SOLIDARITY FOR SALE
HOW CORRUPTION DESTROYED THE LABOR MOVEMENT AND UNDERMINED AMERICA’S PROMISE
For Jack Schierenbeck:
valued mentor, loyal friend, fearless journalist
Part One: What's Wrong With Corruption?
1. The Curse on the House of Labor   3
2. The Hidden Cost of Corrupt Unions  35
3. The Revolt Against Solidarity   67
4. The Fall of Sam Parks   83
5. Dynamite Organizing  98
6. Solidarity for Sale, Chicago, 1905 117
7. Totally Mobbed Up: Daily Life in the Laborers Union 133
8. DC 37: A Progressive Kleptocracy 162
9. UNITE's Garment Gulag 189
10. Ron Carey: Martyr or Mountebank? 214
11. Teamsters for a Democratic Union:
How Bottom-Up Reform Hit Bottom 247
12. Eyes off the Prize: Reform's Rebuff in DC 37 272
13. Andy Stern's Dead Souls 290
Conclusion: Solidarity for Real 315
"Mokita" is the term used by the Trobriand Islanders of Papua New Guinea for a truth that everybody knows but no one talks about. Corruption is mokita in the AFL-CIO. For generations, in the construction, longshore, hospitality, and teamster unions, mobsters have had more influence than the members in choosing the leaders; pension funds are stolen; and bribes smooth the way for contractors to replace union members with lower paid non-union workers. To control union wrongdoing, the Justice Department routinely resorts to the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, treating labor unions as criminal enterprises. In defense, union leaders provide politicians huge contributions—essentially for Get Out of Jail Free cards.
Even though, as a Harris Poll released just before Labor Day 2005 showed, most union households disapprove of American unions, the main reason for their disapproval is never openly discussed in union media or addressed at union conventions. "Sure, unions are flawed," the defenders of American unions will concede when pressed. "They have people in them. So what do you expect? But they're like democracy: a flawed solution that is preferable to any of its competitors."
But it's misleading to blame the pervasive corruption of American unions on human nature or on the nature of unionism. You don't find gangsters running European unions.
Nor does blaming the values of American business culture get us far. Even the leftists who ostentatiously reject those values somehow wind up living by them when they become American union leaders.
Corruption flows rather from the retarded development of American unions, which still haven't broken out of nineteenth-century models of labor organization. The classic aim of the American union is still to monop-
olize a territory; the means—an exclusive bargaining contract; the result—20,000 local unions that inevitably behave more like semiautonomous fiefdoms than like a genuine labor movement pursuing the common good for working people.
Despite the way corruption cripples every vital union function—from organizing to mounting strikes to safeguarding pension money—even many dedicated unionists believe that any open discussion of the corruption problem would undermine the movement.
Most progressives inside the AFL-CIO deeply resent critics of union corruption. Yet I believe well-meaning insiders who close their eyes to the significance of corruption can and must be challenged, because for years, as a union member and later as a union staffer, I was one of them.
In the beginning, at least, my blindness could be attributed to youth. I was fifteen when I joined Local 5 of the Laborers. The ordinary members of the local couldn't figure out what I was doing in the Chicago Heights, Illinois, based organization. Most members were Italian or black. I was Jewish, and I'd been wearing big thick glasses from the time I was five. "Cookie," a giant black fellow ditch digger, immediately dubbed me "The Professor." A1though he watched my back, he rode me constantly. I would retort that he was welcome to reign as the Lord of the Ditches, but I was going to college.
One late summer afternoon just before the 4:30 quitting time, I was digging away in a rowhouse project, just south of Chicago Heights and a few miles west of the Indiana border. I noticed a small cloud of dust on the flat horizon. It kept getting bigger and bigger, until the cloud produced a big black Buick that pulled up to my ditch. Two men in suits got out. They were business agents from Local 5. Towering over me, as I stood clutching my shovel, the shorter one insisted, "You gotta pay your initiation fee." I'd just been paid, so I reached into my back pocket, took out my sweatsoaked wallet, and handed over the cash. While I don't remember getting a receipt, I do distinctly recall being politely thanked. Then the two suits drove away in the Buick.
I forgot about my brief encounter with the Local 5 officials until many years later. In 1986, I was just beginning a career in the labor movement when Chicago was shaken by the news of one of the most brutal of the more than 1,000 gangland murders in the city's history. The bodies of Anthony "The Ant" Spilotro and his brother Michael, both members of the
Chicago Outfit, had been found buried in a shallow grave in an Indiana cornfield. They'd been beaten with shovels and then buried alive. The revolting and terrifying "batting practice" scene is reprised near the end of Martin Scorsese's Casino.
Federal authorities found the bodies and the man who supervised the operation. He was Albert Tocco, the boss of the Chicago Heights crew that ran Local 5. His wife, Betty, gave him up by leading authorities to where the bodies were buried, and Tocco eventually received a 200-year sentence. According to testimony provided in 1997 at the trusteeship hearings into mob control of the Chicago Laborers District Council, Tocco had help from Local 5 offficials: Nicholas "Nickie" Guzzino and Dominick"Tootsie" Palermo. They wielded the shovels.
It still gives me a shiver to think about the Spilotros' burial by union business agents. But had I known about it at the time, I don't think it would have affected my decision to become a business agent myself. Some years before the Indiana massacre, I'd made good on my boast to Cookie. I'd graduated from college and earned enough academic credentials from the University of California, Berkeley, to become an academic gypsy. After bouncing back and forth between low-rung positions at Cornell and New York University, I began to get union staff jobs through the left-wing job network. By 1990, I'd moved up to consulting for a small Tribeca-based municipal union run by leftists. My job was to produce a very ambitious economic development proposal: a Henry George-style land reform, taxing Wall Street, reviving manufacturing, and bringing back the New York City port.
To get support beyond the handful of leftist unions that tacitly supported the economic program, I argued that we ought to try to reach out to the International Longshoremen's Association. "Who has a more direct stake in the revival of the port than the longshoremen's union?" I reasoned. And Lou Valentino, political director and former business manager of Brooklyn's Local 1814, seemed like the go-to guy. Lou was running for a city council seat from south Brooklyn. My boss agreed to write him a small check—$500 from our campaign funds. I even got permission to put the money in Valentino's hands myself.
Feeling like a player in New York City electoral politics, I walked the dozen or so blocks from Borough Hall down Court Street to the old headquarters of Local 1814. I was brought up short when above the doorway
into the union hall, I read the inscription "The Anthony Anastasio Memorial Hall." I knew that name from New York City history. Most notoriously, Anthony shared the surname with his brother Albert—a founder of the Gambino crime family and the boss of Murder Inc. For an instant I wondered if I should turn around. But it was too late. Besides, what would I tell my boss? I entered the building and asked a secretary, "Where's Lou?" "He's upstairs," the secretary replied. I walked up a single flight to find him all alone in a bare room just a few days before the election. He was shouting hoarsely into a telephone, "Get me half a dozen Puerto Ricans and put them on a flatbed truck." Although distracted, Lou seemed glad to get the check I'd handed him.
Practically the next day, Wayne Barrett, the principal investigative reporter for the Village Voice, wrote a feature story explaining who Lou Valentino really was: a Gambino crime family associate. Valentino had testified at the 1979 trial of Anthony Scotto, a Gambino captain and Lou's predecessor as Local 1814 boss. On the witness stand, Valentino acknowledged that Scotto had ordered him to take $50,000 in cash from Anthony Anastasio and give it to Mario Cuomo's 1977 mayoral campaign.
Cash contributions over $100 are illegal. Valentino, who had been the favorite, lost the city council race. But instead of feeling foolish that I'd tried to help elect a mob associate, I remember feeling let down by Barrett. Here we in the labor movement were trying to do something progressive in the economic development field, and we were being undermined, in the left-wing press, by corruption charges.
Perhaps if my union client hadn't decided to can me, I'd still be developing vast plans for urban economic reform, rationalizing alliances with the mob, and fulminating against muckraking radical journalists. But returning to academia, and freelancing for the Voice myself, gave me a second chance to reflect on the low moral horizon of the American labor movement.
Even our classic fallback excuse for union corruption—that big corporations are just as bad or worse—started to wear thin. So what if they are? We don't rely on tobacco companies or HMOs to produce social justice or fight inequality. Because our expectations are low, corporate executives can hurt us only once. But because unions are supposed to stand for something besides the worship of the golden calf, union leaders can actually
hurt us twice: first with the blow to our wallets, and then with the blow to our hearts.
The refusal to probe seriously the sources of organized labor's failure shows that liberals and progressives don't take their own political vocation seriously. A half century ago, in American Capitalism, liberal economist John Kenneth Galbraith identified organized labor as the key institution in the constellation of countervailing powers needed to check corporate power and prevent a drift back to the politics of the Coolidge-Hoover era.
It's true that U.S. labor did put together a couple of very good years (1935-1937). But for most of the last hundred years or so it's been stagnation and decline. Yet the stance of progressives toward official labor in this country, like the attitude of many Chicago fans toward their beloved Cubbies, seems to be'"Well, anyone can have a bad century." When pressed, labor's progressive supporters will blame Bush, mean bosses, bad labor laws, globalization—anything but take an unflinching look at what's gone wrong internally.
Last year's epochal split in the AFL-CIO foreshadowed what may be the end of the line for the American model of labor. Evidently, the Federation had been on the skids for more than a generation. But in the summer of 2005, the full extent of its ugly disarray became obvious to the broader American public. At the end of July, in Chicago, on the fiftieth anniversary of its founding, after two years of ankle-biting argument, the Federation finally split into two warring factions. Supposedly at issue were questions of how best to make the labor movement grow, but it was over turf and dues money that the labor chiefs had taken to cursing each other at executive committee meetings.
Less than a month later, the newly divided movement faced its first crisis. Northwest Airlines insisted on cutting the pay of mechanics and ground workers by 20 percent, and more than half would lose their jobs. When the workers struck, Northwest brought in replacement workers. For a moment, the strikers and their families held their breath, wondering how official labor would react. Then the shrunken AFL-CIO and the dissident Change to Win coalition stunned practically everyone by uniting to support the company. In exchange for not striking, one union, the International Machinists Association, was awarded the jobs of the striking workers.
It was dispiriting to see big labor siding with a corporate Goliath intent
on breaking a union. It was dismaying to realize that labor had split for no principled reason. But turmoil on the tarmacs and the specter of the usually placid labor chiefs calling each other "hypocrite" and worse in public at least had one advantage. Completely overshadowed and overlooked was the Justice Department's RICO complaint earlier in July against the International Longshoremen's Association. The government charged that the nearly 60,000-member organization had been run by the Genovese and Gambino crime families for half a century. It was the usual story of extortion, robbery, bribery, and even murder.
There was no comment from either faction on the Justice Department's action. What could AFL-CIO president John Sweeney say? The ILA belonged to his faction. What could Andy Stern or James Hoffa—leaders of the dissident faction—say? The Change to Win coalition was generally portrayed as the progressive alternative to Sweeney's AFL-CIO Old Guard. But the fact that it contained three of the four historically most mob-dominated unions went widely unreported.
Of course, because many unions are corrupt doesn't mean they're monolithically so. There are thousands of union staffers, and even top officials, who are trying to do their own jobs honestly. They refuse bribes, earn relatively modest salaries, and pass up the leased Lincoln Town Cars and the junkets to Honolulu or Las Vegas. But the honest officials aren't willing to commit career suicide by criticizing corruption—unless it's the corruption of a rival. If the odds of getting thrown out of the labor movement for taking a bribe are pretty steep, it's odds-on you'll get fired if you criticize bribe taking.
Still, the point of this book is not to show that American unions are corrupt. That's obvious to anyone who reads the daily paper. The real argument is about how they've become corrupt, what difference it has made, and why America can't let it stand.
Working people are never going to make sacrifices or run risks for institutions they don't trust. And they are never going to trust institutions that refuse to come clean about themselves. This book is animated by a belief that American working people really want to know why the movement that's been organized in their name has come to so little after so many years and such great sacrifices. It's also based on a faith that today's workers can stand the truth and will act on it.
The Sheraton Bal Harbour, where the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) Executive Council held its 2004 meeting, is an enviable spot to be in late winter. The resort is nestled on ten acres of tropical gardens and sandy beaches in Bal Harbour, just north of Miami. There's a lagoon-style pool with waterfalls and waterslides. In the spa, guests can choose from half a dozen types of body wraps, including the Water Lily After Sun Soothing Wrap and the Desert Heat Clay Wrap. Certainly for AFL-CIO President John Sweeney, the portly, soft-handed, seventy-year-old former IBM market researcher, there were far worse places to be. The members of the old New York City janitors union he once ran would be heaving thirty-pound bags of garbage in the cold March winds into piles for the morning sanitation pickups. Still, Sweeney must have had many reasons to feel uneasy in the shade of the majestic royal palm trees that ringed the pool.
For one thing, nearly nine years before, when he was first elected as the AFL-CIO's "New Voice" president, Sweeney had pledged to give up Bal Harbour. The media, he noted, portrayed the meetings "as symbols of the labor federation's complacency—often with photos of older men lounging at poolside." Sweeney pledged that organized labor would henceforth be meeting at the sites of major organizing drives.
The total, sweeping failure of Sweeney's organizing drives had been made plain just weeks earlier, when the Bureau of Labor Statistics announced that private sector union membership had hit the lowest rate since of ficial figures were compiled: 8.2 percent. There were almost a million fewer union members than when Sweeney took office. These figures
were especially derisory given Sweeney's early prediction that the AFLCIO would add a million members a year through its organizing efforts. In 2003, National Labor Relations elections added a net of only 30,000 members.
Sweeney had already suffered public humiliations earlier in the year, in Iowa's Democratic presidential caucuses in January. Labor's two candidates, Vermont governor Howard Dean and former House majority leader Dick Gephardt, finished third and fourth—dooming their candidacies and ensuring that the Federation would have no leverage over the eventual winner.
Then, just the week before the Bal Harbour meeting, the biggest strike of Sweeney's presidency was settled on humiliating terms. Fifty-nine thousand grocery workers from seven southern California locals would return to work after four months only to accept wages and benefits that were worse than those originally offered. Leaders of the largest locals tussled publicly over the microphone at a major rally. Then they squabbled so long over who would get face time on the evening news that the network canceled them. When Sweeney's AFL-CIO intervened to organize a major Wall Street rally, only 250 people showed up.
Weakness invites attack. Sweeney faced a challenge from Andy Stern, his former aide, who was president of the Federation's largest union—the 1.8 million-member Service Employees International Union (SEIU). Stern assailed the Federation's record on organizing. If it didn't agree to a restructuring, he hinted, he'd split the AFL-CIO. With no irony intended, Stern called his movement the New Unity Partnership.
All these issues would be debated in the light of the sparkling Miami sun. But there was another problem—arguably the most widely perceived and the most fundamental—that dared not speak its name. Corruption was an issue that neither Sweeney nor Stern nor any of the Council's executive committee members would ever publicly discuss—not in the thousands of union newspapers, nor on the myriad union Web sites, nor even in the dozens of academic labor studies programs in universities around the country. It was inadmissible, undebatable, simply unmentionable— taboo.
Just as the rulers of the House of Atreus never told their subjects about the curse levied by the gods that led to five generations of family crimes
and mayhem, so the leaders of the House of Labor pledged themselves to silence. There could be no recognition that they had been beset by five generations of racketeering, Mafia rule, bribery and extortion, job selling, benefit fund theft, and simple thievery, going back to the days of the early twentieth-century labor czars.
Of course, not all fifty-four members of the Executive Council were corrupt. But silence undermined even the guiltless leaders, those who forswore kickbacks and managed to survive on their six-figure salaries, because although corruption itself was unmentionable, it was most often at the root of the mentionable problems. Understood properly, corruption could reveal why American union leaders couldn't organize, win strikes, keep their hands off pension and benefit funds, offer a progressive political agenda, keep labor standards from falling, or reform themselves.
Unlike the House of Atreus, organized labor's curse wasn't the fault of the gods. Corruption had been built into the labor movement from its very inception. Andy Stern, the rebel SEIU leader, hinted obliquely in this direction when he referred balefully to AFL-CIO's "structure"—its loose collection of affiliates and the primacy of its autonomous locals. Stern would allow that the structure produced a weak labor movement, but he refused to probe the structure deeply enough. Ultimately, the source of the Federation's crisis lay in its deepest foundations—the corrupt relations between the members and the leaders.
These foundations are often obscured by ideology. The meaning and nature of corruption have been bent and twisted to fit right- and left-wing agendas. Corruption is properly understood as the private use of public office. When union corruption appears in the press, it's usually because of illegal acts, such as the outright pilfering of union assets or collusion with the boss selling the members'jobs or giving away their benefits. But a lot of corruption is legal—hiring your relatives, taking excessive salaries, hiring-hall favoritism.
Typically, pro-business conservatives stretch the definition of corruption too far by applying it to the actions of unions they don't like—militant strikes or violent political demonstrations, for example. Such actions may be illegal, and they may even be wrong, but they aren't corrupt: no one is exploiting the union for a private purpose.
far, the populist left would narrow it too much. For some leftist critics, only the actions of union officials can count as corrupt. The members are eternal victims.
Exempting the membership entirely means that corruption can't ever be understood as what it patently is: systemic. Corruption in American unions isn't a matter of isolated felonious acts by individuals or permeation from outside by American culture. The U.S. labor movement relies on its own internal system for producing corruption. Some fraction of the membership is involved just as much as the leadership. That's why it has lasted so long.
Organized labor's governance resembles the ancient fiefdoms. Like feudalism, the union system is local, territorial, and based on ties of mutual dependence and protection. Those who produce the revenue—union dues and manorial rents alike—are tied to the territory. Just as serfs couldn't switch manors, workers stay in their locals unless they want to give up their jobs. Just as the serfs paid feudal dues for the right to work the land, workers pay union dues for the right to stay on the job.
Power in the system rests on reciprocal ties between leaders and favored or connected members. Together they are able jointly to exploit the union's job control power. The most favored get union office, and the less favored get staff jobs or positions as stewards and foremen. In Teamsters Local 282, Sammy "the Bull" Gravano's old local, "working teamster foreman" jobs pay six figures—and you don't have to bounce around in the cab of a truck all day long. Foreman jobs are tied to the fortunes of the leaders who give them out. A client turning on his boss, even if the boss is charged with a felony, means giving up a comfortable livelihood.
Together patrons and clients transform unionism into a special interest—a faction that thrives at the expense of the common good. At the hard core may be the officers who use loyalty to create immunity. Those who rely on the officers for jobs are loath to give them up. But the leaders'long reach into the pockets of the disfavored members could hardly exist without sinews that connect them to a substantial fraction of the membership.
The kings of the House of Atreus, Menelaus and Agamemnon, couldn't talk about the crimes of their ancestors because they owed their rule to them. It was the same for the rulers of unions like the Teamsters, the Laborers, and the United Food and Commercial Workers.
No wonder the favorite movie of Jimmy Hoffa's son Jim was The Lion King. Young Hoffa, a graduate of the University of Michigan Law School, had won the presidency following the 1998 expulsion-for-life of Teamsters president Ron Carey. Now Hoffa occupied the office of his father in the "Marble Palace"—the glittering, five-story white headquarters that stands in the shadows of the nation's Capitol building—that had been built in 1995 by Hoffa's immediate predecessor, right before he went off to prison. The new Hoffa was a head taller and a few steps slower than his famous father, whose abduction in 1975 by organized crime probably stands out as the signal event in postwar U.S. labor history. But Hoffa Jr.'s closest allies were chiefly the sons of his father's allies—who had been Midwestern crime family associates.
To exorcise these unpleasant perceptions, Hoffa Jr. hired Ed Stier, a former U.S. attorney, to head an internal anticorruption task force. Stier tried to probe alleged second-generation Chicago mob ties, but then he accused Hoffa of stonewalling the investigation. His report alleged that several Chicago locals were still run by mobsters. The scams were traditional— kickbacks to allow companies to hire non-union drivers and kickbacks from members to get favored jobs. Mobsters even communicated with union critics in traditional "Chicago Outfit" style—a .44 caliber bullet in an envelope meant "Stop passing out leaflets." In case recipient John Pavlak, who wrote a leaflet in 2001 criticizing Dominic Romanazzi, the boss of Local 330, somehow missed the symbolism, the envelope also contained a written message: "You are dead."
According to Stier and his team of internal investigators, Romanazzi was in frequent contact with the Outfit. He received calls at union headquarters from nine different wiseguys. "The people who called me were nephews or sons of mobsters. They were not mobsters," explained Romanazzi to the Chicago Tribune. Allegedly, Romanazzi was sent by the Outfit to get Hoffa to stop Stier's investigation. Whether it was Romanazzi or someone else who convinced Hoffa, he did take Stier off the case.
The latest head of the Laborers International Union of North America (LIUNA) was another junior—Terence M. O'Sullivan, the son of Terence J. O'Sullivan. Like Hoffa Jr., O'Sullivan Jr. was born on the labor union equivalent of third base. His father, O'Sullivan Sr., was a mob associate who'd been the Laborers'secretary-treasurer. So was the man O'Sullivan
Jr. had served for so long as a personal aide and had finally replaced— Arthur Coia Jr., a longtime mob associate who in 1999 finally got taken down on federal tax charges.
Coia Jr. had stepped into the union's no.2 job on the death of his father, Arthur Coia Sr. His ascension signaled the beginning of a Coia dynasty, which succeeded the half-century reign of the Chicago-based Fosco dynasty. Now the Coias in turn were being replaced by the O'Sullivans.
Genealogy casts a dim light on LIUNA's effort to present O'Sullivan Jr.'s replacement of Coia Jr. as a movement toward union reform. Going back to the 1970s, the two families had a history of working together: the Coias—junior and senior—and the senior O'Sullivan had all been co-indictees in the same benefit fund fraud case involving eastern and Chicago crime families.
Of all the AFL-CIO affiliates, though, it is the United Food and Commercial Workers (UFCW), the AFL-CIO's largest private sector union, that seemed to have the densest and most ingrained patterns of nepotism. UFCW had at least a dozen ongoing father-son—and even father-son-grandson—dynasties from California to Long Island. One of the most notorious had belonged to the Talarico family. Sam Talarico, a UFCW founder, was succeeded as its no.2 official by his son Joseph, who may have set some kind of record for family loyalty. Joseph placed more than forty relatives on the payroll of his Utica local. In 1998, the dynasty fell when Joseph went to prison for embezzling nearly $ 1 million—including funds to pay for his hair transplant.
The New Jersey UFCW locals had been Genovese crime family territory going back to the 1950s. The family controlled the two big grocery and meatcutters locals through associates—the Kaplans, the Randos, and the Niccollais, some of whose descendants are still running the locals today.
In the 1970s, the big central Jersey UFCW locals formed the spear point of a Genovese effort to gain a foothold in the banking and soap industries. Local 1262 in Clifton was the lead local in the Genovese scheme to take over a dozen banks by using pension funds as bait. The enterprise failed, and the local's president, Frank Rando, pleaded guilty. Frank's brother, Ramon Rando, is now the no. 2 official in Local 464a, earning $348,000 a year.
UFCW Local 464a, just a few miles away in Little River, was another
Genovese stronghold. Control over the local figured prominently in a mob plot to sell dirty soap to grocery stores in New Jersey and Westchester County. The Genovese family's soap was marketed as "Ecolo G" for its alleged ecological properties. It was a hard sell because the FDA had declared that it contained an eye irritant. To hook store managers, Genovese-controlled union officials offered a break on their Local 464a members'contractual wages and benefits. When A&P executives balked at the deal, their stores were hit with explosions and arson. Two executives were murdered. After the executions, the Genovese boss in charge of the operation was heard on tape saying, "When is A&P gonna get the message?"
But because release of the tapes generated pretrial publicity, nearly everyone charged, mob guys and union officials alike, got off.
Failure to convict anyone for the murder of the A&P executives led to a federal investigation seeking to determine whether organized crime had infiltrated the New Jersey criminal justice system. A grand jury probed possible ties between Local 464a officialdom and the Passaic County prosecutor's office. They found quite a few. The first assistant prosecutor, John Niccollai Jr., was the son of John Niccollai Sr., Local 464a's secretary-treasurer. Steven Kaplan, an assistant prosecutor, was the son of Irving "Izzy" Kaplan, Local 464a's founder and president. Sam Kohen, a business agent for the local, had a brother working as a county investigator.
Following the probe, John Niccollai Jr. made a career change. He resigned from the prosecutor's office and got a job with his dad's union. (The senior Niccollai had just been indicted for the fourth time.) The junior Niccollai's ascendancy to the presidency came in 2002, when the incumbent president was charged with taking bribes and pleaded guilty to a lesser charge.
Two years later, Mr. Niccollai was identified by the Philadelphia Inquirer as having received the highest yearly pay of any union official in New Jersey or Pennsylvania. He earned $407,656. Niccollai also has a dauphin, John II, who serves as a $ 156,000-a-year "director of operations." And, finally, there is Gloria Niccollai, who receives a more modest salary as a clerical employee. When asked in a telephone interview if she was related to the president, Ms. Niccollai replied,"I have no comment at this time."
Across the river, in the town of Hastings-on-Hudson in southern Westchester County, lay another troubled UFCW family fiefdom. It
belonged to the Vetrano family, who ruled quietly until March 2005, when the family patriarch, eighty-three-year-old James Vetrano, was indicted on charges that he helped the Gambino crime family steal Local 305's benefit funds. Vetrano was alleged by the U.S. attorney's offfice to have cooperated with famed Westchester Gambino boss Greg DePalma in a plot to make wiseguys beneficiaries of the plan even though they weren't legitimate union members. Vetrano faces thirty years' imprisonment. But even if he is imprisoned, there's another Vetrano in the pipeline—Secretary-Treasurer Ray Vetrano. When asked what relation Ray was to James, a spokesperson for Local 305 declared,"I'm not going to answer that, sir." A spokesperson for the parent union was no more communicative. Asked if the UFCW would force the elder Vetrano to step down, she replied, "I can't comment on that."
Had Sweeney's talk of a "New Labor" been spin from the very beginning? Well, mostly, yes. A prime concern of delegates to the 1995 convention was the Federation's bad public image. Gallup polls regularly showed that labor leaders ranked near the bottom in ratings of professional ethics. Sweeney showed his determination to change those perceptions by outsourcing his job to Washington's top public relations firms, pollsters, and speechwriters—mostly from the Clinton White House. Sweeney's pollster was Stanley Greenberg, Clinton's pollster. Sweeney's autobiography was written with David Kusnet, Clinton's principal speechwriter from 1992 to 1994. The prominent firm of Greer, Margolis, Mitchell, and Burns came up with a report on "core positioning and message discipline." They provided what Jo-Ann Mort, then communications director for UNITE, called "the new gospel." Union media should always foreground "the economic concerns of all working families" and put the union "as an institution" in the background. The whole effort took a little more than a year to gear up. "The repositioning campaign launched by the AFL-CIO began in 1997," recalls Mort, "with ads and slogans airing in five test markets."
The campaign flopped. By 2002, the public esteem in which labor lead-
ers were held had fallen even further. In 1997, according to a Gallup poll, only 17 percent of Americans had thought the ethics of labor leaders were "high or very high." But five years later the figure had dropped to just 14 percent. Only some salespeople—telemarketers, used car dealers, and insurance salespersons—were ranked lower.
The 1995 contest between the two presidential rivals, Sweeney and Thomas Donahue, had been portrayed as "the first contested election" in the Federation's history. The implication was that a real election was finally going to take place. But a genuine vote would have meant a direct election—one that respects the country's democratic norms. Ever since the passage of the Seventeenth Amendment in 1913, even the United States Senate has had direct elections. But in only a handful of the AFL-CIO's fifty-eight affiliates do the members get to vote for top officials.
When direct elections do take place for the highest offices in American unions, it's usually because of a court-ordered consent decree: The leaders opted for elections only because they were faced with a decision—either allow genuine elections or stand trial on racketeering charges.
