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John Petro

Tell Me What I Want to Hear: Bloomberg’s Living Wage Study

Three top city officials, each rumored to have their eye on a mayoral run in 2013, challenged Mayor Bloomberg on Monday over a living wage bill in the City Council. The mayor has made it clear that he opposes the bill, which would guarantee workers at city-led development projects a living wage, calling these requirements a job-killer.

But with support for living wage growing in the City Council, a grassroots campaign led by city faith leaders gaining momentum, and a complementary bill on prevailing wages also gaining traction, the Bloomberg administration commissioned a $1 million study on the living wage to be released sometime next year. Many City Hall insiders saw the move as a delaying tactic.

Now the three city officials, Comptroller John Liu, Manhattan Borough President Scott Stringer, and Bronx Borough President Ruben Diaz, have questioned whether the study is designed to come to a predetermined conclusion.

The study's lead economists, David Neumark and Daniel Hamermesh, have consistently been critical of living wage and minimum wage laws in the past, and their work has been used to bolster arguments against raising the national minimum wage. While there is certainly disagreement among economists, the majority agree that increasing the minimum wage does not create unemployment.

So the concerns of Liu, Stringer, and Diaz are valid. But the real issue here is not Bloomberg's study, it is creating good jobs for New Yorkers and correcting the structural imbalances in the city's economy. It's about maximizing the impact of the city's economic development programs so that they benefit those that need them the most: low-income New Yorkers.

The city's Economic Development Corporation (EDC) is the quasi city agency in charge of most of our economic development programs. They engage in a wide variety of projects, but the bulk of the EDC's resources go towards large-scale development efforts like Coney Island or Willets Point. The EDC has become, as professor of urban affairs Tom Agnotti called it, "The Real Power in City Planning."

The focus of the EDC should be to increase economic opportunity for the one-in-three adult workers in the city that make less than $24,000 a year. But as Agnotti concluded, the EDC often promotes the interests of real estate developers and big business over the public interest. "The real power and money is with the companies with whom the agency is supposed to be a partner."

Let's be honest. If the EDC-led Kingsbridge Armory project--a planned retail mall that was shelved over community demands for a living wage--had moved forward last year, the entity that would have gained the most was the developer Related Companies. Handed tens of millions in tax breaks and a sweetheart deal on the land, Related would have done quite well with its new retail mall.

Who else would have benefited? National retail chains that would have siphoned off business from locally owned stores and sent their enormous profits back to corporate offices outside of New York.

Yes, there would have been new jobs at the mall for local residents and tax revenue would have flowed to the city from retail sales. But would these jobs really have been "new" jobs, or just transferred from the city's small businesses to national retail chains? And without a requirement for living wages, these jobs would have offered no real economic opportunity. The workers, many of them their family's primary bread-winners, would have made poverty-level wages.

The point is: the city can do better. Our resources are being spread thin because of budget pressures and all city agencies are expected to do more with less. Our economic development resources should be directed at projects that will benefit city residents, not real estate developers. This means creating living wage jobs, not poverty wage jobs.

But instead, Mayor Bloomberg argues that raising wages for city residents is bad for the city's economy. And he is hoping that his $1 million study will tell him he's right.

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Posted at 1:59 PM, Nov 10, 2010 in Urban Affairs
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