supported the landlord lobby and came out in favor of the rent increase. They put the profits of the landlords ahead of the needs of their members who lived in New York and would have to pay those inflated rents.
This so called "luxury decontrol" encouraged landlords to raise up rents as much as possible to get them over the $ 2,000 a month limit. The new rules also encouraged "churning" apartments - encouraging rapid tenant turnover because every time a landlord gets a new tenant, that's a new lease and a new chance to raise the rent.
This was yet another attack on New York tenants by landlords and developers that, other than a few token protests at the Rent Guidelines Board hearings, went largely unopposed by tenant groups and was actively supported by the building trades and building service workers unions.
The luxury decontrol-sparked rent increases, coupled with the influx of a large number of affluent young professionals from Europe, Asia and other parts of the US into New York City who could afford to pay those rents and to pay high purchase prices for co-ops and condos - averaging $ 300,000 for a studio and $ 1.2 million for a 2 bedroom - sparked a residential building boom in the 2000s.
It also helped that construction wages had stayed stagnant at the same time prices were soaring - developers were paying subminimum wages to build million dollar apartments.
Wages had increased in the small segment of luxury residential construction that had stayed union - at least on paper.
In practice, those wages weren't always paid.
In June 2000, the District Council of Carpenters allowed its signatory contractors to no longer have to hire half of their workers from the union's out of work list, as had been a requirement for the previous 30 years.
This brought the union into line with Carpenters Union practice in the rest of the country, where the union had given up total control over hiring to contractors. This was done as an organizing measure, to reassure newly organized contractors that they could use the same workers on every job just as they had when they were non union.
The downside of that is, in an industry where every job is a temporary job, it's very easy for employers to manipulate workers to work for less than union scale in return for steady work.
If those workers can't easily get alternative employment from the union, it makes it even easier for bosses to manipulate workers into accepting less than union scale in return for a steady job.
The biggest trades in residential construction by number of workers are carpenters and laborers and the most labor intensive phases of hirise residential work are concrete work and drywall.
On the union hirise luxury residential jobs, a number of carpentry contractors, in particular James Murray's On Par Construction, began to systematically underpay their carpenters.
In the case of concrete contractors, some firms extended this practice, called "working for cash" to cement workers, the laborers who make up the bulk of the crew on a concrete job.
In the case of drywall contractors, not only did many carpenters find themselves expected to work for cash, but the Genovese family-dominated scab drywall tapers union, Plasterers local 530, also tolerated widespread evasion of union wages and benefits fund payments for their tapers on these jobs. This systematic evasion of union wages was coordinated by drywall taping contractor Louis Moscatiello, Jr, the son of local 530's founder, convicted labor racketeer and Genovese family captain Louis Moscatiello, Sr.
The abuse also spread to masonry contractors, a major portion of the workforce on the many New York apartment buildings with brick veneer exterior finishes. Many of these companies, in particular the firms owned by one Saul Heifetz, systematically underpaid their bricklayers and mason tenders, again in return for the promise of steady work.
By underpaying their tradespeople, these contractors could make lower bids, thus increasing the profits of the real estate developers.
As bad as it was on the union side, at least these workers that were getting cash were making around $ 25/hr to $ 30/hr off the books. Some of the workers on those jobs - in particular the electricians, plumbers, and the building laborers working directly for the General Contractors, actually got paid union scale.
On the scab side of the residential market segment, it was far worse.
The worst offenders were the contractors on HPD subsidized "affordable housing" jobs - which, by this point, were priced to be "affordable" to families that had a household income of more than $ 64.000 a year.
The not for profit Community Based Organizations that had originally dominated this market segment had been joined by for profit builders like Gaetano and Artimus. They had their own lobbying group too, the New York State Association for Affordable Housing, that fought to keep their prevailing wage exemption so they could keep paying below area standard wages.
These guys went way below area standard - way below!
The better paying HPD developers paid between $ 15/hr and $ 25/hr for carpenters, masons, electricians, plumbers and painters and around $ 10/hr for laborers and helpers. The bottom feeders paid as little as $ 7/hr for skilled labor (below minimum wage) and as little as $ 4/hr for laborers and helpers.
