With the emergence of the Italian-American mafia, which we show was driven by labor unrest and a demand for protection, as well as immigration from Italy, labor racketeering became one of the most profitable criminal activities. The Mafia infiltrated several labor unions, controlling labor and restricting competition. We identify places and industries that were more likely to be infiltrated, and show that in such places individuals of Italian origin climbed up to leadership positions. In response to the likely support of workers of Italian origin, these workers started earning significantly more than other European immigrants. This suggest that the Mafia was not only using violence to control labor but was paying them rents too. In their fight against organized crime, the US passed the 1970 Racketeer Influenced and Corrupt Organizations (RICO) Act. We show that RICO cases, which most likely broke many cartels that were kept in place by the threat of violence, led to subsequent growth in employment, in the number of establishments and even in overall wages. The effects were larger in construction, an industry traditionally prone to mafia influence.