Archive for April, 2008

Cleaner Ports, Better Jobs

April 29, 2008

Today’s guest blog is by Jon Zerolnick of the Los Angeles Alliance for a New Economy, who will be speaking at our May 7-8 conference.

We have gotten accustomed to taking our victories where and when we can get them: often marginal improvements and often for small beneficiaries (a handful of workers here, a small community group there). So it is rare (for me) to be able to write of a major victory. But at LAANE, working as part of the Coalition for Clean and Safe Ports, we were just part of something pretty huge: a major victory both for workers and for the environment.

Because of their actions taken last month, the Los Angeles Board of Harbor Commissioners will not just be reforming the broken, dysfunctional port trucking industry; they will be rebuilding it from the ground up. Some 16,000 exploited truck drivers at the Port of Los Angeles (the largest port in the country) have for decades been misclassified as independent contractors. They have finally won long-sought employee rights, which will lead to improvements in pay and working conditions as drivers now have, at long last, the right to organize. People living in the communities around the Port have won meaningful new truck standards that will improve air quality as we get filthy, dilapidated trucks off the roads in favor of newer, cleaner trucks.

Perhaps most important, this multi-year campaign has forged essential new ties between the labor & environmental communities. We’ve gotten beyond the tired old dichotomies of jobs versus environment to a new place where we not only support one another, but where we understand that it is the same forces (of global capital) that hamper progress for all of us.

(I should note that though this was a major victory, we still have much work to do. We will be focused on defending against the expected frivolous lawsuits. We will have to ensure that everything is implemented properly. Most important, we have to lead the way so that LA’s sister port, the Port of Long Beach, scraps their trucking scheme — which fails to address the true underlying problem — and replaces it with a comprehensive solution as LA did. We will then work to make sure that we can replicate at Ports around the country the gains we’ll be seeing here in Southern California.)

I’d urge you: in whatever corner of this movement you find yourself, building and strengthening these ties between different groups is going to be critical as we all move forward to build a more sane, sustainable and just society.

See you May 7 and 8 at the Good Jobs First conference!

Workers Need a Level Playing Field

April 28, 2008

Today’s guest blog is by Mary Beth Maxwell, executive director of American Rights at Work and speaker at our May7-8 conference.

These are hard times for U.S. working families. We are suffering the highest inflation rates in over 20 years. Oil prices today rose to over $118 a barrel, up nearly 80 percent in a year. As Steven Greenhouse’s new book The Big Squeeze documents, working families are getting squeezed while oil companies make record profits.

Americans are rightfully asking a simple question – why does our government continue to dole out corporate subsidies in these tough economic times?

We’ve seen thousands of jobs shipped overseas by the same companies who receive taxpayer-funded corporate welfare. The sub-prime shenanigans of Wall Street have cost thousands of working men and women their piece of the American Dream. Wages have remained stagnant despite surging inflation, and employers continue to prevent workers from achieving their economic goals.

Although workers can’t always rely on their employer to give them fair pay for a hard day’s work, they can count on union representation to fight on their behalf. That’s what most employers want their workers to forget — just ask employees of the retail food industry, where union members earn 31 percent more than non-union employees. Overall, unionized grocers contribute more than twice as much to health insurance premiums and pension coverage than non-union chains.

Corporate giants like Wal-Mart pay their workers poverty wages and then have state governments subsidize their corporate irresponsibility through public assistance programs. The unionbusting retail giant will stop at nothing to prevent its employees from getting a fair shake –that’s why workers in the United States need laws that level the playing field.

That’s why the Employee Free Choice Act is vital. Set to be reintroduced in Congress next year, the bill will give workers a more direct path to freely and fairly form a union if they so choose. Since employers often resist organizing campaigns with illegal tactics to intimidate and scare workers, this legislation will also hold anti-union employers accountable for violating federal labor laws through tougher penalties and greater enforcement.

That is, if lawmakers have the conviction to pass the legislation. While the Employee Free Choice Act overwhelmingly passed the House this session, Republican leadership in the Senate killed the bipartisan bill there. Members of Congress will soon have the opportunity to hear from Americans wanting their elected leaders to take another step toward income parity through passage of this legislation. While corporate subsidies run amuck and the cost of necessities like rent, gas, and health care continue to rise, working families can’t afford another stalemate of this critical bill in Congress next year.