Many of these contractors hired undocumented immigrant workers and didn't bother to have workers comp coverage or pay social security, unemployment insurance or disability or any other payroll taxes.
This was blatantly illegal yet HPD looked the other way and let this blatant lawbreaking go on with no interference. Of course, HPD's subsidies were set at such a low level that the only way a builder or contractor could profitably run a job was to pay wages that low, so the agency played dumb for a reason!
Neither the Association for Affordable Housing nor any other real estate lobby ever tried to get higher housing construction subsidies - instead, they relentlessly used those low subsidies as an excuse for why they should not be covered by prevailing wage laws.
They even had the nerve to put a "civil rights" spin on it and tried to claim the Carpenters and Mason Tenders unions were somehow "racist" for demanding that they pay their mostly Black and Mexican workers area standard wages!
The implication was that somehow only White workers were good enough to deserve area standard wages while Blacks and Mexicans are only fit for substandard pay - which speaks volumes about the contempt they have for their workers.
The non subsidized residential construction sector paid similar abysmal wages to a largely immigrant and minority workforces. The same bad situation prevailed for the largely Mexican and Indian Sikh carpenters and brickpointers in the rapidly growing brick façade maintenance sector, where wages for skilled labor ranged from $ 7/hr to $ 15/hr for the workers who fixed brick veneer walls on occupied apartment buildings.
These obscenely low wages prevailed in the middle of a building boom and the scab sector expanded rapidly. Now only 100,000 of the city's 200,000 tradespeople worked union, and unorganized tradespeople did a majority of the work in the city.
Unlivably low wages for residential construction workers didn't translate to lower rents for NYC apartments. On the contrary, as residential construction real wages fell, rents and co-op prices soared, and the developers' pockets got fatter and fatter.
The developers had even more public funds shoveled into their pockets by the city, with massive subsidies planned for two megadevelopments.
Both of these developments were planned atop railroad yards and initially had sports arenas as their anchor tenants.
One was Atlantic Yards, built atop the state owned MTA Long Island Rail Road yards on Atlantic Av and Flatbush Av in Prospect Heights, Brooklyn. The anchor tenant was a basketball stadium, the Barclay's Center and the complex would consist of 20,000 units of housing, 2,000 of which were supposed to be "affordable" (to families with household incomes of more than $ 64,000 a year). The city and state gave developer Bruce Ratner (the owner of the shopping mall across the street from the site) and his business partner billionaire Russian oligarch Mikhail Prokhorov massive public subsidies to build the $ 1 billion project.
On Manhattan's Far West Side, atop another LIRR railroad yard, developers Steven Ross and Blake Hutcheson asked for, and got, a huge package of public subsidies to build a $ 4 billion project including 20,000 luxury apartments and several office buildings. Again, some of the apartments were supposed to be "affordable" (to folks who made $ 64,000 a year or better).
The original anchor tenant for that was supposed to be a stadium for the 2012 Olympics that would become the new Jets Stadium after the games.
The reason these developments are so expensive is because they are built over working commuter railroad yards and large very expensive steel and concrete platforms will be constructed atop the yards and the buildings put up on those platforms.
The unions supported these giveaways of public funds to rich developers to build homes for the affluent, as usual because of the promise of jobs.
Ratner and Prokhorov's development started first, with the building trades getting an average daily headcount of 600 union workers on the site (not much work considering the basis of union support was Jobs! Jobs! Jobs!)
Ross and Hutcheson's development wouldn't start for several years, first because the Olympics didn't come here. The 2012 games went to London, whose primary advantage over New York is building trades wages that are 67% lower than this city's. The average union tradesperson here makes around $ 45/hr - in London, its closer to $ 15 an hour for union construction workers.
Then the development was delayed because the Jets decided to continue sharing a stadium with the Giants in the New Jersey Meadowlands and to build a new venue, Met Life Stadium, with the Giants at that site.
Ross and Hutcheson ended up redesigning the site without a stadium as its anchor tenant, but with the same massive public subsidies.
