John Petro

Bloomberg Wrong on Living Wage

Mayor Bloomberg's comments on a new bill being considered by the City Council are not just disingenuous, they're also flat out wrong. Yesterday, Bloomberg slammed the new bill--which would require employers to pay living wages to all workers at city-subsidized projects--saying that the requirement would stop new development deals from going through.

"It's a nice idea but it's poorly thought out and will not work... the economics don't work if you have to pay more."

It seems the mayor has a short memory. Just last year the city agreed to include wage requirements as part of the redevelopment of Coney Island--prevailing wages for hotel and building service workers and living wages for other workers.

But if the "economics don't work," as the mayor claimed yesterday, then why did the administration agree to these requirements for Coney Island? Unless Bloomberg is purposefully trying to kill the redevelopment plan, there must be some disconnect in the mayor's logic.

The fact is: there is no evidence that the bill would kill development in the city. Close to 20 other cities have successfully put wage standards on city-subsidized development projects. Los Angeles, for example, currently has 130 development projects in construction or in the pipeline, representing $10 billion in private investment and 3.5 million square feet of new commercial space. And yet, Los Angeles has had a living wage requirement for city-subsidized projects since 2003 and a prevailing wage requirement since 1986.

By guaranteeing that every job created by public subsidies pays a living wage, the bill would maximize the impact of our subsidy tax dollars at a critical time of budget shortfalls and service cuts. Higher earnings by workers at subsidized projects would generate more economic growth as these workers channel their earnings back into the local economy and patronize small businesses.

Instead, when the city subsidizes low-wage work it undercuts those employers that do pay decent wages. The economic development status quo is often a perverse and irrational intervention in the private market that favors certain businesses and developers over others.

And the city pays for it in more ways than one. The city invests vast sums of taxpayer dollars for the purpose of economic development. At Willet's Point, for example, the city plans to pour $380 million into the economic development project for infrastructure improvements over the next five years.

But supporting working families in poverty also costs a lot of money. When workers do not earn enough to make ends meet, the taxpayer picks up the tab. By one estimate the state spends $5.2 billion every year to support working families in poverty. And the city spends considerable money too: $260 million this year to assist low-income working families with child care services. Add up all the other city programs that support working families and the cost of subsidizing low-wage work quickly adds up.

The principle behind the new bill is simple: the city should use economic development subsidies to boost wages for New Yorkers, not undercut them. Higher wages leads to more spending in the local economy, more tax dollars for the city, and fewer costs associated with providing public assistance. Creating low-wage jobs, on the other hand, does nothing to move families out of poverty and off of public assistance. Far from killing growth and development, this bill will lead to a stronger local economy and real economic development for the communities that need it the most.

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Posted at 4:59 PM, May 25, 2010 in Urban Affairs
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