Archive for the ‘Unions’ Category

Subsidizing Union Avoidance at Wal-Mart and Nissan

June 7, 2013

walmart-strike-300x168Most Americans have been made to believe that they have no stake in private sector labor issues. Unions, we are told, are irrelevant to the working life of the vast majority of the population, whose economic fate is supposedly being determined solely by their employers or by individual skills in maneuvering through the labor market.

This narrative, however, is being challenged by organizing campaigns that are taking on two giant corporations – Wal-Mart and Nissan – and showing that collective action is not defunct. And two reports related to the campaigns show that not only the workers involved, but also taxpayers in general, have a stake in their outcome.

For the past 30 years, Wal-Mart has fought bitterly against the efforts of its employees to organize for better pay and benefits. It showed no hesitation in firing workers who supported union drives and routinely closed down operations where successful representation elections were held.

A new wave of non-traditional organizing by Making Change at Walmart and OUR Walmart has revived the prospects for change at the giant retailer. Strikes have become a frequent occurrence at Wal-Mart stores in recent weeks, and large numbers of Wal-Mart workers and their supporters have been converging on Bentonville, Arkansas to make their voices heard at the company’s annual meeting.

A recent report by the Democratic staff of the U.S. House Committee on Education and the Workforce is a reminder that taxpayers are put in a position of subsidizing the low wages and poor benefits that the Wal-Mart campaigners are protesting. The study, which updates a 2004 report by the committee, reviews the hidden taxpayer costs stemming from the fact that many Wal-Mart workers have no choice but to use social safety net programs—such as Medicaid, Section 8 Housing, food stamps and the Earned Income Tax Credit—that were designed for individuals not in the labor force or those working for small companies that failed to provide decent compensation, not a leviathan with $17 billion in annual profits.

The Democratic staff report estimates that today the workers in a typical Wal-Mart Supercenter (Wisconsin is used as the example) make use of programs that cost taxpayers at least $904,542 a year and possibly as much as $1.7 million. Since Wal-Mart has more than 3,000 Supercenters in the U.S., plus hundreds of other types of stores, those costs run into the billions.

Nissan has been following in Wal-Mart’s footsteps in Mississippi, where it opened a large assembly plant a decade ago. The plant brought several thousand direct jobs to the state, but the problem is that many of the jobs are substandard. The company makes extensive use of temps, who are currently paid only about $12 an hour.

In response to the use of temps as well as issues concerning the conditions faced by regular employees, Nissan workers have been organizing themselves with the help of the United Auto Workers. Rather than accepting labor representation, as it does in numerous other countries, Nissan is seeking to intimidate workers using the usual toolbox of union avoidance techniques such as threats and bombarding workers with anti-union propaganda.  The workers, however, have been bolstered by strong community support from groups such as the Mississippi Alliance for Fairness at Nissan.

My colleagues and I at Good Jobs First recently issued a report commissioned by the UAW documenting the extent to which Nissan has enjoyed lavish tax breaks and other financial assistance from state and local government agencies. We found that the subsidies, which were originally estimated at around $300 million when the company first came to the state in 2000, have mushroomed to the point that they could be worth some $1.3 billion. That works out to some $290,000 per job. Noting the over-dependence on temps, we state that Mississippi taxpayers are paying “premium amounts for jobs that in many cases are far from premium.”

Although it was outside the scope of our report, it is clear that the Nissan temps, like the Wal-Mart workers, are also generating hidden taxpayer costs through their use of safety net programs. And we have previously documented that Wal-Mart frequently gets the kind of economic development subsidies Nissan is enjoying in Mississippi.

Whether through hidden taxpayer costs or job subsidies, the public is frequently put in the position of aiding companies like Wal-Mart and Nissan that disregard labor rights while failing to pay their fair share of the cost of government. Perhaps the interests of taxpayers and workers are not so different after all.

