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Living Wage Backers Storm City Hall in New York

May 13, 2011
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Proponents of a bill to mandate higher wages at city-subsidized projects took to the streets on May 12 to call for its passage and to protest a city-funded study that found the measure would stifle development and job growth.

The City Hall Park rally, attended by several hundred people, including dozens of pastors, preceded a City Council hearing on the bill that was expected to last late into the afternoon. Protestors carried signs pressing for a “living wage” and accusing its opponents of “putting New Yorkers to work for less.” The latter sign mocked Putting New Yorkers to Work, a not-for-profit group established by the Real Estate Board of New York that has led opposition to the bill.

“When companies and developers benefit from government support, they should provide something in return—jobs that allow people to live in dignity, not jobs that keep people in poverty,” Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, told the crowd.

Appelbaum has organized a citywide movement of religious, community and labor groups in support of the bill. Before proceeding into the hearing, the pastors led the demonstrators in a prayer and 250 people walked silently around the block housing the council’s offices at 250 Broadway.

The bill, which would compel employers at projects that receive $100,000 or more in city subsidies to pay workers $10 an hour plus benefits or $11.50 without benefits, was expected to draw passionate testimony from supporters and opponents.

Tokumbo Shobowale, chief of staff in the office of the deputy mayor for economic development, planned to testify on the findings of the city-funded study, details of which were released earlier this week. His prepared testimony called for him to say that wage mandates would hinder development and result in tens of thousands of jobs lost and billions of dollars of lost private investment over the next 20 years.

The job loss and disinvestment would occur disproportionately in neighborhoods outside Manhattan and could potentially prevent some two dozen projects—including the World Trade Center, Coney Island and Atlantic Yards—from going forward, his prepared testimony said.

Other opponents, including groups representing small-business owners, supermarket operators, and affordable housing developers, were expected to testify. Joal Savino, executive vice president of Mercedes Distribution Center, a Brooklyn Navy Yard business that fulfills orders for e-commerce sites, planned to testify that the bill would “make it more difficult and more expensive” to run his business in the city.

“Mercedes does not receive any direct financial incentives from the city and in fact pays market rents in the Navy Yard,” he was prepared to tell the council. “Yet, we would be impacted by the legislation because it covers tenants of entities like the Brooklyn Navy Yard, which do receive financial assistance from the city.”

And Pat Brodhagen, vice president of the Food Industry Alliance of New York State, was prepared to tell council members that the bill would mean the end of the city’s FRESH program, which was designed to bring supermarkets into underserved neighborhoods.

“The zoning and financial incentives included in FRESH were crafted to address some of the barriers that inhibit new store development and renovation, and happily, there are now 10 projects in the pipeline,” her prepared testimony read. “The benefit of those incentives will be wiped out if 251-A becomes law, depriving underserved communities of new and/improved food stores and depriving residents of needed job opportunities.”

But not all business groups are opposed to the bill. Mark Jaffe, president of the Greater New York Chamber of Commerce, spoke at the rally and was scheduled to testify in favor of the measure. He conducted a survey of his group’s 2,000 members and found 90 percent of respondents said the city should “absolutely not” provide subsidies to companies that do not pay a living wage.

“Now is the time for New York City to take a close look at the true cost of all developments that are subsidized by taxpayer money,” he said. “Otherwise New York City will continue to face growth in working poverty.”

Four panels of 20 bill proponents were expected to testify, many of whom planned to offer analysis of the city-funded living wage study. John Petro, a senior policy analyst at the Drum Major Institute, a think tank focused on building the middle class, planned to testify that more than half of all jobs created in the city during the recovery have been in the two lowest-paid industries: retail and hospitality.

“These low-paying jobs are having no trouble being created,” his prepared testimony read. “Why would we spend additional city resources to create more of them? Why not think of a better use of the city’s economic development resources?”

Also, a group of 13 liberal economists and experts released a report May 12 charging the city study contained “basic errors” that render it “unreliable as a guide for policymakers in assessing the merits of the proposed living wage law.”

The report claimed the study was based on a tax abatement program that is not covered under the law in order to get a result that showed more projects would be killed and more jobs lost. It said the study’s labor market analysis was too broad—that its focus detects unrelated trends that are occurring in municipal and regional labor markets and wrongly attributes them to living-wage policies.

Critics said the analysis should have focused on the results of individual projects that have wage mandates attached to them, including ones here and in Los Angeles.
Councilman Brad Lander, who helped draft the report, called the study a “$1 million piece of propaganda.”

A spokesman for the city Economic Development Corp. disagreed, saying the analysis was relevant because smaller subsidies offered under the Industrial and Commercial Abatement Program are covered under the bill, as are other incentives such as J-51 abatements for developers, and various subsidies for small manufacturers and city leases.

“Even if it were excluded, as it seems like the proponents are now proposing, both the labor and real estate analyses would still show tens of thousands of jobs lost and a significant fall-off in private investment as a result of the legislation,” the spokesman said.

Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, email editors@workforce.com.

 

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