FEDERAL and local prose cutors were quick to brand last week’s massive bust of 62 alleged Gambino crime family members, union officials and construction executives as “historic” and “a milestone toward eradicating” mob influence in New York’s building industry. If only . . .
In fact, the indictments’ real message is that, even after decades of intensive investigation by law enforcement, organized crime remains a powerful force – especially in the city’s construction industry and related businesses, like trucking.
Spectacular busts won’t end mob influence unless government presses for reforms that change these businesses’ very nature – something politicians have long refused to do.
At the heart of the problem are outdated labor practices that leave construction operating like few other businesses. In most unionized industries, for instance, a business hires workers who then join the union. But in construction, labor law allows contracts between builders and unions in which unions have de facto power over hiring – letting a union enlist workers, then send them out on jobs.
Wise guys have used this control of hiring to dominate the industry in New York. Mobsters can place cronies in key positions, sending them to oversee construction sites – where these mob “associates” shake down contractors and enforce mob discipline among union members.
They can also demand payoffs from people wanting to get into the business, a lucrative source of mob cash. Indeed, a number of counts in last week’s indictments charged that Gambino associates took bribes so that “unqualified” individuals could gain union cards.
New York state’s laws and policies contribute to problem by reducing competition. E.g.: The state decrees that on all public construction projects (a huge chunk of the industry’s pie), government must pay workers, even those who aren’t unionized, a “prevailing” wage – which is usually equal to the highest union wage.
That sharply reduces non-union contractors’ ability to win government work because they lose any pricing advantage their lower wages give them. As a result, even when multiple unionized builders bid on government contracts, the winner inevitably winds up going to the same source – the construction unions – to get the job done. That’s the kind of monopoly that mobsters love.
About the only time that prevailing wage doesn’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, that is, plays both sides of the prevailing-wage laws.
The state Wick’s Law further aids the wise guys. This requires governments to carve up public construction projects into at least four separate bidding packages, multiplying the number of contractors and subcontractors involved in any project and adding layers of complexity that encourage fraud, bribery and bid rigging.
For decades, organized-crime experts have urged New York to repeal or modify the Wick’s Law because it is so difficult for local governments to police. But unions’ political allies in the Legislature have refused to do so because the unions love the complexity, inefficiency and extra work (and workers) that Wicks mandates.
Using its control of construction unions as leverage, the mob has also been able to extend its influence into the many contractors and subcontractors that do business in New York – effectively creating cartels that reduce legitimate competition and drive up prices. Over the years, mob-owned or controlled firms in New York City have monopolized everything from supplying concrete for construction projects to contracts for painting and drywall installation.
This mob control – what prosecutors last week branded the “corrosive influence” of organized crime on the construction industry – adds hundreds of millions of dollars to the cost of construction in the city.
A infamous case is representative of the problem: New York state got overcharged some $12 million for the concrete used to build the Jacob Javits Convention Center because a mob cartel led by Anthony “Fat Tony” Salerno controlled the business and no legitimate firms would bid against the mob.
So how can prosecutions help? Well, consider the successful efforts in the 1990s to rid the city’s carting industry of the mob – an effort that combined aggressive prosecution with structural reforms of the business.
Prompted by threats against BFI (a major national competitor that tried to pry its way into New York), local authorities began a vigorous investigation of the industry and followed up successful indictments and prosecutions by seizing mobbed-up companies and urging landlords to do business with BFI and other “clean” shops.
The city, meanwhile, set up a commission to investigate and oversee new companies coming into the business. The upshot: a sharp decline in carting prices for local businesses and an end to the mob violence that had plagued the industry for years.
In the wake of these moves, then-Mayor Rudolph Giuliani proposed a similar commission for the construction industry – but that effort died thanks to sharp opposition from the industry and its political allies in the City Council. So headline-making busts of the type we saw last week don’t guarantee that the industry is any cleaner. Indeed, even as prosecutors make strides with indictments against members of the so-called five Mafia families in New York, investigators warn that new groups representing Asian and Eastern European mobsters are making headway in labor racketeering in New York City.
Without better oversight and structural changes to the industry, a new generation of mobsters is a sure bet to take over in the wake of even the cleanest sweep.
Adapted from city-journal.org, where Steven Malanga is senior editor.