BY KEN GIRARDIN
Yesterday’s indictment of New York’s top construction union official on federal corruption charges raises a big question: if private companies are paying bribes to avoid having to work with certain construction unions, why is Governor Andrew Cuomo insisting that the state keep doing it?
James Cahill, who heads the statewide New York State Building and Construction Trades Council, was charged by the U.S. Attorney for the Southern District of New York with racketeering, fraud, and bribery. The indictment, which also names 11 other building trades union officials, alleges Cahill took bribes in return for letting a business avoid hiring plumbers belonging to Cahill’s former union.
As interpreted and enforced by the state Labor Department, New York’s “prevailing wage” law for public works projects mandates that contractors on taxpayer-funded public works projects adhere to unions’ contractual wage, benefits, work rules and manning levels.
The problem with forcing union terms on contractors is summed up in a remark Cahill is alleged by the indictment to have made to an unnamed firm (with expletive deleted):
“If you become union, you’ll have 12 guys on your back.”
Federal prosecutors effectively are alleging that the unnamed firm, referred to in the indictment as “Employer 1,” found union contracts so onerous that it was less expensive to simply bribe Cahill and other union leaders. The indictment quotes Cahill as implying that Employer 1 wasn’t alone in making such arrangements.
Construction firms that hire from union halls are at a disadvantage both in terms of costs and flexibility. Union contracts typically demand higher pay rates to backfill underfunded union pension and benefit funds, and employers get stuck using archaic union work rules that, for instance, prevent a carpenter from performing a duty reserved for a painter or an electrician.
That’s led trade unions and unionized construction companies to press state officials for special rules to give them a leg-up. And they’ve found a welcome audience in Governor Cuomo, who described “Jimmy” in 2017 as “a good friend to me and my entire family for so long.”
The bigger scandal
The governor has done backflips to steer government construction work to firms that hire Cahill’s members (who make up less than 30 percent of the state’s construction workers). Cuomo in 2016 went so far as to vow “Every project we build is going to be built with organized labor — every project.”
The Cuomo administration routinely requires contractors to sign a project labor agreement (PLA)—a contract with local trade unions that typically restricts or bars non-union workers from being employed on a construction project. The state’s own data have shown time and again that mandatory PLAs decrease the number of eligible bidders and increase costs.
State law since the 1990s has allowed government agencies to require a PLA if they can demonstrate, albeit through dubious calculations and assumptions, that it furthers the public interest. But Cuomo has often ignored the law, and required PLAs even in instances when the state couldn’t meet its own weak standard.
The Cuomo administration in 2018, for instance, illegally required offshore wind developers to sign deals with downstate construction unions as a condition of getting multi-billion awards for state subsidies. Years earlier, state officials illegally required contractors building what’s now the SolarCity factory in Buffalo to do the same.
The state’s deepening fiscal crisis makes this an appropriate time for state lawmakers—and others—to look at the motivations, methods, and costs behind the favors that the Cuomo administration keeps doing for Cahill and his construction unions. And the allegations against Cahill demand a careful review of the extent to which he’s been given a say on major state policy decisions.
Ken Girardin is Director of Strategic Initiatives at the Empire Center for Public Policy.