John Petro

Living Wage Jobs Are Good for the Private Sector Too

New York City has an economy shaped like an hourglass, with a large number of high-paying jobs on one end, a whole lot of low-wage jobs on the other end, and a narrow midsection where the middle-class jobs are supposed to be. Finding a job that pays a living wage can be elusive for the 3.5 million adult New Yorkers without a college education. Jobs in higher-wage sectors like manufacturing are being replaced with low-wage jobs in restaurants, retail, and other services. For everyone except the highest-paid New Yorkers, the average hourly wage has actually fallen; the typical resident has seen their wages drop by about eight percent since the early 1990's.

Luckily, there is a lot that New York City can be doing to reverse these trends. By refocusing our economic development efforts, we can grow the number of good, middle class jobs. Last month, an article in the American Prospect took a look at what cities across the country are doing to ensure that city-led economic development efforts create economic opportunity. Previously, developers and private firms set the terms for economic development deals with cities. But cities from Baltimore to Los Angeles are changing this dynamic. These cities are no longer content to just hand subsidies over to developers; they're requiring that public subsidies create public benefits, such as living wage jobs.

New York City has failed to realize the potential of its economic development money. In the Bronx, the city has not pushed the developer Related Companies to require living wage jobs in a new mall that is being developed with the assistance of city subsidies. The new Yankee stadium received $800 million in subsidies, but the city failed to leverage one living wage job for residents in the surrounding neighborhood.

It is in the city's best interest to grow the number of living wage jobs. Those working poverty-level jobs have to rely on public assistance to pay the rent and put food on the table. Poverty is linked to higher levels of diabetes and heart disease, putting strain on our public health system. Even worse, children in poverty have lower levels of educational attainment, meaning that the cycle of poverty is likely to be extended to the next generation.

Private investors, developers, and big-box stores will tell you that these types of requirements will drive investment away. But in fact, by requiring living wage jobs a city can actually attract more investment. Residents with living wage jobs will spend more money on goods and services, which will lead to more investment opportunities. They require less public assistance and fewer public services, meaning that taxes can be lowered as the need for these services drops. And reducing the number of residents in poverty will likely have a positive impact on a host of other quality of life issues such as the crime rate.

It turns out that just about worst thing a city can do for its health and prosperity is to have its residents locked into poverty-level jobs. By focusing on economic opportunity, not just economic growth, New York City can become a more prosperous place for both its residents and the businesses that invest here.

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Posted at 12:41 PM, Nov 02, 2009 in Urban Affairs
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