Meanwhile, the government continued its crackdown on unions that let contractors illegally pay substandard wages under the table (openly paying substandard wages was OK, of course).
Three of the more egregious union contractors that covertly paid below union scale wages under the table - drywall taping contractor Louis Moscatiello, Jr, carpentry contractor James Murray and masonry contractor Saul Heifetz - faced prosecution.
Murray beat the case by testifying against the Carpenters Union leaders and gangsters he bribed to let him cheat his carpenters. The head of the NYC District Council of Carpenters, Michael Forde, went to prison as a result of Murray's testimony.
The Carpenters Union was also forced to restore its union out of work list system as a result of this case - since the wage theft wouldn't have been possible if carpenters had had a realistic possibility of quitting cheating contractors and getting alternative work assignments through the union.
Heifetz ended up getting prosecuted as did Moscatiello and his father, Louis Sr, a Genovese family captain who ended up dying in prison while serving time in this case.
A clear message was sent to union contractors, particularly in residential work, by this case - if you need to underpay your workers to make a profit, do so legally by pressuring the unions to make wage and benefit concessions.
This is important for the developers and the bankers who fund their buildings - it's very important that they know what their contractors are actually paying to their workers so any and all labor cost savings can be passed up the capitalist food chain to the moneymen on top.
There was some good news to go along with the bad.
One of the larger non union housing builders, Artimus, agreed to go "double breasted" - part union part scab. On some of their jobs, they would do the concrete and the electrical work with union labor but would continue to do masonry, drywall, plumbing, windows, woodwork and floor laying with non union contractors.
Using some union labor would enable them to use the most qualified workers to do vital work like building the concrete structure and wiring the building for electricity, telecom and data with the best available labor and using much cheaper non union labor for everything else would let Artimus continue to profit from underpaying most of their workers without having to worry about being picketed.
Another developer, Shaya Boymelgreen, went for a similar deal on some of his luxury apartment jobs in Manhattan and Brooklyn - he got reduced union wages in return.
The concessions the unions made to Artimus - letting part of the job stay scab - and to Boymelgreen - reduced wages in return for using union labor - foreshadowed future concessions that union developers would come to expect in return for not going scab.
Not every developer was willing to pay ball with the unions. Gaetano Development aggressively fought the Carpenters Union at their Gateway project in Harlem, even after their workers voted to go union. They did the old corporate name change trick, along with the usual intimidation of union supporters that is common practice in American business these days and kept their job scab.
Meanwhile, the rent increases went on every two years like clockwork, with the only resistance coming from the irrelevant sideshow of ritualized protests every two years at Rent Guidelines Board hearings.
Eventually, every building boom has to come to an end and so did this one.
The real estate boom collapsed, the Wall Street bubble popped, venerable financial houses like Bear Stearns and Lehman Brothers collapsed and the real estate frenzy stopped.
A lot of jobs were already in the pipeline but the supply of rich people willing to pay premium prices for New York City apartments began to dry up. At the same time as the bottom dropped out of the residential market, new construction of office buildings and interior work in existing office buildings dried up, because of the Wall Street meltdown. This was a double whammy for the construction industry in the city.
Some jobs were abandoned in mid build. Neighborhoods like Harlem, the Financial District and Williamsburg that had been development hotspots were now dotted with very expensive brand new abandoned buildings, left to rot in the wind and the rain.
Rents didn't go down, though - developers just kept properties off the market rather than charge less extortionately high rents for them.
The Rent Guidelines Board rewarded the developers and the landlords with yet another rent increase.
As for the workers, both union and non union workers found themselves suffering from high unemployment, made worse for the non union workers because many of them were paid off the books so they were unable to collect unemployment. At the lowest point, at any given time about 50% of the construction workforce were unemployed.
Unemployment was also high among New Yorkers in other industries as well. Despite that mass impoverishment, rents kept on going up, with no attempt to limit their increase.
Other than an eccentric building super from Brooklyn named Jimmy McMillan (who ran for governor on the "Rent Is Too Damned High Party" ticket) there was no serious public opposition to this mass rent gouging.
Obscenely low wages for non union construction workers wasn't a public issue at all, other than the occasional Carpenters or Laborers picketline at a scab jobsite.