Up to Their Hip Boots in Subsidies

April 25, 2008

Today’s guest blog is by David Ewald of Ewald Consulting; he will address both the Big-Box and Smart Growth tracks of our May 7-8 Conference.

Since September 2005 I’ve been involved in an anti-subsidy battle around the country. Cabela’s, a competitor in the hunting, fishing and camping retail space, relies on public subsidies according to its public statements to cover about 30 percent of the construction costs for its stores. It has been a challenging and rewarding effort that was kicked off by Gander Mountain, the #3 player in the same industry that refuses to take incentives.

Well, this was another tough week for Cabela’s as for the third year in a row they were forced to give back money to the city of Buda, Texas for failing to meeting the job targets they promised in order to receive more than an eye-popping $60 million in subsidies. Let’s hear it for clawbacks!

The apologists for the failure to meet the targets point to the weak economy for retailers right now. Isn’t that one of the main points to make when arguing against subsidies? When government partners with retailers such as Cabela’s they are accepting some of the risk inherent in the company’s business cycle. I’m not amazed when the shortfalls occur. What does amaze me is the public statements made by the public officials who continue to be swayed by Cabela’s promises of economic development and great returns for the community.

Bass Pro is a privately held company that engages in some of the same activities. In just the past few weeks the city of Augusta, Georgia has taken preliminary steps to give Bass about $25 million in subsidies to build a store there. This is amazing given the current state of the economy!

I’m looking forward to talking more about this on May 7 and 8 at the Good Jobs First Conference. In the meantime, visit www.sayno2outdoorsretailsubsidies.com for more information on the effort.

Spring fever in the Big Apple

April 24, 2008

I wasn’t just hallucinating in the noonday sun; there was love in the air today.  At a rally on the steps of City Hall stood Bronx residents, elected officials, retail clerks’ and janitors’ union members and plenty of building trades hardhats in support of a Community Benefits Agreement to redevelop the massive, 575,000-square foot Kingsbridge Armory. The landmark facility built in 1917 is slated to be a shopping center with long needed amenities like recreation facilities and entertainment venues.

In New York City, it’s rare to see such a mix of groups back a development project. The political and real estate forces here have perfected a divide and conquer technique that excludes long-time residents and some labor unions from any meaningful input on proposed projects. Indeed, they are cursed as trolls of development.

Not this time.  Members of the Kingsbridge Armory Redevelopment Alliance (KARA), a project of the Northwest Bronx Community & Clergy Coalition, have spent years educating the community about the development process and the potential of a redeveloped Armory. They won a seat at the city’s decision making table – not an easy feat in this town – to ensure the voices of the mostly low- and moderate-income residents were heard from the get go.

This week the city announced a developer had been chosen, with a nod to community involvement for helping with a smooth selection process. Now the hard work begins to ensure that the retail jobs are good jobs – and that badly needed schools are also built in the neighborhood.

Over the years there have been several plans for the Armory that housed tanks, has a huge drill floor and an 800-seat auditorium. Now, thanks to the persistence and inclusiveness of NWBCCC, a good plan is moving forward.

Considering the dismal display of so-called “community benefits agreements” cut privately in The Bronx the past couple of years, those of us working for accountable development in New York are in a spring swoon for the Armory deal.

Come check it out, members of KARA will show off their organizing prowess at GJF conference next month: www.goodjobsfirst.org/conference

 

Behind the Clawback Curve

April 23, 2008

Though clawback provisions are now a standard part of many incentive agreements throughout the country, the Amherst Industrial Development Agency has decided they’re not for them. By a 3-2 vote last week, the board of the IDA in the Buffalo suburb of Amherst defeated a motion that would have made clawback provisions standard in all future incentive agreements. They voted down the proposal even though it would not have made clawbacks mandatory; it would have only inserted language into new agreements allowing – as opposed to requiring – the Amherst IDA to recapture subsidies if companies fail to meet their job promises. According to the Buffalo News, the IDA board member who put forth the proposal saw clawbacks as a “tool” the Agency could choose to use – or seemingly ignore – at its discretion.

Clawbacks need to be enforced to be of any use, but the Amherst IDA board vote shows disapproval for even their consideration. While the executive director of the Amherst IDA expressed a general opposition to clawbacks, other members of the board said they couldn’t pass the proposal due to a recent memorandum of understanding among Erie County’s six IDAs, in which they agreed not to unilaterally change their policies without a consensus.

