Amended version of living wage law debated at Council

New proposal would limit applicability and duration of living wage mandate associated with development projects receiving City economic incentives. On November 22, 2011, the City Council’s Contracts Committee held a hearing on Intro 251- A, an amended version of the Fair Wages for New Yorkers Act. The legislation would require certain employers connected to development projects receiving City financial assistance to pay employees a “living wage” linked to the consumer price index. The living wage would start at $10.00 an hour with supplemental health benefits and $11.50 an hour without benefits. The legislation would apply to developers of subsidized development projects and tenants, subtenants, and certain contractors. Council Members G. Oliver Koppel and Annabel Palma introduced the legislation, which is currently co-sponsored by 27 other council members.

The Council in May 2011 considered an earlier version of the legislation. The proposal would have required employers connected to development projects receiving at least $100,000 in incentives to pay a living wage for the longer of 30 years or the duration of the incentives. The proposal exempted from the wage mandate businesses with revenues less than one million dollars, not-for-profit organizations, and non-retail businesses operating in affordable housing developments. 8 CityLand 69 (June 15, 2011). 

At the May hearing, critics of the proposal claimed that the wage mandate would negatively impact future development and be too burdensome on businesses. Tokumbo Shobowale, chief of staff to the Deputy Mayor for Economic Development, expressed concerns about the proposal’s impact on jobs. Shobowale argued that the broad range of employers affected by the proposal, including owners of manufacturing businesses and grocers participating in the City’s FRESH food program, would be unable to absorb increases in labor costs.

After the hearing, the Council proposed several changes that would limit the applicability and duration of the wage mandate. Among the changes, the wage requirements would only apply to projects receiving at least $1 million in discretionary City assistance. The proposal would now define exempted small businesses as those with revenues of less than $5 million. Retail stores in affordable housing developments and manufacturing businesses were added to the list of exempted entities. The living wage requirement would now apply for the longer of ten years or the duration of the financial assistance.

Council Speaker Christine C. Quinn, who has not taken a public position on the proposal, opened the November public hearing by saying that the Council was focused on strengthening the City’s economy and generating jobs. Quinn hoped that this goal could be reached without hurting businesses or job creation efforts.

Representatives from local chambers of commerce, building associations, and food-related groups testifying at the hearing remained concerned about the proposal’s impact on businesses and job growth. Robert Bookman, counsel to the New York Nightlife Association, opposed the amended proposal because it would still apply to commercial tenants of City-subsidized developments. Bookman testified that tenants who had received no tax breaks or incentives should not bear the burden of the wage requirement.

Tokumbo Shobowale testified that the Bloomberg Administration still believed the proposal would make the City’s economic situation worse by stifling private investment in development projects and killing jobs in low-income communities.

Proponents of the proposal included Bronx Borough President Ruben Diaz Jr., who testified that the coalition in favor of the legislation had made a good faith effort to address the concerns raised by opponents at the May hearing. By being more targeted and specific, Diaz claimed the proposal would not hurt the profitability of major projects, but would “dramatically alter the lives of their employees.”

It is unclear whether Speaker Quinn will allow the legislation to be brought to the floor for a vote.

Council: Hearing – Intro 251-2010, Version: A (Nov. 22, 2011).

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