After the Council's long-awaited bill to extend sick leave to all private employees in New York City crashed and burned last fall once Council Speaker Christine Quinn declared that it would be too harmful to businesses during tough economic times, many of the same players turned their sights on a proposed "living wage" bill for recipients of city development subsidies. Under a bill signed by Mayor Bloomberg in 2002, city contractors are already guaranteed pay of of $10 an hour; the new legislation would guarantee above-minimum wages—$10 an hour for workers with health benefits, $11.50 an hour for those without—to all employees of companies that receive public subsidies from the city Economic Development Corporation or Industrial Development Agency, including commercial tenants at city-funded development projects like malls.
The proposal has drawn bitter opposition from both business groups and the Bloomberg Administration, which say it would put certain stores at a competitive disadvantage. Proponents counter that providing higher wages is a fair tradeoff for city subsidies—and that other cities have pulled off the trick without discouraging development.
Roots in Armory battle
The Fair Wage for New Yorkers Act was introduced last spring by Bronx councilmembers Oliver Koppell and Annabel Palma, in the wake of the bruising fight over redevelopment of the Kingsbridge Armory, where developer The Related Companies wanted to build a mall. That project ultimately foundered when Related pulled out after the Council—at the behest of Bronx supermarket unions, community groups, and Bronx Borough President Ruben Diaz Jr., and over the opposition of Mayor Bloomberg—required that any jobs at the mall would have to pay wages well above the minimum.
Koppell legislative director Jamin Sewell says the armory battle was "the last straw" after previous attempts to negotiate community benefits with the Yankees for their new stadium, and with Related for the Gateway Center mall project. "We've gone from megaproject to megaproject trying to negotiate decent community benefits agreements," he says, but with limited success, as the council's powers are limited to land use oversight. A living wage law would not only eliminate the need for case-by-case battles, he says, but would be a fair exchange for EDC and IDA subsidies: "I think the feeling is that if you're receiving huge subsidies, then you have to give back to the community."
The Retail, Wholesale and Department Store Union played a key role in the Kingsbridge battle in support of unionized Bronx supermarkets who worried that low-wage stores at a subsidized armory mall would undercut their business. As the fight over the new living wage law has taken shape, RDWSU and other proponents of the legislation have worked to build a broad coalition of support for the new legislation, including a "faith caucus" of clergy from throughout the five boroughs.
"I think people just don't realize the level of pressure that low wages put on families at every level," says Rev. Doug Cunningham of New Day United Methodist Church in the northwest Bronx, who first became active in the living-wage fight around the Kingsbridge Armory. "We have lots of families here in the Bronx working two or three jobs. So then you've got kids on the streets at night instead of doing their homework. You've got kids not ready for school the next morning."
Business leaders--particularly the Real Estate Board of New York, the lobbying arm of the city real estate industry, and the Partnership for New York City, which spearheaded opposition to paid sick leave--retort that while increased wages would be nice, they'd make development projects unaffordable. REBNY president Steven Spinola wrote last summer that the Koppell-Palma bill would "greatly impede job creation and even halt it entirely," because it would be impossible to find tenants who'd agree to rent space when they could "go across the street to comparable space and not be required to pay the higher mandated wage." (Neither the city Economic Development Corporation, the Real Estate Board, nor the Partnership responded to repeated requests for comment for this story.)
The 5 Boro Chamber Alliance, a coalition of borough chambers of commerce that was active in opposing paid sick leave, has likewise come out against the Koppell-Palma bill. "The living wage bill just drives me crazy, says Queens Chamber of Commerce executive vice president Jack Friedman, who calls it "another example of government telling businesses how how to do their business, and not understanding the pressures that businesses are under." He says he's baffled that those who supported a living-wage rule at the Kingsbridge Armory project "somehow think it's a victory that 2,000 people who could be working now aren't. I just don't understand the logic."
Unlike increases in the minimum wage, says Friedman, a living-wage policy tied to subsidies creates an un-level playing field: "Who the heck is going to move into a mall, whether it's Kingsbridge or Queens Center or anywhere else, if you're telling that retailer you must pay your employees 50 percent more than the guy down the street?"
Debate over economic impact
A partial answer, say living wage advocates, can be found in the 15 or so cities that have living-wage laws for developer subsidies already on the books. Paul Sonn, an attorney at the National Employment Law Project who's helped local governments write living wage laws, notes that both Los Angeles and San Francisco have been successful at crafting laws that raise wages without discouraging development. "I think the record in Los Angeles and other cities has been that it hasn't been an obstacle to doing deals," he says. One result, he says, has been that developers have worked harder to lure high-end hotels or "retailers like Costco that already pay better wages."