In our report Sprawling by the Lake, we found that IDA incentives in the Buffalo region had a suburban bias, and the hyperactivity of the Amherst IDA was a major reason for this. In the report we recommend consolidation of the county’s IDAs so that investment in the region may be directed where it is most needed. We also recommend other policy options in support of a statewide IDA reform campaign lead by New York Jobs with Justice.

Statewide IDA reform, as well as the ways in which economic development subsidies undermine older urban areas across the country, are both topics that will be covered at the upcoming Good Jobs First conference, May 7-8.

UPDATE: Minnesota State Senate Votes to Axe Rural JOBZ Program

April 17, 2008

The Minnesota State Senate passed legislation two weeks ago to axe Governor Tim Pawlenty’s signature rural economic development program known as the Jobs Opportunity Building Zones (JOBZ) program. This is the latest development since GJF blogged in February about the state Legislative Auditor’s report concluding that the subsidy program is unaccountable and ineffective.

JOBZ subsidizes companies located outside the Minneapolis-St. Paul metro area and has granted $46 million in tax breaks to 350 businesses since 2004. However, two-thirds of businesses admitted to the Auditor that they would have expanded without the subsidies – including 11 percent which admitted they would have made the same investment in the exact same location.

Still awaiting action by the House, the Senate legislation is part of a larger omnibus tax bill. The bill would not allow new JOBZ agreements after May 1 but would preserve existing ones. The entire package would increase state revenues by $150 million in the 2008/09 fiscal year.

The Senate vote is linked to an ongoing fight between the Democratically-controlled Legislature and the Republican Governor on how to balance Minnesota’s growing deficit. Last week, Pawlenty vetoed funding for a Minneapolis-St. Paul light rail project that he has previously supported. Local observers believe the governor may use the light rail funding as a bargaining chip in exchange for continued funding of the JOBZ program.

Competing legislation that would reform, but not eliminate, the JOBZ program has been referred to the Senate Committee on Taxes.

New Analysis Confirms Chicago Area Job Growth Bypasses African-American Communities

April 16, 2008

A new analysis by the Chicago Reporter, an on-line magazine that monitors Illinois policy issues, highlights the mismatch between the places in the Chicago region where rapid job growth has been concentrated and the places where the region’s African-American community–with an unemployment rate five times that of whites–lives.  

 

The Reporter’s review of employment and population data from 1990 through 2006 shows that in the 41 municipalities where blacks made up less than 1% of the population, the number of jobs grew nearly 60,000. In contrast, the 14 municipalities with large African-American populations (30% or more) lost 45,000 jobs in the same period.

 

The Reporter’s findings complement findings of Good Jobs First’s 2007 Gold Collar report, which mapped state subsidy spending between 1990 and 2004.  The report described how these subsidies overwhelmingly supported business location and expansion in Chicago’s already affluent, mainly white and job-rich suburban counties and communities.

 

These were also areas that had little affordable housing and few public transit options for job seekers from Chicago neighborhoods and suburbs with high unemployment. As the Reporter article notes, African-American job-seekers from Chicago’s South Side seeking work in fast growing McHenry County must choose between moving to costly, segregated neighborhoods or making long commutes by car. 

 

Mapping the geographical distribution of other economic development, education, and infrastructure spending remains essential to promote more regional equity.  But more aggressive use of existing policy tools, like the 2006 Illinois Business Location Efficient Incentives law, is also crucial. The law provides a modestly increased corporate tax credit for companies locating or expanding in areas with available affordable housing and/or transit access, and should be promoted vigorously to redirect more job growth back to older and needier urban areas.  

 

Retailers Going Bankrupt, Yet We Subsidize More and More

April 15, 2008

This morning’s New York Times leads with an article about the wave of bankruptcies, likely bankruptcies, and major shrinkages among the nation’s retailers: Levitz and Sharper Image have filed, Linens ‘n Things with 500 stores may soon file, and Foot Locker, Ann Taylor and Zales have announced they will close a combined 357 stores.

It’s the inevitable shakeout driven by the recession and too many chains having been bought out by private equity firms that relied on too much debt.

Yet America’s economic development profession — and its loosey-goosey subsidies like Tax Increment Financing — continue to subsidize the construction of ever-more retail square footage, including predatory chains like Wal-Mart and market-share grabbers like Cabela’s and Bass Pro.

