Council considers proposed living wage law

G. Oliver Koppell

Proposed local law would impose wage mandates on certain businesses receiving City economic development incentives. On May 12, 2011, the City Council’s Contracts Committee held a hearing on the proposed Fair Wages for New Yorkers Act. The proposal, Intro 251-A, would require employers connected to a development project receiving at least $100,000 in financial assistance from the City to pay employees a mandated “living wage” that would be linked to a consumer price index. The living wage requirements would apply for 30 years from the completion of the development project, or the duration of any City financial assistance, whichever is longer. The Fair Wages for New Yorkers Act is an amended version of a proposed local law first introduced by the Council on May 25, 2010.

The Council in 2002 enacted legislation mandating a prevailing or living wage that applied only to certain City service employees, including homecare and building service workers. Intro 251-A would apply to the developer of a subsidized project, as well as tenants, subtenants, and certain contractors who operate on-site. The law would not apply to a defined group of employers, including small businesses grossing less than one million dollars, not-for-profit organizations, and businesses (excluding retailers) operating on the premises of a project primarily consisting of affordable housing.

According to Committee Chair Darlene Mealy, Intro 251-A would require covered employers to pay their employees a minimum of $10.00 per hour with health benefits, or $11.50 per hour without benefits. Council Member G. Oliver Koppell, a cosponsor of the law, stated that the City provides millions in financial subsidies to spur private economic development, but that the jobs subsequently created only pay “poverty wages.” Koppell argued that the failure of EDC and Related Companies’ Kingsbridge Armory project highlighted the need for a Citywide wage policy for subsidized developments. 6 CityLand 167 (Dec. 2009). He pointed out, however, that the language of the proposed law was not final and that the Council would consider additional exemptions.

Tokumbo E. O. Shobowale, chief of staff to the Deputy Mayor for Economic Development, expressed concern about the proposed law’s impact on jobs and development in the City. He stated that a forthcoming study indicated that 6,000 to 13,000 low-income jobs and more than seven billion dollars in private investment would be eliminated as a result of the proposed wage mandate Shobowale explained that industrial and manufacturing businesses, affordable housing developers, and grocers participating in the City’s FRESH food program already relied on incentives to operate and would be unable to absorb additional labor costs.

Supporters of Intro 251-A, including Bronx Borough President Ruben Diaz Jr., argued that the cited study was flawed. Diaz claimed that the study’s assessment of the law’s effect on real estate development was based on its hypothetical impact on the City’s Industrial and Commercial Abatement Program, which, according to Diaz, would not be covered by the law.

Representatives from a host of industry groups opposed the proposal. Robert Bookman, representing the New York Nightlife Association, testified that retailers and tenants do not receive a “single penny” in City subsidies, and questioned why they should bear the burden of increased labor costs simply because they chose to rent in a building developed with City subsidies. Frank J. Anelante Jr., for the New York State Association for Affordable Housing, testified that the law would place “massive” compliance responsibilities on developers, owners, and operators of affordable housing, and would limit developers’ ability to construct affordable housing in a cost-effective manner.

Andrew H. Kimball, president of the Brooklyn Navy Yard Development Corporation, stated that the success of the Navy Yard was related to its ability to attract private sector investment and support job growth. Kimball claimed that the law would force many of the Navy Yard’s manufacturer- tenants to either “shed thousands” of jobs or relocate to more business-friendly areas.

Council: HearingIntro 0251-2011, Version: A. (May 12, 2011).


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