The Brothers Who Busted Philly Unions. For Good.

Brutish threats, expletive-heavy protests, oil poured at construction-site entrances–for years, Philly unions have used intimidation and bully tactics to protect their power. Then two young developers set up cameras and a website, and set in motion the most dramatic power shift the city has seen in generations.

By now, it might be appropriate to wonder how anything ever gets built in Philadelphia. The answer is that out of custom and self-interest, an unofficial compact has emerged by which this city’s Trades, developers and politicians have learned to get along.

The Pestronks say they’ve been told by people within the development community that certain established builders get better labor rates than they were offered. Multiple sources inside Philadelphia’s development community say that information is correct. “It isn’t like the unions ever work for market rate,” says one developer, who requested anonymity for fear of retribution from the Trades. “But instead of coming in 40 or even 50 percent over market, they’ll come in at 20 percent. Maybe throw in some government subsidy, and it’s just enough to get the deal done.”

The arrangement has dark ramifications for the city’s economy. “The issue,” says one elected official, who also asked for anonymity, “is that a younger developer or an out-of-town developer gets a vastly different price than someone who has a relationship with the unions. There is a kind of old-boy ne­twork involved. And there is an element of protectionism to it. The established developers complain about the unions. But they cut deals with them and enjoy the fact that the unions reduce any competition they might face.”

Another developer, who admits to “cheering the Pestronks on,” typifies any benefit received as unasked-for­—as a dose of sugar to go with the poison on offer. He says the reason better-established developers don’t challenge Building Trades is more p­ersonal: “The Pestronks are young. They have that fire in the belly. [The rest of us] are a lot older.”

Either way, it all comes out the same: A handful of developers gets rich while the city’s tax structure and union labor costs stymie the local economy. And Philadelphia’s elected officials sit on the sidelines.

Inquirer reporter Bob Warner has published a series of stories quantifying the amount of money Johnny “Doc” Dougherty donates to local politicians. Dougherty, the boss of Local 98, annually funnels $2 million into state and city races, circumventing campaign contribution limits by funding political action committees that lavish his favored candidates with cash. The Trades have it in their power to acquire huge stakes in any city politician. A review of 2011 political campaign filings shows City Council representatives Bill Green, Mark Squilla and Bobby Henon each received roughly 20 to 25 percent of their funding from Trades-related sources.

These numbers encourage Council members with little union support to stay in line, if only to forestall a future Trades-backed opponent. As an example, Council-
woman Maria Quiñones-Sánchez didn’t return calls requesting an interview for this story. Councilman Wilson Goode Jr. can’t get off the phone fast enough: “I’m not going to give any interview on this,” he says. And even Mayor Michael Nutter, who was elected without support from Trades, sticks to the shadows. Emails I obtained show his administration quietly helped the Pestronks work with city cops to maintain order at the site and transport a crane past a union blockade. Given Nutter’s reputation for running a top-down administration, the emails should indicate his sympathies. But in Philadelphia, not even a sitting Mayor with no need to seek reelection can risk an open war.