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Verdict Is In: EDC's $1 Million Living Wage Study is Rigged

October 27, 2010
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Council Members Say, 'Pass the Fair Wages for New Yorkers Act Now'

New York City Council members blasted the Economic Development Corporation (EDC) today for spending $1 million on a living wage study that is rigged to support Mayor Bloomberg's position.

They supported their charge with a report exposing Charles River Associates (CRA), EDC's choice to conduct the living wage study, as a management consulting firm using economists opposed to living wage and even minimum wage policies. The detailed report on CRA and its economists is written by the Fiscal Policy Institute (FPI) and the National Employment Law Project (NELP), two highly respected economic research groups.

According to the report, "Illustrative of [economists] David Neumark and Daniel Hamermesh's biased position on the issues that EDC has hired them to study is the fact that both have ties to the Washington, D.C.-based Employment Policies Institute. As detailed in June 2010 by The New York Times, the Employment Policies Institute is a front organization created by the controversial lobbyist Richard Berman and funded by low-wage employers to advocate against raising the minimum wage. Since its founding in 1991, the Employment Policies Institute has focused on publishing studies and engaging in media advocacy opposing minimum wage and/or living wage increases."

"It appears that our worst fears about the fairness of the EDC study have now been confirmed," Council member Oliver Koppell said, referring to concerns he and eight colleagues raised in a June letter to the EDC as well as those expressed by three Industrial Development Agency board members who voted against the $1 million study when it came before them for approval.

"We're not going to allow this study to subvert the democratic process and derail legislation that will help working New Yorkers," Koppell continued. "Given the leading members of the study team have been consistent critics of minimum wage and living wage laws, the results of EDC's living wage study seem to be a foregone conclusion. We must move forward and pass the Fair Wages for New Yorkers Act now." Koppell is the chief sponsor of the Act.

NELP's legal Co-Director Paul Sonn, co-author of the report on CRA, said, "David Neumark, the economist leading EDC's study, has spent his entire career criticizing not just living wage policies, but even the minimum wage. On the EDC study he's proposing to use a 'junk science' methodology that has already been exposed by other researchers as flawed and unreliable."

When asked about Mayor Bloomberg's stated opposition to living wages, Sonn replied, "The Mayor has been a real leader around greening New York City and promoting public health. But on decent wages for working New Yorkers, he definitely has a blind spot."

Council Member Annabel Palma, co-sponsor of the Fair Wages Act and Chair of the General Welfare Committee, said, "When a million dollars in taxpayer funding is spent to study a policy as important as Living Wages, an impartial team of experts is the least we should expect. Instead, the Mayor and the EDC have employed a company that will give New Yorkers a biased analysis of the efficacy of the proposed legislation and a distorted opinion of how to further New York City's economic development policies."

Living Wage NYC spokesperson Morenike Dagbo added, "I am a hard working minimum wage earning New Yorker. I am completely beside myself with anger and disappointment to even think that a management consulting firm will be using one million of our tax dollars to conduct a study on the effects of the proposed Fair Wages for New Yorkers Act on people like me. It makes little sense to throw away hard-earned tax dollars on a one-sided study. I think hard working New Yorkers of any economic status deserve to have their money put to better use, such as helping to mend some of the many budget gaps plaguing our city."

Also speaking at the event were City Council members, Fernando Cabrera, Melissa Mark-Viverito, Brad Lander, Letitia James, Ydanis Rodriguez, Jumaane Williams, and Robert Jackson. Twenty eight (28) City Council Members have signed on in support of the Fair Wages for New Yorkers Act (intro 251)) requiring developers who receive major taxpayer-funded subsidies to pay at least a living wage for the permanent jobs they create.

Under the bill, the living wage will start at $10.00 per hour - the same as under New York City's existing living wage law. Employees who are not covered by an employer-provided health plan will receive an additional $1.50 per hour wage supplement to help them purchase their own health insurance. Both the living wage and the health benefits supplement will be adjusted each year to keep pace with the rising cost of living.

Every year New York City spends billions of taxpayer dollars to subsidize development and create jobs. Too often the permanent jobs created with these public subsidies pay poverty wages with no benefits -- whether it's retail and stockroom jobs at shopping centers, mailroom jobs in office buildings, or food service jobs at stadiums. The Fair Wages for New Yorkers Act will lay out clear expectations for developers and help speed economic growth that will create jobs that benefit all New Yorkers.

More than 15 cities have enacted such legislation and they have found that these policies create quality jobs for local residents without slowing growth. New York City is behind the times on this issue and, as a result, our publicly subsidized developments are keeping people in poverty-wage jobs, rather than providing them with opportunities to get ahead.