Philadelphia, we need to talk.
It hardly needs to be said that Philadelphia is an old-school union town, one of the last left in America where muscle and tradition rule unquestioned. Until two thirtysomething developers, Michael and Matthew Pestronk, began converting a 10-story loft building at 12th and Wood Streets into 163 apartments, no one had dared in decades to build a major project here without an all-union workforce.
Their decision to challenge the city's trade-union Goliath, by attempting to employ a mix of union and nonunion workers, is now being watched with fascination - and no small amount of awe - by city developers, labor leaders, and City Hall. If the Pestronks succeed in finishing their $38 million project, nothing will be the same in the Philadelphia construction business.
Union members have a right, of course, to use legal measures such as picketing to protest the Goldtex project. It's also worth pointing out that unions play a valuable role in protecting American workers from exploitation and abuse by employers, especially in these days of the suffering 99 percent.
Yet few in power here are willing to acknowledge that the trade unions' iron grip on Philadelphia has cost the city dearly in lost projects, especially by national developers. Philadelphia trade-union members are paid on average $63 an hour - about $10 less than those in New York, and twice as much as those in Washington, D.C. - despite much lower real estate sales prices here, according to Kevin C. Gillen, of Econsult, an independent economic-research firm in Philadelphia. A bigger issue for many developers, he said, is that union contracts require developers to inflate their workforces with more employees than they want.
As a result, the cost of erecting a new building using union labor often exceeds the return, which helps explain why the apartment tower now rising at 23d and Chestnut Streets required a $12 million grant from the state's Redevelopment Assistance Capital Program.
By loosening up Philadelphia's closed-shop tradition, the brothers could reset the economics, making large construction projects more feasible. The Pestronks, who operate as Post Brothers and have rehabbed several apartment buildings in Germantown and the city's Northeast, insist they are not antiunion, and originally had contracts to employ union carpenters, electricians, and demolition crews. When those crews balked at working with nonunion workers, such as laborers, the developers decided to go ahead anyway.
"It would cost 50 percent more to do this all-union," adding about $10 million in labor costs, Mike Pestronk says. "We asked ourselves, 'What's going to happen if we use nonunion workers?' We estimated the costs and decided it was cheaper to fight." He says they expect to spend $1 million on added security.
What was a simple cost-benefit analysis for the developers was seen by the unions as a threat to their existence. "Anything less than 100 percent union is a recipe for disaster" for Philadelphia workers, says Patrick Gillespie, who runs the Building Trades Council, an umbrella group for the city's construction unions. "All we're trying to do is earn a decent, livable wage."
The two sides are now engaged in a fight to the death. Every weekday, Gillespie dispatches between 30 and 100 protesters to picket Goldtex. The Pestronks obtained a court injunction in May requiring the picketers to stay 45 feet from the building, and are now paying $2,000 a day to the Sheriff's Office to enforce the order. Police from the civil affairs unit also are on site daily to keep watch.
When I visited last week, about 30 beefy, agitated union protesters were clustered right up against the Pestronks' chain-link security fence, nose-to-nose with the developers' beefy security guards. Several union protesters paced the length of Wood Street, which dips under the mammoth stones of the Reading Viaduct arches. The demographics of the protesters seemed to confirm a consistent criticism of the unions: The picketers are overwhelmingly white, while the workers at Goldtex more closely reflect the city's ethnic makeup.
When word came that a flatbed carrying construction materials was on Vine Street, protesters rushed to surround the truck. Shuffling slowly in front of the vehicle, they forced it to move at a crawl. It took more than two hours to travel the two blocks down Wood Street, from Broad to 12th. As the truck approached the building, police and sheriff's deputies ordered protesters back so it could enter the site.
Mike Pestronk says the project is now four months behind schedule. The developers are unable to obtain cement, crucial to finishing an underground garage, because local producers are all unionized plants.
Technically, it is illegal for the protesters to block deliveries. "We don't condone blocking delivery trucks," Gillespie told me repeatedly in an interview, even as his deputy, Fred Consenza, was at the site organizing the blockages. As a result of the protest, Gillespie says, "the FBI is investigating me."
The Pestronks plug on, but tensions are escalating. Several fights have broken out in the last two weeks, resulting in cuts and bruises on both sides. Gillespie says his men have been attacked by the Pestronks' security force, and one is wearing a neck brace. But it's the union attacks on the Pestronks' workers that have been graphically documented at phillybully.com.
While the protest tactics seem straight out of the '30s, the Pestronks are retaliating with modern technology: Their employees carry recorders whenever they leave the building, and security cameras ring the perimeter. The videos are posted online.
After a video showed a Pestronk engineer thrown against a wall as he entered the construction site, the Pestronks persuaded Michael R. Resnick, Philadelphia's director of public safety, to visit the site.
"The incident was very troubling to me," Resnick said, and afterward he directed the police to charge four men with assault. Two, Ryan P. Stewart of Philadelphia and Philip J. Garraty of West Grove, Chester County, were charged this week. The other two were being sought.
Gillespie dismissed the seriousness of the attack, saying the videos had been edited to make the violence appear one-sided. "I don't know of anyone getting beaten. Some pushing, maybe," he said.
The arrests did nothing to calm the streets around Goldtex. The neighborhood, which was eagerly awaiting an influx of new residents at Goldtex, now feels increasingly "threatened," says Sarah McEneaney, president of the Callowhill Neighborhood Association. One resident, who asked not to be named, says she was followed home by a union protester after she picked up a ball of welded nails near the Pestronks' loading dock.
With such incidents occurring regularly, it's a perfect time to reassess the city's relationship with its trade unions. Too bad few are willing to initiate a conversation about it.
Mayor Nutter, who is the first modern Philadelphia mayor to be elected without union support, has not attempted to mediate the dispute. (He did not respond to several requests for comment.) Not even the Building Industry Association, which represents developers, is willing to discuss Goldtex. It sent a note by e-mail saying it had "no comment on the issue."
Without intervention and mediation, it looks like the siege will continue for many more months. And the videos will keep appearing on the Internet. But no one wants to talk about that.
Contact Inga Saffron at email@example.com or 215-854-2213, or follow on Twitter @ingasaffron.