Professional Documents
Culture Documents
Living
Wage
by
Phillip
Quintero
November
26,
2011
The
ongoing
debate
over
the
Living
Wage
Act, i
Introduced
in
May
of
2010,
has
gained
coverage
after
the
city
council
meeting
of
November
22,
2011.
Credible
news
sources
pose
the
debate
as
one
with
two
clear
sides.
On
the
one
hand
are
labor
activists
and
supporters
who
believe
that
employees
should
be
paid
a
legal
minimum
wage
of
$10
an
hour
with
benefits,
or
$11.50
an
hour
without.
On
the
other
are
business
and
labor
leaders
who
believe
the
bill
will
stifle
economic
growth,
because
businesses
will
choose
to
go
where
wages
are
lower.
In
2002
the
city
passed
a
bill
requiring
this
same
living
wage
be
paid
to
employees
under
city
contracts.
The
new
bill
would
extend
that
minimum
to
employees
of
private
development
projects
that
receive
more
than
$1
million
in
assistance
from
the
New
York
Economic
Development
Corporation
(EDC).
Assistance
often
comes
in
the
form
of
tax
breaks,
tax-free
bonds,
and
grants.
In
the
current
revision
of
the
bill,
businesses
making
less
than
five
million
in
annual
revenue,
not-for-profit
institutions,
construction
contractors,
and
projects
intended
to
provide
affordable
housing
are
exempt
from
the
higher
minimum
wage
requirement.
Current
projects
receiving
EDC
funding
include
renovations
of
public
urban
areas,
retail
centers,
skating
rinks,
theaters,
recycling
facilities,
marine
terminals,
parks,
applied
science
research
facilities,
water
systems,
museums,
housing,
bike
lanes,
fire
stations,
public
transportation,
and
senior
living
centers.ii
Cost-Benefit
Proponents
of
the
bill,
like
New
York
City
Council
Member
Melissa
Mark-Viverito,
claim
that
economic
development
projects
do
not
help
local
communities
if
the
jobs
they
produce
are
low-paying
and
without
benefits.
The
bill
is
intended
to
counteract
the
growing
number
of
New
York
City
households
that
subsist
below
the
poverty
line.
Opponents,
including
business
and
labor
leaders
as
well
as
Mayor
Michael
R.
Bloomberg,
claim
that
the
bill
would
make
up
to
one-third
of
current
and
upcoming
development
projects
financially
unfeasible.
The
city
commissioned
a
study,
conducted
in
May
by
consulting
firm
Charles
River
Associates,
which
claims
to
show
that
the
proposed
legislation
would
not
raise
wages
enough,
or
for
enough
people,
to
offset
the
jobs
that
would
be
lost
as
a
result
of
businesses
who
would
take
their
investment
to
nearby
cities
were
the
legislation
to
pass.iii
Others
contest
these
claims.
A
joint
analysis
by
the
National
Employment
Law
Project,
the
Fiscal
Policy
Institute,
and
Good
Jobs
New
York
find
the
report
contains
a
series
of
flaws
in
assumption
and
methodology
that
render
the
CRA
study
invalid.iv
Supporters
cite
San
Diego, which has had a similar policy since 2006, as a positive example that the bill can be effective.v The role Mayor Bloomberg and the EDC played in ordering these studies has also been called into question. New York City Comptroller John Liu, for instance, is dubious of the EDCs work as it is.vi The Other Debate While disputes over empirical assessments will require further research, I notice a curious omission from the public discourse on the issue. Most popular media represents the costs and benefits of raising wages as the cornerstone of the bill, but I do not think this is its most contentious aspect. The major deterrent for developers does not, in fact, seem to be the costs associated with paying the higher wages themselves. Raising wages to a higher minimum is a predictable cost with a fixed rate of increase. The greater threat to employers seems to be, rather, accountability itself. Under the new bill, the New York City Comptrollers office is responsible for monitoring and enforcement. The bill gives the Comptroller a great deal of authority to investigate employersincluding access to their books, interviews with employees, and site visits. All of this monitoring poses an added expense and responsibility to the office of the comptroller. Despite this, maintaining compliance presents a real cost for employers as well; they will need to monitor employee wages very carefully to avoid the harsh sanctions imposed for living wage violations. A client receiving assistance from the city who is found to be in violationtwo offences within six monthscan lose the citys financial assistance altogether, which may be scheduled to extend over many years. The bill requires living wage compliance for at least 10 years, and regulates how records are kept and how wages are calculated. It also includes sanctions intended to protect employees who file complaints against employers violating the wage regulation. In addition, the increased oversight means increased liability, as public sanctions do not preclude private lawsuits. This presents a problem for the many industries that depend on the labor of undocumented immigrants, as employment practices will be under higher governmental scrutiny. So far, this issue has not been discussed in the public eye. Developers claim that the bill will make many projects unfeasible, as investors and employers are not willing to take on the associated costs of the additional record keeping and reporting required of them or the sanctions violators will face under the new bill. The picture here is not one where lower profit margins will deter economic growth, but one where investors are unwilling to invest in economic infrastructure, because the new legislation poses a great liability to themselves and the employers they hope to attract with their development projects. Specifically, the argument is that it is a deterrent for the government to make businesses accountable for their employment practices. This argument is, I feel, implicit in the debate and one that both sides would do well to acknowledge.
i City Council Int. No. 251 and 251-A: http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=664291&GUID=A83A5A5B- 9589-4589-AAD7-5B2C6884610F&Options=&Search= ii NYC EDC: http://www.nycedc.com/PROJECTSOPPORTUNITIES/CURRENTPROJECTS/Pages/Current ProjectsIndex.aspx iii Full CRA study: http://www.nycedc.com/NewsPublications/Studies/Documents/CombinedReportLiving WageImpacts.pdf iv See the joint assessment: http://www.nelp.org/page/- /Justice/2011/AssessmentEDCStudyMay2011.pdf?nocdn=1 v Living Wage NYC: http://www.livingwagenyc.org/pagedetail.php?id=4 vi In official press releases as well as his personal twitter account, Liu calls for the EDC to return money to the City treasury after a recent audit showed that many funds have been allocated for projects but not dispersed: http://comptroller.nyc.gov/press/2011_releases/pr11-09-075.shtm