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Economic Impact of First Nine Months of Living Wage Legislation
Retail, Wholesale and Department Store Union, UFCW Research Department
Context and Background: The Fight for Living Wages
eginning in 2010, community groups, faith organizations, civil rights activists and labor unions came together to build a campaign to enact living wage legislation in New York City. Led by the Retail, Wholesale and Department Store Union (RWDSU), this economic justice coalition fought to establish that when substantial sums of public dollars are used to promote private development, the public has the right to expect something fair and equitable in return: good jobs that strengthen communities rather than poverty-wage jobs that weaken communities. On June 28, 2012 the Fair Wages for New Yorkers Act was enacted (overturning Mayor Bloomberg’s veto) requiring that workers employed at developments receiving $1 million or more in taxpayer assistance are paid a living wage of $10.00 an hour with beneﬁts or $11.50 an hour without beneﬁts. On April 1, 2013, pursuant to the legislation, which annually adjusts the living wage rate based upon the Consumer Price Index, the value of living wage increased to $10.20 an hour when beneﬁts are provided or $11.75 an hour when beneﬁts are not provided. Although Mayor Bloomberg had sued the City Council to overturn the living wage legislation, the law is currently in effect. The law suit has had no impact on the legislation. Not only did the courts not suspend the legislation while it was being litigated, but on July 2 of this year the United States District Court for the Southern District of New York dismissed the Mayor’s lawsuit. The court held that the Mayor’s allegations were “clearly insufficient to establish standing.” As the law requires, the City Comptroller has been enforcing the living wage law. On January 1, 2013, the Office of the Comptroller issued the enforcement publication titled, “Living Wage for Employees in New York City Financially Assisted Workplaces Pursuant to New York City Administrative Code §6-134” . 1 It states that the effective period for the legislation’s requirements began September 26, 2012. It is from this date that we calculate the law’s impact on jobs, and speciﬁcally the number of jobs at new subsidized economic development projects that must pay the living wage.
Key Findings: Living Wage Impact at Nine Months
In the ﬁrst nine months of living wage implementation the law has not dampened business appetite for tax exemptions. The Industrial Development Agency (IDA) has been operating at full capacity with no change in number of applications for public assistance month to month (roughly three to four projects per month). Economic development activity in the city has not slowed down as a result of requiring good job creation through living wage legislation. Most
1 Downloadable at http://www.comptroller.nyc.gov/bureaus/bll/2012-pdf-ﬁles/6134Jan2013Final.pdf
importantly, the number of jobs requiring a living wage through IDA investment has surpassed all estimations. Since compliance for the law went into effect2 12,448 full-time equivalent (FTE) jobs at publically subsidized companies will have to pay at a minimum the living wage.3 It is clear that the living wage requirement is playing and will continue to play a key role in ensuring city funds for economic development are directed to support and grow living wage jobs at a time when many New Yorkers are struggling to survive. Although tenant businesses of subsidized developments were exempt from the legislation, developments with a tenant component are not often subsidized in the city. In the past decade leading up to the passing of the law, there were only two IDA subsidized developments that had tenants as a major component. Since the law went into effect no jobs at IDA subsidized developments have been exempted from paying a living wage because the employer is a tenant. Even if tenant businesses had been included in the legislation, no additional jobs would have been covered by the living wage requirement during the ﬁrst nine months of implementation. There are now over 12,400 full time equivalent jobs that will be required to pay at least a living wage because of this legislation. Good economic development can now be deﬁned as generating good-paying jobs. Because of the living wage legislation, the New York City Economic Development Corporation (EDC) must now promote good job creation and seek high road employers. This signiﬁcant shift in how the EDC operates will support the wellbeing of working families, communities and our economy.
Doing the Math: Calculating the Number of Jobs Requiring Living Wages
In order to receive public assistance for economic development, a business or non-proﬁt must complete a rather extensive application. Since job creation and retention is fundamental to economic development, this application includes an employment section that consists of current number of employees at the development site as well as projected number of employees that are expected to be hired up to 15 years from date of application. Since the effective date of the living wage, the IDA has held public hearings on 28 projects.4 Out of the total projects that will have received public assistance 10 of them are fully exempt from living wage legislation based on exemptions in the law.5 This leaves 18 projects in nine months that are required to pay at least a living wage to its employees at the subsidized development.
2 September 26, 2012 as established by the Office of Comptroller. 3 See appendix below that details IDA public hearings of ﬁnancially assisted projects in the past nine months as well as the employment tally of covered employers in chart on page 3. 4 Special thanks to Good Jobs NY for posting all the project applications on their website: http://goodjobsny.org/monthly-alerts 5 Exempted projects in the ﬁrst nine months were either from the manufacturing exemption, recipients of FRESH subsidy program, or they received less than $1 million in public assistance.
The chart below shows the total number of jobs at these projects that must pay the living wage:
Jobs Requiring a Living Wage
NYCIDA Subsidized Projects First Nine Months Through June 11, 2013 Employment at Subsidized Projects Requiring Living Wage 36 73 75 43 62 244 63 4578 143 150 23 63 6397 100 262 62 39 35 12,448
Subsidy Recipient Foodfest Depot LLC “R” Best Produce Inc Fairway Bakery LLC * Krinos Foods LLC * Artex, Inc. Shleppers Holdings LLC Richards Plumbing and Heating Co JetBlue Airways Corporation Fairway Bakery LLC (Walnut Ave) * Jetro Cash and Carry Eclectic/Encore Properties Inc Coda Resources Ltd Delta Air Lines Oz Moving and Storage, Inc Shine Electronics Co. Inc., Dealer Storage Corp. Greenfelds Covanta
Job Retention 16 52 43 40 52 122 56 4458 66 120 18 57 6397 80 210 32 19 0
Job Creation 20 21 32 3 10 122 7 120 77 30 5 6 0 20 52 30 20 35 610
Total Jobs at Subsidized Projects 11,838
* Projects marked with an asterisk partly contain a manufacturing component which is exempt from living wage requirements. Until the project is developed the job number listed here is a placeholder and estimates that half the jobs would be exempt from living wage. See detailed appendix below.
