Thursday, June 03, 2010

As law proposed to require minimum wages on subsidized project (so as to avoid CBAs), Bloomberg resorts to distortion

At a panel May 17 on Community Benefits Agreements (CBAs), Al Rodriguez, General Counsel to the Bronx Borough President, argued that that certain aspects of CBAs--such as living wages and local hiring--should be institutionalized, not negotiated.

And last week a bill was introduced in City Council to require living wages on certain economic development projects that are benefiting from city subsidies, thus removing it from "negotiations," such as with the Atlantic Yards CBA.

Affordable housing

It's notable that Mayor Mike Bloomberg's criticism of the bill relies on a mischaracterization of it.

In a May 25 article headlined City Takes Another Pass at a Living Wage Bill, WNYC's Matthew Schuerman reported:
Bloomberg spoke out against the living wage bill Monday, saying that the reason these projects need city subsidies is that they wouldn't stand on their own otherwise.

"We’re trying to build more affordable housing. We're trying to provide more services for the elderly," he says. "The economics don't work if you have to pay more."

But according to a copy of the bill introduced Tuesday, affordable housing projects and buildings that house social services organizations would be exempt from the living wage requirements.
Schuerman also noted that the New York City Economic Development Corporation (EDC) is commissioning a study of how a living wage bill would work.

From the Observer

The Observer's Eliot Brown reported, in a May 25 article headlined Living Wage Bill Formally Introduced; Bloomberg Smirks:
The bill, dubbed the Fair Wages for New Yorkers Act, would force most every development receiving city subsidies of at least $100,000 to require a minimum wage of $11.50 an hour (or $10 and benefits) for anyone working in the development, a mandate that would mostly affect retail jobs (which tend to be low wage).

The Bronx elected officials—led by Bronx Borough President Ruben Diaz Jr.—and the Retail Wholesale and Department Store Union are launching a campaign on the issue (with T-shirts, a logo, a Web site and all), and held a press conference Tuesday at City Hall (one which Mayor Bloomberg walked by with a smirk on his face) to press the issue.

Indeed, the text of the bill certainly displays more effort and some sense of reality than a similar bill introduced by some of the same elected officials last session. That bill called for all developments receiving at least $10,000 of subsidy to mandate the living wage, something that would anger far more subsidy recipients. The new bill also exempts developments used exclusively for affordable housing, and developments that house a cultural institution or social services organization.
Bloomberg: "free market works much better"

In an interview May 28 on The John Gambling Show, Bloomberg said he couldn't support the bill: "There are some projects that... like affordable housing, do not make any sense if the government.... the project's just not going to get done... an awful lot of nonprofits we help, they would be devastated."

Bloomberg's conclusion: "The free market works much better."

"Having the public subsidize some workers and not others is not fair," he added.

Um, couldn't the same be said about "some projects and not others"?

DMI response

John Petro of the liberal Drum Major Institute commented May 25:

It seems the mayor has a short memory. Just last year the city agreed to include wage requirements as part of the redevelopment of Coney Island--prevailing wages for hotel and building service workers and living wages for other workers.

But if the "economics don't work," as the mayor claimed yesterday, then why did the administration agree to these requirements for Coney Island? Unless Bloomberg is purposefully trying to kill the redevelopment plan, there must be some disconnect in the mayor's logic.

The fact is: there is no evidence that the bill would kill development in the city. Close to 20 other cities have successfully put wage standards on city-subsidized development projects. Los Angeles, for example, currently has 130 development projects in construction or in the pipeline, representing $10 billion in private investment and 3.5 million square feet of new commercial space. And yet, Los Angeles has had a living wage requirement for city-subsidized projects since 2003 and a prevailing wage requirement since 1986.

By guaranteeing that every job created by public subsidies pays a living wage, the bill would maximize the impact of our subsidy tax dollars at a critical time of budget shortfalls and service cuts. Higher earnings by workers at subsidized projects would generate more economic growth as these workers channel their earnings back into the local economy and patronize small businesses.

Looking for data

Crain's, in a May 25 article headlined City Hall sponsoring big ‘living wage' study, reported:
As organized labor and its elected allies push to tie “living wage” standards to publicly subsidized development initiatives, the city is commissioning a study to examine the feasibility of such requirements, according to sources familiar with the plan.

City officials hope that nearly a dozen labor, business and civic groups will participate in an advisory committee to shape the terms of the study. The groups—which range from 32BJ SEIU and the Hotel and Motel Trades Council to the Real Estate Board of New York and the Partnership for New York City—would be able to provide data and offer examples from cities that already have living wage mandates.
Crain's noted that (as I've reported) Comptroller John Liu has set up a task force to examine the role of public benefit agreements in development projects.

Given the well-balanced composition of the task force, I suspect gridlock is not unlikely.

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