The last time union candidates with alternative programs faced each other in a real contest was at the AFL's 1895 convention. An alliance of Populists and labor radicals backed United Mine Workers of America president John McBride. He actually defeated the conservative AFL incumbent, Samuel Gompers. But it was a last hurrah for radical politics— or for any politics in the Federation. The Gompers forces crushed the McBride insurgency after only a year. A weak confederacy of autonomous fiefdoms will never provide a theater for genuine politics. Instead of settling arguments by persuasion and mobilization of opinion, those who find themselves in the minority simply leave the organization.
A century later, the delegates could choose between two former offficials from the same union who stood for almost identical goals and strategies. Thomas Donahue, the older of the two, who was serving as interim AFLCIO president, had actually given Sweeney his first staff job in the SEIU's 32BJ—the largest of the union's janitorial locals and one of the most corrupt, going back to its founding in the 1930s. Initially, Donahue had been Sweeney's choice for president. Both were bald-headed Irish Americans from the Bronx. In fact, three of the last four AFL-CIO presidents have been bald-headed Irish Americans from the Bronx.
And what about New York's janitors Local 32BJ—now the mother of AFL-CIO presidents? Why wasn't serving as a top official in the New York janitors union an outright disqualification? James Bambrick, who founded the union in 1935, had struggled unsuccessfully to free himself from mob control. He wound up paying protection money to George Scalise, the former pimp who had become the union's international president with the approval of the Capone gang. Bambrick was succeeded under dubious circumstances by David Sullivan, who'd been the union's secretary-treasurer. Sullivan had also been indicted for allegedly participating in the payments to Scalise as well as pocketing funds. The indictments were dropped and the prosecuting attorney was hired as Local 32BJ's general counsel. Like Sweeney, Sullivan would use 32BJ as a springboard to the presidency of the international union. But Malcolm Johnson, a Pulitzer Prize-winning journalist whose series of exposes turned into On the Waterfront, described the local's saga as a paradigm of labor racketeering. If Sweeney's predecessors were tainted, so was his immediate successor, Gus Bevona. In 1999, Bevona, often reckoned the nation's highest-paid union official, decided to retire after settling a civil suit by dissidents charging him with using union funds to hire a gumshoe to harass a member who had complained about"Greedy Gus"'s $400,000-a-year salary.
Sweeney's relationship with Bevona perfectly illustrated the patronclient relationships at the heart of the American labor movement. Bevona, who lived at members' expense in a 3,000-square-foot marbleclad penthouse atop the union's Sixth Avenue headquarters, was widely regarded as an embarrassment. He allegedly once told a crowd that he'd kill President Clinton if he was in the room. Sweeney was the labor movement's rising star. Yet Sweeney and Bevona were joined at the hip — and cash was the glue. Basically, Bevona paid Sweeney protection money. After being elevated to the SEIU's presidency, Sweeney stayed on as Bevona's consultant, at a salary that reached nearly $80,000 a year. But the job was no sinecure, Sweeney insisted; he was involved. True enough. When Bevona used union funds to go after his principal critic, Sweeney approved the use of union funds plus legal expenses to defend Bevona. Sweeney also approved a sweetheart real estate deal Bevona made with two cleaning company contractors that allegedly cost the union $200 million in extra lease payments. It was part of a rental arrangement on the
Sweeney's rival Donahue connived at even grosser corruption. When six officials of 32E, the parent union's Bronx affiliate, were convicted of taking bribes from landlords in exchange for sweetheart contracts, Donahue was brought in. It was his job to supervise the long-overdue reform of the local. Ever since Scalise founded the local in 1938, installing Sam "Firpo" Abrams, a convicted bank robber, as president, every local president had gone to jail or been murderecl.
Not that it made all that much difference whether Sweeney or Donahue served as AFL-CIO president. Both had established their qualifications for a job that demanded more discretion than dynamism. The AFL-CIO was not a centralized organization that put a lot of power in the hands of a single leader. The presidency was mostly an honorific position, and the occupant acted as a spokesperson for a collection of completely autonomous affiliates. The affiliates in turn were made up of 20,000 largely autonomous locals. The president couldn't call a single strike or organize a single worker—any rebuilding of the Federation's strength had to start at the local level, where the money and power were located. It was often not in the interest of these leaders to bring in new members or to do much more than perform routine maintenance on the political machines that kept them in power.
A major journalistic conceit is the importance of character. By probing the lifestyle, background, convictions, ethnicity, and gender of the actor, you understand the person. If you understand the person, you understand the behavior of his institution.
If character is so decisive, how come union problems all seem so much the same, year after year, no matter who runs the institution? Whatever the
gender, race, or intellectual background of the leaders, corruption has been a constant. District Council 37, the 120,000-member NewYork affiliate of the American Federation of State County and Municipal Employees, is run by a seventy-eight-year-old black woman, Lillian Roberts, a former nurse's aide. Her critics accuse her of responsibility for kickbacks, election irregularities, nepotism, benefit fund scams, and poor contracts. In 1998, her predecessor, Stanley Hill, a black man, resigned in the face of similar charges. But many of the rackets uncovered at the time by prosecutors originated in the era of his predecessor, Victor Gotbaum, a Jewish man who'd been an intelligence offcer and served on the Council on Foreign Relations. Regardless of temperament or background, the job requires a certain combination of iron and rubber—an iron hand and rubber principles. The occupant either has them to begin with or acquires them soon.
Academics generally don't do character analysis. They have bigger theoretical fish to fry: globalization, the shift of manufacturing to the third world, the rise of the information economy, the feminization of the workforce. These universal trends are supposed to explain our unions' problems. How come, then, American unions are so different from unions elsewhere? Except in officer salaries and total union financial assets, where we're far ahead, the U.S. labor movement comes in last or nearly last in just about every other important respect: the lowest density, the longest decline in membership, the least success in social welfare legislation, the fewest strikes—America hasn't had a real general strike since 1877.
The American labor movement is not only weaker than others, it's also a lot more corrupt. Of course, some corruption is probably inevitable. But the scale and scope of corruption and self-enrichment in "old Europe" remain relatively underdeveloped. In other advanced industrialized countries, you don't find insignificant local leaders earning over half a million a year. Nor do you find whole unions run by crime families—not even in Sicily or Calabria. To realize their dream of becoming union leaders, young thugs like James "Big Jim" Colosimo, the founder of the Chicago Laborers and the longest-serving crime boss in the city's history, had to migrate in 1895 from southern Italy. Only in America!
The fundamental actors in American labor are institutions—the unions themselves. It's the union institutions that act and have identity, that manage or succumb to trends, and that shape the character of their
leaders. The real question is not "Who is John Sweeney?" but "What is the institutional character of a labor movement that turns out John Sweeneys generation after generation?" What needs scrutiny is less the adverse macroeconomic trends than why the AFL-CIO has been so notably unable to handle them. American unions share the problems of unions everywhere, but they also have deeper, characteristic problems.
Call it the fiefdom syndrome—a kind of protection system based on exclusive jurisdictions, exclusive bargaining, and job control. Those who control the jobs become the bosses; those who want the jobs become their clients. Loyalty to the boss becomes the highest virtue. It's an ethic of dependence rather than solidarity, one that promotes the most wide-ranging corruption. Corruption in turn produces atomization, weakness, demoralization, and apathy, which in turn promote further corruption. Solidarity—united action on behalf of the common good—turns into a slogan that produces only crooked smiles.
It's this special character that explains why the American labor movement fares so poorly in the vital tasks unions are designed to perform: improving the material living standards of the majority of working people, ending the dependence of workers on the will of the employer, and reducing the blatant economic inequality that tends to develop between those who run corporations and those who work for them.
Defenders of the AFL-CIO status quo argue that friends of the labor movement should shut up about corruption. Exposes of labor bosses, they say, only aid corporate bosses. The unstated assumption is that corruption has no damaging consequences of its own. It's just the perception of corruption that's harmful.
But corruption is not cost free, and in many ways its consequences are more serious than ever. This is true even though the gross symptoms are less obvious. It's not like in the late 1920s or the early 1930s; we don't have gunfights on street corners, with the Capone and the Moran gangs blasting away at each other for control of the Teamsters, laundry, janitors, and
bartenders unions. Nowadays in Chicago, the Outfit has no rivals, and their bullets are delivered in envelopes, meant to scare dissidents, not kill them. Maintaining a territory requires a lot less firepower than seizing it in the first place. But the slow strangulation of genuine labor union impulses and energies has had its effect. The devastating results of the curse—five generations of corruption—can be measured in seven specific ways.
The continuing shrinkage in membership numbers. Most critics point to a decline in dues-paying membership as the Federation's biggest problem. It's not. If the AFL-CIO's 13 million members were active, participating members, if they were connected in action and in sympathy with non-dues-paying workers in a genuine labor movement, if current union leaders had any moral authority, American labor might still be a powerful force in the country.
Still, the numerical decline says something about the fortunes of the Federation. When the AFL-CIO was created fifty years ago, it had 16 million members, and private sector union density stood at nearly 40 percent. Now in the private sector, it's 8 percent. Public sector membership stands much higher, but it has stopped growing, and public sector workers constitute only about 15 percent of U.S. workers. Two Princeton labor economists predict that, given present trends, the entire U.S. labor movement—in the public and private sectors—will eventually bottom out at 2.1 percent.
Theories abound to explain the decline—including outsourcing, deindustrialization, globalization, the Reagan Revolution, bad labor laws, employer resistance, and the decline in the species of male, blue collar workers. But lacking is any recognition that stagnation is the natural state of official labor in America. From the dawn of the twentieth century, the periods of decline (1919-1934 and 1955-2004) are greater than the periods of growth (1900-1919 and 1934-1955).
Historically, the American Federation of Labor has tended toward stagnation for a lot of the same reasons corporate monopolies do. They are able to raise prices by restricting entry. They have little incentive to expand. Inefficiency, underinvestment, corruption, and inequality flow naturally from their restrictive efforts.
Understood as a loosely connected web of urban job trusts, the recent history of U.S. labor is easily told. Early in the twentieth century, the AFL
steadily filled up the available monopoly niches—mainly in the construction, longshore, and transportation trades. Having reached a saturation point after World War I, membership naturally began to stagnate, at least until the 1930s, when a mass revolt of industrial workers shook the Federation and caused a split. Goaded by the newly formed CIO to defend its jurisdictions and aided by the federal government, the AFL poured resources into organizing, and membership tripled. But organizing stopped in 1955, when the two rival federations merged and agreed to respect each other's jurisdictions. A burst of organizing in the public sector during the 1960s proved to be only a speed bump on the road to stagnation.
Why, then, if there is an inherent tendency to decline, didn't organized labor disappear long ago—or at least fall to its 2 percent natural equilibrium level? Historically, what has prevented the AFL from death by attrition is foreign wars and opposing organizations. World wars have been tremendous stimuli for growth: in exchange for unions giving up the right to strike, the government promotes unionization.
Having a domestic opposition helps too. The AFL grows when it can provide a more acceptable alternative to employers than more inclusive, less corruptible organizations. About once a generation, a new labor movement comes along to challenge the trade unions. The Progressive Era produced a "new unionism" in opposition to the prevailing "business unionism" of the AFL. Even when the new unionists failed to consolidate their victories in the aftermath of the great strike in Lawrence, Massachusetts, led by the Industrial Workers of the World, they triggered an increase in the demand for unions. Above all, they produced the aspirations and forms of struggle that eventually led to the challenge of the more inclusive CIO.
But after the CIO merged with the AFL in 1955, all direct incentives to organize disappeared. The following year, organizing budgets fell more than 50 percent, and organized labor began its slow fifty-year fade. The inherent tendency for the local monopolies to stagnate was abetted by their unwillingness to spend money on bringing in members who might tip the political balance within the union.
The failure to organize. The total may represent only a third of the civilian labor force, but the AFL-CIO cites polls indicating that 45 million workers would like to join a union. Yet the AFL-CIO has only 13 million
members. Neither Sweeney nor anyone in official labor was willing to admit that it simply wasn't in the interests of many unions to spend money on organizing. That's why they never did—and never will. But at least Sweeney didn't hide behind the old excuses that employers were mean and the government's election rules unfair. He squarely blamed his predecessor, Lane Kirkland, for failing to lead.
Under Kirkland, Sweeney noted, organizing efforts had hit rock bottom. In 1990, the worst year, there were only 3,628 elections for union representation covering 230,000 workers. Winning only about 50 percent of the elections meant bringing in less than half of the 300,000 new members a year the labor movement needed just to keep from shrinking. Sweeney's target was a million a year, which in ten years would bring the Federation back to where it was at the time of the merger. AFL-CIO headquarters hired 200 new organizers, and the affiliates hired thousands more. The goal was to get every affiliate to increase its organizing budget to at least 20 percent.
The upshot was even fewer new members: a steep and steady decline in the number of elections and in the number of workers brought into unions through elections. In sheer numerical terms, Kirkland, whose organizing specialty was alleged to be Georgetown soirees, actually produced better organizing numbers than Sweeney. In 2003, there were one-third fewer elections than ten years earlier, under Kirkland, and the number of workers brought in through union elections was only 47,000. When the number of members lost via employer-sponsored decertification elections—where the members vote to get rid of the union—was figured in, it left only 30,000 new members, or about 3 percent of the target of 1 million.
Why should this come as a surprise? The U.S. fiefdom model of unionism operates a lot like old-style cartel capitalism. Of course, it's in the interests of organized labor to have more members. But it's not necessarily in the interests of each local to spend the money to organize. It's also in the interest of business as a whole for each individual firm to invest. One firm's spending benefits another. But if the firm has a monopoly, extra investment may lower profits. There has to be a competitive threat.
gradual taming of the CIO and its ultimate incorporation into the AFL, employers had less incentive to recognize the more employer-friendly, corrupt AFL affiliates. The main point of the merger was to save money by calling off the battle for members. The big falloff in membership started with the agreement between the two federations to stop competing for members. Jurisdictional boundaries between unions became more secure than ever before.
Certainly U.S. laws governing union recognition are a disgrace. They abridge a fundamental human right—the right to organize and bargain collectively with employers. But the most towering obstacle to organizing remains the AFL-CIO itself, a patchwork realm of 20,000 self-regarding local fiefdoms. That's where 75 percent of the money for organizing lies. Many have little incentive to organize. Others aren't equipped to organize even if they wanted to.
In the classic trades—construction, longshore, and certain elite locals in the Teamsters, unions don't organize because bringing in more members wouldn't raise the income of those already organized. It would lower them. Many blacks, immigrants, and women would like to become plumbers and electricians, and many would like $100,000-a-year jobs on the docks. But from the union standpoint, bringing in these groups wouldn't increase the number of unionized jobs, just the number of workers sitting in the hiring hall waiting for jobs. There's also the danger that black members might dilute the political base of the white leadership.
Then there is the most unmentionable of internal organizing obstacles: corruption. Why didn't the Teamsters'Joint Council 25 boss, Bill Hogan, try to organize low-wage United Service Companies employees at the Las Vegas Convention Center? Why, in 1999, did he try to replace Las Vegas union workers making $20.00 an hour with employees from United making $7.90? Because his brother was a big executive in United, according to a Teamsters Internal Review Board, which expelled him for life. Why didn't Hogan's boss, Hoffa Jr., set him straight? Most likely because gaining new members was less important to Hoffa than keeping the political support of his powerful regional baron.
Why don't union carpenters have a bigger share of the work in midtown Manhattan? Because the head of the New York City Council of Carpenters allegedly took an envelope with $10,000 inside. Prosecutors said it
had been given to him by the son-in-law of the DeCavalcante crime family's godfather. The exchange took place after the two quaffed beers at Hooters, just a few steps from the Park Central Hotel. In exchange for the ten large—a down payment on a $50,000 bribe—Mike Forde, the Council's boss, agreed to allow lower-paid, non-union carpenters to replace his members on the Park Central remodeling job. Forde was convicted of the charges in 2004, but the conviction was later overturned by the presiding judge, Jeffrey Atlas, because of alleged anti-union sentiment on the part of some jurors. Atlas accused them of holding the view "that the case resembled a Sopranos episode." Perhaps the problem of juror bias could have been solved by excluding those contaminated with knowledge of the union's history. A decade earlier, Martin Forde, Mike's dad, was brought down on similar charges. The same charges doomed an almost unbroken series of District Council officials going back to the late Teddy Maritas, who allowed Genovese crime families to control a non-union drywall empire in the Bronx until he disappeared just before his trial.
The decline in the number and effectiveness of strikes. Just consider the past fifty years. There was no great spike in strike activity in the 1950s— nothing like the strike wave following World War II, after price controls were lifted. But in 1952 there were 470 major strikes involving 2.75 million workers. The totals have dropped pretty steadily since. There was a flareup in the 1970s—inflation again. But the numbers in the Nixon-Ford era never reached those of the Truman-Eisenhower period. And by 1992, there were only thirty-five strikes involving 364,000 workers. The percentage of work time lost by strikes fell to an oceanic depth of 0.02 percent— two hundredths of 1 percent.
Although it hardly seems possible, strike activity has fallen substantially since then. The 1997 Teamsters strike against UPS—heralded as a "watershed" by the secretary of labor and "a major triumph and an omen of future success" by the New York Times—proved to be a false dawn. The two-week strike didn't even change the ratio of full-time to part-time workers at UPS, much less reverse the decline of the U.S. labor movement. The downward trend continued unabated. In 2004, there were only seventeen strikes affecting only 0.01 percent of precious work time. The strike rate in the United States is only a fraction of what it is in major western European countries.
Labor experts at the Heritage Foundation, a conservative think tank, predict that globalization will bring with it the triumph of the U.S. industrial relations model. This may be wishful thinking. Despite setbacks and scattered signs of convergence, it hasn't happened yet. On the contrary, in western Europe, South Korea, and Israel, general strikes, nationwide labor protests, thought to have gone out with cloth caps and lunch pails, have returned. Most seek to stop the dismantling of the welfare state. Perhaps the most successful general strike took place in France, where a three-week job action in 1995 brought down the conservative government and led to the passage of legislation guaranteeing a thirty-five-hour workweek. General strikes in Italy brought down the first Berlusconi government; since then they have become almost routine. In the winter of 2004, the second of two massive actions saw over a million demonstrators in fifty Italian cities protesting changes in pension eligibility. Likewise, in France during the winter of 2005, when the conservative government of Jacques Chirac tried to repeal the thirty-five-hour law, over a million workers went on strike in protest.
Not all the general strikes were defensive. In the late 1990s, a largely successful Danish strike for a sixth vacation week had 10 percent of the Danish population in the streets. The Danes stayed out for two weeks, demanding parity with workers in other Scandinavian countries. Seventy percent of the Danish population supported the action. When the vacation legislation was enacted, employers complained that Denmark had become "a workers'dictatorship."
At least that's one threat America doesn't face. It's not just that multinational employers have an easy time of crushing the isolated, uncoordinated protests of their employees, who are trapped in the ever-shrinking archipelago of organized labor, or that U.S. labor laws uniquely favor employers by allowing the use of "replacement workers." There's also the cynical indifference of the higher union officials to the struggles that take place at the lower levels of their own organization.
Consider the desperate but doomed efforts of 300 workers at Domino Sugar's Brooklyn refinery who tried to resist management's plan to lay off a third of the workforce. On June 15, 1999, the members of Local 1814 of the International Longshoremen's Association (ILA) challenged Lyle & Tate, the multinational owners of their 143-year-old plant, by going out on strike.
The union ranks held for twenty months—not one single member crossed the picket line. By the end of February 2001, the members were driven back to the factory by hunger, a member's suicide, and the glacial indifference of labor's leadership—including their own. Domino Sugar's other unionized U.S. plants worked overtime to turn out the sugar lost by the Brooklyn strike. Explained the head of Baltimore's United Food and Commercial Workers Local 1l0l, "If my contract were expired, I would have joined them 100 percent." The Domino Sugar workers also got no help from the head of the NewYork State Federation of Labor. "It bothered me from the beginning that the union wasn't strong enough to put this together," recalled the official. But it was the silence of AFL-CIO president John Sweeney that resounded loudest in Brooklyn. After the members had surrendered, strike leader Joe Crimi commented, "God Bless our labor leaders who must have thought this strike was a waste of time," he said. "But what makes me mad is I stopped [the] members from putting up the RAT [a fifteen-foot inflatable rodent signifying"scabs at work"] against Sweeney. Two-year strike, one death, totally destroyed membership, a contract book that took more than sixty years to accomplish slashed to shit. God knows the money they lost, families disrupted. And I stopped them. Why? Because I didn't want to hurt the labor movement."
Crimi's strikers didn't even get any help from their own international union, the International Longshoremen's Association—not even strike funds. John Bowers, the ILA's president, who kept office even after a 1990 racketeering suit charging he was a mob puppet, couldn't be bothered. Nor could the top leaders of Local 1814. These weren't the same mob associates charged in the 1990 suit—they were new ones. But they were busy, too, running errands for the Gambino crime family, extorting payments from members for cushy waterfront jobs, collecting kickbacks from bosses for labor peace, and intimidating trustees of the local's health plan to award contracts to companies owned by the Gambino and Genovese families. These activities are the charges in the 2002 indictment brought against Local 1814's president, Frank "Red" Scollo, who was indicted along with fifteen other crime family members and associates. Scollo eventually pleaded guilty.
The collapse of labor standards. "America Needs a Raise" was the title of John Sweeney's book. His premise was that by putting resoorces into or
ganizing unions, Americans could get a raise. But increasingly, many American unions weren't capable of getting raises that exceeded the non-union rate or sometimes even the minimum wage. Union wages below or only slightly higher than the legal minimums were common in the grocery stores and chicken-plucking factories represented by the UFCW, in factories and warehouses represented by the Teamsters, and, above all, in the restaurants and garment shops represented by UNITE-HERE.
For the immigrant workers represented by UNITE, attaining even the minimum wage was their American Dream. In 1997, a Bureau of Labor Standards report revealed that NewYork City, where UNITE had its headquarters, had the worst sweatshop problem in the nation. About two-thirds of the garment shops in the city were sweatshops, in violation of wage and hour or safety standards. The stunning finding, though, was that three-quarters of the union shops were sweatshops. The results seemed to conflict with the common wisdom that "a bad union is better than no union."
In fairness to union-run sweatshops, the government study didn't take into account that UNITE members had health and pensions benefits and non-union workers didn't. Still, the level of union benefits was extraordinarily low: a typical pensioner was receiving only $60-$70 a month—and that after a lifetime of body-destroying work, breathing air filled with cotton particles, bent over machines that required repetitive motion, often seven days a week, twelve hours a day.
UNITE's leaders had long ago given up any effort to improve conditions in the shops or even defend their contracts, which called for thirty five-hour weeks and nearly double the minimum wage. Since the 1960s, their overt strategy was to maintain membership—and their dues base— by tacitly matching non-union contractors with dollar-for-dollar concessions. While they succeeded in keeping wages low, membership fell by three-quarters anyway.
Much more successful was UNITE's innovative public relations campaign, which positioned the union as leader in the battle against sweatshops—not here in the United States, but overseas. The National Labor Committee, which began as the union label division of UNITE's predecessor organization, exposed the terrible conditions faced by Central Americans and Chinese in overseas garment shops. But if UNITE wanted to
battle against sweatshops, why didn't it just enforce its own contracts here in the United States? Occasionally the hypocrisy was on display. One day during the Christmas season, the union-led activists in a lower Broadway demonstration protested sweatshops in Mexico while dozens of UNITE workers were demonstrating literally across the street against the union's failure to enforce their contract in a particularly revolting sweatshop at 446 Broadway.
UNITE officials never took the slightest responsibility for conditions in the shops. Not without some plausibility, they invoked overseas competition, Wal-Mart, and the docile character of their members, who were often undocumented immigrants. But invoking those forces didn't explain why shop conditions in New York City were worse than elsewhere. How come totally non-union San Francisco, which had the same undocumented immigrants and produced the same type of garments, had only a fraction as many sweatshops?
A lot of the reason New York's rag trade was the worst was that it had the worst mob problem. Mobsters owned trucking and garment companies. The Lucchese crime family had deeply infiltrated the union and, according to a 1998 report by the Of fice of Labor Racketeering, an associate ran UNITE's largest local. Mob infiltration of the union was an old story. But whereas the mob's emphasis was once said to be on price stability— making sure no one undersold their clients—now it seems to be on helping them with cost control. The racket du jour is pay not to play. Depending on the size of the bribe, contractors could get a friendly business agent, a break on benefits, or simply get rid of the union altogether.
The crisis of the $350 billion multiemployerpension system. America's labor leaders manage a huge sum: over $350 billion in pension funds. Unfortunately, though, this sum is not nearly enough. Obligations exceed assets by at least $150 billion. Officials explain that the market's been down, and they talk about actuarial problems. But simple corruption and the fragmented character of the unions perhaps explain a great deal too.
One reason why there's not enough money to pay future obligations is that there are too many plans. Why does the AFL-CIO need to have 2,100 separate pension plans for its 13 million members? That's a plan for every 6,200 members. Social Security has one plan for all 280 million Americans. Social Security's administrative costs run about $11 a year per per-
son. Take a Teamsters pension plan at random—Long Island City's Local 814. Administrative costs run about $420 each per year for the 2,700 member-participants, who mostly work for moving companies. That's nearly forty times more per capita than what the Social Security Administration charges. The Bush administration insists that the sky is falling for Social Security because it will be able to meet only 70 percent of its obligations in 2040. Today, the Local 814 plan has only 55 percent of the funds it needs to meet its obligations.
It might well be that decades of control over Local 814 by the Bonanno crime family has shrunk the assets it needs. Still, a simple reduction in the number of union plans could save members billions in administrative costs—costs that consume a substantial portion of the plans'investment gain, and sometimes all of it. But consolidating the plans would mean less patronage and less power for the local union leaders who get to name trustees and hire outside vendors—and less opportunity for racketeering conspiracies.
Labor racketeers love pension funds. In 2002, a report by the Department of Labor's Office of the Inspector General showed that there were 357 pending racketeering investigations; 39 percent involved organized crime, and 44 percent involved pension or welfare plans.
It's often pension plan looting—not just adverse macroeconomic trends like low interest rates—that helps explain why union-run plans are so dangerously underfunded. The Teamsters' Central States Plan, "the Mob's piggybank"during the 1970s and 1980s, can't pay its obligations today. UPS, the largest employer of Teamsters, touts its pension plans as fully funded. One of the saddest facts about the American labor movement is that the putative beneficiaries of union-run plans have been historically less likely to get a pension than workers who are beneficiaries of company-run plans.
But Sweeney's New Labor agenda never included reforms aimed at reducing pension fund pilferage, lowering administrative costs, or even ensuring that members actually got their pensions. Instead, Sweeney committed himself to a very different type of pension reform. He vowed that labor unions would use their prodigious pension fund assets to become corporate watchdogs. Union pension fund activists would compel the Fortune 500 companies to treat workers better, fight for the public
interest, and force unwilling companies to recognize AFL-CIO affiliates. Sweeney started a public relations operation called "Paywatch" that targeted corporate malfeasance.
The summer of 2002 found him on Wall Street baying against corporate pension crooks from Enron, WorldCom, and Arthur Andersen. Strangely, though, Sweeney chose to focus on "the sorry spectacle of Gary Winnick, the CEO of Global Crossing, selling off $734 million in stock while urging his employees to buy more."
What Winnick did was unconscionable, but he had help from a company on which Sweeney served as board chairman—Ullico—Union Labor Life Insurance Company, the AFL-CIO's insurance company, founded in 1925. Ullico was present at the creation of Winnick's non-union Global Crossing. Winnick wanted labor leaders on board, and in 1997, he reportedly solicited more than two dozen of them to participate in the company's initial public offering. Ullico got shares worth $7 million, which turned into shares worth an incredible $2 billion before Global Crossing collapsed five years later, nearly taking Ullico with it.
