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Living-Wage Debate Gets Broader, Louder
Crain's
Daniel Massey

May 23, 2010
View the Original Article


A fierce debate over city-mandated wage levels that derailed the redevelopment of the Kingsbridge Armory in the Bronx late last year is set to spread across the five boroughs. A bill that will force projects that receive any subsidies from the city to pay wages of at least $10 an hour plus benefits for all jobs they create is slated to be introduced in the City Council on Tuesday.

The introduction will kick off a citywide push by a coalition of labor, community and religious groups, spearheaded by Stuart Appelbaum's Retail, Wholesale and Department Store Union, to pressure elected officials to tie wage mandates to economic development projects. The proposed floor for wages is almost 40% higher than the state's minimum wage of $7.25.

Judging by the Kingsbridge battle—in which elected leaders in the Bronx and the City Council ultimately squashed a project that would have yielded 2,200 jobs—the bill will get a frosty reception from the Bloomberg administration.

As debate over Kingsbridge unfolded, Mayor Michael Bloomberg and his economic development team repeatedly argued that transforming the empty armory into a retail mall would not be viable if the mandate for a “living wage” was attached. And earlier this month, a City Hall official testified against a separate bill that would require prevailing wages for building service workers at city-subsidized projects.

With proponents of the new bill seeking to cover all jobs created citywide through subsidized projects, the stakes will be higher, and the fight is sure to get even testier.

The Fair Wages for New Yorkers Act will be unveiled by council members Oliver Koppell and Annabel Palma, both Democrats from the Bronx, at the behest of their borough's president, Ruben Diaz Jr. It would require developers of any project that receives more than $100,000 in city subsidies—such as bond financing, tax abatements or infrastructure improvements—to guarantee a minimum wage of $10 an hour plus benefits, or $11.50 without benefits. The salary would be indexed to inflation.

“Where should the city put its finite resources?” asks Mr. Koppell, whose district lies near the armory. “It should put money into enterprises that create good jobs, not that create jobs that will maintain poverty-level conditions.”

Some 20% of city families with at least one full-time, year-round worker live in poverty, according to the Center for Economic Opportunity.

Seen as job killer, by some

The city's business community and its allies will work to make sure the measure doesn't move forward, insisting that it would be a job killer.

Manhattan Institute Senior Fellow Steve Malanga points to a study by the Public Policy Institute of California which argues that living-wage laws like the one proposed in New York actually increase unemployment among the lowest-paid workers by up to 9% within a year of implementation.

“When you force employers to raise wages above where they might normally be,” Mr. Malanga explains, “they shift to using better-paid, more educated workers, but fewer of them.”

Kathryn Wylde, president of the Partnership for New York City, a consortium of the city's largest private-sector employers, believes that any action on the bill should wait for the city to complete its recently announced study on the impact of living-wage mandates.

“Legislation is forever,” Ms. Wylde says. “Markets go up and down, and this could threaten bringing jobs and economic activity to low-income neighborhoods, particularly during difficult times.”

Mr. Koppell says he is still gathering co-sponsors, but he anticipates “very broad support” for the bill when it is introduced.

In Speaker Quinn's court

Since the measure comes at the request of the Bronx borough president, it's likely to get the backing of the City Council's entire Bronx delegation. It also seems to be assured the support of the dozen members of the council's recently formed Progressive Caucus, which included a living-wage economic policy in its founding platform.

Yet because there is virtually never a contested vote in the overwhelmingly Democratic chamber, the bill's future may hinge not so much on a counting game but rather on whether Speaker Christine Quinn makes it a priority in negotiations with the mayor. The number of backers is not inconsequential, but it will take more than widespread support to give the bill traction.

New York was one of the first cities to pass a living-wage law: In 1996, it increased the wages of government-contracted cleaners and security guards, despite Mayor Rudy Giuliani's veto. In 2002, Mr. Bloomberg extended the law to about 50,000 home health aides.

More recently, the city has entered into agreements linking higher minimum wages to subsidized projects in Greenpoint/Williamsburg and Coney Island in Brooklyn and Willets Point in Queens.

“We're already using wage standards for large-scale projects, and there's no indication they're impeding development,” says Paul Sonn, legal co-director of the National Employment Law Project, citing, for example, the 29 responses the city has received to its request for proposals to redevelop Willets Point.

None of those wage deals, however, were as expansive as the one about to be proposed—setting up a clash that could make the Kingsbridge fight look tame by comparison.