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Wage Debate Heats Up Ahead of City Council Testimony
Carl Gaines

May 12, 2011
View the Original Article

NEW YORK CITY-A coalition of business owners, non-profits and city chambers of commerce met on the steps of City Hall yesterday to voice their dissatisfaction with proposed living wage mandates. The bill that would implement the mandates calls for wages of at least $10 an hour on jobs that receive significant amounts of public money. Yesterday’s gathering came in advance of today’s City Council hearing on the matter.

“In city after city, wherever wage mandates are tried, the very people who are supposed to benefit are hurt the most,” Manhattan Chamber of Commerce president Nancy Ploeger said. She went on to outline the three main points of contention: the additional costs, the belief that it will make New York noncompetitive in areas such as development and building, and the creation of vast amounts of red tape to monitor compliance.

Jack Friedman, executive VP of the Queens Chamber of Commerce, tells GlobeSt.com that the measure would all but kill development, which has already been hit hard in the region. “I can’t imagine Willets Point going forward if the living wage mandate goes forward,” Friedman says. “Because what retailer in their right mind is going to agree to sign leases in a place where they’re going to have to pay their employees 50% more than the people down the block?”

As GlobeSt.com has reported, construction numbers in the city continue to plummet, down 12% in 2010 compared to the previous year.

“Areas like Staten Island where I come from--we have most of the vacant land in New York City--we’d love to see development projects move forward,” Staten Island Chamber of Commerce president and CEO Linda Baran said. She added that the living wage mandate would impact a mixed-use development underway in Stapleton at the site of the former US Navy Homeport. She also tells GlobeSt.com that, with construction down in the borough, that the mandate would stifle burgeoning development in areas like St. George.

A study commissioned by the city’s Economic Development Corp. addressed several ways that the living wage mandate would have direct negative effects on real estate development. For one, the Charles River Associates study claims that some projects would continue to be developed, just without the financial assistance that would cause them to come under the bill’s purview. “The increased costs of development without financial assistance may have some distortionary effects on tenant mix and rents which may generate employment loss,” the study reads, in part.

Second, the study says that some projects might not go through at all--leading to job losses resulting form employers locating elsewhere.

But James Parrott, deputy director and chief economist at the Fiscal Policy Institute, thinks the study is flawed. “The legislation does not cover the ICAP program,” Parrott says, referring to the Industrial & Commercial Abatement Program, which provides property tax abatements for eligible commercial and industrial buildings. “That’s not a useful basis for modeling the impact of the living wage law because the benefits under ICAP--while in a cumulative sense add up to a lot because so many properties qualify for that--on an individual basis they’re not that great.”

Parrott tells GlobeSt.com that the focus of the living wage legislation is really the big development projects like Willets Point and that modeling the study on ICAP was perhaps just a way to inflate potential employment losses. He also says that the EDC study relies on a simplistic supply-demand model--labor costs rise and demand for them falls--instead of investigating positive effects of higher wages, like happier, more productive employees who provide better customer care and stay on the job longer. He planned to testify at today’s hearing.