Reposted from the Dirt Diggers Digest

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Striking Chicago Teachers Highlight TIF

September 14, 2012

This past week, the Chicago Teachers Union (CTU) strike has been making national headlines. But what major media outlets have overlooked is the role of tax increment financing (TIF) in worsening the fiscal situation for the Chicago Public School (CPS) system. The strikers, however, are making an issue of it. As Good Jobs First has documented time and again, TIF and other subsidies frequently divert property taxes away from school districts.

In Chicago, as well as Illinois generally which has about 1,000 active TIF Districts diverting over $1 billion each year, the problem is particularly severe: 10 percent of Chicago property tax revenues are diverted into TIF coffers. The CTU estimates that at the end of 2011, Chicago had $831 million in unallocated TIF funds sitting in bank accounts. Nearly half that money would have otherwise gone to schools. That number is also far bigger than the $700 million budget shortfall CPS had for the 2011-2012 school year which remains relatively unchanged for 2013. Instead, TIF monies are frequently utilized as subsidies for corporations.

Yesterday, thousands of teachers picketed a Hyatt hotel which had received $5.2 million in TIF subsidies chanting “give it back.” Speakers gave impassioned arguments against the use of TIF. The choice was not a coincidence: Penny Pritzker, a billionaire whose family owns the Hyatt chain, is also an appointee to the Chicago Board of Education.

Protestors contend that the TIF money used on the hotel would have been better spent on improving the education system. As one protestor commented, “I think it’s really important to bring awareness to the fact that, according to what I found out, $5.2 million has been given to developers [to build the Hyatt hotel]… That’s money that could have gone to classrooms, and computers, so many other things.”

Ultimately, all Illinoisans should also care about TIF in Chicago and elsewhere. The burden of school funding lost because of TIF property tax diversions is likely being made up for by all Illinois taxpayers.

Pritzker’s role on the board of education and Hyatt’s TIF funding are not the only reasons that labor is unhappy with Hyatt. A Unite Here campaign called Hyatt Hurts has been calling attention to what it alleges are unfair labor practices at the company and calling for a boycott.

We hope investigative journalists everywhere take notice: TIF has caused serious budgetary harm in Chicago and deserves more serious scrutiny in every school district.

Will Aircraft Industry Follow Autos with Subsidies and Weakened Unions?

August 9, 2012

Guest post by Kenneth Thomas

The growth of subsidized competition that undermined the auto industry and the United Auto Workers may now be happening in the aircraft industry. First came the 2009 announcement that Boeing would build a second assembly line for the 787 Dreamliner in South Carolina rather than Washington state due, at least in part, as company officials publicly stated, to unhappiness with its dealings with the International Association of Machinists. Then, on July 2, it was announced that Airbus would begin assembling its A-320 airliner in Mobile, Alabama. In both cases, the facilities received substantial subsidies to build non-union facilities. This is especially ironic in the case of Airbus, since its European facilities are, of course, unionized.

The South Carolina package for Boeing is thought to be worth over $900 million  to open a new assembly line for the Dreamliner. That project is expected to create 3800 non-union jobs in the state. It was also the subject of a huge labor dispute after Boeing CEO Jim Albaugh said that the decision had been motivated by strikes at its facilities in Washington (http://motherjones.com/kevin-drum/2011/09/quote-day-boeing-vs-nlrb, h/t Matt Yglesias). This was a no-no: the National Labor Relations Act protects workers who exercise their rights to form a union or to strike from retaliation by the company. This prompted a National Labor Relations Board complaint from the Machinists union, which was eventually dropped when the company agreed to locate production of the new 737 MAX in Renton, Washington, and signed on to a four-year contract extension (http://seattletimes.nwsource.com/html/businesstechnology/2016901106_boeingiam01.html, h/t Talking Points Memo).