The mass construction worker unemployment unleashed by the recession emboldened union contractors to demand pay cuts.
The federal and state prosecutions made under the table wage cuts impossible.
So the contractors, through their umbrella group the Building Trades Employers Association, just blatantly demanded that workers take a major reduction in pay and benefits so as to keep contractor and developer profits high.
The leadership of the Building & Construction Trades Council initially went along with the BTEA, and set about the task of selling these concessions.
Initially we were told that the employers wanted limited wage and benefit concessions on a dozen commercial jobsites in Midtown Manhattan and the Financial District, jobs that were supposedly not going to be built without concessions being made.
Those jobs were just the camel's nose in the tent.
Soon, the BTEA, the developers and the City of New York began demanding concessionary Project Labor Agreements on every major job in the city. The BTEA also came out with a 28 point ultimatum, demanding concessions on every issue, from wages to having a longer work day at straight time rates to the requirement that contractors provide bathrooms on jobsites.
The City of New York even demanded that workers give up their morning coffee break on all of its jobsites (they did magnanimously say we could drink a cup of coffee while we were working)
The most egregious was the Project Labor Agreement for residential construction in the outer boroughs, which demanded a 20% wage and benefit cut.
The Building & Construction Trades Council and its affiliates rolled over on this, and gave the BTEA, the developers and the City of New York a total of 250 separate PLAs for just about every large and medium sized jobsite in the city.
The unions got nothing in return for these concessions.
The City, while making sure to get PLAs for the school and municipal building work that it does with union labor, very pointedly did not sign a PLA for HPD subsidized residential work.
The HPD jobs continue to be done by low wage scab contractors who are exempt from the state prevailing wage laws (and, in practice, openly violate the federal and state minimum wage laws).
These givebacks only emboldened the contractors to demand an across the board 20% wage cut for all union construction workers on top of the concessions in the PLAs!
The BTEA launched a public relations campaign to sell these concessions to the workers, through ads on the subway and in the pages of the Daily News and the Post and through propaganda leaflets stapled to workers paychecks.
The Building & Construction Trades Council initially planned to join with the BTEA in selling these givebacks as the only way to "help our good union contractors compete with the non union".
Among the trades most deeply involved in residential work - carpenters and painters - the deepest concessions were demanded.
Painters District Council # 9 took a wage freeze on commerical work, a 20% wage cut on residential work in Manhattan and a 67% wage cut on residential work in Upper Manhattan and the outer boroughs (bringing union scale on those jobs down to non union levels).
Carpenters took 20% "market recovery rate" pay cuts on residential work - not just outer borough "affordable housing" jobs either, but even on luxury buildings in Manhattan.
On top of that the carpentry contractors also demanded "full mobility" - they wanted to get rid of the requirement that they hire part of their carpenter workforce from the union's out of work list.
This would almost certainly lead to contractors demanding that carpenters work for less than union scale, on top of the agreed upon wage concessions. With no possibility of getting work through the union those carpenters would have no choice but to take the deal and cheat themselves out of the wages they deserve.
These concessionary demands touched off considerable resistance from union construction workers, including a rank and file construction workers protest in front of a BTEA event and even a brief wildcat strike by cement workers at the Freedom Tower and the Carnegie 57 hirise residential development.
Unfortunately, the leadership of the unions was prepared to make these concessions, even in the face of resistance by members.
These concessions come in the face of an emboldened non union sector, with former union General Contractor Flintlock and non union hotel developer Sam Chang (a beneficiary of PLAs on some of his jobs) to build hirise hotels in the middle of Midtown and the Financial District with 100% non union labor.
Other than limited area standard picketing of some of Chang's jobs by the Carpenters, the Building Trades have not responded to this direct attack in any meaningful way.
Chang's hotels are low wage non union franchises of major chains - Marriott, Holiday Inn, W Hotels, Ramada Inn, Hampton Inn ect. Many of those chains operate unionized hotels in other parts of the city, often within sight of Chang's non union hotels. However, no attempt has been made to enlist the Hotel & Motel Trades Council or unionized hotel workers to put pressure on Chang's hotels, or even to help workers in those hotels form a union with the Hotel & Motel Trades Council.
