Union violence against non-unionized workers and their employers is an under-reported story. Everyone knows it happens but they look the other way. It’s hard to look the other way, however, when the violence and vandalism is videotaped and put on the web–that’s what two Philadelphia developers did and the result is making waves far beyond the workplace.
Since the first videos went up in spring, the tide of public sentiment has turned, and the Pestronks won a court order restricting the picketers’ behavior. But in coming years, the Goldtex battle and the techniques employed there may be seen in grander, historical terms: as the moment that started the unraveling of Building Trades’ vast economic and political power, and perhaps of Philadelphia’s entire power structure.
The above-market wages, featherbedding and absurd work rules make low-cost development difficult:
…According to Gillen, the economics of our Trades unions hinder middle-income developments and force developers toward high-end luxury residences. Yet Building Trades flaunts its power with labyrinthine work rules and outrageous demands. Most famously, the Comcast tower was equipped with two sets of pipes—one “green” and functional, the other old-fashioned and disconnected—to feed the union beast. But the Trades are an everyday drag on the local economy. Union plumbers must call in the electricians if a single wire needs to be moved.
As is usual, in these situations, the rents do not go the workers alone but instead are partially distributed to inside developers who accede because they get monopoly power:
…The Pestronks say they’ve been told by people within the development community that certain established builders get better labor rates than they were offered. Multiple sources inside Philadelphia’s development community say that information is correct. “It isn’t like the unions ever work for market rate,” says one developer, who requested anonymity for fear of retribution from the Trades. “But instead of coming in 40 or even 50 percent over market, they’ll come in at 20 percent. Maybe throw in some government subsidy, and it’s just enough to get the deal done.”
The arrangement has dark ramifications for the city’s economy. “The issue,” says one elected official, who also asked for anonymity, “is that a younger developer or an out-of-town developer gets a vastly different price than someone who has a relationship with the unions. There is a kind of old-boy network involved. And there is an element of protectionism to it. The established developers complain about the unions. But they cut deals with them and enjoy the fact that the unions reduce any competition they might face.”
The politicians also get their share of the cut:
..Inquirer reporter Bob Warner has published a series of stories quantifying the amount of money Johnny “Doc” Dougherty donates to local politicians. Dougherty, the boss of Local 98, annually funnels $2 million into state and city races, circumventing campaign contribution limits by funding political action committees that lavish his favored candidates with cash. The Trades have it in their power to acquire huge stakes in any city politician. A review of 2011 political campaign filings shows City Council representatives Bill Green, Mark Squilla and Bobby Henon each received roughly 20 to 25 percent of their funding from Trades-related sources.
Read the whole excellent piece. Hat tip to EconJeff who notes that the article is flawed only by a bit of lazy history suggesting that the 40 hour work week and good working conditions are primarily due to unions (there is also a bit of weak economics in a suggestion that the wages of builders and city rents should be closely related). Still it’s a very astute article that connects the dots in the iron triangle.