Airbus’ new $600 million facility in Alabama is projected to create 1000 jobs, also non-union. Initial reports put subsidies to the company at $158.5 million from the state and various local governments (thanks to @varnergreg for pointing out this article). Remember, though, that initial reports are more likely to underestimate subsidies than overestimate them, as in the case of Electrolux in Memphis. However, if this is remotely near accurate, Alabama got a much better deal for Airbus than did Washington state for the Boeing 787 Dreamliner, giving tax breaks equal to an almost $2 billion cash grant, which was 220% of the investment and $1.65 million per job (according to my calculations for Investment Incentives and the Global Competition for Capital), more than 10 times the per job cost in Alabama.

Unfortunately, these developments could repeat the example of the subsidization of new automotive facilities that hastened the decline of Detroit’s Big Three and weakened the UAW. According to economic geographer James Rubenstein (1992, Table 1.1), from 1979 to 1991 there was a 1 to 1 correspondence in the opening and closing of new automobile and truck assembly plants in the U.S. and Canada: 20 new ones were built, 20 old ones were closed. Every one of the new facilities received subsidies from state and local (or federal and provincial, in Canada) governments. Given that the automobile industry was in a position of overcapacity for much of that period, it is no surprise that new production simply displaced older production.

Will the same thing now happen in the aircraft industry? Globally, Airbus has been putting market share above profits since the early 2000s. With its current move to Alabama, CEO Fabrice Brégier said the company hoped to grow its U.S. market share for single-aisle planes (the A-320 competes mainly with the Boeing 737) from 17% to 50% over the next 20 years. If Airbus is successful, it would be bad for the 80,000+ employees in Boeing’s Commercial Airplanes group.

Of course, there is growing global demand for airliners, especially in Asia. But China has already developed its own competitor in the single-aisle market and Airbus is building A-320s in Tianjin, China, making it unclear how much of the global growth can translate into increased U.S. employment.

As was the case with automakers, the competition for facilities allowed Boeing and Airbus to extract rents through the site selection process and getting non-union labor as well as subsidies. By repeating this process for projects large and small, state and local governments deprive themselves of as much as $70 billion per year in revenue, enough to hire all state and local employees laid off since the recession began in December 2007. At the same time, over the long haul, the process in the auto industry replaced well-paid unionized workers with less well-paid, non-union workers.  The prospect that this evolution could be repeated in the aircraft industry is a pretty depressing one, when all is said and done.

(This post is a revision of an earlier version at Middle Class Political Economist, Alabama’s Airbus Subsidy Eerily Reminiscent of Auto “Transplants”.)

Public Employees and the Public Interest

February 25, 2011

Chicago Tribune, January 29, 1900

Well before Wisconsin Gov. Scott Walker began his unholy crusade, the Right was heavily promoting its claim that public employee unions are a threat to the public. The title of a 2009 book by conservative ideologue Steven Greenhut said it all: Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.

What the union bashers are trying to obscure is that public employees have a long history of supporting policies that promote the broad public interest. This goes back to the very roots of the public employee union movement.

In the 1890s teachers in Chicago created a federation that became the first real teachers union and one of the pioneers of public employee unionism in general. When the federation, led by Margaret Haley and Catherine Goggin (illustration), was confronted with a move by the board of education to cut teacher salaries because of a purported fiscal crisis, the teachers responded to the claim of a revenue shortfall in a creative way. They launched an intensive investigation of tax dodging by some of the largest corporations in the city, finding that property tax underpayments amounted to some $4 million a year (serious money back then).

Tax officials were reluctant to crack down on powerful business interests, so the teachers sued, eventually winning a favorable ruling in the Illinois Supreme Court (though the U.S. Supreme Court later went the other way).

A cynic might say that the teachers were simply acting in their self-interest by finding a new revenue source that would help restore their lost wages. Yet their goal was also to find funds that could improve conditions in the schools—and those conditions were truly abysmal. In his 1975 history of the American Federation of Teachers, William Edward Eaton writes that in the 1890s:

The teachers of Chicago daily faced the horrors of overcrowded, unsanitary buildings stuffed with too many children and controlled by an impersonal bureaucratic structure. This they did with poor pay, no job security, and no pension system.