The following projects were listed in New York City Industrial Development Agency’s (IDA) notices of public hearing since September 26, 2012.6 The data are based on IDA cost/beneﬁt analysis and applicant information in the core application for program inducement.
October 9, 2012
I Foodfest Depot LLC will receive $4,074,315 in tax exemptions. It will relocate 16 Full Time Equivalent jobs (FTE) and create an additional 16. An affiliated entity will create 4 FTE. I “R” Best Produce Inc. a wholesale produce distribution company will receive $3,745,764 in tax exemptions. It is relocating 51.5 FTE and adding 21 employees. I Fairway Bakery LLC, (half EXEMPT: manufacturing; half warehousing) a subsidiary of Fairway Market will receive $3,683,530 in tax exemptions. It is relocating 55 FTE and 30 additional positions over the following ﬁve years. In addition the company will be creating 64 FTE within 15 years of operations. I Krinos Foods LLC an importer, distributor, and manufacturer of olives, olive oils, cheeses and other Mediterranean food times will receive $10,525,446 in tax exemptions. The company will retain 79 employees and create 5 FTE in ﬁve years.
November 13, 2012
I Artex, Inc. will receive $8,211,476 in tax exemptions to acquire a storage facility. The company currently has 51.5 FTE and plans to create an additional 10 FTE. I 5 Bay Street (EXEMPT: under public assistance threshold)
December 11, 2012
I Shleppers Holdings LLC will receive $1,770,992 in tax exemptions. The company will relocate 122 FTE and will create 122 additional FTE. I Richards Plumbing and Heating Co will receive $1,842,337 in tax exemptions. It will relocate 56 FTE and create 7 additional FTE. I JetBlue Airways Corporation will receive approximately $6.2 million in tax exemptions to build an extension at Terminal 5 at JFK. Based on current employment and hiring trends they expect to have 4,578 FTE positions. I National Acoustics Inc. (EXEMPT: manufacturing)
6 This list of projects does not include public hearings on non-proﬁts, which are exempt from living wage requirements.
January 8, 2013
I Fairway Bakery LLC (half EXEMPT: manufacturing; half warehousing) will receive $8,009,109 in tax exemptions in connection with renovation of a 237 ,000 square foot industrial facility. The company is a subsidiary of Fairway Market and intends to use the leased space as a centralized bakery, produce processing and prepared foods facility, as well as for warehousing and distribution in support of Fairway’s retail markets. The company currently employs 132 FTE at project location and projects adding 153.6 FTE. I Art to Frames Inc. (EXEMPT: manufacturing)
February 13, 2013
I Jetro Cash and Carry Enterprises, LLC is a privately owned cash and carry wholesaler of food and related products for independent grocery stores and businesses in the restaurant and catering sectors. The company will receive $13,278,514 in tax exemptions to expand its Queens operation at 43-40 57th Avenue. It currently employs 120.5 FTE and projects creating 30FTE. I Rock Beach Food Corp. (EXEMPT: FRESH subsidy recipient)
March 12, 2013
I 149 Street Food Corp: (EXEMPT: under public assistance threshold) I Eclectic/Encore Properties Inc. is seeking approximately $5,778,212 to acquire and renovate a 91,000 square foot building located in Long Island City. The company will relocate 18 FTE and create 5 FTE in ﬁrst seven years.
April 9, 2013
I Bogopa LIC, Inc. (EXEMPT: FRESH subsidy recipient) I Coda Resources Ltd. a global sourcing and distribution service provider, will receive $2,204,845 in tax exemptions to renovate and equip a 100,000 square foot facility with solar panels. The company currently has 57 FTE and will create 6 FTE. I Delta Air Lines Inc. will receive tax-exempt bonds with forgone tax valued at $2,343,491 to construct and renovate an extension to Terminal 4 at John F. Kennedy Airport. Delta currently employs 6,397 FTE at JFK. I Oz Moving and Storage, Inc. a moving and storage company will receive $5,237 ,851 in tax exemptions to acquire and renovate 155,000 square foot building in the Bronx. The company currently employs 80 FTE will create 20 FTE. I Shine Electronics Co. Inc., an electronic restoring and refurbishing company will receive $8,292,566 to acquire and renovate a 45.000 square foot building in Queens. The company currently employs 210 and will create 52 FTE. I Spaeth Design, Inc. (EXEMPT: manufacturing)
May 14, 2013
I Dealer Storage Corp. a fullservice automobile storage and distribution company for car manufacturers and car dealers, will receive $3,562,453 in tax exemptions in connection with the acquisition, furnishing, and equipping of an approximately 4,500 square foot office in Staten Island. The company will employ 32 FTE at operations start date and create 30 FTE. I Superﬂex Ltd. (EXEMPT: manufacturing)
June 11, 2013
I Bogopa 163 LLC (Exempt: FRESH subsidy recipient) I Greenfelds a certiﬁed kosher food distributor will receive $1,119,201 in tax exemptions in connection with acquisition of a bigger facility. The company will employ 19 FTE and will create 20 FTE. I Walsh Electrical Contracting (EXEMPT: under public assistance threshold) I Covanta, an owner and operator of waste to energy facilities throughout the country, will receive $2,630,015 in tax exemptions for acquisition of equipment. It will create 35 FTE.
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