None of Ullico's directors wound up with a $92 million house in Bel Air, like Gary Winnick did. Their entire swag amounted to a comparatively trivial $5.2 million. But they were playing the same game: using their insider status to benefit themselves at company expense.
It was very easy to fleece the beneficial owners of Ullico stock—the union members who were participants in the various union plans that actually owned it. Ullico stock wasn't publicly traded. The directors themselves set its price—which was effectively based on the price of Global Crossing stock. As Global Crossing stock went up, up went Ullico stock. The directors and officers had the company sell them stock on favorable terms denied to everyone else. When Global Crossing went down, the insiders lowered the price of Ullico stock, but not before selling their stock back to the company at its peak price. Sweeney didn't participate in the transactions, but he approved them.
Many of the directors who did profit from the trades had also gotten in trouble for alleged misuse of their unions'pension funds. Among them was Plumbers Union President Marty Maddaloni, who'd lost at least $200 million in pension fund money on the reefs off Hollywood, Florida, in the effort to rebuild the mob-linked Hotel Diplomat. In addition to helping
Also among them was Doug McCarron, the six-foot-five, white-haired boss of the United Brotherhood of Carpenters, who bears a striking resemblance to Charlton Heston's Moses. Whether or not McCarron actually broke the Sixth Commandment, he resigned from the Ullico board after returning about $200,000 of the $276,000 he earned from stock swapping with Ullico.
McCarron is a veteran of pension fund controversy. He'd been the target of a civil suit charging that he'd paid excessive advisory fees to money manager Richard Blum, who is Senator Diane Feinstein's husband. In an eight-year period during the l 990s, Blum got $54 million in advisory fees from the Southern California Carpenters'Fund, although he handled only a small part of the fund.
Blum's fees were awarded by McCarron and Ronald Tutor, co-chairs of the $2 billion fund. Tutor, southern California's largest contractor, had been a major supporter of McCarron during his rise to power. Tutor and Blum were also business partners. At one time, Blum was the largest investor in Perini Corporation, a construction company later taken over by Tutor. It was the allegedly imprudent investment by Southern California Carpenters in Perini that initially triggered the civil suit. Blum sued the plaintiff, retired carpenter Horacio Grana, for libel. He then dropped the libel suit. Grana's death ended the litigation.
Besides McCarron and Maddaloni, Communication Workers of America (CWA) boss Morty Bahr was another Ullico director who got the message that money could be made from insider trading. A month before he got caught taking $27,000 in stock trading profits, Bahr lambasted Global Crossing for "corporate arrogance" and "secret dealings and employee abuses."
Bahr hadn't always been so critical of Global Crossing. In 1999, when Global Crossing was battling Qwest in a takeover battle for Frontier Communications, he came out strongly for Global Crossing. Insisted Bahr: "Qwest stands for an old-style slash and burn merger strategy, while Global Crossing stands for growth."
Actually, Global Crossing, although it appeared robust, was already in its death spiral. It didn't have the cash to buy Frontier's assets. It paid for
the company with its own stock—which was achieving stratospheric heights on the engines of accounting fraud. A few months later, Bahr and the rest of the Ullico directors got opportunities to become minor partners in the Global Crossing Golconda.
Things turned out differently for CWA's members at Frontier Communications. Employees with 401 (k) plans had balked at having their life savings in Global Crossing stock, but CWA officials had put their fears at rest. A local CWA official who represented Frontier employees exclaimed bitterly, " [They've] lost everything they've worked thirty, thirty-five years for, they're devastated."
For official labor, though, the biggest casualty may have been the AFL-CIO's "No More Enrons" campaign. In March 2002, AFL-CIO secretary-treasurer Richard Trumka had planned a big public relations offensive attacking the appointment of a former Enron director to the board of Lockheed Martin. By April, as the Ullico revelations piled up, Trumka decided to pull the plug. A union official explained to BusinessWeek, "He didn't want us to look like hypocrites."
Failure of union reform. In the l990s, beginning with the election of Teamsters president Ron Carey, labor activists—the AFL-CIO left—were convinced that they had unleashed a wave of reform that would have irreversible effects. More than a decade later, the impact is hard to detect. A lot of the same unions that were run by thieves, racketeers, and gunmen fifty, eighty, or a hundred years ago—the New Jersey Longshoremen, the Chicago Projectionists Union, the Boston Teamsters, the Ironworkers— remain corrupt today. Nine Ironworkers officials have been indicted for embezzlement; four have pleaded guilty, including the president, Jake West. It was worse in 1913, when thirty three officials were sent to prison for participation in dynamite bombings. But the Chicago projectionists are still setting off bombs in theaters; the Gambino and Genovese crime families continue to extort their respective longshore locals on both sides of the Hudson River; and the Irish gangs continue to provide the muscle for the Teamsters in Boston's Local 25.
There's a tendency in all large organizations for the reformers to get spit out or worse—to get digested without a trace by the system. The labor movement, though, has a particularly strong digestive tract. The reformers go in, and they may capture a few locals and win what are seen as ma-
jor victories. But either they don't get far—like Ken Paff, head of Teamsters for a Democratic Union, who has fought the good fight for thirty years, with increasingly less impact—or they do as "Uncle Dan" Tobin did: he began in 1905 as a Teamsters reformer and eventually became general president of America's most corrupt union.
It's the fiefdom nature of the system—the localness, the complexity of the ties between leaders and members—that makes it almost impossible to build a broad base across the whole membership or keep from being coopted by the demands of loyalty.
While the protection game between leaders and members explains a lot of corruption's persistence, so do the symbiotic relations between lowerlevel leaders and higher-level leaders. It goes right to the very top of the AFL-CIO.
Credit Sweeney with generous impulses and a desire to speak authentically with a New Voice. He wasn't a free citizen. He had to compete with longtime Kirkland aide Thomas Donahue for votes from the affiliates. Many of the affiliates had deeply rooted organized crime problems. In 1986, the President's Commission on Organized Crime had identified the four most mobbed-up unions: the Teamsters, the Laborers, the Hotel and Restaurant Workers, and the East Coast Longshoremen. Although Sweeney was widely portrayed as battling the Old Guard, three of the four supported Sweeney; the fourth, the Longshoremen, went for Donahue.
At the 1995 convention, the four historically most mobbed-up unions were far from holding a pariah status. They controlled over 2.5 million out of 13 million convention votes. Competition for their allegiance was fierce. Laborers president Arthur Coia Jr. made the most of his strategic position. "Right now you got one guy in a position to determine the whole presidency of the AFL-CIO," said Coia, who controlled 750,000 votes. Referring to himself as "the kingmaker," he added: "Not bad for a small-time, hometown guy from Providence, Rhode Island."
If Coia could name the king, the realm was in big trouble. He would later admit in sworn testimony that he owed his first national office in the Laborers to a meeting he had with Chicago Outfit boss Vincent Solano, who at the time ranked no. 42 on the Fortune list of America's top fifty mobsters. Arthur Coia Sr. was about to retire. To step up to his father's no.2 position in the union, Coia Jr. had to have Solano's blessing. An Outfit
associate summoned Coia Jr. from Providence to meet with the aging crime boss in a coffee shop at O'Hare Airport. The audience took only about fifteen minutes. "It was like out of a movie," Coia recalled.
With campaign debts to supporters like Coia Jr., the battle for reform wasn't going to get much help from the AFL-CIO's president. It would have to come either from inside the individual AFL-CIO affiliates or from outside, through government prosecutorial efforts.
Government-led reform is clearly the least desirable course. It bends toward government control of unions and encourages efforts by union leaders to find politicians who will protect them from the prosecutors. But without the outside prosecutors, it's also clear that leaders like Arthur Coia, whom the Justice Department described in a 212-page complaint as a "mob puppet," would still be on-stage performing their herky-jerky routines.
In the case of Arthur Coia, the Clinton administration devised a novel arrangement. In place of an independent board, Coia was allowed to hire Robert Luskin, his personal defense attorney, to clean up the union. The deal was worked out in a February 1995 White House meeting that included not just Luskin but also Harold Ickes, a former Laborers'attorney who served as a top Clinton aide. Skeptics noted that Coia contributed nearly $5 million to the Democrats during the next two election cycles, and before that, he lent $100,000 to Clinton's inauguration. Skeptics also pointed out that Luskin did eventually force over 200 corrupt officials to leave the Laborers—mainly by providing them with financial incentives to leave.
Rather than wiping out the mob problem, though, the ultimate outcome of the Clinton Justice Department's most celebrated cleanup may have just shifted the locus of Mafia influence in the union from Chicago to New York. Coia was under pressure to deliver heads. He naturally chose to deliver those of his adversaries. Historically, the Outfit had run the Laborers from Chicago, and that changed under Coia. The Chicago mob sent two representatives to Coia Sr.'s 1993 funeral to register their displeasure with his son. Coia says they accused him of "stealing and taking the presidency from Chicago." But the Chicago boys were mercilessly purged anyhow, even though no evidence was ever presented that the ousted Outfit associates who ran the Chicago locals were guilty of labor racketeering.
On the other hand, with few exceptions, Coia's mob supporters in the east got to run their fiefdoms pretty much as they liked.
The AFL-CIO's "barren marriage" to the Democratic Party. Unions give much more to political campaigns than media accounts suggest. Yes, corporations give more, but unions are surprisingly competitive. According to the Center for Responsive Politics, seven of the top ten campaign contributors in the last decade are not Fortune 500 corporations. They're AFL-CIO unions. And overwhelmingly they give to the Democrats; union giving is much more one-sided than corporate giving. The corporations divide their contributions into about 60 percent to the Republicans and 40 percent to the Democrats. In the 2002 election cycle, the AFL-CIO spent nearly $100 million on candidates, with over 90 percent going to the Democrats. That's just in federal elections, and it doesn't include most inkind contributions, like "volunteer" phone banking. While it's hard to know precisely, it's unlikely that very much of the $100 million in cash was given to candidates to advance a common agenda for working people. Most goes to promote very specific purposes of individual union leaders.
In descending order of public benefit, these aims are, first, to improve contract terms for their respective unions; second, to increase their membership—sometimes at the expense of other unions; and third, union leaders write checks to protect themselves. They're buying Get Out of Jail Free cards—or, more strictly, Stay Out of Jail cards.
Between 1996 and 2000, three of the top union givers—AFSCME, SEIU, and the Teamsters—were headed by presidents who were under federal investigation, although only Ron Carey was charged. The presidents of the Laborers, the Ironworkers, and the Hotel Employees and Restaurant Employees (HERE) also came under scrutiny. They all had to resign, but at least they didn't do time. The total membership of these unions whose presidents were under criminal investigation is equal to half the membership of the AFL-CIO.
The point here isn't that labor's money mainly goes to keep union leaders out of prison. It's that the portion that probably does illustrates a huge and widely underappreciated fact that is denied on both sides of the transaction—even by Republicans, who try to scare their base by suggesting that the money is going to advance John Sweeney's "radical agenda": "legalizing abortion, legalizing marijuana, forcing the Boy Scouts to admit
homosexuals and atheists," and so on. But it's not what's going on in the Boy Scouts that explains why union leaders and Democratic pols hook up. Nor do broad public policy reasons do much to illuminate the relationship. On trade, tax policy, labor law, minimum wage policy, welfare reform, and so on, labor gets so little. Why the fidelity?
Even the far left accepts the two sides'own account of why they're together. In the 1980s, Mike Davis, the brilliant and scholarly Trotskyist truck driver, in his Prisoners of the American Dream, described the relationship between the AFL-CIO and the Democratic Party as a "barren marriage." Quite convincingly, he portrayed how little the unions got, in public policy terms, from their courtship of the Democrats; how far short the unions were falling in the effort to make the Democrats into European-style social democrats. Davis was assuming that social democracy is what the AFL-CIO is truly aiming at.
The natural conclusion of Davis's critique was the same as Leon Trotsky's: that the great task of organized labor in America was to break with the Democrats and create its own party. Davis, however, didn't fully embrace his own conclusions. He argued that the labor left had to break with some Democrats and ally with others, particularly with the Rev. Jesse Jackson, who had battled Walter Mondale for the party's 1984 presidential nomination. Davis's strategy was to form militant rank-and-file caucuses in AFL-CIO unions and steer them toward an alliance with Jackson's Rainbow Coalition forces.
Jackson, however, had already allied with Jackie Presser, the roly-poly, 300-pound former car thief who'd risen to the Teamsters general presidency with the help of the FBI and the Cleveland mob. Even less than most mob associates, Presser was no friend of rank-and-file caucuses. To combat Teamsters for a Democratic Union, Presser organized BLAST—Brotherhood of Loyal Americans and Strong Teamsters: goon squads designed specifically to intimidate and break up dissident rallies.
At Presser's own rallies, after his indictment on labor racketeering charges, he deployed Jackson. At one "Don't Send Jackie to Jail" rally at the Cincinnati Convention Center, Jackson enumerated, one after another, all the Reagan officials who had been indicted. "If you live in a glass house, you don't throw stones," said Jackson, bringing the crowd to its feet.
After the speech, Jackson and his entourage boarded Presser's private jet, only to voice his disappointment with the surprisingly proletarian fare available on Air Jackie. "Where's all the grand food, the lobster, the shrimp, and the caviar?" complained Jackson loudly. "Don't tell me that fat son of a bitch hasn't laid out a supper for me."
After a few drinks, Jackson got over his pique. According to Duke Zeller, a Presser aide, Jackson and Jackie had actually been together for some years. Public policy hadn't been the basis of their mutual attraction. Jackson always wanted money from Presser. And Presser, continually harassed by the Justice Department, needed the political cover that the Chicago-based civil rights leader brought to Teamsters events. After Presser died, Jackson found an even bigger trade union teat: Hotel and Restaurant Union boss Ed Hanley. A close ally of Presser, Hanley was also a creature of Midwest mobsters. Facing federal investigation, Hanley put nearly a dozen Rainbow/PUSH Coalition staffers on the union payroll, including Jesse Jr., although before he became a U.S. congressman. In 1999, Karin Stanford, the mother of Jackson's love child, also got a HERE salary while she worked for Rainbow/PUSH.
The relationship between trade union bosses and Democratic Party politicians may be a "barren marriage," but only by the standards of modern Western-style marriage. It's true that the unions and the Democrats don't have a relationship of equals based on shared common ideals and goals. It's more of an old-style patriarchal marriage. Union leaders are like traditional brides who must bring a dowry. Democratic Party politicians are the grooms who assume the dominant role. When it comes to party affairs, the trade union role is in the kitchen, preparing"grand food." The unions accept their role because the Democratic Party politicians let them do what they please in the kitchen; how the union leaders manage to put the shrimp on the table is up to them. Still, both sides know that their relationship is being judged by more demanding standards, making for frequent furtiveness, pretension, and hypocrisy.
When major institutions in society become corrupt, the point is to identify what has gone wrong, mobilize indignation, and undertake necessary reforms. With unions, however, there is a danger that they've been weak and corrupt so long that it's no longer clear what it is they contribute to the health of the society. When major drug companies knowingly put
lethal drugs on the market, the public doesn't say, "Let's get rid of drug companies," because people realize that America needs world-class companies to manufacture drugs. But most don't think they need world-class unions. Americans haven't seriously reckoned with the burden of bad unions.
The Hidden Cost of Corrupt Unions
What difference does it make that labor unions play such a small and sorry role in American life? Why should those of us whose pensions don't depend on a continuous inflow of union dues care if organized labor is in trouble? Maybe labor's problems are like the perpetual crisis that plagued the Austro-Hungarian Empire in its last fifty years: terminal but not truly serious. That is, perhaps the United States needs a labor movement no more than central Europe needed an empire. That's essentially the position of free market conservatives who argue that labor unions are a thing of the past. Unions were a creation of blue collar manufacturing workers in the nineteenth-century nation-state. Now nation states have been undermined by globalization, and the digital revolution has rendered blue collar workers obsolete.
The left, too, for the most part, has lost interest in the labor movement. Its most fashionable thinkers no longer address workers at all; U.S. workers'interests aren't seen as having any special significance or legitimacy. As philosopher Richard Rorty has observed, today's left "thinks more about stigma than about money, more about deep and hidden psychosexual motivation than about shallow and evident greed." The shift in concerns took place, he notes, at the same time that"intellectuals began to lose interest in labor unions."
It's not just the intellectual elite. On a list of issues that Americans feel are important, the sad state of American unions doesn't show up anywhere—not even on a list of economic concerns. Americans worry about job security and the rising cost of health care. They fear outsourcing. They don't fear that some union leader is going to steal their pension or sign a sweetheart contract giving away their dues money.
Although Americans may know where it hurts, they may not know what's causing them their pain. That throbbing you feel in your throat may not come from your throat. It may be from acid reflux disease in your stomach.
For many Americans, the idea that their economic pain might be connected with the state of the unions would be a stretch. Many workers have no direct contact with unions, clean or dirty. The numbers are especially telling among young people. Of those under twenty-five, only about one in twenty are union members, compared with nearly one in four among workers over sixty.
The AFL-CIO is an archipelago of fiefdoms in a sea of unorganized workers. As the sea level rises, the state of the labor movement's shrinking domain hardly seems to matter any more. But if politics and material life still matter, the state of the labor movement makes a gigantic difference. New York Times columnist David Brooks inadvertently makes clear what's at stake when he writes that Americans are "the hardest working people on the face of the earth. The average American works 350 hours a year . . . more than the average European." But is this because of our "strong work ethic," as Brooks believes, or, far more plausibly, because of the weakness of American labor? And why is it so weak?
STRONG WORK ETHIC OR WEAK LABOR MOVEMENT?
It's the lack of a powerful collective voice, one that speaks with genuine moral authority, that has turned millions of Americans into semidependent creatures incapable of exercising a meaningful choice in the workplace. Non-union employees—92 percent of those working in the private sector—have no collective voice whatever. Their working lives are still largely shaped by the ancient Tudor doctrine of"employment at will," as interpreted in a seminal American legal treatise written in 1877 by Horace G. Wood entitled Master and Servant. Unless they want to give up employment entirely, they can't refuse the boss's order to work overtime. They can't ask for a raise, so they take that extra part-time job even though it means less time with their families. Workers in the private sector can't
go on vacations like the globetrotting Germans because they don't have unions that are capable of winning the right to take long enough vacations. Millions in the Home of the Brave are afraid to risk being seen going to the toilet on company time.
Ours is the only country in the advanced capitalist world in which there is no national legislation mandating a minimum vacation time. In Europe the minimum is four weeks. We are also unique in lacking a statute guaranteeing long-term paid sick leave. The average in Europe is fifty-four weeks at 62 percent pay. Another sign of American exceptionalism is our lack of a federal law guaranteeing paid maternity leave. It's common in Europe, where the maximum is eighteen weeks at 89 percent pay.
Maybe there is a uniquely American work ethic. We could find out if national legislation were passed giving employees the right to take vacations, get sick, and become pregnant without penalty. If workers chose nevertheless to keep on working the same number of hours, Mr. Brooks would be proved right.
In nations around the world, the stronger the unions, the less inequality and insecurity and the more "social democracy"—the more workers are free to choose whether to work more or go on vacation; the more rights they can claim against employers, like the right of French workers to walk off jobs they deem to be unsafe; and the more collective goods they enjoy, like universal health insurance, free child care, and job security.
There are two widely used measures of union strength: union density— the share of union members in the workforce—and union coverage—the share of workers who benefit from union contracts. These measures are far from complete, but countries with high rates of union density—like Sweden, Italy, and Germany—or union coverage—like France—have more workplace rights and a wider distribution of collective goods. They also have less inequality, violent crime, and social exclusion.
It may be that the Europeans are making the wrong choices. Most U.S. conservatives think so. Writes David Brooks: "The European model is
foundering under the fact that billions of people are willing to work harder than the Europeans are." America's penchant for low taxes, high income inequality, reduced social benefits, workplace insecurity, and long hours, it's claimed, represents the most sensible strategy for growth in a global economy. Perhaps. But that's not the issue here. Nor is the statistical sleight of hand that allows Brooks to claim that the sloth of European workers has reduced them to a standard of living comparable to that enjoyed by the typical resident of an Arkansas trailer park.
Nor is it material that European welfare states are under tremendous pressure, or even that European unions and labor-led parties aren't what they once were. Many continental unions find themselves with a shrinking, aging membership, bargaining at lower levels, fighting against concessions, and defending social benefits won years before. In Germany, the unions and the Social Democratic Party have divided over "flexibility," with the party insisting that the unions give up free weekends. In the late 1980s, the Italian unions gave up la scala mobile: national legislation won by mass strikes in the 1970s that had pegged wages to the cost of living.
But it's one thing to be giving ground while defending a social democracy, and another never to have achieved one at all. The question is, what explains the choice of models—the direction of development? Why has most of Europe gone in the direction of social democracy, while the United States, after a brief and comparatively mild fling beginning in the 1930s, turned around in the 1970s and adopted the nineteenth-century model of capitalism that the rest of the Western world had abandoned— unrestricted free trade, poor laws, seventy-hour work weeks, the night watchman state, and the hangman—institutions that were already being satirized by Charles Dickens in the 1840s?
The most plausible reason is inequalities of power. If power is the capacity to make others act contrary to their will, American workers have little of it. Such leverage as they do have is unnaturally fragmented, monopolized by a comparative few, and used without benefiting most American wageworkers, who simply lack any influence over corporate management, either in the boardroom or in the streets. Unlike countries in the European Union, America lacks laws mandating works councils that allow workers to have a say in determining work rules. Nor can Amer-
ican workers mount nationwide strikes of the type that force governments to retreat or fall—as they have in France, Italy, and Denmark.
American workers, unlike European workers, can't compensate for their lack of private sector power with political power. In Sweden, the relations between the governing Swedish Workers Party and the union movement are very close. Labor governments have run the country most of the time since 1929, creating an unrivaled social democracy—albeit one that emphasizes the opportunity to work rather than the chance to get on welfare. It was the British Labor Party, which came to power in 1945, that introduced national health insurance to the Anglo-Saxon world. In France, a union-backed government of the left came to power in 1997 and enacted the key demand of the unions: reduction of the workweek to thirty-five hours.
The comparative futility of American labor's involvement in national politics is stunning. It's not just that American unions don't have a party. They probably spend more on elections than all the labor movements of the rest of the world combined—an estimated $250 million in the 2004 election cycle. Yet the dividends for ordinary workers are hard to identify. The last truly significant piece of pro-worker legislation—the creation of the Occupational Safety and Health Administration (OSHA)—passed in 1970, under Richard Nixon.
America's lack of a strong labor or social-democratic party is something that's been chewed over for a hundred years. But the reasons debaters once found compelling now seem terribly dated. Observers formerly pointed to the huge divergence between American and European living standards. The difference, some argued, was due to the American model of trade unionism, which had modeled itself on American business. Progressivism, famously observed the German sociologist Werner Sombart, "foundered on the reefs of roast beef and the shoals of apple pie."
But that was in 1906, when, as Sombart also noted, "the American worker makes two or three times what his German counterpart makes." A few years later, in 1909, AFL president Samuel Gompers, who took a five-month European grand tour, also noted the huge difference in living standards. Gompers claimed he had never seen such poverty as he saw in Amsterdam or Brussels. The Belgian pushcart drivers were so poor they didn’t even have horses. They hitched up dogs to their carts.”
European workers were less well off because they were badly led, he concluded, with labor officials espousing an effeminate social welfare philosophy as well as a primitive egalitarianism. To French trade union critics who disparaged his penchant for staying at the Ritz with an entourage, Gompers vaunted the difference between European and American labor movements. The French unions had only $75,000 in their treasury, he pointed out, while the AFL "counts its deposits in banks by millions of dollars."
American workers were rich, Gompers explained, because of the AFL's steady leadership. He ended the account of his 1909 grand tour with a pleonastic tribute to the organization that paid his salary: "In unity and capacity for organization, progressiveness of propaganda, thoroughness and clearness in scope and purpose, militancy of spirit, soundness of finances, adaptability in administration to the ends sought or continuity and rapidity of development, the national movement in no foreign country can compare with the AFL."
Did American workers owe their comparative prosperity to the AFL, as Gompers claimed? It's hard to see how. At that time, membership in American unions stood at just 10 percent in the private sector. While that's higher than today's 8 percent, it wasn't high enough to materially affect the wages of the other 90 percent. AFL membership was concentrated in urban occupational niches like construction, trucking, and longshore. The far higher level of American wages can be explained by the far higher levels of productivity in American manufacturing and agriculture. American unions had scant presence in either sector.
What Gompers utterly ignored on his grand tour was the huge upsurge in European labor in the first decade of the twentieth century. By 1907, the United States was already far behind every country but Belgium in union density. Sweden's main labor federation, the Swedish Trade Union Confederation (known as LO), had organized nearly half the country. Proportionately, Germany had about three times as many workers organized as the United States did.
It would take a long time for Europe to match the United States in roast beef. But by the l990s, the dogs in Brussels were no longer pulling carts but strolling on leashes or perched on laps. Belgium had reached 98 percent of U.S. labor productivity. And the Netherlands wasn't far behind. As European and American productivity converged, it was possible for
Europeans, with their much more powerful labor movement, to reduce their hours and distribute the wealth they produced more equally. While in the United States the number of hours worked per year had increased since 1980, France had reduced hours worked by 244, Spain by 210, and Germany by 489. If official statistics can be believed, the average wage of Italian workers in the 1990s nearly equaled the declared income of jewelers and hotel owners.
Social democracy may not be the end of history, but social-democratic regimes accomplished what their adversaries had insisted was impossible. First, they've proved capable of incorporating capitalism's main strengths —openness to technology and the value of innovation. According to the World Economic Forum, four of the top six countries in the world in terms of competitiveness are Scandinavian social democracies. Second, social-democratic regimes remedied the gross inequality and insecurity produced by early free market capitalism. By the nineteenth century, as anthropologist Marvin Harris reminds us, "Factory hands and miners were putting in twelve hours a day under conditions that no self-respecting Bushman, Trobriander, Cherokee or Iroquois would have tolerated. At the day's end, after contending with the continuous whine and chatter of wheels and shafts, dust, smoke and foul odors, the operators of the new labor-saving devices retired to their dingy hovels of lice and fleas." What transformed these conditions was not improved technology and freer markets but organized movements of the miners and factory hands themselves.
Perhaps the reduction of inequality and insecurity is an ignoble societal objective. Friedrich Nietzsche denounced these concerns as the product of "slave morality." To stop fast-growing social-democratic movements, he advocated reducing workers to serflike status so they could better provide leisure and security for the artist class. In parallel fashion, American social Darwinists like William Graham Sumner opposed unions, social programs, and even private charity because they restricted the freedom of the robber barons—the genuine benefactor of the Forgotten Man.
In Europe, opponents of social democracy lost the argument and lost the war. Here in the United States, neo-social Darwinists have regained the upper hand. In no small measure, America's domestic social democracy deficit is due to the desertion of its practical advocates. The problem
isn't simply that the bosses have the upper hand, or even that American union leaders have been poor advocates and practitioners, but, more seriously, that the genuine interests of the trade union establishment lie elsewhere. The AFL-CIO hasn't fought for social legislation that would reduce insecurity because it seeks to maintain union-controlled private health and pension plans—plans that serve as pillars of patronage, kickbacks, and self-enrichment for union leaders. Then, too, American unions can't fight inequality effectively because by their very structure they serve as amplifiers rather than ameliorators of wage differences.
Losing the Battle Against Inequality. "American Exceptionalism" used to suggest the question "How come America escaped European-style class differences?" Now it raises exactly the opposite question. For at least a generation, with the exception of the late 1990s, the United States has been moving proudly, confidently, and almost inexorably toward greater inequality. Among the advanced nations, what is striking about American income isn't the sheer extent of it so much as how unevenly it's distributed. According to a study of fourteen advanced countries, the median income among the rich—defined as the top 10 percent—is higher in the United States than in any of the other countries—and in relation to the bottom 10 percent, way higher. The rich in America earn 5.4 times what the bottom tenth earn; in the other thirteen countries, the rich average only 3.5 times what the bottom tenth earn.