The efforts of teacher organizations to address these problems, through collective bargaining as well as tax justice campaigns, also redounded to the benefit of the students and their families.

The Chicago teachers were also an important force in the passage of the Illinois Child Labor Law of 1903. That cynic might say this was aimed at boosting school enrollment and increasing the demand for teachers. Maybe so, but can anyone deny that banning child labor was also a boon for society as a whole, aside from sweatshop proprietors?

In the decades that followed, unions of teachers and other government employees have been among the strongest advocates of a vibrant public sector. They have continued to be leading critics of corporate tax dodging and opponents of efforts to gut public services. Unions such as AFSCME have been at the forefront of campaigns to stop the contracting out of government functions and the privatization of public assets such as highways—practices that usually work to the detriment of taxpayers as well as public employees.

The state and local public employee unions accomplished this against all odds. Denied the protection of the National Labor Relations Act, they had to get states one-by-one to recognize their right to organize—the right that is at risk in Wisconsin and elsewhere. It took a period of remarkable militancy in the 1960s and 1970s—including defiance of laws banning strikes by public employees—before they made significant progress. Among those strikes was the 1968 walkout by sanitation workers in Memphis, where Martin Luther King Jr. was visiting to show his support when he was assassinated.

And even then there were often severe fiscal limits on the ability of public employees to bargain for substantial wage gains. To compensate, many public unions put more emphasis on securing better retirement benefits for their members. These pension rights—in effect, deferred wages—are now under attack as if they were some giant giveaway.

The real giveaways are the lavish business tax cuts and corporate subsidies that the likes of Gov. Walker promote at the same time that they are demanding severe concessions from government workers. The great confrontation of 2011 comes down a question of whose interests are more closely aligned with those of the public at large: those who teach our children, drive our buses and put out fires in our homes—or superwealthy individuals and large corporations that are reluctant to create new jobs.

With each passing day, the momentum is moving in favor of the descendants of the 1890s Chicago teachers who are fighting for their rights and for the public interest in Madison, Columbus and other capitals across the nation.

Note:  A new movement called US Uncut is organizing actions around the country calling for a crackdown on corporate tax dodging as an alternative to harmful cuts in government programs such as education.

(Reposted from the Dirt Diggers Digest)

Right questions, wrong decisions on subsidies for big firms in NYC

August 5, 2010

Deloitte has an office in the city's municipal building on the same floor as the City Comptroller

At the New York City Industrial Development Agency’s public hearing last week, two proposals generated notable controversy: one to bestow millions in tax breaks on Big Four accounting firm Deloitte LLP, and another to revive a subsidy agreement from 1998, still worth millions in unused credits, for information services giant Thomson Reuters. This past Tuesday, the IDA board approved both projects, but not before a handful of board members engaged in a robust dialogue with IDA staffers, especially on the Thomson Reuters proposal.

The Deloitte proposal could have benefited from an even more vigorous discussion. For one thing, it smells like the same old game in which companies pit states and regions against each other in bidding wars for investment. As an IDA staffer explained, the agency “took seriously” a “threat” that Deloitte would leave the city for “other opportunities,” namely New Jersey. (Deloitte LLP plans to use the subsidy to help pay for moving its headquarters from one highly prized Manhattan office location—midtown—to another—Lower Manhattan.) And yet IDA staff also reassured the board that the proposal wasn’t about retention, but about growth. As EDC President Seth Pinsky stated, Deloitte will get no benefits until it increases its employment numbers within NYC. (more…)

NYC Considers Big Subsidy Packages for Thriving Firms While Cutting Vital Services for Poorest Residents

July 16, 2010

Later this month, the New York City Industrial Development Agency will consider lucrative subsidy packages for two of the world’s largest corporations: “big four” accounting firm Deloitte, LLP, and Thomson Reuters, a multimedia news and information provider. Meanwhile, despite recent reports of an improving unemployment rate, 385,000 New Yorkers are still jobless—twice as many as there were two years ago—and in the name of budget crisis, the city is slashing critical services for its poorest residents, from seniors and children to those with HIV/AIDS.

