Unions Losing the War for New York

ANYONE stumbling across last month’s union protest at the National Football League’s Park Avenue offices might have thought that the target was the league’s much-discussed requirement that players stand during the national anthem.

In fact, the demonstrators were mostly New York construction workers, and they were protesting the inclusion of Miami Dolphin owner Stephen Ross on the league’s new social-justice committee.

A New York real-estate developer, Ross has angered unions by launching a campaign against their extravagant compensation and work practices at his gigantic Hudson Yards project on Manhattan’s West Side. Workers wanted to embarrass Ross after his firm, The Related Cos., filed a lawsuit contending that the unions’ failure to live up to an agreement to curb construction expenses has cost the company an astounding $100 million in overcharges.

Behind the controversy is a larger union struggle to hang onto a deteriorating share of the construction industry in New York City, still the most heavily unionized and expensive building market in the country.

Hudson Yards is a long-running project to create a new commercial district in Manhattan. The plan will eventually encompass some 18 million square feet of office, residential and retail space.

With the city’s construction industry, devastated by the financial crisis and Great Recession, still recovering in 2013, Related negotiated a so-called project-labor agreement with a consortium of trade unions — the Building and Construction Trades Council of New York — to reduce costs.

The unions promised to maintain “standards of excellence,” which included adhering to safety procedures; sticking to common daily starting and ending times for workers; setting out compensation rates for each class of worker that allowed the cost-saving use of apprentices for many tasks; promoting a drug- and alcohol-free workplace; and avoiding strikes or work stoppages.

Hudson Yards has been a boon to construction in the city. So far, says Related, it has employed 20,000 construction workers and paid them some $3 billion in wages — and nearly a decade of work remains.

In its lawsuit, however, Related says that the unions have failed to live up to their end of the bargain. “During the six years of construction at the [Eastern Rail Yards], defendants have in effect repudiated the PLA by condoning, if not actively participating in, various corrupt practices, including failing to work a full day, failing to uphold safety agreements, undermining the discipline essential to a safe workplace” and others.

The building council disputes Related’s claims. It accuses the company of engaging in a “race to the bottom” on compensation by trying to cut deals with nonunion shops and individual unions willing to work alongside nonunion labor. The head of the union coalition, Gary La Barbera, calls Related “greedy.”

The open warfare over Hudson Yards is part of an ongoing struggle for control of the lucrative Gotham construction market, especially in Manhattan. While the Building and Trades Construction Council says that it still boasts a 65 percent share of work on residential towers with 100 units or more, a 2016 study by the Real Estate Board of New York, using city planning data, found that only 18 percent of large affordable-housing buildings were built using exclusively union labor. The shift is partly responsible for a steady decline in union representation within New York state’s construction industry, from nearly half of all workers in the early 1980s to about 30 percent today.

However, the risk for private developers in New York, especially Related, is growing rapidly. Though the Manhattan market is soaring again, Related’s efforts to transform the undeveloped parts of the Far West Side will take years, and the company knows that it will likely have to survive at least one major market downturn before it finishes. Spending an extra $100 million here and there because of excessive labor costs is daunting, even in New York. What’s at stake will ultimately amount to far more than that sum, as other developers consider whether they can afford to keep building in the city.