Hello all, lately I came upon one of the mobs money making schemes that I couldn't seem to understand. How does the Labor racket work? I've always been fascinated as to how these individuals generate their ill-gotten money, and I usually catch on to it quick, but this one hasnt been explained to me in the book im reading. For those curious its called the Sixth Family.

Cheers
- O'Pazzo, or Oobatz if you prefer

Hello, O_Pazzo, hope to see many thoughtful posts from you!

Labor (unions) has always been a great source of power for organized crime, in several ways:

1. Unions make members pay dues. Thus union treasuries are a great source of money for racketeers who dominate labor unions. Unions also administer pension funds, which contain enormous sums, often tax-exempt or -reduced. If you saw the movie, "Casino," you saw that the Teamsters Union Central States Pension Fund invested in a Las Vegas hotel/casino--and skimmed the profits for their Mafia bosses.
2. Unions have thousands of members who can constitute a voting bloc. If the union "leadership" (i.e., Mafia guys installed in leadership positions) endorses a particular political candidate, all the union members will be "urged" to vote for that candidate. When the candidate is elected, the candidate will owe a debt to the union leaders (i.e., Mafiosi, in corrupt unions) who endorsed him or her.
3. Unions can "shake down" bosses. Let's say you're a builder (contractor) putting up a big office building in a major city. All the construction workers are unionizied. They all have contracts with you. The contracts are as thick as a telephone book, and specify every working condition. Most of this is chicken-s**t. But, if the union bosses want to shake you down, they can call a "rulebook slowdown": they can insist, for example, that every truck entering the construction site be inspected for "safety" by their own members. They can insist that any overtime (which you may need to complete the job on time) be ordered two weeks or a month in advance. They can insist on investigating the union membership of every person who works on the site...it goes on and on. The net is: if you don't pay them off, they can shut you down or slow you up to the point that you'll never make a profit on that contract.

One of my favorite Mob related books.

To add to what Turnbull so thoroughly and correctly said, many years ago workers, who were exploited by big corporations and mangement, began to try and unionize themselves. The companies would go out and hire, (what was referred to back then, as the "law and order" people) goons from the mob. The corporations would hire these mobsters, or should I say the mob would hire out their goons, to beat up these strikers who were trying to form unions so that they could get better wages, working conditions and benefits.

Then the Mob got really smart. Not only did they hire their goons out to the corporations and the companies, but they offered those same services to the labor unions. The mob now began playing both sides of the fence. As time went on the mob realized that the Unions were becoming a rich source of money for them. They saw that it was becoming much easier for them to embed themselves within the unons. And as more time went on the mob began actually running many of the unions. They began, as Turnbull has said above, utilizing the pension funds that the unions had built up, taking ridculously low interest loans to get into "legitimate" businesses, to build places like casinos and hotels in Las Vegas. Then when those "legitimate" businesses were built, the mob went to work skimming profits from those casinos which they had initially used union money to build.

Welcome to the boards Oobatz!

Here are the 5 main types of labor racketeering -

1. Bid-Rigging: Only pre-selected companies are allowed to bid. A company is either owned by the mob or must kickback a percentage in order to be chosen for the job. Unapproved companies trying to bid will have problems with the mob-controlled union.

2. Sweetheart: A mob-controlled union allows a company to use non-union labor or union labor for only part of the job. The company saves money and kickbacks some of it to the mob.

3. Extortion: A mob-controlled union extorts payments from a company in turn for labor peace, timely deliveries, no harrasment, etc.

4. No-Show: In turn for any of the above - being selected for a job, using non-union workers, labor peace, etc. - a company puts mob members on their payroll. The mobsters have a legitimate source of income for doing no work.

5. Embezzling: Mob guys in key union positions are able to divert union funds through ghost payrolls, use it as capital for loans or investments, force workers to kickback part of their pay to keep their jobs, etc.