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Wage Wars: $10 an Hour Emerges as Make-or-Break for New Development
The New York Observer
Eliot Brown

December 15, 2009
View the Original Article

By all measures, a press conference early Monday afternoon on the steps of City Hall appeared to be a victory celebration.

The City Council had just voted, 45-1, to block a planned new mall at the Bronx’s Kingsbridge Armory, as the developer, the Related Companies, balked at requiring its retail tenants to pay wages of at least $10 an hour—$11.50 without benefits—a so-called living wage. And while the elected officials on hand gave a disclaimer that the event was not actually a “victory”—there now will be no wages of any sort at the armory, after all—they repeatedly boasted of a job well done, with the crowd of union members and activists erupting in cheers and applause as they pumped signs reading “We want living wages.”

“We can no longer support development that only ensures profits for barons while perpetuating poverty for people of the Bronx,” Ruben Diaz Jr., the Bronx borough president who led the fight for a mandatory living wage, bellowed. “That notion of any job is better than no job no longer applies.”

The bar for development in New York City just got higher.

With a resounding triumph behind them, the union that drove much of the living-wage push, the Retail, Wholesale and Department Store Union, and elected officials are already casting their eyes further out on the horizon. From the ashes of Kingsbridge, they now expect that the living-wage matter will rise up to appear in future individual developments as they come before the Council, and they will press for a citywide law requiring a living wage for most any project that receives city subsidy.

“As far as we’re concerned, the battle for middle-class jobs for New Yorkers has only just begun,” Stuart Appelbaum, president of the RWDSU, said.

This new terrain—and the extremely rare defeat of a development project—points to the rising influence of labor in the City Council, as city and state politics are reshaped with a louder, union-backed voice coming from elected officials. On top of the push for retail workers’ wages, the powerful building service workers union, SEIU 32BJ, is pushing a bill that would grant similarly high “prevailing” wages to building employees in subsidized projects citywide. And on the state level, a recent draft of a bill from Governor Paterson’s office called for wages of $19 an hour for any development receiving subsidies through certain state authorities, a measure viewed as a demonstration of support for labor.

The justification for living wages, by the telling of union leaders and elected officials, runs like this: If a developer is receiving public-sector subsidies, it should pay forward to the workers some of the government’s goodwill. And thanks to the Kingsbridge fight, numerous council members are now on the record demanding that a developer receiving city subsidies—Related, in this case—has the obligation to require living wages at its development. Given that the Council voted Related down because it did not meet that demand, how does it now turn to other developers and allow them to build without the same mandate?

In remarks at the vote, multiple council members used rhetoric to suggest such actions would continue. Charles Barron said he hoped the vote would be “precedent-setting,” and John Liu, the city comptroller–elect, said it “set a standard for accountability.”

Taking this to a citywide level, last week a bill was introduced by Bronx Councilman Oliver Koppell that would require living wages for workers in nearly every development that receives city subsidy or tax breaks (anything over $10,000). Although the bill expires at the end of the year, Mr. Koppel said he would reintroduce it next year, and expected to press the issue.

“The Council as a whole has a lot of sympathy to the idea of subsidized projects producing better jobs,” Mr. Koppell said Monday. “It makes more sense to do it on a broader level.”

All of this raises the question of whether living-wage requirements would have their desired effect—expanding wages in new developments—or whether they would simply mean far fewer jobs.

The real estate and business communities oppose the requirements and warn in particular that they would effectively halt any new large-scale retail development. “This is a matter where this is the complete triumph of ideology over practical common sense,” said Kathryn Wylde, president of the Partnership for New York City, a leading business group. “It’s not like there’s a lot of money for employers to spread around, and it’s very subject to economic cycles,” she said of retail.

This was Related’s position throughout the Kingsbridge fight—the company said it would not be able to get financing or tenants—and Related’s attorney, Jesse Masyr, said the principle would apply in other projects.

“I don’t see it,” he said of a broad living-wage requirement. “In the economic realities of today, I don’t see how you can put up this barrier and think people aren’t going to run around it.”

OF COURSE, NEW YORK would hardly be the first to put living-wage requirements on subsidized projects or government contracts. More than 100 cities nationwide have passed some sort of living-wage requirement, part of a larger movement throughout the country in the past 15 years. Retail, which generally pays low wages, is not included in the vast majority of these laws, though the trend seems to be going in that direction.

“There has been a general trend toward broader coverage of economic development projects under local wage laws,” said Paul Sonn, legal co-director at the National Employment Law Project and a drafter of numerous living-wage bills. “The early living-wage laws were focused on city contracting, but there has been a gradual expansion of them.”

A bill in Pittsburgh that would require living wages for subsidized developments in numerous sectors—in grocery stores; for hotel workers—has the support of most of the City Council there. Oakland has a law requiring living wages on subsidized retail developments; and Los Angeles has such a law for projects on city-owned land. (Ironically, Related is the designated developer on one of these projects, and it did not use the same arguments against the requirement as it did at Kingsbridge. That said, the developer cannot secure financing, and the project is not proceeding.)

It’s no certainty that the New York City Council will now feel compelled to demand that every development project offer a living wage. Those on the losing side of the Kingsbridge fight view it as something of an anomalous political situation in which the borough president had unusual influence (the local councilwoman, Maria Baez, lost her bid for reelection), a situation unlikely to be repeated.

Further, unions do not have a great track record at presenting a unified front when pushing for issues such as this, with pressure easing on legislators once one or two unions have their individual demands satisfied. In Kingsbridge, for instance, the Building Trades coalition of unions splintered off from RWDSU and other labor groups once it felt the project was actually threatened, and Related had been negotiating with 32BJ late last week on a separate deal.

And should Mr. Koppell’s legislation advance, it would presumably have to withstand a fight from the mayor. The Bloomberg administration was involved in days of negotiations in Kingsbridge and consistently pushed back against a living-wage requirement. The mayor has said he is against such a mandate on principle.

“It’s not the public sector’s role to try to set private-sector wages,” said Andrew Brent, a spokesman for the mayor. “The notion of introducing artificial wage requirements for an individual project when across the street there are none is not a realistic answer, would make the city less competitive and would result in less development and fewer jobs.”