Since 1970, the U.S. national income has more than doubled. Who has benefited? Not the poor—the bottom 10 to 15 percent of the population. Compared with seventeen other advanced nations in the Organization for Economic Cooperation and Development, our leadership in poverty is substantial in the most widely measured categories: we have the highest— and the deepest—rate of child poverty, the highest percentage of elderly poor, and the highest percentage of people who are poor in their lives at least once. And notwithstanding the folkloric claims about the superior mobility of American society, we have the highest percentage of people who are poor for protracted periods in their lives.
The broader middling strata in the United States have no reason to celebrate either. U.S. workers experienced the longest period of wage stagnation in modern American history: median nonsupervisory worker wages fell between 1971 and 1995. Then came the five years of the Clinton bub-
ble, when wages shot up, especially for the bottom quartile. But since the stock market crash in 2000, wages have resumed their downward trajectory. By 2003, the median non-supervisory wage for male workers was less than it was in 1973. Overall, for this generation, what has kept incomes from cratering despite falling wages is greater work effort: an extra 172 hours a year per person since 1973, and for a family in the middle fifth, about 500 extra hours.
In plutocratic America, much of the gain in national income has gone to the top 1 percent. Since 1979, this group's income in real terms has more than doubled. A Forbes article entitled "In Praise of Inequality" boasts that the United States has more billionaires per capita than any other country. There are dozens of nations where the gross national product doesn't equal the personal fortunes of the wealthiest Americans, like Bill Gates ($46.6 billion) and Warren Buffett ($42.9 billion). But the Forbes data also show that the most fertile countries for growing billionaires aren't necessarily the wealthiest. In poor countries like Mexico and Russia, where corrupt institutions make it easier to appropriate the wealth of others, wealth tends to concentrate in the hands of a few.
Among the world's economies, the United States stands out like Martha Stewart at a Tupperware party: fabulous but faintly suspect. Our economic profile—as cast bywhat economists call the Gini index—resembles third world countries like Venezuela and Mexico more than first world countries like Sweden, France, and Italy. By the peak of the 1990s New Economy, American CEOs earned 500 times what the median worker earned. By 2003, the ratio had fallen to a mere 300 times. But that's still an order of magnitude greater than in continental Europe, where it stands between 11 and 19 to one.
What happened? Clinton administration economists explained that people don't cause inequality, computers do. The introduction of information technology provided higher returns to those who had acquired the new information-based skills. Others have stressed increased trade and globalization. But Sweden and Japan have computers too, and they're also major trading nations, and neither comes close to our level of inequality. Plus, here in America, the era of the great technology boom ( 1995-2000) was the one period since the late 1970s when wage inequality was reversed.
As the "irrational
exuberance" of the late l990s waned—or rather was channeled into
real estate speculation—federal investigators discovered that many of the
most successful CEOs had acquired their fabulous incomes through rather
traditional skills, like stock swindling, accounting fraud, and pilfering from
the company. Bernie Ebbers, the Mississippi mogul who created the $55 billion
telecom giant WorldCom by making over seventy acquisitions, managed to conceal
for years that the company was worthless. In 2002, WorldCom finally sank,
taking down over $30 billion in debt and 17,000 jobs. Ebbers was eventually
found guilty of perpetrating an $ 11 billion fraud. Global Crossing's Gary
Winnick—bankrolled in part by the AFL-CIO—buried $34 billion worth
of fiber optic cable in the ocean, where it remains 98 percent unused. After
taking Global Crossing into bankruptcy, Winnick then bought a $60 million house
in California. Then he fixed it up—for a total cost of $94 million.
Winnick's castle sheltered his personal assets from workers who were trying to
collect $34 million in lost pensions.
The unrivaled emperor of excess, though, was probably Tyco International's
Dennis Kozlowski, another merger wizard. At the high point of Kozlowski's
reign, Tyco had a market value of $120 billion. Kozlowski, who slept on $5,960
sheets and used a $17,000 toilet kit, celebrated by staging a $2 million birthday
party in Sardinia that made Trimalchio's banquet seem like the South Beach
diet. The piece de resistance was an ice sculpture of Michelango's David that
dispensed vodka from its penis for celebrity guests.
The unrivaled emperor of excess, though, was probably Tyco International's Dennis Kozlowski, another merger wizard. At the high point of Kozlowski's reign, Tyco had a market value of $120 billion. Kozlowski, who slept on $5,960 sheets and used a $17,000 toilet kit, celebrated by staging a $2 million birthday party in Sardinia that made Trimalchio's banquet seem like the South Beach diet. The piece de resistance was an ice sculpture of Michelango's David that dispensed vodka from its penis for celebrity guests.
Vulgarity may be the least of the problems presented by the Kozlowskis of the corporate world. The practical justification for inequality has always rested on the claim that investment—and therefore jobs—depends on the rich. Yet the investment of the late l990s may ultimately have created fewer rather than more jobs. The number of jobs in 2004 stood lower than the total in 2000, at the stock market peak. Literally trillions in assets were destroyed. Like the unbridled Soviet-era communists, whose uneconomic heavy industry projects still litter a ravaged landscape, the renegade CEOs carried out a huge, arrogant misallocation of wealth, destroying more capital than they created. At least the robber barons of the nineteenth century built the railroads.
How has power shifted so strongly in favor of a self-aggrandizing corporate elite? And what could cut them down to size? The popularity of TV
reality shows like The Apprentice, featuring Donald Trump, suggests that Americans simply love arrogant billionaires who shout "You're fired!" at them. The show has high ratings, and Trump has millions of fans. But he also has some of the most negative ratings of anyone in public life. Other polls show that Americans aren't a lot more tolerant of inequality than Europeans.
European and American unions treat their tycoons very differently. In the United States, the AFL-CIO played the role of pilot fish to Gary Winnick's shark, swimming in the wake of his company's initial public offering of stock, secretly benefiting through insider trading from what dropped from his jaws. It was a scenario often repeated by Ullico with other corporations and by other union funds.
In Europe, the rise of an overweaning plutocracy has been largely checked, at least until recently, by labor-driven political action. Through tax policy, labor and social-democratic governments redistribute income. Although tax rates on upper brackets have come down almost everywhere, the top marginal rates in Europe are still substantially higher than in the U.S.—50 percent or higher in every major continental country. Through wage policies, European countries have established a higher basic minimum wage than the United States has—as high as 70 percent of the median wage, as opposed to less than 40 percent here. In other European countries, union collective bargaining contracts are extended to non-union workers. France has about the same share of union members as the United States, but over 90 percent of French workers are covered by union contracts.
In the private sector, too, European unions flatten out wage differences. They push for a "solidarity" wage whose ideal is the strong helping the weak. In European unions, the spread between union leaders'salaries and members' wages is generally negligible. In America, the highest-paid union leaders make as much as the lowest-paid Swedish CEOs. Egalitarian sentiments ring out from the nation's founding document. Decades later, Alexis de Tocqueville, a distinguished French visitor, observed in his travels across America that equality was "the fundamental fact from which all others seem to be derived."
But today the United States lacks effective institutions capable of translating egalitarian values into action. The problem with labor's legislative efforts isn't only the unions'lack of leverage, it's also how the leadership
chooses to exercise what leverage it has. But the real sources of income in-equality are in the private sector, where employees face off for shares of corporate revenue against corporate managers and stockholders. If labor were more successful in the market, the need for legislative redistributive action would be a lot less.
In the private sector, unions can reduce inequality in two ways. They can use their bargaining power to raise the share of corporate revenue that goes to wages, and they can use their persuasive power on their own members to sell them on compressing the spread of wages—convincing the strong to help the weak.
In the past half century, American unions haven't ventured very far down either road. Capital's share of national income has been rising and wage inequality has been increasing. It's a twin failure that can't be explained just by pointing to falling union membership, lack of market power, low union density, and so forth. Low union density itself has to be understood as a principal outcome of American-style unionism.
A few economists, particularly those close to the AFL-CIO, blame rising U.S. inequality on falling rates of union membership. Their solution is to allow existing unions to add dues-paying members; eliminate the need for cumbersome National Labor Relations Board elections, which are heavily stacked against labor; and repeal the Taft-Hartley Act, which took away big portions of labor's bargaining clout. It's unlikely, though, that legislative changes—however desirable from the standpoint of assuring workers' rights—would reduce income inequality. If today's unions had more members, they'd be bigger but not better attuned to broader social welfare issues; they'd be richer, but not more egalitarian. The problem is not just that American unions don't have enough members; it's that they organize in ways that tend to leave most workers out, creating substantial wage differences among workers who do the same work and amplifying economic inequality.
Besides creating inequality within unions themselves, unions have lost their power to reduce inequality between union and non-union workers. They aren't able to raise the wages of less skilled workers. In the garment, retail, grocery, hotel and restaurant, and meat processing industries, the problem isn't that unions have no presence, it's that their presence doesn't make a difference.
Unlike continental European unions, which have no geographical jurisdictions, territorially based American unions naturally seek exclusive territorial monopolies. The successful monopolist restricts supply. That's what keeps wages high for those shielded by the monopoly's protective wall, and the high wages attract workers who want to join. But if a territorial union were to let all applicants in, the number of union jobs in the territory wouldn't increase, just the number of members seeking those jobs. Adding more members would dilute the market power of those already in the union. "Organizing the unorganized" sounds like an obvious idea until one realizes how it threatens the wages of the already organized and the political base of the incumbent union leadership.
Under the U.S. fiefdom model, the point is to find a rich territory and occupy it. Little incentive exists for the occupiers to extend the benefits of the union to low-paid outsiders. Nor is there much inclination for the union and the employer to fight each other for shares of revenue. For one thing, the union monopoly depends on the employers'monopoly. And a lot of the employers' strength comes from having an agreement with a union that monopolizes the labor—whether skilled, like plumbers, or strategically located, like longshore workers. Occasionally there will be a falling-out, but usually it's in the interest of both sides to work together quietly to gouge the public.
The still-powerful New York City construction unions, totally intertwined with the contractors, perfectly illustrate the monopoly model. The New York construction unions have the nation's highest wage and benefit scale. The New York contractors have achieved the nation's highest construction costs. And the city has the lowest rate of housing construction among all American cities experiencing population growth. It goes without saying that the construction unions, many historically run by crime family associates and some even by made guys, have had little to contribute to the civic debate about low-cost housing or alternatives to a market where the median apartment in 2004 sold for $1.2 million.
Even so, the union scale might promote equality if it were more widely shared. But how many of the city's 125,000 construction workers—union or non-union—actually get the $75-an-hour wage and benefit packages called for by the contract? It's hard to know for sure. But union density appears to have slipped over the past couple of decades; one estimate puts
Most notoriously, the "Theme from The Godfather" regularly serves as background music whenever six-figure construction jobs are in play in New York City. It's hard to avoid the strong arm of the wiseguys when there's so much money to be made from the huge spread between the union rate and the market rate. The contractors can hire non-union labor for as little as $10 an hour with no benefits. Then they charge the owner, the developer, or the government the union rate. The difference will be pocketed by the contractor, minus the cost of bribes to union offficials to look the other way. Mob guys—if they're not the contractors themselves—will wind up with at least a couple of points. It's the fee they charge for protection—a vital commodity in the construction field. The more the spread between wages, the more union members getting the premium wages need protection against those seeking their jobs and the more officials who are betraying their members will need protection against those who covet their territories.
In other words, job control unionism requires protection, and protection bends toward the mob. Thus the mob becomes the ultimate guarantor of wage inequality.
The tilt toward inequality isn't restricted to the skilled construction trades in the conservative-minded former AFL unions. Take the International Longshoremen's and Warehousemen's Union (ILWU). Organized by communists, born out of the San Francisco general strike of 1934, and adopting the Wobbly motto "An injury to one is an injury to all," the ILWU has been identified as the reddest of all American unions. Its founder, Harry Bridges, whom the government tried to deport for alleged communist leanings, was the West Coast director of the CIO. On May Day, 1999, his avatars shut down ports all along the West Coast in sympathy with radical journalist Mumia Abu Jamal, who was convicted of murdering a Philadelphia policeman. At the front of 20,000 demonstrators, an ILWU contingent marched chanting, "An injury to one is an in- jury to all! Free Mumia Abu Jamal." It's hard to imagine a comparable job action on the East Coast, where the International Longshoremen's Association (ILA) holds sway. Since the 1930s, the ILA has been run by the
Gambino and Genovese crime families—rarely noted for their progressive sympathies.
Long ago, communists and mafiosi effectively divided the nation's ports. The reds got the West Coast and the mob got the East—and never, you would think, the twain shall meet, which is why it's jolting to see how much alike the ILA and the ILWU have become in key respects.
Both unions practiced successful job control unionism. Each controlled the hiring hall and thus became the gatekeepers doling out steady work and high-wage jobs. The ILWU avoided the most corrupting effects of job control. At least on the West Coast, you didn't have to be a wiseguy's nephew to get the best job. But, insensibly, the Los Angeles docks became fiefdoms, too. By 2004, when West Coast port officials announced a lottery for 3,000 new casual jobs and over 500,000 applications were received, it turned out the lottery had been blatantly rigged in favor of ILWU offficials'relatives.
More broadly, officials of both organizations have used the union's power over jobs not to create more equality—equal pay for equal work— but rather to create status groups—legally defined categories of workers who have sharply distinct rights to work and opportunities for earning income. Some workers get to work more hours than other workers. They get called first when jobs are available. The work they perform is less demanding. The mob-run and the progressive-run unions display a similar pattern of multitier union membership, nepotism, radical income inequality, and racial and gender discrimination, and the majority of port industry workers never get into the union at all.
In Boston, Port Authority investigators charged ILA officials from three area locals with issuing union cards to their children—some as young as two years old. Casual dockworkers would then be assigned to work in place of the children for a few hours every year, building up valuable seniority for the union bosses' kids. When the children grew up, investigators explained, instead of starting at $16 an hour, they would earn $28. About thirty children were involved in the alleged scheme, which was uncovered in 2005 and dated back about two decades. Suspicions were first aroused when a dockworker was discovered using the same name as the ten-year-old granddaughter of an ILA boss.
In L.A. they call longshore work a "million-dollar job." It's dangerous and requires substantial upper body strength, but it doesn't demand a
lengthy apprenticeship or a college education. Yet ILWU members in the port of Los Angeles-Long Beach average nearly $90,000 a year plus $30,000 in benefits. Then there are the clerks, who work with clipboards, inspecting the cargo and reporting damage; they average $125,000 a year plus benefits. Union-chosen foremen ("walking bosses") get more.
The problem is getting to be a full-fledged member. Until 1980, when a federal court intervened, blacks and women were almost totally excluded from membership at any level. To reach the six-figure brackets today, you not only have to be in the union; you have to be an A-list man in the union. It's an exclusive club. The ranks of the A men come from the ranks of the B men. It takes 8,000 hours of work for a B man to become an A man. The B men in turn come from the ranks of casuals, who earn $18-$21 an hour when they work—and weeks can go by when they don't. Casuals wait, shelterless, in a parking lot, near an auto-dismantling yard where dead bodies sometimes turn up. Meanwhile, it takes an average of seven years to get from casual status to the B-list.
Altogether, the 5,000 union jobs are only a fraction of the 40,000 longshore jobs in the Los Angeles port. Many of the non-union port jobs don't pay a lot more than the California minimum wage.
The evolution of the left-led ILWU shouldn't be seen as some kind of unique betrayal by self-seeking sellouts. It only duplicates the history of the even more radical Industrial Workers of the World (the Wobblies), which before World War I captured the docks in Philadelphia. The Wobblies began by insisting on equal wages for all port workers. The more they raised wages, though, the more desirable longshore jobs became. They opted finally for a two-tier system that protected the well-connected Wobblies and excluded "floaters." Expelled by the national organization, the Wobbly-founded Local 8 disappeared into the ILA. Progressive ideals will always founder on the reefs of job control unionism.
Still, if growing inequality is a concern, it's hard to see which is worse— job control unionism or the loss of job control. That's what has happened to old AFL unions like UNITE-HERE, the warehouse workers in the Teamsters, and, despite strong membership gains, the UFCW. These unions have found it harder than organizations in the skilled construction trades to monopolize work; they also lacked control over choke points in the economy, which the longshore unions had. It was in the 1960s and
1970s that these weaker craft began to lose market power. Long accustomed to relying on mob muscle, they found there was little the Mafia could do to help with problems of deregulation, import competition, and runaway plants. But wiseguys could help employers get the lowest wages possible. In UNITE's New York garment locals, the mob regularly collected bribes from employers who were allowed to pay sub-minimum wages. In the Teamsters Joint Council 16, the most mobbed up in the country, officials signed off on a liquidation of a local whose warehouse contract called for $ 18 an hour and transferred the membership to a corrupt New Jersey local whose contract paid $5 an hour less. In the UFCW, officials grew rich while wages and conditions reverted back to the days of The Jungle.
Call it "Wal-Mart unionism"—low wages every day. The union leaders' strategy—most successful in the case of the SEIU and the UFCW, and least successful in the case of UNITE-HERE—has been to gain members and increase income by adjusting to employers’ demand for low wages.
Today, UNITE workers include the lowest-paid union workers in the advanced industrialized world. Some in UNITE's flagship Local 23-25, the trimmers in Chinatown garment factories, earn as little as $1 an hour. Seven-day workweeks are common. Many earn below the federal minimum wage. Contracts go unenforced by tacit agreement. The mob still flourishes here too. The downtown racket is a variation of what goes on in midtown construction. In construction, the contractors pay the mob for using non-union workers; in garment, the contractors give up bribes for the right to pay union workers at the non-union market rate.
It's in these neo-craft, immigrant-based unions, where wages are typically 50 percent below the national median, that the highest salaries among officials in the U.S. labor movement can be found. In the UFCW, for example, where nepotism, mob control, and failed strikes have been a tradition, presidents of obscure locals can earn more than the president of the United States. There's Jack Loveall, president of Local 588 in Rosemont, California, whose salary comes from dues paid by low-wage baggers and checkers. Loveall earns $547,000 in annual compensation. His sons Jacques and Adam Loveall, both vice presidents, get $143,000 and $174,000, respectively. UFCW Local 770 president Ricky Icaza, who headed the 59,000-member coalition of grocery store workers who were
badly defeated in the 2004 southern California grocery strike, earned $274,000. His no. 2 actually earned more: $308,000. Another local president, who was part of the wrangling coalition whose members fought over TV face time, topped out at $345,000. The overpaid UFCW bosses wasted the courage and sacrifice of their members, who returned to work after a four-month strike under terms worse than those they initially rejected.
By contrast, the three-week French general strike in 1995 that led to the fall of a conservative government headed by premier Alain Juppe bent on increasing drug copayments and social security taxes was run by union officials who typically made far less than the chauffeur of the Washington, D.C., Teachers Union.
Unlike AFL-CIO leaders, whose pay is routed to them directly by the employer without ever passing through the hands of the members, the French leaders get their pay through voluntary contributions. "We have these little books," explained Jean-Pierre Page, a former Air France worker who serves as head of the International Department of the Confederation Generale du Travail (CGT). "Every month we go around to the workers in the factories or the office and ask them to buy a stamp and paste it in their book."
This stamp gathering, or philatelism, as it is sometimes self-deprecatingly called, costs workers anywhere from half a percent to 1 percent of their pay. (Low-paid southern California grocery store workers pay their leaders $61 a month after a $400 initiation fee—that is, more than four times as much in percentage terms.) It's not easy to create a fortune on French union dues. "We make the equivalent of $2,400 a month," said Page, "about what a skilled worker in the Paris region makes." Even Page's boss at the time, Louis Vainnet, the head of the CGT France's largest union, made no more. Declared Page, "We are poor, but militant."
OFFICIAL LABOR: ALLIES OR ADVERSARIES OF THE WELFARE STATE?
President Ronald Reagan raised the retirement age. President Bill Clinton abolished welfare "as we know it." Hillary Clinton's health care plan imploded. President George W. Bush seeks to privatize Social Security.
While it's too early to write obituaries for the American welfare state, it may not be premature to ask what has gone wrong. What explains America's unique status among advanced economies in the welfare world? It's not just that we're alone in failing to provide universal health coverage; it's also that the programs we do provide are generally the least generous and the least universalistic, relying the most on stigma and means testing.
Just like America's penchant for overwork, our welfare state—which finds its model in the Victorian Poor Law—is usually explained by invoking American values: the work ethic, of course, but also individual initiative, risk taking, and hostility to big government. Internationally, sociologists observe, American values are off the charts on the "individualism vs. group solidarity" scale. We're five times more likely than Japanese to think that corporations should be concerned with just making profits. (Still, revealingly, 60 percent of Americans reject this idea.)
As long as the discussion remains in the cloudland of "values," America's mean-spirited welfare state seems like a populist preference. Sturdy, independent Americans disdain big government handouts. The results change drastically, though, when pollsters'questions are sharpened. If you ask, "Do you want universal health care coverage?" by two to one, Americans reply yes. If you ask, "Do you want the government to invest Social Security funds on Wall Street?" they say no in nearly the same proportions, 61 percent to 38 percent. How about increasing the retirement age? Over two-thirds oppose it (although only a minority is aware that Reagan already raised it). An NBC/Wall Street Journal poll found that 77 percent of the American public supported universal coverage, regardless of health or employment status. Support was back to where it was before the failed effort to pass health care legislation during the Clinton administration.
Why aren't American preferences translated better into welfare legislation? The short answer is that organized labor—which in other countries provides the chief impetus—lines up on the wrong side in the United States. If both organized capital and organized labor oppose a piece of legislation that affects them, it's not going to pass.
In every country the battle over the welfare state divides into two opposing interest groups with opposite strategies. On one side are the wealthy minority, who are doubly opposed to the programs because they don't benefit from them and would have to pay a disproportionate share
of their cost. On the other are the less wealthy potential majority, who would receive a disproportionate share of the benefits without fully paying for them. Those who support a welfare state seek to create universal benefits that would give everyone—not just the needy—a stake in the program. Their strategy is to upgrade the benefits to meet, as one Swedish social democrat puts it, "even the most discriminating tastes of the new middle class."
Those opposed to the welfare state try to limit benefits to the most desperately indigent. Their strategy rests on the "less eligibility" principle, well illustrated in Oliver Twist, where conditions for the poor are kept less preferable than those experienced by the lowest-paid laborer.
But the order of battle isn't defined only by the opposing interests of rich and poor. Just as important are special interest groups. Auto manufacturers' interests may be served by having taxpayers subsidize their health care costs. (General Motors says its health care costs run $1,400 per vehicle produced; its European competitors, who shift the cost to taxpayers, pay nothing.) GM would benefit from state-provided care. If doctors' salaries are low, as they were in the Progressive Era, it may be in physicians' interest to have the government increase demand for their services. On the other hand, the life and health insurance companies are dependably on the side of the wealthy minority. They don't want to lose market share for their services to the government. By restricting government benefits to those who can't afford their product, they stay profitable.
Where do organized labor's interests lie? In Europe, they fall unambiguously on the side of the welfare state. Occasionally, welfare legislation was enacted by the European right to blunt labor's appeal. To steal the thunder of the Social Democrats, conservative German chancellor Otto von Bismarck put the country on the road to national health insurance. Proclaimed Bismarck in 1881: "The cure of social ills must be sought not exclusively in the repression of (socialist) excesses but simultaneously in the positive advance of the welfare of the working class." Legislation soon followed mandating employer-funded health, accident, and old-age insurance. Mostly, though, welfare state legislation was a direct product of union agitation, labor efforts, or popular front governments. In post-World War II Britain, the Labor government created the National Health Service, improving on the 1911 National Insurance Act, which covered only work
ers earning less than 1 pound a day, by providing free health care for all. The health minister was the leader of the Welsh miners, Aneurin Bevan, whose father, David, also a miner, had died of black lung.
Why does Canada have national health insurance and we don't? Seymour Martin Lipset, one of America's leading political sociologists, says that it's because of a difference in national values. We Americans, of course, value individual initiative and a weak state. Up north, they hold to strong Tory values, among which Lipset identifies communitarianism, group solidarity, and a strong state.
But whatever role Tory values may have played in priming the pump, the Tories themselves didn't do much to initiate or enact Canada's universal health care legislation. The credit belongs to Tommy Douglas and the Canadian labor movement. In 2004, Douglas was voted"the Greatest Canadian" in a CBC-sponsored poll, beating out several figures better known to Americans, like Wayne Gretzky, Pierre Trudeau, and Alexander Graham Bell. Douglas's achievement was to get the union-backed Cooperative Commonwealth Federation to support something he called "universal health care."
What would grow into a nationwide system of universal care was first tried out in the small town of Swift Current, in Saskatchewan, after World War II. But as a programmatic idea, universal health care began in the 1930s when the four labor parties of the western provinces merged to form the Cooperative Commonwealth Federation and pledged to support universal care. The Federation came to power in Saskatchewan in the 1940s, with Tommy Douglas as the premier. Along with a pension plan that provided medical and dental services, Douglas was able to enact a public insurance plan for hospitalization in Swift Current. People in Swift Current liked universal coverage. From there it spread to other towns in Saskatchewan, and from Saskatchewan to the other nine Canadian provinces. In 1962, the health care movement advanced another step, again radiating out from Saskatchewan, only this time providing universal coverage for doctors'services outside the hospital.
Of course the coverage stopped at the U.S. border. But in the United States there had been a similar party with a similar objective formed in Minnesota. The Minnesota Farmer-Labor Party actually served as a model for the Canadians. It was founded earlier, and its candidate for gov
ernor, Floyd Olsen, won office earlier. But the Minnesota organization never managed to achieve universal coverage, even in a small town.
In the United States, the problem hasn't been chiefly that there were no figures like Tommy Douglas, who advocated universal health care. It's that they could never persuade official labor to support the cause. Instead, official labor often found common cause with the wealthy, the financial institutions, the HMOs, and the insurance companies. The upshot is that Americans simply do without programs Europeans and Canadians take for granted—principally universal health insurance, but also programs like universal free child care. Although child care is the third-biggest expense for young American families, a national plan for child care is nowhere on the agenda of the AFL-CIO. The official approach is to secure child care benefits through collective bargaining, but only about 1.6 million union members are covered for child care benefits through their union contracts. (Even the jewel in the crown of our welfare state—Social Security—fails to shine with anything like the sparkle of continental Europe's benefits. In fact, when measured by criteria such as how much a retiree receives as a percentage of the median wage, how many years it takes to qualify, and how many retirees actually receive a pension, the United States ranks below every European country except Ireland.)
You don't get as chintzy and as mean-spirited a welfare state as ours overnight. It takes generations to fall so far behind. A huge opportunity was lost early in the twentieth century. On the eve of America's entry into World War I, it looked as if the United States would follow Germany and Great Britain in enacting a national health insurance law. It was the high tide of the Progressive Era. In 1912, the Progressive Party had come out for national health insurance, and even the American Medical Association and the National Association of Manufacturers were cautious early supporters. Largely because of opposition from the insurance companies, backed up by organized labor, health insurance never happened.
Naturally, the better-endowed insurance industry led the struggle. Metropolitan and Prudential both jumped into a fateful 1917 referendum in California with the message that the advocates of health benefits were trying to turn America into the Kaiser's Germany. Health insurance lost by more than two to one. Observed Frederick L. Hoffman, vice president of Prudential, "Unhappily, most of the kindly thought of the world is wasted
The interests of the insurance companies were obvious: they had policies to sell and markets to protect. But at the time, so did organized labor. It is said that organized labor acquired interest in the pension and health benefits industry only after the passage of Taft-Hartley in 1947. But as early as 1907, notes historian David Brian Robertson, eighty-four of the approximately 125 AFL affiliates had benefit funds. Nineteen of them, including the main craft unions in construction, such as the carpenters and the painters, offered disability benefits. The wealthy railroad brotherhoods were also deeply involved in the insurance business.