In the residential sector, there was an attempt by the Building & Construction Trades Council to get the state legislature and the city council to pass laws requiring HPD's low wage scab contractors to publicly disclose the often illegally low wages they pay.
To date, those bills haven't gotten anywhere, due to opposition from the real estate lobby and Democratic politicians loyal to the developers.
Meanwhile, the landlord-dominated Rent Guidelines Board slapped New York tenants with yet another rent increase, the 44th consecutive rent hike imposed by the board. This increase was only 2%, the lowest rent hike in 10 years. However, over the course of the board's existence, it has increased New York tenants' rents by a total of 212.5%.
So, it seems like the real estate interests really have the people of New York over a barrel.
What can we do about it?
First and foremost we have to unite against the developers and the landlords.
Renters are 70% of the city - 5.6 million people. We outnumber the landlords and the real estate developers 50 to one and we need to remind them of that fact.
Including construction workers, commerical janitors, apartment building workers and hotel workers, over 400,000 workers - 10% of this city's employed working class - work for the real estate industry.
Despite the claims that construction and building service workers union leaders often make about an alleged "partnership" between us and our bosses, we have nothing in common with the real estate interests and a strong community of interest with the tenants.
Actually, a lot of those 400,000 workers (this writer included) live in apartment buildings and the same real estate interests who profit off of our labor at work also profit off of our rents in our homes.
All of the unions with jurisdiction in the construction, building service and building materials industries (the unions of the NYC Building & Construction Trades Council, Service Employees International Union local 32bj, the Hotel & Motel Trades Council and Teamsters locals 237, 282, 522, 553, 813 and 814) need to join forces with the rest of the labor movement, tenants groups and the Occupy Wall Street movement and launch a struggle against the developers.
We need to demand that every one of the 400,000 workers in the building industry be paid at least the prevailing wage for their occupation, have the right to form a union with the labor organization of their choosing and to have their employer bargain with that union.
We need to demand that every developer who receives a subsidy or a tax break be mandated to build with 100% union labor receiving 100% of union scale and that once the building is put up they be required to use union janitors, maintenance workers and security guards receiving 100% of union scale.
We also need to demand that every person resident in New York City, be they citizen, resident alien or undocumented immigrant, has a right to decent affordable housing.
We have to fight for a rollback of the present extortionately high rents and the cap on rents at one third of a renter's household income, the same system that the NYC Housing Authority has successfully used for the past 78 years in the projects.
We need to demand that the NYCHA's projects be expanded, with the housing components of the Atlantic Yards and Hudson Yards sites to be built as public housing projects. We need a floor to pull down the high rents of privately owned apartment buildings and a rapid expansion of public housing would very effectively do that.
We should also demand that HPD be merged with the NYCHA, all future HPD housing be built by the city as public housing projects and, wherever possible, existing HPD buildings be taken over by the NYCHA and run as public housing.
These are very big demands and there will be opposition. The real estate lobbies and the media will condemn this, as will many of the politicians. The not for profit sector will also fiercely fight this (they'll figure out a way to claim that it's "racist" to raise the wages and lower the rents of Blacks and Latinos) as will the contractors and their associations.
Be that as it may, this is very important.
Housing is a burning issue for all classes of New Yorkers, but especially for the working class and the poor.
We can unite the great majority of New Yorkers behind a platform demanding decent low cost high quality housing for New Yorkers, built and maintained by workers being paid decent wages
We can also isolate the greedy billionaires and their allies who extract excessive profits off of the basic human need for shelter.
The fact is, most New Yorkers despise landlords and they should.
It's about damned time we took advantage of that healthy class hatred and used it to actually change the living circumstances of the 70% of New Yorkers who are renters.
- commentary by GREGORY A. BUTLER, LOCAL 157 CARPENTER
FOR GANGBOX: CONSTRUCTION WORKERS NEWS SERVICE
"UNION NOW, UNION FOREVER"
Originally published on Friday, September 21, 2012
© 2012 Gregory A. Butler, all rights reserved.