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Living Wage Is No Job Killer, New Study Argues
City Hall News
Chris Bragg

May 12, 2011
View the Original Article

New York businesses are creating more low-income sector jobs as they emerge from the recession, and requiring higher wages won’t stop their growth, a new study contends.

The report from the liberal Drum Major Institute tries to undercut the findings of a Bloomberg administration study that concluded the opposite, as both sides prepare for this afternoon’s City Council hearing on a proposed living wage mandate.

“The [Economic Development Corporation] study said it would have an effect on low-wage workers” said John Petro, the author of the DMI study, who is expected to testify at the hearing. “But if you look at the jobs that are actually being created now, it’s difficult to say that that’s where jobs would be lost.”

A $1 million study released earlier this week, which was funded by the city’s Economic Development Corporation, found that the job losses from a wage mandate would offset any income gains for low-skill workers. The EDC study predicted that at least 33,000 prospective jobs would be destroyed by the mandate over the next 20 years.

But the DMI study found that in the year since the city’s economy began recovering at the end of the 2009, more than half the 52,000 jobs created have been in retail or hospitality, the two lowest-wage industries, which would be heavily affected by the living wage mandate currently before the Council. Petro also found that the city’s five lowest-paid industries make up 82 percent of all job growth over the past year.

These industries, on average, pay up to 59 percent lower than the citywide average, the study argues. Petro said the continued growth of low-paying industries would drive down the city’s economy as a whole, since those workers generally lack the funds to make big consumer purchases.

“The path we are on isn’t sustainable,” Petro said. “It's not a zero-sum game. By lifting wages we can grow the city's economy.”

Opponents of the living wage bill argue that job increases in lower-income industries would grow at a slower pace if living wage legislation were adopted, since industries like retail have thin profit margins.

The living wage bill would require all employers in developments that receive more than $100,000 in city subsidies to pay workers $10-per-hour if the employer pays health care benefits, or $11.50 an hour if they do not. The EDC study found that the proposal would raise wage standards for up to 62,000 prospective workers.

Council Speaker Christine Quinn refused to take a stand on the EDC study at a press conference on Wednesday, saying it would be one of a number of pieces of information she will consider in deciding whether to allow a vote on the bill. The legislation currently has 29 co-sponsors. Proponents of the bill are expected to hold a rally outside City Hall before the hearing.

Donald Spivack, the recently retired as deputy chief of operations at the Los Angeles Community Redevelopment Agency, is expected to be the key witness for proponents of the bill. He will speak about the city’s experience with a living wage law, which the city passed in 1997.