Were union leaders just protecting their markets, or did they really believe that a British-style health care system based on employer mandates would undermine the American character? It's impossible to tell for sure, but what we do know is that support for or against national health insurance broke down pretty much along the lines of institutional interest. Official labor's support for national insurance was limited to industrial unions that didn't offer pension or health benefits, such as the Mineworkers and the Amalgamated Clothing and Textile Workers. "In so far as the attitude of organized labor is concerned," observed a lawyers committee investigating the issue, "it is opposed or indifferent to any compulsory health insurance laws."
Throughout the Progressive Era, AFL boss Sam Gompers was the public face of labor's battle against health insurance. Most of his arguments came from the insurance industry, which provided him with data showing that health insurance hadn't worked in Germany or Britain. Some arguments, though, could only have come from Gompers. American workers didn't need a government-run health plan, he insisted; all they needed was a union contract. It was collective bargaining that led to the reduction of hours and the monitoring of safety conditions that were the workers'best guarantee of physical and mental health. Gompers didn't address how the 90 percent of American workers who were not in AFL unions would maintain their physical and mental health.
Worse than no coverage for Gompers was the specter of an iron heel crushing strong men, reducing them to effeminacy. If a national health
insurance program were passed, the employers' sway would no longer stop at the factory gates, predicted Gompers, but would extend that jurisdiction to the workers' homes. Gompers insisted that the health insurance schemes passed in 1911 by a Liberal-Labor parliament had "taken much of the virility out of the British unions."
Not only were the English now less virile, but they were also less healthy than Americans. "Are the health conditions better in any other country than ours?" Gompers asked at a meeting of the plutocratic National Civic Federation. "Is the length of life of the people of other countries greater than the length of life of the people of the U.S.? Statistics can demonstrate that easily." What was the world's healthiest nation? he asked rhetorically. The United States of America, he answered, where there was no health insurance at all.
But might not health insurance make Americans even healthier? Perhaps, but that wasn't the point, Gompers argued. The issue was freedom. "Shall the toilers surrender their freedom for a few crumbs?" he asked in the subtitle of an article replying to the arguments of Meyer London, the socialist congressman from New York City's Lower East Side. "Sore and saddened as I am by the illness, the killing and the maiming of so many of my fellow workers," Gompers insisted, "I would rather see that go on for years and years, minimized and mitigated by the organized labor movement, than give up one jot of the freedom of the workers to strive and struggle for their own emancipation through their own efforts." Perhaps, too, Gompers feared the effect of government legislation on the demand for unions. That's why he opposed federal restrictions on the length of the working day. "If we can get an eight-hour law for the working people," he warned in 1914,"then you will find that the working people themselves will fail to have any interest in your economic organization."
On the other hand, if you were a member of Gompers's United Cigar Makers and you wanted to stay healthy and free, Gompers had an insurance plan he would sell you. Unfortunately, like many other union plans of the period, the Cigar Makers' plans kept having financial difficulties, and frequently benefits had to be suspended. The union plans of the period suffered from a lack of regulation. No effort was made to apply real insurance principles, like funding or community rating, and union leaders freely took money out of the plans for non-insurance purposes. A lot
of money went into the union kitties, and comparatively little came out in the form of benefits. In 1916, the amount of money the entire American labor movement paid out in all forms of benefits—pension, health, and unemployment—came to about a dollar and a half per member.
But Gompers was just a spokesman for the affiliates. More closely identified with union financial institution building and the movement to defend unions against the threat of compulsory health insurance was Warren Stone, the distinguished-looking president of the Brotherhood of Locomotive Engineers. In 1917, he'd led the fight against health insurance as labor's ranking member of the National Civic Federation's Committee on Health Insurance. "Instead of trying to bail a leaky boat," Stone argued, "we would stop the leaks, that is begin at the other end and pay a living wage. The whole idea of the workingman is to avoid paternalism."
After the war, the issue of national health insurance began to fade. Warren Stone was asked to join Warren Harding's cabinet, but he declined, turning his attention to financial empire building. Stone founded a fastgrowing Cleveland-based chain of labor banks, which he touted as a remedy for labor-management conflict—especially after the collapse of the great strike wave in 1919.
With Grand Chief Engineer Stone at the throttle, organized labor had entered into its own era of Frenzied Finance. Labor-owned banks, insurance companies, and real estate and investment companies were springing up all across the country. Stone's coast-to-coast empire alone was valued at $150 million—well over $1.5 billion in today's dollars. In 1920, he issued his own $5 bills as legal tender, displaying President Benjamin Harrison's picture and, underneath, Stone's signature.
It was about the same time that Charles Ponzi began his investment enterprise in Boston. Stone's operation, though, was far more elaborate, long-lasting, and, ultimately, more damaging. His banks lent money to individuals and businesses that couldn't pay them back. The bad loans were then fobbed off on union pension and health insurance funds. The funds became insolvent too. Meanwhile, Stone lived in a luxurious parkside apartment and hired his son to serve as his second in command. By 1927, Stone's entire enterprise came crashing down. By dying in 1925, however, he escaped opprobrium. On news of his death, flags flew at half-staff throughout Cleveland, the headquarters of the Brotherhood Bank.
With Gompers's demise just the year before, Stone had departed as America's most prominent labor union leader. He's been almost completely forgotten by contemporary labor historians, but it's an unfortunate erasure, one that obscures the origins and continuity of official labor's long struggle for union financial enterprise and against government meddling in health care.
At various times in the history of organized labor, various avatars of Warren Stone have manifested themselves at key times to save American workers from losing their freedom for "a few crumbs."
In the 1970s, the danger of national health insurance being passed was the greatest since the crisis of 1917. Franklin D. Roosevelt had decided not to include health insurance as part of the 1935 Social SecurityAct. Harry Truman had been forced to back off his national health insurance plan. But in 1971, conservative Republican Richard Nixon actually proposed a national health insurance plan—at a time when the Democrats controlled Congress.
Nixon's plan was far more generous and comprehensive than any plan being discussed by either political party a generation later. It required employers to pay three-quarters of the costs of health insurance for their employees; for those not covered by employers, the government would pick up the bill. The coverage was truly comprehensive, including not only doctor and hospital bills but also lab work, nursing homes, and mental health care—the works. Nixon's bill also cut red tape: no forms to fill out—just show your "health card."
"Comprehensive health insurance is an idea whose time has come in America," Nixon announced in sending his bill to Congress. He was, of course, dead wrong. The plan was immediately attacked by the U.S. Chamber of Commerce as "revolutionary,""radical," and an "outright handout." The Chamber was joined by the AFL-CIO, which attacked the plan just as vehemently from the left. Requiring employers to offer health insurance (so-called employer mandates) was a thinly disguised measure to allow bosses to replace full-time workers with part-timers.
So instead of supporting the bill as a beginning, something to build on, organized labor opposed it from the left. The plan just wasn't good enough. Labor's two wings—AFL-CIO president George Meany for the conservative trades and President Leonard Woodcock for the more pro
gressive UAW—joined to promote an alternative scheme based on the single-payer model in which the government would pay all health bills, not myriad insurance companies. The union-backed plan was more in line with the most advanced legislation in Europe. But at the time, it had zero chance of passage. Labor urged congressional allies not to vote for the Nixon plan. This was like breaking down an open door, since few Democrats wanted to give Nixon a historic social policy victory, especially before an election. On the same grounds, liberals and labor helped defeat Nixon's guaranteed annual income plan.
For the next two decades, the threat of national health insurance receded sharply. But in the early 1 990s it surfaced again, with the Democrats in control of both houses of Congress and George H.W. Bush's reelection prospects threatened by a severe recession. The momentum for putting health insurance back on the national agenda, though, came less from organized labor than from embattled U.S. manufacturers.
Overseas carmakers were gaining market share at the expense of the Big Three—Ford, GM, and Chrysler. While health care costs for foreign automakers were socialized, for U.S. automakers they came out of Detroit's bottom line. Chrysler chief Lee Iacocca even became the head of something called the National Leadership Coalition on Health Care, which included some Fortune 500 companies supporting a Canadian-style plan. Iacocca supported a single-payer approach because it was cheaper. Administrative costs eat up over 30 percent of U.S. health costs, compared with about 17 percent in Canada's single-payer system.
For the companies selling insurance—which earn nearly a quarter of all the corporate profits in America—a single-payer plan would have been devastating. But they didn't have to face that threat alone. Just as in 1917, the insurance companies found a major ally in organized labor. In the 1 990s, the avatar of Warren Stone was Bobby Georgine, head of the AFLCIO's Building and Construction Trades Department. He also headed Ullico, which has a subsidiary, Zenith, that administers health and pension plans for many AFL-CIO affiliates, mainly in the buildings trades.
Georgine became notorious in 2003, when his role in engineering the Ullico insider trading scheme was exposed (see chapter 1). It was in the early 1990s, though, that he played his most significant public policy role. He cast what was said to be the deciding vote in the AFL-CIO on whether
About a year before Clinton won the presidency, Georgine had been on one side of a noisy and uncharacteristically heated controversy at the Executive Council in Bal Harbour. "Most years," one veteran observer wrote, "the hot topics during the AFL-CIO's annual meeting are less heated than a debate over whether the clams should be cold or steamed." This time the two sides argued over whether to continue fighting for a single-payer plan or to back a revived version of the previously despised Nixon plan.
Narrow, purely institutional interests divided the two camps. On one side were the industrial unions—just as in 1917. The UAW and the steelworkers did have health and pension benefits, but unlike their Bal Harbour peers in the construction unions, they had less control over them. And they were under constant pressure from employers to shift health costs to the public sector. Allied with the industrial unions was AFSCME. A union that represents government workers obviously had little to lose from the expansion of government-administered health plans. But there was also little to gain. When the Clinton administration announced its employer mandate plan, AFSCME dropped its support for the singlepayer plan. According to Charles Lewis of the Center for Public Integrity, President McEntee even paid for the Clintons' bus tour to sell the insurance company-backed plan to the heartland.
On the other side were the traditional enemies of universal health insurance—the building trades and the union representing HMOs and the health care industry—the Service Employees International Union. The SEIU boss at the time was John Sweeney, soon to become head of the AFLCIO. He also headed the AFL-CIO's committee on health care issues. The leader of the building trades on health care issues was Ullico's Bobby Georgine.
Construction trades officials looked to Ullico for directorship fees, for financing of local union contractors, and, as it turned out, for insider trading opportunities. Even more important, the leaders of the old-line trades had their own health care plans and their own administrative apparatus, which paid out benefits. As for Georgine himself, ending the single-payer system would have been a personal setback. Without Ullico, who would pay his million-dollar-a-year salary and keep him aloft in private jets? Georgine and his
allies approved the Clinton plan because, as Georgine explained to a House Committee, it preserved the status quo in the industry. In Bal Harbour, though, Georgine explained his positions strictly in public policy terms. "I wouldn't want to be tilting at windmills, I want to do what's doable," he claimed. When the AFL-CIO health policy committee later took a vote on whether to endorse a single-payer plan or to maintain the status quo, Georgine cast his deciding vote.
Georgine's biggest ally outside the building trades was John Sweeney, who in 1995 would become the AFL-CIO president but whose voice had grown in authority since the 1980s as SEIU added numbers in the burgeoning health care field. As chair of the AFL-CIO health plan committee, Sweeney could be expected to defend his dues base: the private health care industry. In the mid- 1990s, about a third of Sweeney's 1.2 million members worked for HMOs, for-profit hospitals, or private nursing home facilities. A single-payer plan was not in the interest of his for-profit employers. Sweeney's fingerprints, writes Professor Marie Gottschalk, "were all over the AFL-CIO's doomed health care strategy."
In America's century-long failure to produce a national health care system, organized labor looms as a major culprit. Labor leaders'actions can be explained, first, in terms of what benefits them as individuals, second, what benefits their respective organizations, third, what their employers want, and lastly, if at all, what's good for American working people as a whole. Samuel Gompers actually accused national health insurance advocates of letting concerns for the $1.50-a-day worker drag down the $5-a-day man.
In the final presidential debate in 2004, President Bush attacked Democratic candidate John Kerry's health plan as a"government" plan—although in fact it left the role of private insurers entirely intact and merely reduced the number of uninsured to 25 million. Warming to the attack, the president channeled arguments made in 1917 by Gompers and health insurance executives: Americans don't need reform because we already have the best health care in the world. "Just look at other countries that have tried to have federally controlled health care," said Bush, "they have poor quality health care. Our health care system is the envy of the world because we believe in making sure that the decisions are made by doctors and patients, not by of ficials in the nation's capital."
America's system may be the envy of insurance companies around the
world, but the World Health Organization's rankings suggests little reason for envy elsewhere. The United States ranks no. 1 in per capita health expenditure and no. 1 in the amount spent as a percentage of gross domestic product. But it does far less well in terms of life expectancy, infant mortality rate, and the universality of coverage. The upshot is that our system stands only thirty-seventh in overall performance, just barely ahead of Cuba but behind countries like Morocco, Dominica, and Costa Rica. (France and Italy, with far stronger labor organizations, rank no. 1 and no. 2 )
It would be stretching things quite a bit to say that the U.S. labor movement is the architect of the American poorhouse state. To be an architect of anything, you would have to have a plan. The AFL-CIO is too divided, too distracted by parochial interests, too bogged down in institutional corruption to come up with any credible alternative to the main drift. The 20,000 fiefdoms that constitute labor in America lack sufficient coherence to mount even a noisy national protest. In 1996, when President Clinton signed the Personal Responsibility and Welfare Reconciliation Act, he eliminated the right to welfare that was established in 1935 when FDR signed the Social Security Act. Down went food stamps and out went Medicaid for legal immigrants. It moved the country back toward the spirit of the Poor Law. In any of a dozen European countries, its passage would have set off a general strike. Sweeney sent off a telegram.
Ross Clark, writing in the weekly Spectator, reminds us how bitterly the British came to resent the legacy of their own welfare system, based on the Poor Law and "less eligibility." He recalled the humiliations George Orwell described in The Road to Wigan Pier, including unemployed miners being forced to evict elderly bedridden parents to qualify for means-tested relief. Miners president Aneurin Bevan described the regime as "a principle that eats like an acid into the bones of the poor. In the small rooms and around the meager tables of the poor, hells of personal acrimony and wounded vanity arise." More than any other factor, Clark says, means testing explains the British people's flight to democratic socialism in 1945.
The same deprivations and miseries exist today in America. For a similar turn to take place successfully here, though, labor would have to completely reinvent itself. It got off to a bad start.
Totally Mobbed Up
DAILY LIFE IN THE LABORERS UNION
When sixty-eight-year-old Gaspar Lupo died in the late spring of 1989, it marked the end of two meticulously intertwined careers: one open, the other secret. In his public calling, Lupo had served for more than two decades as the president of the NewYork Mason Tenders District Council, the umbrella organization for a dozen locals and 10,000 laborers in the five boroughs and Long Island. He'd operated at the highest circles of the New York labor movement, earning nearly $400,000 a year; the state AFL-CIO elected him a vice president, and he served on the executive board of the New York City Central Labor Council.
It was Lupo's hidden calling, though, that explained his eminence in organized labor: Gaspar Lupo was a made member of the Genovese crime family, the largest, most powerful criminal organization in the United States. As president of the Mason Tenders District Council, Lupo was elected by delegates from the locals. With one exception, the locals were all run by New York City crime families. The Gambinos ran one local and the Luccheses three, but the Genoveses controlled all the rest, so the majority mob ruled.
The Mason Tenders perform the hardest, most dangerous jobs in the building industry: removing asbestos, demolition, and doing grunt work for plasterers and masons. They make anywhere from $30 to $43 an hour plus substantial benefits. But because laborers are comparatively unskilled, they're highly vulnerable to being replaced by non-union laborers, who may earn as little as $8.50 an hour for the same work.
This is where Lupo and his goombata came in. Officially, it was their job to enforce the contract, protecting the members from employers who
would otherwise hire $8.50-an-hour workers. Unofficially, though, Lupo & Co. made sure the employers could hire all the low-wage, non-union workers they wanted, in exchange for bribes. It was a service officials claimed to be proud of. "Have we screwed the worker?" an attorney for one of the Mason Tenders locals asked rhetorically when confronted by an accusatory reporter. "Some schnook who can't read or write gets a job at $10 an hour? Hey, we made him a person."
In criminological circles, the Genovese crime family is known for the discipline and discretion it imposes on its members. All his life, Lupo lived on the down-low as an obedient Genovese soldier. He avoided publicity. His typical attire—rep tie, pastel jacket, and dark slacks—made him look more like a typical senior citizen than a wiseguy; there were no pinkie rings on his thick, stubby fingers. He followed the rules and took orders—even from much younger men. His obedience caused more thuggish mobsters to laugh at him behind his back. "Gaspar's a good, good man. He'll do anything I tell him," boasted James Messera, the Genovese capo to whom Lupo reported. "Anything, I mean anything. I don't give a fuck if I tell him to jump off the roof, he'll jump from the fucking building."
In public, of course, Lupo gave the orders. Every five years, someone on the Mason Tenders' Genovese-controlled executive board would move to nominate, second, and reelect Lupo. It was the same ritual that had been practiced in the 1920s when Lupo's father-in-law, Charles Graziano, presided over the Mason Tenders.
The locals were just miniature versions of the district council—each, it seemed, had its reigning family. In Local 66 on Long Island, there was the famous Vario family—Paulie Vario was "Paulie Cicero" in Martin Scorsese's Goodfellas (played by Paul Sorvino). In Manhattan, there was the Giardina family, who ran Local 23 for the Gambinos. There were two branches of the Pagano family, both affiliated with the Genoveses; one ran Local 59, the other Local 104. Mostly they'd been around for generations.
But within five years of Lupo's death, largely because of his successors' flamboyant lack of Genovese discipline, the extraordinary enterprise that the family had built up over three quarters of a century would be shaken to its foundations. Federal authorities charged more than twenty officials with labor racketeering. Lupo's oldest son would go to jail. The government
would take over the union, wipe out the Genovese locals, and create fewer, larger locals, which would in theory be less vulnerable to Mafia control. Dozens of made guys and associates who'd battened on the payroll were banned for life. For the city's crime families, it would take years to recoup even a portion of their former influence—and income.
Meanwhile, ongoing court proceedings exhumed family secrets about the district council and the individual locals—how mob-connected officials enriched their non-union construction companies; how they carried out their pension fund scams; and how their awards of health care contracts to obvious quacks destroyed the health funds. It added up, investigators claimed, to perhaps the biggest fund rip-off in labor history.
But the total sums—estimated at over $65 million—were soon dwarfed by scandals in several other construction unions. Plumbers officials, for example, would be charged with misappropriating four times that amount.
There was certainly nothing new in running a labor peace racket, however comprehensive. The novelty lay not so much in what was done, or even in who was doing it—mob influence prevails in most New York City construction trades—but in the matter of degree. The Mason Tenders were totally mobbed up. Union governance was simply a matter of mob protocols. All decisions of consequence were made not by union leaders in the Mason Tenders headquarters on Eighteenth Street but by a Genovese capo in the family clubhouse on Mott Street. Ultimately, though, what the revelations added up to was that the Laborers in New York City faithfully mirrored the history and operation of the parent union, the 800,000-member Laborers International Union of North America (LIUNA).
In the Laborers, a century-long tradition of corruption had transformed the casual nepotism of the labor movement into a rigid, almost pharaonic dynastic system. Mob guys didn't have to marry their sisters or undergo ritual mummification, but they maintained a similar ancestor cult for similar reasons—the promotion of loyalty, stability, and trust. And even if they've still got a long way to go to rival the 2,500-year span of the Old, Middle, and New Kingdoms, they've also managed to parlay inherited office into life-and-death control over their subjects.
LIUNA was probably the first U.S. union to come under the control of organized crime, and for more than a century, precedent and practice, custom and mores have maintained the most direct and most complete
Mafia rule over a union anywhere in America and probably anywhere in the advanced industrialized world. The Laborers thus serve as an archetype of what's wrong with the domestic labor movement, and the New York Mason Tenders are a faithful embodiment of the type whose dimensions have been made unusually clear by the marvels of electronic surveillance.
How can it really be said, though, that the Laborers are even more mob-dominated than the Teamsters or the Longshoremen or the Hotel and Restaurant Workers Union? All four AFL-CIO unions were identified in the president's 1986 Crime Commission Report as the most mobbed up in America. What's so special about the Laborers?
Fewer degrees of separation. Compare, for example, the government's 1988 RICO (Racketeer Influenced and Corrupt Organization Act) case against the Teamsters with its 1993 draft complaint against LIUNA. In the Teamsters, only a dozen out of about 2,500 locals were charged with being run by actual members of organized crime. Most were crime family associates—union officials who weren't formally inducted into the mob but who owed their positions to mob backing and who reciprocated by taking mob orders and sharing bribes, kickbacks, extortion fees, and benefit fund loot.
In the Laborers, though, it was far more common for the head of the local or a district council to be a made guy—like Gaspar Lupo, who actually went through the traditional Mafia ceremony, where you swear allegiance for life and they burn the saint's picture in your hand. In several cities the head of the local Laborers union was actually the head of the local crime family. Like the pharaoh, who wore two crowns—red and white, symbolizing two kingdoms—John Riggi, the New Jersey boss of the DeCavalcante family, was also the business manager of LIUNA Local 394 in Elizabeth. In 2003, Riggi—already in prison on extortion charges— pleaded guilty to the murder of Fred Weiss, a Staten Island contractor. The murder was a favor, Riggi testified, to John Gotti of the Gambino crime family. Gotti feared the contractor might cooperate with law enforcement. "I and the others met and we agreed Fred Weiss should be murdered," Riggi explained. "Pursuant to that agreement, Fred Weiss was murdered. That's it."
Riggi had paid the price of wearing the dual crown. Serving as the head
of a major labor organization had raised his public profile. But in taking more risks, he had reaped more rewards: the fewer people between you and the swag, the more there is to earn. Besides, why waste all those sixfigure union official salaries on people who aren't even in the family?
Francis Ford Coppola, director of The Godfather, says he modeled Vito Corleone in large part on Vito Genovese, founder of the Genovese crime family. To understand Vito Corleone and his enterprise in New York, Coppola takes us back to Corleone, Sicily. But to grasp the malignant dimensions of the present-day Genovese influence in the New York Laborers and the union as a whole requires a double flashback, first to Italy and then to Chicago.
The Laborers are the most mobbed-up union in America mostly because they've been mobbed up the longest. Not only the tradition of force but the force of tradition combine to repel countervailing influences. It wasn't until the 1 920s, the muscling-in era, that unions all across America came under the control of organized crime. But in the Laborers, the mob had almost a generation's head start. In fact, organized crime control over the Chicago locals preceded the foundation of the international union itself.
But Chicago has to be seen against the background of southern Italian immigrant tradition and Sicilian labor racketeering. The Old World racketeering system wasn't transplanted directly or all at once to America. It proceeded in stages, starting with immigrant laborers trapped in the padrone system. In the late nineteenth century, Italian immigrants from southern Italy paid exorbitant commissions to better-established Italian American immigrant labor bosses in exchange for work. The contractors paid the padrone, and the padrone, after taking a hefty cut—the pizzu— paid the worker. Essentially it was a kind of peonage, but with a typically American twist in which successful peons sometimes wound up as padrones. And the most successful padrones sometimes ended up as pioneer crime syndicate bosses.
It was a former padrone who became the patron saint of organized crime in Chicago and the founder of the Chicago Laborers union. A1 Capone gets too much credit. He simply added, by violent means, to a trade union empire that had been built from scratch in the Laborers by James "Big Jim" Colosimo. A generation before Capone, even before the 1903 creation of the Laborers as an international union, Colosimo had become the principal force in the Laborers. As a young pimp, he'd married a middle-aged madam and gone on to control a chain of South Side whorehouses. Colosimo later established Chicago's first Italian American crime syndicate—but it was his founding of the Laborers union in Chicago that made him a different kind of crook.
Colosimo created the Chicago Street Sweepers and Street Repairs Union: the "White Wings," so called because of their white uniforms. Controlling the White Wing votes gave Colosimo leverage over the Chicago South Side Democratic Party machine, which in turn favored his members—and his hookers. It was the first fiefdom in what would be Colosimo's steadily expanding trade union domain, consisting mostly of pick-and-shovel laborers' locals, employing mainly Italian American workers.
What made Colosimo such a pioneer in the organized crime field was that he was the first to take over otherwise legal institutions—labor unions—and bring them together with illegal operations in whorehouses, liquor, and gambling to create an integrated, citywide crime conglomerate. Wider territories gave Big Jim the power to hire more shooters, bribe more politicians, and out-intimidate his rivals.
Colosimo did so well he was able to turn over the day-to-day affairs of the local unions to younger subordinates. The White Wings, he awarded to his bodyguard, "Dago Mike" Carozzo. Although Dago Mike had once been indicted for murder, it scarcely slowed his ascent in the American labor movement. He wound up running over two dozen mob Laborers locals in Chicago. By the 1 920s, Carozzo was a fixture on the executive board of the AFL. He joined another Italian American Laborers official from Chicago, "Diamond Joe" Esposito, head of Sewer and Tunnel Workers Local 2. Like Carozzo, Esposito had also been indicted for murder without any damaging vocational effects. Like Colosimo, he'd also been a padrone. But Diamond Joe's reign lasted only a few years. It was cut short, allegedly
on orders from A1 Capone. Fifty-eight garlic-tipped bullets were found in Esposito's body.
In the 1920s, Chicago led the nation in elaborate and closely watched gangster funerals. The meticulously organized last rites became the simplest way to grasp the politics of union succession: just observe who buried whom. In 1921, when a young local Laborers leader, Joe Moreschi, appeared as one of the six pallbearers at the funeral of the Sicilian Mafia boss of Chicago, it was a reliable sign of future eminence. Sure enough, in 1926, Moreschi became the first mob-controlled president of the International Laborers and Hod Carriers Union.
Moreschi would last as long as any of the most tenacious pharaohs in the Old Kingdom. He held on to the ruling position until 1968—forty-two years. During most of his reign, no conventions or elections were held. When he died, at eighty-four, he was replaced by another Chicago dynasty: the Foscos—Peter Fosco (1968-1975) and, after Fosco's death, his son Angelo (1975-1993). The Foscos' continuous rule simply expressed the continuation of mob control in the Chicago Laborers locals. The old White Wings became Local 1001, representing 2,700 sanitation workers. But they're still controlled by Colosimo's descendants—the Outfit—according to a 2004 complaint by a government-sanctioned internal prosecuting attorney. And in 1999, Diamond Joe Esposito's Local 2 was put under trusteeship for alleged mob control.
At last, though, with Angelo Fosco's death in 1993, a real rupture took place—the wresting of the international union from the Chicago mob's control. Practically on his dying day, Fosco was pulled out of bed and ordered by the Chicago Outfit to jet off to a meeting of the LIUNA executive board in Miami. There he was supposed to support the transfer of power to an Outfit-backed successor. He got as far as the lobby of the Bal Harbour Sheraton. Then, as he was being wheeled in on a gurney in a tangled array of tubes and needles, attended by nurses and aides, "he croaked."
Fosco's death allowed the incumbent general secretary-treasurer, the no. 2 official, Arthur Coia Jr., to round up the votes he needed to steal the general presidency away from the Outfit. Coia could afford to risk Chicago's anger because he had the apparent backing—and presumably the protection—of the eastern crime families, principally the Genoveses, who now controlled the international executive board. They had sup-
Coia Jr. was almost immediately identified by the Justice Department, in a 212-page complaint, as a"mob puppet." Still, he managed to last seven years before the government took him down on felony tax charges. He survived until 2000 by skillfully cultivating Bill Clinton on the one hand and the Genovese-led eastern block of families on the other. Nevertheless, Coia acquired a reputation as a Mafia-busting reformer. Under an unprecedented agreement that allowed him to run the cleanup of his own administration, the Justice Department insisted on getting many scalps, so it was scalps that Coia provided. Mostly, though, they belonged to his Chicago adversaries, not his own eastern supporters.
