THE UNION SCAM THAT MAKES NEW YORK CITY HOTELS SO EXPENSIVE
http://online.wsj.com/articles/the-gangs-of-new-york-1417387861
The Gangs of New York A union scam helps explain why Gotham hotels cost so much.
Tourists converging on New York City for the holidays are often stunned by how expensive the hotels are. Much of that is real estate and seasonal demand, but what may be less apparent to travellers is a shakedown engineered by Big Labor and assorted corporate cronies to force non-union accommodations to organize or leave Gotham.
In 2001 the major city hotels bought labor peace through a multi-employer collective-bargaining agreement known as the Industry Wide Agreement, or IWA. The New York Hotel Trades Council (AFL-CIO) and the Hotel Association of New York City, the trade group for the five boroughs, agreed that association members would be neutral when the union tries to organize a property and abide by “card check.” That’s the gambit that denies workers their right to secret ballots in labor elections.
Businesses tend to get the unions they deserve, and three of every four New York hotel employees now belong to a workplace with contracts governed by the IWA. More notable is that the agreement contains an unusual “accretion clause” that foists the IWA’s terms on every hotel that is directly or indirectly owned or managed by any party to the IWA.
Hotel owners in New York often engage third-party managers to run the business or as contractors to provide discrete services such as guest amenities or back-office due diligence. Under the accretion clause, a non-union hotel that hires one of these agents becomes a “joint employer” that must obey the IWA even if its proprietors never consented to the agreement, bargained with the AFL-CIO or joined the Hotel Association.
ENLARGE The six degrees of Jimmy Hoffa don’t stop there. Under the union interpretation of the IWA, the owner who hired the agent must then apply the IWA to any other affiliates he owns too. The managers of those properties are then in turn bound to the IWA, as are any other hotels they manage, and so on forever.
For example, in 2003 a successful former Hong Kong garment worker named John Lam hired a management company called Interstate Hotels and Resorts Inc. to run his Four Points Chelsea hotel and was suddenly caught in the IWA tractor beam. The management agreement specified that the hotel would remain union free. But because Interstate had agreed to obey the IWA without informing Mr. Lam, the AFL-CIO claimed in 2007 that it would attempt to organize the Four Points under neutrality and card check—as well as the dozen other New York hotels owned by Mr. Lam or his family.
The Chelsea Four Points then fired Interstate, but all disputes under the IWA are subject to arbitration hearings whose negotiators are creatures of the IWA itself. The Lam family lost at arbitration earlier this year, but it is now challenging the IWA in a lawsuit as a violation of federal antitrust law.
Labor at union hotel shops is 40% more expensive than at their rival unorganized counterparts, a cost structure that can’t compete except through the enforced monopoly of the IWA. The union enjoys captive employers, above-market wages and work rules that require more workers and thus pad union rolls. The suckers are the tourists paying far more per night than they would if Big Labor wasn’t running the joint.
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