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Government as Labor’s Agent

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Government as Labor’s Agent

When unions fail to organize, they make politicians impose union rules. June 14, 2017
Economy, finance, and budgets
Politics and law
New York

A federal judge recently nullified a New York City labor law targeting the carwash industry. The 2015 law, the “Car Wash Accountability Act,” forced all car-washes in the city to carry a bond ensuring that their workers would be paid in the event of a wage dispute. Carwash owners had to buy a $150,000 bond, unless they had a unionized workforce, in which case the required bond was only $30,000.

By imposing such a significant penalty on non-union carwashes, Mayor de Blasio and the city council were effectively compelling these small, independent businesses to encourage unionization. Extensive federal law regarding how workers form unions includes no mechanism for localities to impose unionization on businesses, though, and a judge has ruled that the Car Wash Accountability Act violates the National Labor Relations Act, noting, “pressuring businesses to unionize is impermissible under the NLRA, as it inserts the City directly into labor-management bargaining.” ​

The Car Wash Accountability Act did not originate in the city council but rather as a legislative reaction to a long, mostly failed effort on the part of organized labor and immigrant activist groups to unionize these businesses. Starting in 2012, the Retail, Wholesale, and Department Store Union (RWDSU) began a push to organize New York City’s 200 carwashes, which mostly employ low-skilled illegal immigrants. The effort has not succeeded: at one point, ten car washes had been unionized, but several have reportedly gone out of business since then.

The problem: carwashes are independently owned small businesses that can easily replace their workforce with machines. In most parts of the country, carwashes are largely automated and operate with just a few workers; the New York City model of having a team of “carwasheros” buffing and scrubbing each car is mostly a function of the low cost of local immigrant labor. Organizing shop-by-shop is an intensive, expensive operation, so the RWDSU, which contributes mightily to political campaigns, took a shortcut to mass unionization by having the city council and mayor legislate it into effect.

With brick-and-mortar retail cratering nationwide, it’s hard to imagine a rosy future for the RWDSU. A 2014 New York Times article extolled the steady work schedules and guaranteed minimum hours of unionized employees at Macy’s flagship Herald Square location. Last year, 5,000 Macy’s employees authorized a strike, and local elected officials, including Mayor de Blasio, joined the battle to force the company to agree to higher wages and other demands, averting labor action. Earlier this year, Macy’s announced plans to close at least 100 stores and lay off 10,000 employees, and just yesterday the company disclosed that its margins have shrunk 60–80 basis points.

With the Internet depriving organized labor of new retail workers to organize, unions such as the RWDSU and SEIU have turned to nontraditional employees—like the carwasheros—as potential new members. Fast-food restaurants emerged as another prime opportunity for organizing, but unions have made little headway in getting burger-flippers to sign up. A large percentage of these workers are young people working their first job: in New York State, 23.4 percent of fast-food employees have not completed high school, and 28.4 percent are 21 or younger. As a point of comparison, only 6.1 percent of New York State’s overall workforce is in the same age bracket, indicating that fast-food employment is indeed a stepping stone into the workforce, and not viewed by most younger workers as a lifetime career demanding union protection.

Further, despite bearing the names and logos of international corporations, most fast-food restaurants are franchises operated as small-to-medium-size businesses. Unionizing these companies means going shop by shop and painstakingly organizing a transient, young workforce. Or, failing that, going to the city council with a set of bills that would impose—just on one industry—all the conditions that would normally be included in a collective bargaining agreement.

The “Fair Work Week” legislative package, signed by the mayor at the end of May, imposes wide-ranging rules on scheduling, forcing fast-food restaurants to set schedules 14 days in advance and penalizing management if changes are made within that period. The package also limits businesses from hiring new workers before offering existing staff the opportunity to absorb additional hours. Both of these conditions are typical of unionized shops, especially the latter, which will effectively force employers to maintain a leaner workforce, inevitably leading to payment of overtime.

Another law in the Fair Work Week package allows fast-food workers to authorize their employers to deduct money from their paychecks and direct the money to “nonprofit organizations of their choice.” Labor unions and “employee organizations” are not permitted to receive these contributions; however, allied radical organizations such as New York Communities for Change (the successor organization to ACORN) or Make the Road (an illegal immigrant advocacy group) are eligible. The sponsor of this first-in-the-nation law, council finance chair Julissa Ferreras-Copeland, explained the political motivations of the law: “given the agenda Trump has laid out on immigration . . . there is a role for the nonprofits to sustain through workers’ payroll deductions to organize communities to fight what we feel is a racist and very nationalist agenda.”

Elements of the Fair Work Week package pertain to all retail workers in New York City, but the emphasis is on the fast-food industry, similar to the way in which the city targeted car washes in the Car Wash Accountability Act. It is unlikely to face the same problem in court, however, because the fast-food bill does not attempt to impose unionization on the companies: it merely imposes the conditions of unionization.

Nevertheless, the activist legislation is ultimately as unlikely to benefit fast-food workers as the earlier law did car wash workers. Both industries are easily subject to automation and are beginning to build in the mechanical or digital infrastructure that will render low-skilled workers superfluous. Government can take the side of organized labor and act as its agent when labor fails to organize, but businesses cannot be compelled to hire workers above their value.

Photo by Spencer Platt/Getty Images

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