Coia was particularly careful not to bruise the foreheads of the leadership of the Genoveses' flagship union—the New York Mason Tenders. In 1994, when the feds issued their 214-count racketeering complaint against Lupo et al., it was inevitable that some wiseguys would have to go. But for Coia Jr. to keep control of the Laborers, it was also crucial that many bad guys would have to stay.
It was a testament to his survival skills that Coia Jr. managed, for longer than anyone would have supposed, to maintain two faces. To the government, he appeared as the great scourge of union corruption. To the mob associates and dynastic families who had run the Mason Tenders for generations, he was their indulgent uncle, recommending them for top positions in the new, "reformed" Mason Tenders, and then, when the court monitor dug in his heels, sending the wiseguys off to top administrative jobs with the Laborers' Albany, New York, welfare funds. Displaying both guile and grace under pressure, Coia surmounted a deadly threat to his political base. Never before in more than three-quarters of a century of operation had the mob-controlled NewYork Mason Tenders faced federal prosecution: how had they finally got caught?
Gaspar Lupo's aggressive displays of loyalty may have concealed a streak of independence or just simple common sense. Perhaps it was just nice luck and good timing, but as long as Lupo occupied the top of fice, the Mason Tenders managed to stay out of major trouble with the criminal justice system. Under Lupo, the number of people allowed to steal from the funds was kept within reasonable bounds. The amounts stolen were never so great as to impair the funds' ability to pay out benefits, and pension thieves didn't advertise their thefts by conspicuous consumption.
Within a year of Lupo's death, capo James Messera was organizing huge rip-offs of the funds that were so blatant that even the Mason Tenders' lawyer, who participated in Lupo's routine rip-off schemes, was afraid to OK them. Eventually, $50 million to $60 million disappeared from pension, health, and annuity funds. Members with AIDS lost their health coverage. Most of the money disappeared in crooked real estate deals. The purchase of the West Eighteenth Street Mason Tenders headquarters building, according to prosecutors at the time, produced one of the biggest thefts in pension fund history.
No sooner had the Eighteenth Street deal gone down than Messera's principal scam partner, a Long Island strip club operator, went out and bought four Mercedes Benzes and a yacht. In 1990, the U.S. attorney for the Southern District indicted Messera and half a dozen members of his crew on unrelated charges. Most of the made guys did time. Messera himself got thirty-nine months. Finally, in 1994, Messera was indicted for his role in the pension fund scam.
Both of Lupo's sons, Frankie and Jimmy, the boys he'd groomed to take over the Mason Tenders after he died, were indicted too. Lupo would get his wish—his sons would follow him as president. But their terms as top union officers would turn out to be little more than brief apprenticeships for prison life.
For a couple of generations at least, criminologists have debated whether or not organized crime might perform some essential social function. Primarily because the FBI was able to bug the Genoveses' clubhouse at 262 Mott Street and because James Messera, the Genovese capo
who ran the Mason Tenders, was such a blowhard, we have a clearer idea of what mob guys really do in unions.
Diego Gambetta, an Italian sociologist whose book The Sicilian Mafia has become an academic classic, suggests that mafiosi are chiefly in the business of providing protective services. The "men of honor" help stabilize transactions in a world lacking in trust. Less academically trained observers have suggested that the mob is made up primarily of thieves, not genuine businessmen. Probably both are right as far as they go: a principal occupation for the mob is providing protective services for thieves, but stealing on their own account can't be ignored either.
Yet neither the emphasis on protective services nor the focus on thievery captures the key political dimension of mob unionism. The mob leaders of the Laborers are some of the most murderous people on the continent. But notwithstanding the muscling-in era of the 1920s and 1930s, the Mafia has been able to capture and maintain control of trade unions less through overt violence than through their mastery of the politics of job trust unionism.
Mob leaders will kill without hesitation whoever seems to constitute a threat, particularly snitches and those who might grab their territory. But ordinary union members don't constitute a threat, so there's no point in worrying about them. Would-be union opponents can't muster much of a following in an institution dominated by the politics of patronage. Members aren't involved in any decisions, so they don't have any information that would be useful to prosecutors.
John Riggi, a DeCavalcante boss who served as head of the Elizabeth, New Jersey, Laborers local, has made this point clear. He's a confessed cold-blooded murderer. But he drew the line at rough stuff against his members. It was unnecessary. When a dissident faction of African Americans began protesting discriminatory hiring practices at a Local 394 meeting, Riggi's dad, the union's former business manager, wanted to go after them. "Don't argue with these guys, Pop," Riggi told his father, according to testimony before the National Labor Relations Board. "I'll hit him in the pocket book where it hurts." The ringleader of the protest wound up working twenty-six hours in two years.
An ordinary non-mob union boss might have applied the same sanction. In fact, there's a lot of overlap: hiring hall favoritism, no-show jobs,
spreading around contractor kickbacks to subordinates—how different is the mob union leader's game from the ordinary corrupt trade union leader's? Not very. The aims and the rules aren't all that different. It's just that the mob's game is played at a much higher level. Ultimately, the union political game is not based on issues or programs or on principles of solidarity but on personal loyalties. And the mob knows how to play that game above the rim. For one thing, fear inspires loyalty. Mob guys know how to create closer, more reliable, more proactive social networks. They uphold and revere tradition; they use ritual apd kinship organization. They use family institutions to substitute for normal political institutions like open conventions or meetings. A hereditary of ficialdom requires a closed selection mechanism. The mob funeral has evolved for this purpose.
In bygone days, mob funerals were decorous extravaganzas. In 1924, at the wake for Dion O'Bannion, a top Chicago gangster, the Chicago Symphony Orchestra played Handel. Chicago Tribune reporters described how the body "lay in state" as mourners silently filed by. Then the pallbearers, led by labor racketeer Maxie Eisen, president of the Kosher Meat Peddlers Association, bore the casket to the hearse.
Nowadays mob funerals are more utilitarian and less liturgical, and more like rowdy job fairs than ceremonies of last respect. Retainers jostle each other for better positions and more lucrative contracts; loud arguments break out over rights of succession and threaten to drown out the organ music.
At the funeral of Arthur Coia Sr., in Providence, Rhode Island, in 1993, Coia Jr., the Laborers' newly selected general president, complained about two thick-necked mourners who arrived from Chicago. At full volume, they threatened trouble if Coia didn't return LIUNA to the hands of those who owned it. A generation before, it had been the Chicago mob that enforced funeral discipline. At Peter Fosco Sr.'s 1975 funeral, Terence J. O'Sullivan, the father of the reigning LIUNA president, was forced into early retirement as punishment for disrupting the proceedings with his
importunate demands for higher office. Similar threats and barely suppressed violence marked Gaspar Lupo's final hours above ground.
Frankie Lupo, Gaspar's oldest son at forty-five, stood next in the Lupo line of succession for the $391,000-a-year president's job. He complained about the buzzing crowd of favor-seeking retainers at Vernon C. Wagner's two-room funeral parlor in Hicksville, Long Island. In one room lay the body and the principal mourners. In the other, recalled Frankie Lupo, "there were all these officials having loud conversations. You go to your father's funeral and you've got some person that doesn't even have the respect to wait till the funeral's over to talk about jobs."
But Frankie Lupo himself turned out to be the biggest favor seeker at his father's funeral. Not only did he want the top job for himself, he wanted his brother Jimmy to get the no. 2 job.
At least that's how Genovese boss James Messera remembered it. "Now at the funeral the first day I was there," Messera recounted a few weeks later, "Frankie [Lupo] was there. And I told Frankie,'You got the number one position there.' He says,'Can I put my brother there?"' Frankie was asking for the two top Mason Tenders positions—president for himself and business manager for his brother. His father had held them both. Besides the salaries, whoever got the positions could serve as a pension and benefit fund trustee.
Messera claimed he wanted to divide the patronage plums more evenly. "'You know,'I says,'Frankie, I want to put Baldo [Mule], give him a shot. He'll retire in six and a half years.... Let him retire with a little dignity out of this fucking joint. Your brother ain't ready for it yet."' Frankie's brother Jimmy was eight years younger. Baldo Mule was the fifty-seven-year-old son-in-law of Joe "Lefty" Loiacono, Messera's predecessor as Genovese captain in charge of the District Council.
Mule was almost family. He was an adult. And Frankie Lupo, no roof-jumper like his father, needed supervision. Putting Mule in one of the top two Mason Tenders positions, as Messera explained to a family member, would mean a pair of ears at the top reporting back directly to the family. At the same time, Mule's ascension would mean less independence for Frankie Lupo, who was an associate, not a trusted member of the family like his father.
It was obvious that what was at stake in the arguments at the funeral
was power—above all power to award jobs and take bribes as well as to control $200 million in pension funds. But Lupo and Messera talked around the main issue, speaking in terms of legitimacy and respect.
"You know, my family always had the number one [and] number two position," Messera recalled Frankie Lupo saying, "My father held the positions until later on in years he brought me in."
"Well you ain't going to hold two positions," shot back Messera.
"Please Jimmy," said Frankie, "I won't get no respect in that joint. Fifty years, a member of this family held the one and two spots. Besides, I know my father would want it this way."
Messera disputed the old man's intention. "Gaspar," he recalled, "had no fucking use for that kid [Jimmy Lupo] ." He "treated him like a jerk-off." Lupo never brought Jimmy along when they would eat together. Still, Messera decided to be generous and grant Frankie's wish. "All right Frankie, if it means that fucking much, all right."
The real lines of authority in the Mason Tenders weren't on paper. The actual headquarters of the union at the time wasn't on Thirty-seventh and Park Avenue South. It was at 262 Mott Street in Jimmy Messera's social club. Messera didn't appreciate the comments of Nino Lanza, who had taken sides at the funeral with the Lupos and even told Messera he should restrain his generosity toward his associates. "Do me a favor," Messera said. "Tell this fucking Nino we'll make the decisions here, not him. Lou [Casciano] and Al's [Soussi] getting a raise. Give them the fucking cars I think they should get. Get a nice Oldsmobile or get a nice Buick. Whatever the fuck he's looking for. You know, one of these sporty-looking motherfuckers. I just said to Frankie,'He's getting a fucking raise and he'll get any fucking car he wants. And give that fucking message to Nino."'
The night after Lupo's funeral, the recollection of Lanza's insubordination ate away at Messera. "I didn't sleep a wink," he complained. "I was walking the fucking floor." Messera decided to give Frankie Lupo something to think about too. He ordered a subordinate to call Lupo. "Tell him his fucking brother ain't got the number two spot. Baldo got number two. And tell your brother because of that loudmouth motherfucker [Sal Lanza, Nino's brother] he ain't got number two spot."
Later Messera would explain his concerns about Gaspar Lupo's son Frankie to a member of his crew. "If I gotta worry about . . . his son fuckin'
me, then he ain't gonna last. He won't be there five minutes. I don't give a fuck if it's Lupo's son. I'll take this motherfucker down in one second and he won't be there anymore."
WHICH SIDE ARE THEY ON?
The Mason Tenders tapes show that while Messera didn't have the total control he boasted of, it was only because other factions in the Genovese crime family had to be taken into account. Evidently, the Genoveses had the power. What did they do with it?
Despite America's longtime obsession with the Mafia, it's still not at all clear what the members actually do—besides practice colorful rituals, talk dirty, and whack people—especially in unions, which have been among their most important businesses. "It's our job to run the unions," Gambino boss Big Paul Castellano once observed in an FBI-recorded lecture. Mobsters are frequently charged with "labor racketeering"—but what's the racket? Evidently, the mob doesn't work pro bono. But cui bono? There are only two sides in a market transaction. The buyer—the boss—and the seller—the worker. Where does the mob put its leverage?
On questions of this sort, scholars connected with academic labor studies programs have practiced an omerta rivaling the Mafia's own. Lawyers and prosecutors have been less reticent. But their concern is chiefly with law enforcement, not with the union as an institution in civil society. Hollywood has provided only a bit more illumination. The classic modern mob movies—Coppola's Godfather series and Scorsese's Goodfellas and Casino—ignore mob unionism. Elia Kazan's On the Waterfront, made over half a century ago, gives us a sidelong glance via longshore leader Johnny Friendly—smooth, brutal, and inhuman. Obviously he's with management; he wears an overcoat, like the ship owners, not a bomber jacket, like the members. He has thugs to beat and kill informers who threaten his rackets with the ship owners. But it's not really clear what the rackets are.
A Hollywood close-up of labor racketeering, like full-frontal male nudity, remains beyond the pale.
But the Mason Tenders case brings the mob’s presence in unions into
clearer focus. In the New York Mason Tenders, mobsters were charged with a huge number of racketeering acts—the 1994 RICO complaint itemizes over two hundred, and for each act, there might be as many as forty or fifty counts. The overwhelming majority are for bribery: taking money from contractors to avoid payment of union wages or benefits, or both, or maybe just ignoring overtime.
The bribes at the shop steward level from subcontractors for allowing non-union labor on a particular site ranged from $250 to $1,000. Local officers who controlled larger jurisdictions could nick subcontractors for a lot more: $1,000 to $4,000 for the same thing—the use of cheap nonunion labor. Higher up the hierarchy, though, the Mason Tenders "field representatives"—all "connected"—who were supposed to patrol construction sites to make sure contractors paid their contributions to the funds, actually earned more substantial sums by letting them ignore or discount the payments.
The complaint didn't include a single count for extortion. The absence of extortion charges against what may have been the most mobbed-up union in America is notable, especially given what mob-involved contractors have customarily claimed when they are indicted—that they were extorted. Going back to Thomas Dewey's 1937 prosecution of the Dutch Schultz restaurant racket, the classic employers' defense has been that they paid money to mobsters only because they were afraid. It's true that it's often hard to distinguish between a bribe and extortion. Ultimately, though, the distinction turns on whether you get a real service for your money. Are they avoiding an additional cost or acquiring a significant benefit? In the restaurant racket case, the jury thought there was a benefit. The ten defendants, union leaders and restaurant owners alike, were pronounced guilty on all counts.
Calling strikes and then demanding bribes to call them off is the classic shakedown threat. Bosses pay just to avoid the greater cost of a strike. That didn't happen in the Mason Tenders. And on the basis of available evidence, such naked extortion may be on the way out. The mob seems to be more solicitous nowadays of its contractor clients. In the case of one contractor who paid the Gambinos to have a job action called off, it turned out that Mason Tenders Local 23's Louie Giardina couldn't deliver. The contractor who paid $50,000 and got no relief felt cheated and threatened
For the Mafia, pension fund pilfering may represent the canoli of labor racketeering, but bribery is the everyday pasta. If most of what ordinary unionism is about is getting and enforcing contracts, most of what mob unionism is about is undermining contracts. Instead of making sure that the contractors live up to the contract, mobsters make sure that the contractors are all paid up for the right not to have to live up to them.
One dialogue that took place in 1989 in Little Italy is a virtual one-act play illustrating how the natural impulses of the legitimate trade unionis to uphold the contract are thwarted by mob control. The two character are real: A1 is Al Soussi, one of the Genoveses'"field reps" at the Mason Tenders District Council. The job of the field rep is to enforce the contract—to make sure that the wages and benefits called for in the contract are being paid to the members. Carl is an ordinary laborer in the Masor Tenders. He wants to help the union by calling in the name of a non-union company. Al is furious because the non-union company belongs to him.
Carl: I give him the name of the company. He goes,'No, it's not union, but we're gonna get it unionized in a couple of days' . . .
Al: What was the name of the company?
Carl: D-E-P, something like that.
Al: D-E-P's my company, you cocksucker, what're you crazy?
Al: Yeah, that's my company. Yeah, yeah, yeah, D-E-P, yeah, yeah, I got the shake on 'em. What're you interferin'it?
Carl: No, I called—
Al: (Yelling) Yeah, yeah, you called the delegate on me! Now what?
Carl: It's on Seventy-sixth . . .
A1: Yeah, now what? Now what d'ya do, now that you ratted on me?
Carl: How do I know?
Whatever the Mafia's origins as "primitive rebels," today's mobsters in the labor movement are no populists. Clearly, a big reason why mafiosi tend to side with the bosses instead of the members is that they are the
bosses. A mob-dominated union is no more than a particularly virulent form of employer-dominated union.
As the union's trustees, the Genoveses could be trusted to skim the benefit funds and steal the pension money. Welfare annuity and benefit fund money turns over much more quickly than the money in pension funds. With benefit funds, the main focus is on kickbacks. Benefit fund vendors pay for the right to overcharge for real or bogus services. The truly grand larceny goes on in the pension funds, which are required to have large reserves. In the New York Mason Tenders, the pension fund's total stood at over $250 million worth of assets. Gaspar Lupo once confided to an undercover informant that he had about $150 million he could move into phony real estate deals.
Given those sums, it was understandable that along with the succession question, the most avid discussions in the bereavement room at the Hicksville funeral parlor involved plans for stealing from the pension fund. Messera tells Frankie Lupo about some real estate properties that he was getting ready to sell to the union. In a deposition, Lupo recalled, "He [Messera] asked me if I could . . . go ahead with the purchases. I told him I'd give it to the lawyers. If everything was okay, there'd be no problem."
Under Messera's direction, the share of funds invested in real estate would more than quadruple to 25 percent of all fund assets. Since nearly all the value was bogus, the pension fund was impaired. The members never really found out what happened to the money. The subsequent leadership of the Mason Tenders—including the business manager and secretary-treasurer who later would resign after being charged in 2004 with misappropriating union funds—told the members that the problem in the fund had been caused by bad investment advice on the purchase of derivative contracts and that the money had been recovered—both totally false.
Stealing from pension funds is a quiet, undramatic crime that is hard to discover and attracts relatively little notice. In 1978, when the Luccheses
robbed German airline Lufthansa of $6 million, the theft provided tabloid headlines for weeks. At the time, the heist was the largest successful cash robbery in American history. It would serve as the dramatic armature of Scorsese's Goodfellas. But in the 1990s, when the Genoveses were discovered taking out ten times that sum from the Mason Tenders pension fund in real estate swindles, the story created barely a ripple.
It's easy to see why Hollywood chose to portray the robbers rather than the real estate operators. The amount of long-term planning, the split-second timing, and the genuine risk involved in the Lufthansa heist far outstripped what was required to steal the Mason Tenders' money. In the Lufthansa robbery, there was a guard who had to be struck senseless; half a dozen employees who had to be taken unawares and handcuffed; a supervisor who had to be plied with a hooker while his keys were stolen; alarm systems to deactivate; and two technologically challenging vaults to unlock with the duplicated key.
In the case of the Mason Tenders, the custodians of the fund didn't need to be overpowered or deceived by the thieves. They were the thieves.
No one tried to stop Messera from stealing the money—not the lawyers; not the accountants; not the trustees—either from management or the union side; not Nino Lanza, the trust fund administrator; nor his assistant Carlo Melacci. (Although later Melacci, who would eventually provide a deposition for the prosecution, would find bullets whizzing through the windows of his house.)
Messera knew how easy it would be. At the funeral he predicted that on the sale of Brooklyn real estate to the Mason Tenders'pension fund, he would make"close to a million or more, cash."
Gaspar Lupo's death on June 13, 1989, interrupted the scheme. But at the June 19 funeral service, Messera gave Frankie Lupo the instructions needed to keep the plan in operation. Lupo was directed to go to the Wall Street law offtce of the Mason Tenders'trust fund lawyer, Bill Davis. There he was to meet Genovese associate Ron Micelli. It was from Micelli that the pension fund was expected to buy the overvalued Brooklyn properties.
The point, of course, was to make it seem as if the properties weren't overvalued. For this, it was necessary to reach out to "connected" real estate appraisers. Alfio Di Franco, an Ozone Park realtor and a Genovese associate, explained how the abandoned, decrepit buildings in central
Brooklyn near the Holy Cross Cemetery would soon be worth even more millions than he was estimating: "Real estate in this general area is now coming into its own," he explained in his report to the pension fund trustees, "with values excalaterating [sic] due to the unique structure of the subject."
Satisfied by this analysis, the trustees asked no questions and bought the Brooklyn properties for over $3 million. The plan was to rehabilitate the buildings. But only four months after the purchase, one of the Brooklyn tenements, which was being used as a crack house, collapsed before its anticipated "excalateration" in value.
Four years later, when interviewed by assistant U.S. attorney Alan Taffet, Frankie Lupo seemed at a loss to recall exactly how much he took in bribes from the contractors who were carrying out the rehab job on the Brooklyn properties. "I think it was around—between $100,000 and $130,000, I'm pretty sure." of course, the passage of four years can erode memory, but an ordinary person would probably remember whether he'd gotten $130,000 or $30,000 less than that. For the median New Yorker, $30,000 is close to a year's income. But for Lupo, who was earning ten times that in salary, perhaps it's understandable how it might all begin to blur—there were so many kickbacks, so many bribes.
Generally, the Mason Tenders real estate swindles were carried out in two phases. First, the trustees would buy a property at inflated value from mob-connected sellers. Then they would renovate the property in order to get kickbacks from the contractors doing the work.
In the Miami real estate scam, where the trustees pretended to be building a home for retired laborers, the real money was made not in phase one but in the bribes collected from the contractors carrying out the renovations. The year before Gaspar Lupo died, the welfare fund had already purchased property for $1.45 million at 6060 Indian Creek Road from Marie Buscemi. "Marie Buscemi" was an alias of Messera's mom.
After some sham negotiations designed to make the eventual purchase price of the Indian Creek Road property seem more legitimate—allegedly attorney Bill Davis's idea—the trustees paid a little over twice the true value. 'We knew that the price was inflated high, my father and myself, and we went along with it," admitted Frankie Lupo in his deposition. "Bill Davis knows too, because he's the one who suggested we make it look like
we lowered the price, to make it look a little better. In turn, . . . he wanted to be on retainer so he can get his monthly fee, because [he] was the only one [who] had a Florida license, and . . . he subsequently did go on that retainer for years to come."
One reason Davis stayed on retainer for so long was that it turned out Messera's mom didn't actually own the Miami property that the union had bought from her. She lacked a clear title. And Davis forgot to check. "That was another ongoing problem for years," recalled Lupo, "trying to clear up the title." But by spending a few hundred thousand more of the members'money, the fund finally owned the dilapidated hotel on Indian Creek Road.
Now it was time to wreck it and begin the renovation phase of the swindle. The members were told at first that the fund had purchased a hotel in Florida so it could be turned into a retirement home for laborers. Employer trustee Joe Fater began to engage contractors to demolish the structure and a general contractor to build the new Laborers'retirement home. In the renovation phase, the fund spent a total of $18 million. The building was transformed successively from a hotel to a retirement home to a commercial hotel to a hospice, but throughout all these transformations, the appraised value of the property never exceeded $4 million.
In all these transactions, Frankie Lupo and Joe Fater were a model of labor-management cooperation. Sometimes Fater picked up bribes for Lupo. Sometimes Lupo for Fater. "Basically, I would pick up the money and go to Joe's office on Park Avenue," Lupo told the assistant U.S. attorney. "When he collected the money, I'd go up to [his] office and he would give me the money and I would give him what I wanted to give him out of that check."
Frankie Lupo recalls Messera directing him at the funeral to "get together ~with Ron." Ron Micelli was a forty-two-year-old owner of a Long Island topless nightclub, the Mirage Bar, where the "Girls of Goldfinger" danced. Together Messera and Micelli cooked up a deal on the remodeling of the
union's Chelsea headquarters that would make the Brooklyn and Miami scams seem like sound investments.
Union leaders commonly get kickbacks from contractors when they build or remodel their headquarters. The contractors pay the kickbacks because it means they're free to overcharge the union for their work. But the Genovese team managed to wring about $28 million worth of graft out of the project.
Their treasure was an eighty-four-year-old twelve-story vacant loft at 32 West Eighteenth Street. Although the property was not that far from what is now the red-hot Flatiron District, in 1990 the Manhattan real estate market was headed downward, and 32 West Eighteenth Street hadn't had a tenant in four years. Still, Micelli told his lawyer to contact Davis, the Mason Tenders fund lawyer, to prepare documents for the deal. Davis rounded up the usual phony appraisals from the mob-connected real estate guys, who established the building's value at $15.85 million. Twelve months later, a non-connected appraiser found the property to be worth about $8 million. Indeed, the building's owner had just bought it for $7.5 million.
The initial idea was a classic "flip": a purchase at the market price and then a sale for an excessive amount to a party that knowingly allows itself to be bilked—in this case the union. And what a flip it was! Double the purchase price of $8 million. But Messera got greedy.
Instead of having Micelli, who'd been the "developer" of the Brooklyn properties, simply buy the properties and turn around and sell them to the union for double what he paid, Messera insisted that there should be a double flip—or back flip. First Micelli would buy the Chelsea property for $16 million, with the union lending him the money so he could make the purchase. Then, ten months later, Micelli would turn around and sell the building back to the union for $24 million.
According to Frankie Lupo, the size of the fraud scared off Davis. He refused to go ahead, putting Lupo in a tight spot. Lupo wasn't about to tell Messera that the deal had gone bust. "I mean there was . . . no way after I committed myself to these people, Jimmy and Ron," said Lupo, "that I was going to turn around at that point and back out of the deal then."
Frankie Lupo chose to get mad at Davis rather than at Messera, the mob capo who got him into the deal in the first place. "At this point, after telling
me everything was fine, now you're telling me we can't do it," he complained to Davis. "I'm not going to tell Jimmy at this point in time that we're not going to go ahead with this."
Understandably, Lupo didn't want to be responsible for taking millions out of the mobster's pocket. Labor-management cooperation to the rescue. Management trustee Joe Fater brought into the deal his own lawyer, who agreed to take over from Davis and prepare the necessary documents. "All I basically did was sign the checks at the very end," explained Frank Lupo. "He [Fater's lawyer] put this whole thing together."
Now that the fund owned the property, phase two of the rip-off—renovations—could begin. Messera's partner, Micelli, chose the renovating contractors. Complained Lupo, "They had no concept of construction ' cause the building was as bad as when we started. Everything was wrong, the codes, everything."
Still, the incompetent contractors did reward Lupo with $150,000 in kickbacks. Along with his $300,000-plus salary, the extra income enabled to Lupo drive a Mercedes and a Lincoln. The members earned an average of $30,000-$35,000, although about 25 percent of them were unemployed at the time.
Altogether, with the renovations and the flips, the trustees had poured $32 million into the Eighteenth Street headquarters. By the mid-1990s, the twelve-story building was appraised at $4 million and had produced no income. In 1998, the trustees sold it for $8 million. The combination of the Miami, Brooklyn, and Eighteenth Street frauds broke the pension fund and as well as the welfare funds, which had also been mobilized by the trustees for the real estate investment program.
TOWARD A NEW MOB KINGDOM?
"As we know, the LCN [La Cosa Nostra] has mutated and has been restructured. The children of the made are well educated. They know that to pull a Gotti is to find a cold jail."
Ancient Egypt's New Kingdom emerged in defiant reaction to the invasion and occupation of the territory. By driving out the invaders, Egypt's rulers were able to unify Upper and Lower Egypt, the two feuding realms, enabling their successors to hang on to power for a few hundred more years. In the Laborers, for the Upper and Lower Kingdoms, substitute the Midwest and the East and their capitals, Chicago and New York.
In 1994, when the feds began to prosecute the NewYork Mason Tenders, the Justice Department seemed poised to take over the entire union, now run by the younger Coia. The action threatened to disrupt the continuity of a freshly established eastern dynasty, which had just emerged after a struggle with the midwestern bosses.
In November, the Justice Department released the 212-page draft complaint detailing the pattern of mob activity in the Laborers going back to the 1920s. It seemed as if the Clinton administration was heading down the same track as the Bush administration, which in l988 filed its RICO case against the Teamsters and then ousted the leaders and put the union under the control of an independent court-approved board.
