Steven Malanga of the City Journal in New York has a great piece talking about how all the government oversight, police investigations and Federal indictments hasn’t dimmed the mob’s influence over New York City’s construction trade and, for the most part, the labor laws and unions are to blame for the mob’s ease of infesting that troubled trade.
The construction industry operates like few other businesses today, especially in New York, because of outdated labor practices. In most unionized industries, a firm hires workers who then join the union; in construction, by contrast, labor law permits contracts between builders and unions in which unions effectively have power over hiring. They enlist workers in their organizations first and then send them out on jobs.
So, since the union actually controls who works, who gets hired and where they work, this absurd practice leaves them ripe for mob infiltration.
Now, if the construction companies could do the hiring and the union just oversee contracts, like most union relationships, the mob could not have the same level of iron fisted control over the construction business in NYC.
And what is the big reason why this is all such a mess? It’s because there is no capitalist competition.
New York Stateâ€™s laws and policies add to the industryâ€™s problems by snuffing out competition. The state decrees that on all public construction projectsâ€”representing a huge chunk of the industryâ€™s revenue pieâ€”government must pay even nonunionized workers a â€œprevailingâ€ wage that in most cases is equal to the highest union workerâ€™s wage. The law sharply reduces the ability of non-union contractors to get government work, since they lose any pricing advantage that lower wages would give them. Thus, many donâ€™t even bother to bid on government contracts, which the construction unions inevitable win. Thatâ€™s the kind of monopoly that mobsters love. One of the rare circumstances when the â€œprevailing wageâ€ doesnâ€™t prevail on public jobs in New York State is when mobbed-up unions solicit bribes from contractors so that they can use nonunion workers. The mob, in other words, plays both sides of the fence.
The socialists in the city love the fact that there is no capitalist process in the city and the mob loves it too.
Go on over to the City Journal and read all of Malanga’s piece, Construction Corruption. It’s worth the read.
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