But as experts such as Big-Box Swindle author Stacy Mitchell remind us (hear her keynote and at our May 7-8 conference near Baltimore!), and as I detailed in The Great American Jobs Scam, we already have many times more retail space per capita than any other industrial nation, and several times more than we had a few decades ago.

If there is a silver lining to be found in this awful recession, let it be this: states amend their rules to say no economic development subsidies for retail unless the project is located in a neighborhood that is demonstrably underserved with basic retail such as groceries, pharmacies and clothing stores.

Money and Happiness in Alabama

April 14, 2008

It’s not often that a TV program takes on issues of tax equity and corporate giveaways, but they are exactly the focus of this week’s edition of the PBS series NOW, which aired in most places Friday night and is available in its entirety on the show’s website.

The report focuses on Alabama, where there’s been an effort by activist groups such as Alabama Arise! to reform a state tax system skewed against the poor. Alabama depends heavily on the regressive sales tax—and it is one of the only places in the country that applies the tax to food, which accounts for a larger portion of spending by those with lower incomes. State income taxes are designed so they “soak the poor.”

For some state legislators, all this is apparently not a problem. NOW interviews State Rep. Robert Bentley (R-Tuscaloosa), who says of the unequal tax burden on the poor: “I don’t get upset about it. I really don’t…I have too many things to worry about…You can be happy and be poor…Money does not make you happy.” If that’s the case, Alabama, with its lopsided distribution of income, must be one of the happiest places on earth.

The NOW segment notes that while the poor are overtaxed, large corporations are often undertaxed in Alabama. The state has given large tax breaks and other subsidies to automakers such as Mercedes, Hyundai and Honda to lure their assembly plants. Last year, the state put together an $800 million package for a steel mill proposed by the German company ThyssenKrupp. Asked by NOW correspondent Maria Hinojosa whether it is right to allow a large company to operate essentially tax-free for 30 years when the poor are struggling, Rep. Bentley says he supported the deal because it will create jobs. When Hinojosa asks “Did it have to come at so high a price?” Bentley responds: “It does if you’re going to recruit that kind of company…We were in competition with a number of states.”

Actually, ThyssenKrupp chose Alabama even though it was offered a larger package by Louisiana, suggesting that maximum subsidies are not always what make corporations most happy.

Full disclosure: Good Jobs First was consulted by NOW producers during the preparation of the program. Although we are not mentioned in the program, there are a couple of links to our material on the NOW website.

Forest City Just Can’t Get Enough

April 9, 2008

Senior executives say the darndest things. On a recent earnings conference call of the $10 billion real estate giant Forest City Enterprises, its chief officers made a number of statements that provide insight into the company’s stance on subsidies. When asked about a Lower Manhattan residential project receiving liberty bond financing, the company’s new CFO stated, “That’s the beauty of the liberty bonds, tax-exempt rates and all market-rate units.” Ah yes, the beauty of receiving public money without providing public benefits. But it was CEO and President Charles Ratner’s statement that they “still need more” subsidies for Brooklyn’s controversial Atlantic Yards project that received wide attention.

Watchdog blogger Norman Oder first reported on Forest City’s claimed need in his Atlantic Yards Report. Others soon picked up on the CEO’s statement that despite the initial $200 million in direct subsidies the company was promised from the city and state, and the additional $105 million in subsidies it has secured in the past few months, it’s still looking for more. This comes at a time when news sources are reporting that the developer expects the slowing economy to stall a number of components of the project, including much of the affordable housing (while prioritizing the arena). Councilmember Bill DeBlasio told the Brooklyn Paper, “There has already been very generous public investment…I don’t see how we can go any farther.”

In the conference call, Charles Ratner praised his company saying, “We’re one of the few in these places that continue to offer opportunities for development to these major urban markets (in New York and elsewhere).” The notion that other developers would not be interested in the places Forest City chooses is clearly questionable. It is true that across the country Forest City looks to develop mixed-use projects in transit accessible urban areas. However, as Greg LeRoy discusses in his recent article TIF, Greenfields and Sprawl, the benefits of such development can easily be outweighed by costs to schools and public services when such projects are publicly financed.

Officials everywhere take note: If Forest City has gotten its snout in the public trough, there comes a time when it needs to be told that enough is enough.


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