But Coia was able to avoid the Teamsters treatment. He didn't have to resign, like the Teamsters leaders. He didn't have to put up with an independent board that could purge him or his people at will. Instead, in February 1995, a deal finally emerged after months of negotiations in which Coia was represented by his defense attorney, Harvard-trained Robert D. Luskin. Under the terms, Luskin would serve as Coia's in-house prosecutor. The in-house clean-up presumed that Coia—a man whom Justice had designated just a few months earlier as a "mob puppet"—would cut his
own strings and resolutely battle his puppeteers. How was such a one-sided pact possible?
The simple answer, provided by Republican congressmen who held hearings just before the 1996 election, was that Coia had kissed up to Bill and Hillary Clinton. He sent them thoughtful gifts and provided millions in cash for Democratic campaign funds. LIUNA's political action committee, the Laborers Political League, paid out $2.3 million during the 1995- 1996 election cycle, with the bulk of the money going to Clinton allies. Coia hosted a Democratic.National Committee dinner that raised $3.5 million. DNC chief Terry McAuliffe wrote a memo in January 1995, a month before the deal with Justice, that identified Coia as "one of our top ten supporters." The cash drew Coia and the Clintons closer. Bill and Arthur exchanged gifts of golf clubs. Coia gave Clinton a club with the presidential seal on it. In appreciation, Clinton wrote, "Dear Arthur, I just heard you've become a grandfather.... Thanks for the gorgeous driver— it's a work of art." Clinton then gave Coia a Calloway "Divine Nine" club. In all, according to Republican Party accounting, Coia had over 120 personal contacts with the Clintons, including private breakfasts with the first lady. About the time the draft agreement was being finalized, Hillary Clinton addressed a Florida LIUNA convention despite Justice Department warnings that "we plan to portray him as a mob puppet."
None of this damning material was false. But, to hear Robert Luskin argue the case, it seemed almost irrelevant. The LIUNA-Justice agreement was neither one sided nor unproductive, he insisted. Look at all the bad guys he'd ousted—over 200. The Justice Department got their scalps without having to go to court, saving the taxpayers millions. Coia got to keep his job and even escaped direct supervision. "But Coia knew that if he didn't let me do my work," Luskin explained in an interview in his Washington, D.C., law office at Patton & Boggs, "Justice would bring down the hammer and take over the union just as they had done in the Teamster case. Besides, the Justice Department eventually did remove Coia on the basis of charges Luskin had originally filed.
None of Luskin's exculpatory material was false either. But in substance, it was quite misleading. How great a blow against the eastern dynasty was Coia's ouster? In 2000, the LIUNA president had been charged with failing to pay sales tax on several heavily discounted Ferraris he'd
bought from a mob-linked auto dealer who had an exclusive contract with the union. Coia paid a fine and became LIUNA's emeritus president, at just about his former salary. His top assistant, Terence O'Sullivan Jr., took over as general president.
Had Coia been removed in more than name? That was the question raised by Ron Fino, a former Buffalo mob associate. Fino's opinion carries special weight. He was the son of a mob assassin, but he rejected the role assigned him by birth and became a voluntary undercover operative for the FBI. Beginning in 1969, Fino was a model asset, gaining the confidence of LIUNA's top bosses. He was also a model labor leader. As business manager of Buffalo LIUNA's Local 210, Fino was even voted AFL-CIO's "man of the year." Perhaps most important, he'd worked as an investigator for LIUNA's independent hearing officer after the 1995 agreement. But Fino said he became disillusioned when he was told that his investigations of Coia and his allies were off limits. In a bitter 2004 letter to the U.S. attorney in Chicago, Fino reminded him of his prediction that Terence O'Sullivan Jr. would eventually get either the no. 1 or no. 2 position.
The prediction was easy to make, because mob-dominated organizations are reliably nepotistic. O'Sullivan would move up because his father, the former LIUNA secretary-treasurer, had been so close to the Coias— they'd all been indicted together in the 1980 Hauser welfare fund scam case. O'Sullivan Sr. had been booted out of the union, not for being indicted but for violating mob etiquette. "I was at the funeral of Peter Fosco Sr. and present at the discussion to remove O'Sullivan Sr.," Fino recalled. Just like Frankie Lupo at Gaspar Lupo's funeral, O'Sullivan Sr. had pushed the succession issue too hard. He'd insisted on replacing Fosco, antagonizing the Chicago bosses, who weren't about to give up the no. 1 position to a candidate linked to the eastern families.
Fino was also deeply skeptical about Luskin's nine-year prosecutorial efforts. "The bare truth is: this whole consent decree program has been a sham," he wrote, "a vehicle to remove Coia opponents and replace them with Coia loyalists, a vehicle where certain Genovese family controlled officials have been allowed to escape prosecution and allowed to strengthen their position."
Fino's prime example of a sham cleanup was the Mason Tenders District Council in New York. He knew the players intimately: it was his body
Arthur Coia himself had portrayed the overnight reform of the Mafia's most deeply rooted enclave in New York as a triumph of his Clean Team. "The Mason Tenders have made tremendous strides in transforming a once corrupt organization into a democratic organization," Coia announced on the occasion of the first elections. A full-time public relations official on staff made sure the public was aware of the transformation.
It wasn't a hard sell. The media loves to tell transformational stories. How often have we heard the saga of the failed oilman, a middle-aged alcoholic who finds Jesus and in ten years becomes a national political figure? With the Mason Tenders, the total makeover took months rather than years. Both the New York Times and the Daily News ran feature stories about the union's rebirth. The Mason Tenders' principal unit, Local 79, became famous for a fifteen-foot inflatable rat, which officials placed in front of organizing targets. The president of the New York City Central Labor Council was quoted: "I use Local 79 as a model of the new labor movement everywhere I go."
Louise Furio, for one, was highly skeptical. She'd been fired from her clerical supervisor's job in the Mason Tenders benefits division—let go by Frankie Lupo—in retaliation for helping the FBI in its investigation, she said. "If the union was really clean, they'd have called me back to work," she said. According to Furio, the new administration was less a Clean Team than a Second Team made up of mob relatives and associates.
After working nine years in the headquarters, Furio knew who was who in the Mason Tenders' ruling families. She demonstrated how little had changed in a leaflet she passed out under the noses of the Clean Team bosses as they filed past her to attend a general meeting.
Richard Ello, the central figure in the cleanup and now the Mason Tenders'new funds trustee, she pointed out, was Gaspar Lupo's nephew. And when James Lupo, Gaspar's son, suddenly disappeared—just before his arrest—Ello moved into his house.
The fund's management trustee, Furio's leaflet noted, hadn't even been replaced. And the fund's clerical office was still being used to provide top officials with no-show jobs for their wives.]60]
Daniel Kearney, the new Mason Tenders secretary-treasurer, rushed up
to Furio, grabbed her leaflets, and tore them up, shouting, "It's all garbage!"
Actually, it wasn't. In 2004, Kearney and the entire top NewYork Laborers leadership—including the president of the Mason Tenders District Council—would be forced to resign under the weight of hundreds of embezzlement charges. Since then, the union has again been placed under trusteeship.
The huge inflatable rat turned out to be an authentic icon for the Laborers reform movement. Had Arthur Coia been sincere about ridding the New York Mason Tenders of the Genoveses, he would never have had his personal representative recommend Mike Pagano Jr. to head Local 79, the new flagship local. From the Genovese standpoint, of course, Pagano would have been the logical choice. Their top guy, Messera—whom Pagano had appointed to be his field representative—was then in jail. As former head of Local 104, the Genoveses' old flagship local in the Mason Tenders, Pagano was the highest-ranking Genovese associate from the Mason Tenders still on the street. But how did the choice of Pagano aid the reform cause? He'd been charged in the original complaint with three racketeering counts. And his family had been running the local for four generations. Mike Jr. had taken over from his uncle Anthony Pagano Jr., and Anthony had been preceded by his uncle Sam Pagano. Sam in turn had been preceded by Anthony's father, AnthonySr., who had founded the local in the 1920s.
Unaccountably, though, the FBI agent in charge of vetting the Clean Team approved Pagano. Only the intervention of the court-appointed investigations officer, Mike Chertoff, now the Bush administration's Homeland Security chief, kept Pagano from the no. 1 position in New York City. Eventually, Pagano was banned for life from the Mason Tenders in New York City, but not from the Laborers in Albany, where he served, until his 2004 retirement, as the assistant director of the NewYork State Laborers' Tri-Funds, based in Albany. Once established in the state capital, Pagano might have encountered Harold Ickes, who after his ouster from the White House began representing the New York State Laborers political action committee in Albany. His law firm also served as the Laborers' lobbyist.
Instead of Pagano for the head of Local 79, the union chose his subor-
dinate out of Local 104, Joe Speziale. The family principle was upheld again when Joe's brother Sal got to run the other big New York Mason Tenders Local. Since the 2004 embezzlement scandal, both Speziale brothers have dropped out of sight.
But the Clean Team wasn't just a pack of ordinary thieves, gnawing away at the treasury. There was more going on. In the fall of 2004, federal indictments implicated Local 79 in a multimillion-dollar mob scam of the Metropolitan Transportation Authority. Eddie Garofalo, the brother-in-law of Sammy"the Bull" Gravano, got contracts for demolition and asbestos removal at the MTA's headquarters at 2 Broadway. He used non-union labor but charged the MTA for union labor. To keep the giant rat from showing up on the site, Garofalo paid $1,000 a week to an official of Local 79. The renovation was supposed to cost $150 million. But with the help of two crime families and three mobbed-up construction unions—including the Mason Tenders—it cost $375 million. Shades of the Eighteenth Street Mason Tenders headquarters remodeling job.
The 2004 federal indictments also throw a sad and eerie light on the great MTA demonstration that shook midtown New York in the summer of 1998. As many as 40,000 construction workers surrounded an MTA construction site on Fifty-fourth and Ninth Avenue. They were protesting Roy Kay Co., which had gotten a $35 million non-union contract. "No scabs! No scabs!" they shouted. "Whose streets? Our streets! Whose city? Our city!" Leading the demonstrators was Joe Speziale of Local 79. "Do what ya gotta do"—he told the men. As the work-hardened trade unionists rushed the site, the handful of cops protecting it went flying; terrified young officers panicked and wound up macing themselves.
For the first time in more than a generation, New York City had a sense of the raw, concentrated, muscular power of the labor movement. Roy Kay tried to continue the work. But the daily demonstrations, featuring Local 79 and the rat, proved too disruptive. The company couldn't take the daily doses of harassment, the threats, and the constant anxiety. Finally, Kay signed an exclusive agreement.
It was a famous victory. But in retrospect, you have to wonder why the rat never found its way to MTA's downtown headquarters. What was the difference between Roy Kay Co. and Eddie Garofalo, the crime family
boss? Both had MTA contracts. Both used non-union labor. Kay at least paid the prevailing wage. Garofalo was alleged to have paid as little as $8.50 an hour. One got the rat treatment, the other the silent treatment. How come? Five generations of Laborers history, stretching back to Big Jim Colosimo, should be enough to explain why.
1. http://www.randomhouse.com/wotd/index.pperl?date= 19991220
2. Unions were viewed negatively by 61 percent of union households and 69 percent of working adults. Unions were viewed even more negatively than corporations. Pollsters didn't include a question about corruption. Harris Poll 68, August 31,2005, http://www.harrisinteractive.com/harris_poll/. See also Zogby International, "Nationwide Attitudes Toward Unions," February 26, 2005, Table 6, http://psrf.org/info/Nationwide Attitudes_Towards_Unions_2004. pdf. "Corruption" was the reason most often given by union members to explain why they opposed unions.
3. Office of the Independent Hearing Officer, LIUNA In re: Trusteeship Proceedings No. 97-30T, Hearings, Midland Hotel, 172 West Adams Street, Chicago Illinois, July 18, 1997, see esp. 654-659. See also Order and Memorandum, 51-54. Neither man was ever charged. Palermo, however, got thirty-two years on a gambling charge and died in jail. Guzzino received a thirty-nine-year sentence for racketeering and is still in prison. See "Local Mob Boss Dies in Prison," Northwest Indiana Times, April 19, 2005.
4. Although "Tough Tony" spelled it "Anastasio" and Albert called himself "Anastasia."
5. U.S. v. Anthony M. Scotto and Anthony Anastasio, Nos. 1121,1132, Dockets 80-1041, 80-1044. U.S. Court of Appeals, Second Circuit, May 20, 1980, argued; September 2,1980, decided. Cuomo denied any knowledge of the contribution.
6. In 2005, Louis Valentino was identified as a Gambino crime family associate and named an unindicted co-conspirator in the government's RICO case against the ILA. See U.S. District Court, Eastern District of NewYork, U.S. v. International Longshoremen's Association, Complaint, Civil Action CV-05,23.
7. John Kenneth Galbraith, American Capitalism: The Concept of Countervailing Power (Boston: Houghton Mifflin,1956).
8. U.S. District Court, Eastern District of New York, U.S. v. International Longshoremen's Association, Complaint, Civil Action CV-05.
1. John Sweeney, America Needs a Raise (Boston: Houghton Mifflin,1996),121.
2. Among them were Mike Bane, for example, an alleged crime family associate whose father "took a bullet" for Hoffa's father, and Larry Brennan, Jim Hoffa's former employer, whose father Bert was Jimmy Hoffa's closest partner.
3. Stephen Franklin and Todd Lighty, "City Teamsters Linked to Chain of Corruption; Quashed Probe Uncovers Charges," Chicago Tribune, October 17, 2004.
4. Pavlak wasn't killed, but he got fired from his union job. "I still believe in unions," he told the Chicago Tribune, "but I don't believe in a corrupt union." Stephen Franklin, "Mob-Control Allegations Rise Among Teamsters: Union's Internal Probe Collapses," Chicago Tribune, November 7, 2004.
6. U.S.v.Anthony Accardo,U.S.S.D.Fla.No.81-230-CR-ALH 18 USC.51962(d).
7. Utica Observer-Dispatch, February 10, 1998.
8. Relationship confirmed by telephone interview, May 3, 2004. Rando's secretary spoke with him. He gave her the message that he couldn't come to the phone, but that yes, Frank was his brother.
9. Quoted in Jonathan Kwitny, Vicious Circles (New York: W. W. Norton,1979), 275.
10. Ronald Sullivan, "Prosecutors' Aides in Passaic Called in a Union Inquiry," New York Times, September 8, 1971.
11. "Five Indicted in Embezzlement of Union Funds in Newark," New York Times, March 3, 1972.
12. Joseph P. Rizzo was charged in 2000 with having taken bribes amounting to $200,000-$350,000 from employers in return for favorable treatment on wages and benefits. He pleaded guilty to conspiracy. Associated Press, October 22, 2001.
13. Thomas Ginsberg, "Union Compensation Shows a Wide Gap," Philadelphia Inquirer, November 21, 2004.
14. Telephone interview, Gloria Niccollai, March 16,2005.
15. U.S. Attorney, Southern District of New York, press release, "U.S. Charges Acting Boss, Acting Underboss, and Top Leaders of Gambino Crime Family with Racketeering and Other Crimes," March 9, 2005, http://www.usdoj.gov/usao/nys/Press%20Releases/MarchO5/Squitieri%20Indictment%20PR.pdf.
16. Telephone interview, March 16,2005.
17. Telephone interview, March 16,2005.
18. Jo-Ann Mort (ed.), Not Your Father's Union Movement (New York: Verso, 1998),44,52.
19. CNN/USA Today/Gallup Poll, November 14-16,2003.
20. See Michael Pierce, "The Populist President of the American Federation of Labor: The Career of John McBride,1880-1895," Labor History 41,1 (2000): 5-24.
NOTES TO PAGES 11-20
21. John Hutchinson, The Imperfect Union: A History of Corruption in American Trade Unions (NewYork: E. P. Dutton,1970),124-126.
22. George Meany, Tom Donahue, and John Sweeney.
23. Bambrick went to jail for giving Scalise $ 10,000 in union funds. See Hutchinson, The Imperfect Union, 406-407.
24. Malcolm Johnson, Crime on the Union Front (NewYork: McGraw-Hill,1950), 522.
25. Steven Greenhouse, "Chief of Building Workers' Union Leaves with $ 1.5 Million," New York Times, February 2, 1999.
26. Jonathan Mahler, "The Boss: Gus Bevona's Labor Pains," New York Magazine, February 9, 1998.
27. Robert Fitch, "Sweeney's Labor," Nation, November 25,1996.
28. "Union Officer Is Seized," New York Times, July 21, 1941. Abrams lasted only three years before he was indicted for extorting $100,000 from Bronx landlords. He was followed by Tommy Lewis (assassinated) and Henry Chartier (convicted of extortion). See Charles Grutzner, "Union Plans Clean-Up of Racket Local," New York Times, September 11, 1966,78.
29. Burton Hall, "Labor Insurgency and the Legal Trap," in Autocracy and Insurgency in Organized Labor, edited by Burton Hall (New Brunswick, NJ: Transaction Books, 1972), 259-260.
30. Information from Donatella Della Porta, chair of the Department of Sociology, European University Institute, 2004, e-mail response to questions.
31. Herbert Asbury, Gem of the Prairie (New York: Alfred A. Knopf,1930),313.
32. Henry S. Faber and Bruce Western, "Round Up the Usual Suspects: The Decline of Unions in the Private Sector,1973-1998," Princeton University, Industrial Relations Section, Working Paper No. 437, 36. The authors assume current rates of employment growth (0.05) and new organizing (0.001).
33. AFL-CIO, "The Silent War: The Assault on Workers' Freedom to Choose and Bargain Collectively in the United States," Issue Brief, June 2002,2. In 2004, the civilian labor force numbered over 145 million (U.S. Census Bureau, Statistical Abstract of the United States).
34. David Brody, "Labor and the Great Depression," Labor History 13 (Spring 1972): 237.
35. Richard Bensinger,"When We Try More,We Win More," in Jo-Ann Mort (ed.), Not Your Father's Union Movement, 27-43.
36. See Internal Review Board, "Proposed Charges Against International Representative Dane Passo and International Representative and Joint Council 25 President William T. Hogan, Jr.," May 23, 2001; Stephen Franklin, "Union Panel Votes Out 2 Teamsters for Life," Chicago Tribune, May 31, 2002,1.
37. Judge Atlas's opinion quoted in Debbie McGoldrick, "Anti-Irish Bias Acquits Carpenter Union Leader," Irish Voice, May 11, 2005.
38. Bureau of Labor Statistics, "Major Work Stoppages (Annual)," Table 1, "Work
NOTES TO PAGES 20-23
Stoppages Involving 1,000 or More Workers,1947-2004," http://www.bls.gov/ news.release/wkstp.toc.htm.
39. Jim Fuquay, "UPS Strike a Major Win for Labor, Reich Says," Fort Worth Star Telegram, August 20, 1997; Steven Greenhouse, "Gains Put Unions at Turning Point, Many Experts Say," New York Times, September 1, 1997; quotes from Leo Troy, "The UPS Strike: Labor Tilts at Windmills," Heritage Foundation, Backgrounder No.1165, March 20, 1998.
40. Bureau of Labor Statistics, "Major Work Stoppages (Annual)," Table 1.
41. See Robert Fitch, "Dead Men Leading: Why Our City Labor Leaders Need French Lessons," Village Voice, April 16, 1996. A milder, more recent version of the 1995 strike took place in France when efforts by another conservative government to change pension laws drew nationwide protests by teachers, hospital workers, scientists, and firefighters that preceded the transfer of power in French regional elections. See Craig S. Smith, "French Veer Left in Regional Vote," New York Times, March 29, 2004. Some may ask, "But don't job actions by European workers jeopardize their competitive status?" Perhaps. But at least they have organizations that endow them with the power to choose whether or not to take that risk.
42. "Sciopero generale, piu di 50 manifestazioni," Corriere della sera, March 26, 2004.
43. "Journee de mobilisation nationale pour les salaries et l'emploi," Le Monde, March 10, 2005.
44. Jacob Antoine, "Le secteur prive au Danemark est touche par une greve massive," Le Monde, April 29, 1998; Dietmar Henning, "Danish Government Ends Strike," World Socialist Web Site, May 12, 1998, http://www.wsws.org/workers/ 1998/mayl998/den=m 12.shtml.
45. Denis Hughes, president of the New York State AFL-CIO, quoted in Steven Greenhouse, "Bitter Strike at Domino Sugar Finally Ends," New York Times, February 27, 2001.
46. Letter from Joe Crimi, http://www.labournet.net/docks2/0103/domino1.htm, February 28, 2002. The remaining workers got a 5 percent raise.
47. Tim Golden, "U.S. Sues Longshoremen's Locals, Charging Decades of Mob Control,"New York Times, February 15, 1990.
48. See Jerry Capeci, "Red Sings the Waterfront Blues," This Week in Gang Land: The Online Column, November 21, 2002, http://www.ganglandnews.com/ column305.htm.
49. In Saddle Brook, New Jersey,400 UFCW workers who earned as little as $5.25 an hour after five years of employment were on strike against Arrow Fastener Co. See Kevin G. Demarrais, "Strikers Have Company," Bergen Record, October 26,2004.
50. Even the SEIU, which had made the most serious efforts to improve wages, was mostly a low-wage union.
NOTES TO PAGES 24-27
51. Robert Fitch, "The Union from Hell," Village Voice, January 20,1998.
52. Daniel Bell, End of Ideology (Cambridge, MA: Harvard University Press,2000; originally published 1960).
53. Congressional Budget Offfice,''Administrative Costs of Private Accounts in Social Security," March 2004. See also Form 5500 for Local 814 (EIN [Employer Identification Number] 11-6234358). The filings are available online at freeERISA.com.
54. For Bonanno control over Local 814, see U.S. Court of Appeals for the Second Circuit 879 F 2d 20; 1989 App. LEXIS 9364, March 13, 1989, No.88-6289.
55. Mary Williams Walsh, "Teamsters Find Pensions at Risk," New York Times, November 15, 2004.
56. Richard B. Freeman and James L. Medoff, What Do Unions Do? (NewYork: Basic Books,1984),68-69. The authors acknowledge that union plans have "less liberal” vesting rules than non-union plans. Why? Because "union policies are determined by all members and thus are more influenced by the desires of older, more stable workers." Ralph and Estelle James's study of the Teamsters' pension fund operation was based on attendance at meetings and access to minutes. They argued that vesting rules were determined mainly by considerations of public relations—i.e., to make Hoffa look good—and also to conserve assets so that they could be lent to Hoffa's dubious allies. Freeman and Medoff can't explain how it was in the interest of members to deny themselves benefits if they simply switched from one local to another. See Ralph James and Estelle James, Hoffa and the Teamsters (Princeton, NJ: Van Nostrand,1965), especially ch.24, "Manipulating Pension Benefits."
57. AFL-CIO, press release, "Remarks by John J. Sweeney, President of the AFL-CIO On the Wall Street Rally," July 30, 2002.
58. Along with George Bush Sr. and Democratic National Committee chair Terry McAuliffe.
59. "New Leaders Stabilize ULLICO and Try to Put Scandal in the Past," Engineer-
ing News-Record, May 31, 2004, http://www.enr.com.
60. Employee Benefits Security Administration, press release,"Labor Department Removed Plumbers' Union Pension Fund Trustees, Collects $ 10.98 Million for Workers' Retirement," August 3, 2004.
61. Steven Greenhouse,"Union Chief to Return $200,000 from Stock Deal Under Inquiry," New York Times, November 1,2002.
62. Nancy Cleeland, "Organize or Die," Los Angeles Times, March 10, 2002.
63. Jeffrey L. Rabin, "Lawsuit Alleges Mishandling of Pension Funds," Los Angeles Times, January 19, 2000,1.
64. PR Newswire, March 6,2002, Communications Workers of America. Cited in Kenneth F. Boehm, Testimony Before the Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises, Committee on Financial Services, U.S. House of Representatives, May 1, 2002.
NOTES TO PAGES 27-32
65. Communications Workers of America, press release, June 16, 1999.
66. NPR, "All Things Considered," February 12, 2002.
67. Aaron Bernstein, "A Black Eye for Labor," BusinessWeek, April 8, 2002; see also "Union Movement Launches 'No More Enrons' Campaign" on the AFL-CIO Web site. The AFL-CIO Executive Council called for reform of corporate governance, admonished corporations for promoting a culture of greed, and called on directors to allow workers to have a greater voice in pension plans.
68. Who was also a participant in the Ullico insider trading scandal. For the Ironworkers embezzlement cases, see U.S. Department of Justice, press release, May 2,2003.
69. John E. Mulligan and Dean Starkman, "Coia Votes May Decide AFL-CIO Presidency," Providence Journal-Bulletin, October 24, 1995.
70. Fortune Archive, "The 50 Biggest Mafia Bosses," 1986 list, http://www.fortune. com/fortune/mafia.
71. Transcript of Chicago hearing available at http://www.laborers.org/Coia_ Test.html.
72. Draft Civil RICO Complaint, U.S. v. Laborers International Union of North America, AFL-CIO, et al., November 11, 1994, U.S. District Court, Northern District of Illinois.
73. "Gore's Guys," Wall Street Journal, February 11, 2000.
74. Office of the Independent Hearing Officer, Laborers' International Union of North America, In the Matter of Arthur A. Coia, Docket No.97-52S, Orderand Memorandum, section V, paragraph 22.
75. The New York firefighters are battling the New York City Police Department for control of emergency response situations. The SEIU's and the Teamsters' political priorities cancel each other out: the SEIU wants more Mexican immigrants in; the Teamsters want Mexican truckers off American roads. The big priority for the International Brotherhood of Electrical Workers is more money for Amtrak; it's less so for the UAW. Carpenters want tariffs on softwoods from Canada; Laborers lobby for free trade. And so it goes. It's not exactly sixty different affiliates pulling sixty different ways. But it doesn't add up to strong, univocal progressivism either.
76. Linda Chavez, Betrayal (New York: Crown Forum,2004),18,97.
77. Davis's political target was lapsed Trotskyists—like Dissent editor Irving Howe and Democratic Socialist leader Michael Harrington. They argued that the Democrats would already be a European-style social-democratic party—or on the cusp of becoming one. See "Voices From the Left: A Conversation Between Michael Harrington and Irving Howe," New York Times Magazine, June 17, 1981,24. See also Harrington's Socialism (New York: Bantam Books, 1973).
78. Dan La Botz, Rank-and-File Rebellion (London: Verso,1990),191.
79. The official history of the Teamsters for a Democratic Union, La Botz's Rank
NOTES TO PAGES 32-37
and-File Rebellion, which appeared in a series edited by Mike Davis, savages Presser but treats Jackson as a valued supporter.
80. F. C. Duke Zeller, The Devil's Pact: Inside the World of the Teamsters Union (Secaucus, NJ: Carol Publishing Group, 1996), 409. Zeller was the communications director of the Teamsters for fourteen years.
82. In 1986, he surrounded himself with as many presidential candidates as he could. At one rally, Presser snagged four, including Illinois Democrat Paul Simon. For the Cincinnati rally, see James Neff, Mobbed Up (New York: Dell, 1989),463.
83. President's Commission on Organized Crime, Report to the President and the Attorney General, "The Edge: Organized Crime, Business, and Labor Unions," 1985, section 4, see especially p.86, fn 13.
84. Monica Davey, "Unions Finance Jackson Staffers:'Work Isn't Quid Pro Quo,' He Says," Chicago Tribune, March 26, 2001.
1. Richard Rorty, Achieving Our Country (Cambridge, MA: Harvard University Press,1998),77.
2. CBS News Polls, "Poll: Economy Remains Top Priority," CBSNews.com, May, 13,2003, http://www.cbsnews.com/stories/2003/05/ 13/opinion/polls/main55 3730.shtml.