Why are these profitable firms up for tax breaks when everyone else is forced to sacrifice and there’s no guarantee these subsidies will create jobs for those who need them most?

Even in good times, there would be ample reason to question the wisdom of these deals. Let’s begin with Deloitte: The firm wants taxpayers to finance what amounts to a reshuffling of space in Lower Manhattan—a move from 2 World Financial Center, where it currently subleases space from Merrill Lynch, to 4 World Financial Center. (Bank of America acquired Merrill in 2008, and both firms have received hefty subsidies from the city and state.) Deloitte has allegedly been considering leaving the Financial Center in favor of other locations within the city. The company already received a $14 million cash grant under a program the state created to retain large businesses in Lower Manhattan after 9/11, not to mention millions in BEIP subsidies in 2008 from neighboring New Jersey. It is also likely that Deloitte received—or will receive as a result of its impending move—generous benefits from the Lower Manhattan Relocation and Employment Assistance Program, though the city withholds the names of participating businesses under a “tax secrecy” provision.

It’s also worth noting that Deloitte benefits from contracts worth tens of millions of dollars with New York City and state (not an unusual arrangement), and even has an office on the 6th floor of the city’s Municipal Building. The issue of double dipping aside, the potential for corruption should be of concern. Last fall, Pennsylvania’s Auditor General found that Deloitte was being awarded subsidies from the very entities it was auditing. While there’s no evidence that this is the case in NYC, Deloitte’s business practices in other contexts should be taken into account.

IDA is also considering a proposal to allow media giant Thomson Reuters to steer unused subsidies from a 1998 agreement toward seven new locations in Manhattan. This might not sound so bad, except that the only information the public has to evaluate this proposal, an IDA Annual Report from 2005, shows that Reuters failed to meet job targets. It also shows that the company only used $2.4 million out of $26 million in subsidies. The public deserves the latest data on the true value of the remaining subsidy, Reuters’ employment record in the city since 2005, and the impact of its 2009 merger with Thomson Media on its job figures. IDA will release project details a week prior to the July 29th public hearing, but whether these and other critical questions will be answered remains to be seen.

Adding to the issues with the Thomson Reuters deal, the Newspaper Guild of New York has filed a complaint with the National Labor Relations Board charging that the company plans to cut wages of reporters and other employees by an average of 10 percent this year without the union’s consent. Reuters denies this claim, but at the very least no subsidies should be considered until this dispute is resolved.

Both the Deloitte and Thomson Reuters deals are rife with transparency and accountability issues—not to mention Deloitte’s deep connection to the Wall Street crowd that got us into the economic crisis in the first place. This would be unacceptable even in good times. But with our most vulnerable residents set to suffer even more as the city and state retrench, New Yorkers should be especially outraged.

Standing Strong at the Kingsbridge Armory

September 8, 2009

esnuestroIn a move rarely seen in The Bronx lately, an elected official is standing up for the creation of good jobs and accountable development. Newly elected Bronx Borough President Ruben Diaz Jr. has voted no on a land use proposal to build a subsidized mall inside the Kingsbridge Armory because the developer refused to sign a community benefits agreement.

This must come as a shock to Related Companies, which plans to develop the mall and has gotten subsidies and sweetheart real estate deals from the city in the past. Related was awarded the contract to purchase the armory from the mayoral-controlled Economic Development Corporation for the bargain basement price of $5 million. The armory is a landmarked building that spans an entire city block, has a new roof, and is directly across the street from a subway and bus lines. 

The city seemed to move in the right direction in 2006 by involving community leaders in developing a Request for Proposal and including language that applicants supporting a living wage provision for the permanent jobs associated with the project will be viewed favorably. But after that the community hasn’t been involved.

