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Study Says Higher-Wage Bill for City Projects Would Cost Jobs
New York Times
Kate Taylor

October 5, 2011
View the Original Article

A proposal that would require companies to pay higher wages on city-subsidized projects would result in a loss of jobs, according to the final version of a long-awaited study of the proposal released by the city’s economic development agency.

The study says that in cities where similar measures have been adopted, modest wage gains have been offset by a decrease in employment among low-skilled workers of about 2.2 percent. Based on that finding, the study predicts that the bill being considered by the City Council would result in the loss of 6,000 to 13,000 low-skilled jobs.

An earlier version of the study, which was commissioned by the Economic Development Corporation, was harshly criticized as biased by advocates of the so-called living-wage proposal. Both Mayor Michael R. Bloomberg and business leaders have opposed the measure, arguing it would cost the city jobs.

The study’s release follows an announcement earlier this week by the bill’s advocates that they would introduce revisions to the bill that are intended to make it less onerous by excluding manufacturing firms and small businesses from the wage requirement.

The proposed bill, which was originally introduced last year by two Bronx Council members, G. Oliver Koppell and Annabel Palma, would require that employees working in city-subsidized projects be paid $10 an hour with benefits, or $11.50 an hour without benefits. The minimum wage is $7.25 an hour.

The bill has the support of a majority of the City Council, along with a coalition of labor leaders, antipoverty advocates, and clergy, who cite recent Census Bureau data showing that the city’s poverty rate had risen to 20 percent as a reason why the proposal is crucial.

The Economic Development Corporation described the study, which it paid a Boston consulting firm nearly $1 million to conduct, as the most significant study to date on wage mandates. Among the study’s other findings, it predicted that the living wage bill would reduce real estate development. Over 20 years, it found, it would result in a loss of $7 billion in private real estate investment and as many as 100,000 jobs.

A spokeswoman for Mr. Bloomberg on Tuesday night reiterated the administration’s opposition to the bill.

“This study shows clearly that while wage mandates may raise income for a few, they also result in significant job losses and reduced private investment for many,” the spokeswoman, Julie Wood, said in an e-mail. “We’ll review any proposed legislation when it’s introduced, but this Administration is working to make it easier to create jobs in New York City, not harder.”

Stuart Appelbaum, president of the union Retail, Wholesale and Department Store Union, which has organized a coalition of groups supporting the living wage measure, decried the study.

“This is a desperate attempt to derail much-needed living wage legislation that many thousands of New Yorkers have been urging the City Council to pass,” Mr. Appelbaum said in a statement. “Instead of investing in the creation of good jobs, the mayor continues to waste taxpayer money on pathetic propaganda that was discredited months ago.”