3. David Brooks, "Our Sprawling, Supersize Utopia," New York Times, April 4, 2004.
4. See Magnan v. Anaconda Industries, Inc., 479 A.2d 781, n.8 (Conn. 1984). "Scholars and jurists unanimously agree that Wood's pronouncement in his treatise, Master and Servant. . ., was responsible for nationwide acceptance of the rule."
5. In the 2002-2003 recovery, corporate profits got an unprecedented share of the growth in national income, 41 percent, while labor got 38 percent. See Bob Herbert, "We're More Productive. Who Gets the Money?" New York Times, April 5, 2004, citing Andrew Sum, "The Unprecedented Rising Tide of Corporate Profits and the Simultaneous Ebbing of Labor Compensation: Gainers and Losers from the National Economic Recovery in 2002 and 2003," Center for Labor Market Studies, Northeastern University,2004.
6. Richard B. Freeman, "How Labor Fares in Advanced Economies," Working Under Different Rules, edited by Richard B. Freeman (New York: Russell Sage Foundation,1994),22.
NOTES TO PAGES 38-41
9. David Brooks, "Fear and Rejections," New York Times, June 2, 2005.
10. Ibid. It's odd. The more the United States hollows out its once-mighty industrial base, the less competitive it becomes in international trade; the deeper in debt it goes to foreign nations, the more its productivity rates soar. For decades, America's productivity growth rates remained mired around 1 percent yearly—less than Europe's. Since the mid- 1990s, though, there's been a reversal of fortunes. The secret? Some think it "hedonics." Inventive U.S. macreconomists now measure output to take quality improvements into account. Instead of just measuring increases in physical output, productivity measures now include increases in satisfaction, too. (The extra button on your new blender makes you happier, increasing its value, therefore embodying more productive labor.) Certainly the effect of this new measurement mode must be satisfying to American corporate leaders, since it tends to lower inflation, thus keeping wages and benefits down. And at the same time, it improves U.S. competitiveness on paper, adding prestige to the U.S. model of enterprise.
11. Thomas Meyer, "The Transformation of German Social Democracy," in Looking Left: European Socialism After the Cold War, edited by D. Sassoon (London: I. B. Tauris, in association with the Gramsci Foundation,1997),126.
12. Sheri Berman, The Social Democratic Movement (Cambridge, MA: Harvard UniversityPress, 1998).
13. Unemployment fell sharply, confounding the economists who predicted"national suicide." In 2004, when the conservatives tried to take the thirty-five hour week away, they lost in nearly every one of France's twenty-six regions.
14. Werner Sombart, Why Is There No Socialism in the United States? (White Plains, NY: International Arts and Sciences Press, 1976; originally published 1906),106.
16. Samuel Gompers, Labor in Europe and America (New York: Harper & Brothers, l910),62.
17. Industrial Worker, August 19, 1909, cited in Philip S. Foner, History of the Labor Movement in the United States, vol. 3, The Policies and Practices of the American Federation of Labor, 1900-1909 (New York: International Publishers, 1964), 148.
19. Angus Maddison, The World Economy: A Millennial Perspective (Paris: Development Center of the Organization for Economic Cooperation and Development, 2001), Table E-7,351.
20. Marcel Van der Linden and Jurgen Rojahn, Formation of Labor Movements, 1870-1914 (Leiden: E. J. Brill, 1990),260.
21. See Maddison, The World Economy, Ibid.
22.Lawrence Mishel, Jared Bernstein, and Heather Boushey, The State of Working America, 2002/2003 (Ithaca, NY: Cornell University Press,2003),425.
NOTES TO PAGES 41-44
23. Paul Ginsborg, Italy and Its Discontents (New York: Palgrave Macmillan,2003), 58.
24. The first six are Finland, the United States, Sweden, Taiwan, Denmark, and Norway.
25. Marvin Harris, Cannibals and Kings (New York: Vintage,1977),274.
26. It would be necessary to increase the distance between the classes so that the bottom feeders would be invisible to the ubermensch. See Friedrich Nietzsche, The Gay Science (New York: Vintage, 1974),91.
27. William Graham Sumner, "The Forgotten Man," Capitalism Magazine, September 11, 2000.
28. Given how much harder Americans work, you'd think they'd be a lot richer than Europeans, but in per capita terms, they're not. Using market exchange rates, half a dozen countries are richer and another half a dozen are only slightly less rich. Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of Working America, 2004/2005 (Ithaca, NY: Cornell University Press,2005),385.
30. Ibid.,102,124. Or, to put it more provocatively, it's the increase in the amount of labor that Americans furnish that helps explain why their wages fell. That's what generally happens when the supply of something increases: the price falls. The behavior of American workers makes sense in individual but not in collective terms. It's like the crowd arriving early to beat its own rush.
31. Mishel et al., The State of WorkingAmerica, 2004/2005, 62.
32. "The Rising Tide," Forbes, March 15,2004.
33. Nigel Holloway, "In Praise of Inequality," Forbes, March 17,2003.
34. The Gini index measures income or wealth concentration. It tracks the percentage of national income earned by different domestic income groups. A perfectly equal society would be expressed as a curve with a forty-five-degree angle. A perfectly unequal society would display a curve that would lie flat until the very end, when it would shoot upward. The curve for United States bends further upward from the forty-five-degree angle than that of any other advanced economy.
35. "Spreading the Yankee Way of Pay," BusinessWeek, April 18, 2001; "Executive Pay," BusinessWeek, April 18,2001.
36. Roger Doyle, "Income Inequality in the U.S.," Scientific American, June 1999.
37. Mishel et al., The State of Working America, 2002/2003, 168.
38. Mishel et al., The State of Working America, 2004/2005; see especially 205-212, "The Technology Story of Wage Inequality."
39. CNN Money, "Jurors See Tape of Kozlowski's Party," October 29, 2003; LouAnn Lofton, "Kozlowski Faces the Music," Motley Fool, September 29, 2003; Art Weinberg, "Tyco's Kozlowski Sets Sail," Forbes, June 3, 2002; Andy Kessler, "Winnick's Voyage to the Bottom of the Sea," Wall Street Journal, March 21, 2002; Jon Swartz, "Homes of the Rich and Infamous," USA Today, July 14, 2002; "WorldCom's Woes," Forbes, August 9, 2002.
NOTES TO PAGES 45 49
40. Harris Poll, no.72, December 4, 1999.
41. Lars Osberg and Timothy Smeeding, "An International Comparison of Preferences for Leveling," paper prepared for the Twenty-eighth General Conference of the International Association for Research in Incomes and Wealth, Cork, Ireland, August 22-28, 2004.
42. In Germany, though, Klaus Zwickel, the chief of IG Metall, the nation's largest union, was forced to resign after he was implicated in what was known as the Mannesmann affair. Zwickel was accused of connivance in a merger that essentially gave the directors a 130 million euro bribe in exchange for approving the deal. Because of Mittbestimmung, the presence of unions on the board, Zwickel could have stopped the looting with his single vote. He wasn't charged with sharing in the "bonuses" (see "Geld-Geber," Die Zeit, July, 2003). Eventually the case against the executives collapsed.
43. Alan Reynolds, "Marginal Tax Rates," The Concise Encyclopedia of Economics, http://www.econlib.org/library/ENC/MarginalTaxRates.html. No advanced economy has as low a rate as the United States; the country with the lowest rate is Bolivia (10 percent).
44. M. Carley, European Foundation for the Improvement of Living and Working Conditions, "Industrial Relations in the EU, Japan, and the USA,2002," 11-12, Table 3, 2004.
45. Silvia Ascavelli, "CEO Compensation Surges in Many European Countries," Wall Street Journal Online, July 26, 2004.
46. Alexis de Tocqueville, Democracy in America, vol. 1 (New York: Alfred A. Knopf, 1944),3.
47. James Poterba, "The Rate of Return to Corporate Capital and Factor Shares," National Bureau of Economic Research, Working Paper No.6263, April, 1999.
48. Mishel et al., The State of Working America, 2002/2003, ch.2.
49. David Card, Thomas Lemieux, and W. Craig Riddell, "Unions and Wage Inequality: A Comparative Study of the U.S., U.K., and Canada," National Bureau of Economic Research, Working Paper No.9473, September 2003.
50. See Economic Report of the President, 1999, "The Experts Consensus on Earnings Inequality" (Washington, DC: U.S. Government Printing Office, 1999), 175, Box 5-3.
52. Mark Brenner, labor economist at Association for Union Democracy construction trades conference, cited in Carl Biers, "New Voices at AUD Construction Trades Conference," Union Democracy Review 145 (January/February 2003).
53. Union officials justified their favoritism toward their own relatives, saying, "We need them to be good people who'll build the union." Ronald D. White,
NOTES TO PAGES 49-54
"With Deluge, Longshore Jobs Become Long Shots," Los Angeles Times, August 18, 2004. See also "An Inside Job on the Docks," Los Angeles Times,August 29, 2004.
54. Mac Daniel, "Audit Targets Payroll at Docks," Boston Globe, June 10, 2005; Ralph Ranelli and Mac Daniel, "Unions Alleged to Pad Payrolls with Children," Boston Globe, June 9, 2005.
55. Dan Weikel, "Anything But Casual About Dock Work," Los Angeles Times, May 9, 1999,1.
56. For the classic trade union argument for wage cutting to accommodate market forces, see David Dubinsky and A. H. Raskin, David Dubinsky: A Life with Labor (NewYork: Simon and Schuster,1977), chapter 5.
57. U.S. Department of Labor, Form LM-2, File number 517-385.
59. Robert Fitch,"Deadmen Leading," Village Voice, April 16,1996.
62. Gosta Esping-Anderson, The Three Worlds of Welfare Capitalism (Princeton, NJ: Princeton University Press, 1990), Table 3.1.
63. Seymour Martin Lipset, American Exceptionalism (New York: W. W. Norton, 1996). For idealization of nineteenth-century poor relief, see Marvin Olasky, The Tragedy of Compassion (Washington, DC: Regnery Publishing Co.,1992). Olasky, the prophet of "compassionate conservativism," specifically invokes nineteenth-century charitable practices, which in New York City required applicants to chop wood or scrub clothes for a certain number of hours. In New York, private relief controlled by charity societies replaced "outdoor relief" The private societies were run by landlords, who would otherwise pay a disproportionate share of relief.
64. Lipset, American Exceptionalism, 294.
65. Gary Langere, "Health Care Pains," ABC News, October 20, 2003, http://abcnews.go.com.
66. Pew Research Center, "Bush Failing in Social Security Push," http://peoplepress.org/reports/display.php3?PageID=926.
67. Cited in Ruy Teixeira, "Happy with Health Care?" American Prospect 11,3 (December 20, 1999).
68. Esping-Anderson, The Three Worlds of Welfare Capitalism, 27.
69. Ed Garsten, "GM Health Care Bill Tops $60 Billion; Cost Adds $ 1,400 per Vehicle, Hurts Competitiveness," Detnews.com, March 11,2004, http://www.detnews.com/2004/autosinsider/0403/ 11/aO 1 -88813.htm.
70. William H. Dawson, Bismarck and State Socialism: An Exposition of the Social and Economic Legislation of Germany Since 1870 (London: S. Sonnenschein & Co.,1891).
71. In France, for example, a general strike brought the Popular Front to power in
NOTES TO PAGES 55-59
1935. The following year, the Blum government enacted a forty-hour workweek and a two-week vacation. In 1995, a similar scenario played out, with a general strike bringing down a conservative regime, although some of Premier Juppe's reforms in tax and health care fields were continued, against union opposition.
72. Kathleen Jones, The Making of Social Policy in Britain, 1830-1990, 2nd ed. (London: Athlone Press,1994),101,140.
73. Lipset, American Exceptionalism, 92.
74. CBC, "The Greatest Canadian," http://www.cbc.ca/greatest.
75. Aziz Choudry, "Childcare: A Workers' Issue," TIE Asia, May 2001; also author interview with Dan Clawson, a sociology professor at University of Massachusetts, Amberst, who organized a child care conference involving AFL-CIO officials in 2000.
76. Esping-Anderson, The Three Worlds of Welfare Capitalism, 50, Table 2.1.
77. Theron J. Schlabach, Rationality and Welfare: Public Discussion of Poverty and Social Insurance in the U.S., 1875-1935, ch.5, p.3, http://www.ssa.gov/history/ reports/schlabach6.html.
78. "Insurance Companies See Aid to Health in Golf," New York Times, February 11, 1922,10.
79. David Brian Robertson, Capital, Labor, and State (Lanham, MD: Rowman & Littlefield, 2000),239; data from U.S. Commissioner of Labor,"Workmen's Insurance and Benefit Funds in the United States, Twenty:third Annual Report" (Washington, DC: Government Printing Office),23,31.
80. "Report Condemns Social Insurance,"New York Times, January 14, 1917,12.
81. Schlabach, Rationality and Welfare, ch. 6, p. 5, http://www.ssa.gov/history/ reports/schlabach6.html. The AFL Executive Council had already warned, "The workers should be on their guard against provisions of this nature which are only disguised methods of eliminating workers."
82. Robertson, Capital, Labor, and State, 240,243ff.
83. New York Times, January 31, 1920,3.
84. Cited in Schlabach, Rationality and Welfare, ch.6, p.6.
85. Robertson, Capital, Labor, and State, 153; see also 160.
86. Schlabach, Rationality and Welfare, ch.6, p.6. The AFL had 2 million members in 1916 and paid out a total of $3 million in benefits that year.
87. New York Times, July 15, 1917,13. A report coauthored by Stone went on in the same vein: "self-respecting workmen resent pampering . . . such laws are an invasion of industrial rights which labor will not tolerate—that local health insurance societies become labor unions." During World War I, Stone joined August Belmont Jr., a subway tycoon and the head of the National Civic Federation, in opposing monthly benefits for wounded veterans or death benefits for their survivors. It was better, the two agreed, just to give them a lump sum.
88. See Brotherhood of Locomotive Engineers and Trainmen, "History," http:// www.ble. org/pr/history/page4h.html.
NOTES TO PAGES 59-64
89. William Z. Foster, The Wrecking of the Labor Banks: The Collapse of the Labor Banks and Investment Companies of the Brotherhood of Locomotive Engineers (Chicago: Trade Union Educational League,1927).
90. "Labor and Capital Honor W. S. Stone," New York Times, June 16, 1925.
91. Martin Plissner, "A Health Care Bill Fantasy," Slate, June 5, 2001.
92. Marie Gottschalk, The Shadow Welfare State (Ithaca, NY: ILR Press,2000),71.
93. For the unions' position in the policy debates, I've relied mostly on Gottschalk, The Shadow Welfare State, 68-75, although my interpretation differs from hers.
94. Steffie Woolhandler, Terry Campbell, and David U. Himmelstein, "Costs of Health Care Administration in the United States and Canada," New England Journal of Medicine 349,8 (August 21, 2003): 768-775.
95. Reports Marie Gottschalk,"Some union officials grumbled that Georgine's position with ULLICO explained why he refused to throw the weight of the building trades behind any health-care reform proposal to eliminate or greatly reduce the role of insurance companies in providing health care." Gottschalk, The Shadow Welfare State, 51.
96. Merrill Goozner, "Health Care Debate Splits Union Ranks," Chicago Tribune, February 18, 1991,1.
97. Charles Lewis, The Buying of the President 2000 (New York: Avon,2000),41.
98. Gottschalk, The Shadow Welfare State, 151, citing Georgine's congressional testimony.
101. "Transcript of the Debate Between Bush and Kerry, with Domestic Policy the Topic,"New York Times, October 14, 2004,A23.
102. World Health Organization, World Health Report, 2000, statistical appendix. Senator Kerry didn't try to refute Bush's attack on government-run systems. He failed to point out that the health care status quo rests on tax expenditures of $145 billion a year to support the private insurance-run system. He just looked straight into the camera and insisted that the government didn't have a role in his proposed system. As a candidate he didn't have much choice: there is simply no organized support for changing the system, even though a wide majority rejects it as inadequate. Certainly Kerry would get no support for fundamental change from the AFL-CIO.
103. Ross Clark, "How Labour Is Turning Britain into a Land of Paupers," Spectator, October 16, 2004.
NOTES TO PAGES 122-133
CHAPTER 7: TOTALLY MOBBED UP: DAILY LIFE IN THE LABORERS UNION
1. "I have always considered the Genovese Family to be the most powerful LCN [La Cosa Nostra] family in the United States," says Alphonse "Little Al" D'Arco, ex-underboss of the Lucchese family, the government's highest-ranking LCN informant. U.S. v. Mason Tenders District Council of Greater New York, Declaration of Alphonse D'Arco,94 Civ.6487 (RWS),5. The others in the running were the Gambino, Columbo, Lucchese, and Chicago families.
NOTES TO PAGES 133-137
2. See the Web site of the Mason Tenders District Council of Greater New York and Long Island, http://www.masontenders.org/lecet/gnylecet.htm.
3. Daily News, August 29, 1999, quoting Roger Madon, former attorney for Laborers International Union of North America Local 95, now dissolved.
4. All mob dialogue quoted here comes from exhibits from U.S. v. Mason Tenders.
5. In re Mason Tenders District Council and Trust Funds, (N.S.A. et al v. Mason Tenders et al 1:94-CV 06487 RWS), Statement of Frank Faro Lupo, August 9-11, 1994, 140 (hereafter "Lupo deposition").
6. In connection with the Diplomat Hotel (see chapter 1).
7. Just in 2004 in New York City, the top official of the Carpenters was convicted of taking bribes from the son-in-law of the DeCavalcante crime family; the Genoveses were charged with controlling the drywall unions; the Luccheses were indicted in connection with Laborers Local 66, the Bricklayers, and the Blasters, Miners, and Drill Runners (BMDRU); and the Genoveses and the Gambinos were charged in connection with Laborers Local 79, the Elevator Constructors, and the Operating Engineers.
8. President's Commission on Organized Crime, The Edge: Organized Crime, Business, and Labor Unions (Washington, DC: Government Printing Office, 1985).
9. These are two cases. U.S.A. v. International Brotherhood of Teamsters (No.88. Civ.4486); and U.S. District Court, Northern District of Illinois Eastern Division, U. S. v. LIUNA, Draft Complaint (1993).
10. Kenneth C. Crowe, Collision (New York: Charles Scribner's Sons, 1993), Appendix D, "Teamsters Charged with Ties to Organized Crime."
11. The DeCavalcantes think they're the model for HBO's The Sopranos. "Hey, what's this fucking thing,'Sopranos'? What the fuck are they. . . is that supposed to be us?" asked Joseph "Tin Ear" Sclafani. Replied soldier Anthony Rotondo, "You are in there, they mentioned your name in there." Rotondo went on to praise the acting and the verisimilitude in The Sopranos. See Jerry Capeci, Gangland, January 6, 2000. http://www.ganglandnew.com/co/vmn289.htm.
12. Robert Gearty and Tracy Connor, "Mob Boss Pleads to Killer Deal: Hit S.I. Man for Gotti," Daily News, September 6, 2003,3.
13. As early as the 1870s, in Palermo, prosecutors indicted mafiosi for running what later would be called "a racket" in the grain milling business. Palermo mill owners and the carters who worked for the millers both paid a pizzu, or tribute, to the Mafia for protection. Prosecutors described a kind of"guild" called the Mugnai dellaposa (dues-paying millers). The organization aimed to regulate prices and keep competition from getting out of hand. What made it different from an ordinary—and legal—guild was the pizzu that millers paid to the Mafia, who "protected" the organization. In return, those workers whom the Mafia allowed to join got job security and a piecework wage. Carters were also compelled to pay the pizzu. The Mafia tied the carter's or-
NOTES TO PAGES 137-146
ganization and the millers together: the millers agreed to accept grain only from carters who were a part of the association, and the carters worked only for millers who were part of the association. The Mafia-controlled grain business in Salerno uncannily resembles the Outfit-run gravel business in Chicago that grew up fifty years later in the construction industry. See James Fentress, Rebels and Mafiosi (Ithaca, NY: Cornell University Press, 2000), 163-166.
14. Humbert S. Nelli, The Italians in Chicago, 1880-1930 (New York: Oxford University Press, 1970), ch.3.
15. Curt Johnson, The Wicked City: Chicago from Kenna to Capone (NewYork: Da Capo Press,1998),87.
16. Nelli, The Italians in Chicago, 79-80, 149-150; Ovid Demaris, Captive City (NewYork: L. Stuart,1969), 217-219.
17. John Landesco, Organized Crime in Chicago, part 3 of the Illinois Crime Survey (Chicago: University of Chicago Press, 1968).
18. Hod carriers mix cement for bricklayers and carry it to where bricklayers lay the bricks. Thus the term "mason tenders."
19. "Hearing Officer Affirms Trusteeship over Laborers Union in Chicago," BNA Daily Labor Reporter, March 4, 2004, A-14.
20. In his successful effort to impose a trusteeship on Local 2, general executive board attorney Robert Luskin charged in a complaint that "at least since 1985 Local 2 has been corrupted by the influence of organized crime." Office of the General Executive Board Attorney, Complaint for Trusteeship, April 23,1999, http://www.ipsn.org/trusteeshipcomplaint.htm.
21. Michael Powell, "The Saga of Arthur Coia and His Union Is Straight Out of 'The Godfather,"' Washington Post, October 3, 1999.
22. Ron Fino to U.S. Attorney Patrick J. Fitzgerald, February 17, 2004, http:// www.laborers.com/Fino_Fitz_2- 17-04.htm.
23. U.S. District Court of the Northern District of Illinois, Eastern Division, U.S. v. LIUNA, Draft Complaint, November 4,1994. (See chapter 1.)
24. U.S. Department of Justice, U.S. Attorney District of Massachusetts, Re: Arthur A. Coia Criminal No-00, January 27,2000.
25. Diego Gambetta, The Sicilian Mafia: The Business of Private Protection (Cambridge, MA: Harvard University Press,1993),17.
26. Ed Barnes and Bob Windrem, "Six Ways to Take Over a Union," Mother Jones, August 1980.
27. Carl Sifakis, The Mafia Encyclopedia, 2nd ed. (New York: Checkmark Books, 1999),141.
28. Lupo deposition, August 9-11, 1994,46.
29. U.S. v. Mason Tenders, 22.
31. The most recent book-length look at union corruption was written in 1970—
NOTES TO PAGES 147-156
The Imperfect Union: A History of Corruption in American Trade Unions (New York: E. P. Dutton,1970), by John Hutchinson, a business school professor at UCLA. The Mafia isn't mentioned. New York University law professor James B. Jacobs has provided the most insightful analysis so far, in The Final Report of the New York State Organized Crime Task Force (New York: New York University Press,1990). No book conveys the scope of Mafia control better than Jacobs's Gotham Unbound (New York: New York University Press, l999).
32. Investigations Officer v. Barbaro, 94 Civ.6487 (RWS).
33. U.S. v. Daly, 842 F.2d 1380 (2d Cir. 1988), and U.S. v. Gallo, 671 F.Supp. 124 (EDNY) 1987.
34. In the case of the New York City concrete industry, where the mob controls the entire industry and can dictate what firms can bid on a project and how much, the contractors pay a 1 or 2 percent fee to the mob's "construction panel."
35. U.S. v. Mason Tenders, Government's Memorandum of Law in Support of Its Request for Permanent Injunctive Relief, No.118,17-18.
36. See Eric Hobsbawm, Primitive Rebels (New York: W. W. Norton,1965), ch.3.
37. See Declaration, Ron Fino (94 Civ.6487) (RWS).
38. Lupo deposition, August 9-11,1994,39.
39. Kenneth C. Crowe, "Union Fund Showers Money on Dubious Real Estate Deals," Newsday, July 21, 1991,69.
40. Lupo deposition,66.
41. Davis was charged with racketeering; see U.S. v. Mason Tenders, 39-40.
42. Lupo deposition,37.
46. Mason Tenders District Council Pension Fund et al. v. James Messera et al, Complaint,95 Civ.9341. See RacketeeringActs 148 and 149.
47. Lupo deposition,133-135.
48. Fino to U.S. Attorney Patrick J. Fitzgerald, February 17,2004.
49. See, for example, Jerry Seper, "Probe of DNC Union Pal Was Killed," Washington Times, August 7, 1997, and Rowan Scarborough, "Soft Deal for Union Termed a Success," Washington Times, July 25, 1996. Coia also availed himself of the help of White House counselor Harold Ickes, who later served as Hillary Clinton's Washington campaign manager in her 2000 Senate run in New York. In the critical late 1994 period, when the government seemed about to take over LIUNA, it was Ickes who served as the crucial intermediary between Coia and the White House. And appropriately so, since Ickes's law practice was weighted with several of the most notorious mob unions in America—including work for the New York-New Jersey regional Laborers' boss Sam Caivano, who'd been installed with the approval of the Genovese crime family.
NOTES TO PAGES 156-159
50. Interview, Robert Luskin, July 2003.
51. Mike Stanton and John E. Mulligan, "Coia Agrees to Plead Guilty to Tax Fraud," Providence Journal, January 28, 2000.
52. Telephone interview, Ron Fino, April 3, 2005.
53. Ron Fino to Patrick J. Fitzgerald, February 17, 2004, http://www.laborers.org/ Fino_Fitz_2-17-04.htm.
54. Ibid., and Statement, July 24, 1996, House of Representatives, Committee on the Judiciary.
55. Brian Lockett, "Mason Tenders in New York City Holds First Officers'Vote in Trusteeship," Bureau of National Affairs, December 15, 1997.
56. Juan Gonzalez, "Labor Movement Reborn, and Strong," Daily News, July 2, 1998. David Firestone, "Laborers Doing the Heavy Lifting for Unions," New York Times, July 8, 1998.
57. Ello was also the grandson of the Mason Tenders' founder.
58. Ello was one of the officials who took free gifts from secretary-treasurer Danny Kearney. See footnote 61.
59. Employers' trustee Paul O'Brien, who joined the board in 1991, was never charged.
60. LIUNA trustee Steve Hammond had his wife placed in a no-show job in the Mason Tenders'benefit office. When Louise Furio complained to court-appointed monitor Lawrence B. Pedowitz, he explained that Hammond's wife was "lonely" in Washington, D.C. (Pedowitz, of Wachtel, Lipton, later served as Martha Stewart's lawyer.)
61. Tom Robbins, "Laborers Looted," Village Voice, November 3, 2004. See also Report of Interview with Daniel F. Kearney, "Local 79 Misapplication of Funds," International Auditor John R. Billi, April 1, 2003, and April 2, 2003, http:// www.thelaborers.net/LOCALS/LU79/kearney_confession.htm.
62. See Steve Hammond to David Elbaor, "Report and Recommendation," September 7, 1995, memorandum in author's possession. "For this Local, I would recommend Mike Pagano as the Business Manager. Although Mike has had his problems with his involvement in the District Council and implications by the U.S. Attorney, I find Mike to be one of the most knowledgeable people in the council" (p.9). In 1997, Hammond was appointed Arthur Coia's special assistant.
63. Lawrence Giardina,"Notes on Michael Pagano, Jr." unpublished ms. Mike Pagano Sr. had also been an officer in Local 104 as well as a LIUNA international representative. Giardina, head of Local 23, had a genealogy similar to Pagano's.
64. In Albany, Pagano also found a lot of familiar faces—including Sal Lanza, his new boss at the funds. Lanza was the Genovese associate who had disrespected James Messera at Gaspar's funeral. He could get away with it, because he was protected by the top uptown Genovese boss, Liborio "Barney" Belommo. Like
NOTES TO PAGES 159-167
Pagano, Lanza needed a job after being banned for life from the Mason Tenders. When Lanza was finally removed as Albany funds boss under government pressure, his colleagues awarded him a $250,000 golden parachute.
65. FEC filings. See FEC C00220566, http://query.nictusa.com/cqi=bin/dcder/ forms/F.E.C.Image.20635001767, (1-82).
66. U.S. Attorney's Office, Eastern District of New York, press release, September 15, 2004.