April 20, 2024

Economix: A New York City ‘Living Wage’

Today's Economist

Nancy Folbre is an economics professor at the University of Massachusetts Amherst.

New York City spends more than $2 billion a year on efforts to promote economic development, but the benefits flow more to developers than to workers. Why not follow the example of some other big cities, including Los Angeles, and require large city-subsidized projects to pay a “living wage”?

I happened to be in New York on May 12, when the City Council held public hearings on proposed legislation along these lines, requiring recipients of more than $100,000 in financial assistance to pay all their employees either $10 an hour plus health benefits or $11.50 a hour without benefits.

Mayor Bloomberg opposes the legislation and questions whether the City Council has the authority to legislate wage standards.

I hustled down to City Hall, notebook in hand, to watch a vivid political drama unfold.

About an hour and a half into the meeting, a sizable rally in support of the proposal was under way out front and the council was hearing testimony both pro and con, peppering the participants with questions. Councilwoman Letitia James cheerfully enforced strict time limits.

The crowd spilled over into two waiting rooms with audio feeds. On this warm spring day, some people in the crowd brandished cardboard fans printed with www.livingwagenyc.org and a quotation from Martin Luther King Jr.

The initial focus of debate was a preliminary report by economic consultants hired by the New York City Economic Development Corporation, asserting that a proposed living-wage standard would dampen job creation, hurting those it was intended to help.

The preliminary report had garnered substantial publicity, but 13 experts had issued an analysis asserting that the report relied on incorrect assumptions about how many workers would be affected, failed to analyze appropriate case studies and employed flawed methodology.

Prof. Stephanie Luce of the City University of New York, among others, came in person to make this case.

Donald Spivack, a former deputy chief of operations and policy at the Los Angeles Redevelopment Agency, emphasized the positive economic effects of living-wage legislation implemented there and parried some tough cross-examination by Council members.

As several advocates for the legislation pointed out, when work doesn’t pay, taxpayers do – low-wage workers are often forced to rely on public assistance in the form of food stamps or Medicaid.

James Parrott of the Fiscal Policy Institute testified that real wages for low-wage workers in the city have declined substantially over the last 20 years, despite dramatic increases in educational attainment. An institute report noted that business tax subsidies have grown two and a half times faster than overall New York City tax collections and asks why these public resources are invested in poverty-level jobs.

A related study of discretionary economic development subsidies examines specific projects that have relied heavily on low-wage employment, including the Bronx Gateway Mall, a Fresh Direct warehouse and Yankee Stadium.

Mr. Parrott testified that income inequality in New York City exceeds that of other large cities, with the highest-earning 1 percent receiving 44 percent of all income.

The activists at the meeting put some life into the numbers. A woman who said she was a cashier at a McDonald’s in Times Square described winning a prize for her good performance rating — but earning only a “rising star” T-shirt for her efforts. Others pointed to specific projects in the city that have paid a living wage, to good effect.

“I’m not in agreement that higher wages create an obstacle,” one worker said, “I think they create an opportunity.”

Other witnesses at the hearing explained their opposition. Representatives from the New York Nightlife Association and the Council of New York Cooperatives and Condominiums worried that some of their members renting space from subsidized projects might be affected in ways that would cause hardship.

Several City Council members who support the living-wage legislation expressed concern about this possibility and said they wanted to work out details to minimize such problems. As Councilwoman James put it: “This living wage – it’s a work in progress.”

According to a recent Baruch College survey, 78 percent of New Yorkers want to progress in this direction.

Article source: http://feeds.nytimes.com/click.phdo?i=4ebed81700fd1f110d375e07fec8d36d

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