Businesses in large cities across the country can escape onerous new regulations if they unionize thanks to carve-outs crafted by labor unions.
The New York City Council passed a bill Wednesday requiring car wash owners to purchase a $150,000 surety bond to operate in city limits. The massive hike could dramatically drive up prices and even force some businesses to close up shop.
There is one way out for entrepreneurs: unionize. Businesses with collective bargaining agreements with unions in place only need $30,000 coverage.
The law was written with the help of Make the Road New York, a pro-labor nonprofit worker center that also enjoys millions in taxpayer funding and government grants. Ashley Pratte, spokeswoman for the labor watchdog Worker Center Watch, said the group’s success demonstrates the cozy ties between labor and big city politicians.
"The NY car washers’ campaign is the classic example of backdoor union organizing coupled with taxpayer-funded coercion," Pratte said. "These campaigns wouldn’t be complete without calling upon bought-and-paid for elected officials to use the force of government agencies against employers."
Make the Road New York did not respond to request for comment. Its allies in the city council have said the law was designed to shutter "terrible" companies. Democratic City Council Speaker Melissa Mark-Viverito, who first introduced car wash regulations in 2012, told the New York Times on the eve of the vote that it is a punitive measure.
"We’re creating a level playing field for the car wash workers, and closing businesses which are terrible and making sure they are operating within the laws. It’s really exciting," she said.
The New York City Council is just the latest city to pass massive union exemptions for dramatic cost increases.
The Seattle City Council passed a $15 minimum wage in the area surrounding its airport in 2013. However, Unionized workforces did not have to adopt what was at the time the largest minimum wage in the country.
That was a feature, not a bug of the legislation. Maxford Nelsen, a labor policy expert at the free market Freedom Foundation, uncovered a 2013 radio interview in which SEIU Local 775 President David Rolf admitted that the measure created an incentive for unionization. A radio host asked him, "was [the union waiver] included as a way of trying to incentivize employers to accept unions in their workplaces?"
"We always want to offer an olive branch and a high road approach to employers of conscience who would prefer to have direct and honest dealings across the bargaining table with a union that their employees vote for. So, yes, we hope that amongst the several unions that are active in the airport economy—such as SEIU Local 6, Unite Here Local 8, Teamsters Local 117, and UFCW Local 21—that if workers choose to join those unions, we want to, you know, facilitate and encourage productive, bilateral collective bargaining agreements," he responded.
Michael Saltsman, a labor expert at the Employment Policies Institute, said that labor’s new tactics center on politics rather than traditional workplace voter drives because of its weakened position.
"Big labor evidently has another strategy to boost its dwindling numbers: Make the alternative even less pleasant," he said. "At the ballot box and in partnership with left-of-center City Councils, unions have worked to passed onerous laws that employers can avoid by welcoming them into the workplace."
Private sector unions have seen their membership sag from around 30 percent of the workforce to less than seven percent in 2015 over the last several decades, according to the Bureau of Labor Statistics. That leaves labor groups with less money to wage costly card check campaigns and secret ballot elections. Political donations that result in advantageous legislation are a far less costly way of organizing, according to Saltsman.
"These exemptions make clear that labor’s ‘fight’ for bigger paychecks and better benefits is really just a ploy to get new members," Saltsman said.
Mayor Bill de Blasio has indicated that he will sign the car wash regulation.