Diaz’s vote doesn’t mean the proposal can’t happen; the project now moves through the city’s 60-day labyrinthine land-use approval process that includes hearings and votes by the City Planning Commission and the City Council. If other elected officials follow Diaz’s lead, the city could leverage the subsidies to bring Related back to table with the community and still hammer out an agreement.

For nearly a decade the Northwest Bronx Community and Clergy Coalition advocated for community use of the armory. In 2005 the group joined with the Retail, Wholesale, Department Store Union to create the Kingsbridge Armory Redevelopment Alliance (KARA), which called for a project that creates living wage jobs,  promotes retail that doesn’t compete with long-time businesses and builds much-needed community, educational and recreational space for neighborhood youth.

The Borough President’s stance comes not a moment too soon. Unfettered, subsidized development has grown rampant in The Bronx: Gateway Mall (developed by Related) near Yankee Stadium and the Water Filtration Plant have not brought promised jobs, have run far over budget and/or have moved forward in the land use process under the guise of fake Community Benefit Agreements.

Kudos to Diaz for standing up for his constituents and hopefully setting a new standard that won’t allow subsidizing mega developments to come at the expense of locally owned stores and diminished wages, taxes and jobs.

Cooper Tire’s Novel Approach to Subsidy Competition: Pay to Survive

January 23, 2009

In a grim variation of the subsidy game that may become more common in a tanking economy, Cooper Tire last month successfully squeezed over $66 million in subsidies for plants in three states, pushed down union wages and benefits, and eliminated one plant altogether.

Cooper Tire announced in October that it would close one of its four U.S. plants. It then “invited” employees and state and local governments in the different locations to help it decide by offering worker concessions and public subsidies.

The plants pitted against each other were in Tupelo, Mississippi (1200 workers), Texarkana, Arkansas (1,400 workers), Findlay, Ohio (1,100 workers), and Albany, Georgia (1,400 workers).

Mississippi moved quickly to offer Cooper Tire state and local subsidies worth more than $36 million, mostly in workforce training and infrastructure improvements. Some press reports suggested Mississippi’s speed in offering a subsidy package put pressure on the competing sites, especially the unionized ones.

The Findlay and Texarkana plants stayed open after new agreements with their United Steelworkers bargaining units were reached. The locals made significant concessions on wages and on employee contributions to health care costs, in each case worth $30 million over 3 years. The Tupelo and Albany workforces are not unionized.

In addition to worker concessions, the company received $2 million from the Arkansas Governor’s “quick action” closing fund; a 6.5 percent sales tax credit for capital improvements; a five-year, two percent income tax credit for and a 10-year, five percent rebate on payroll for new employees. Cooper Tire received $28.5 million in tax credits, grants and loans from Ohio state and local governments. Georgia reportedly offered $32 million in incentives in an unsuccessful bid to sustain the Albany facility.

In December, Cooper announced the Albany plant would close, with the three surviving plants adopting a “24/7” production schedule that the company said might lead to further hiring. The comparative weight of subsidies, union concessions, and other factors in Cooper Tire’s decision was not clear, although Cooper Tire’s 2006 conversion of its Arkansas factory into a “flex” plant more adaptable to production increases and decreases may have helped it survive.

Cooper Tire CEO Roy Armes called the Albany plant’s closing a “difficult decision,” but said it would “allow Cooper to optimize our global footprint and capitalize on current and future market opportunities.”

Mississippi officials and press treated the survival of the Tupelo plant as a consolation for the indefinite delay of production at Toyota’s nearby Blue Springs plant, for which Mississippi has pledged $323 million. A Jackson Clarion-Ledger editorialist saw the Georgia plant closing as warning states not to forget existing companies while chasing new ones.

But the real lesson is how easily Cooper Tire could compound the pain of a plant shutdown in one state by extracting wealth from workers and taxpayers in three others.

State and Local Ballot Initiative Round-Up

November 7, 2008

democracy in actionThe following is a quick review of selected important ballot initiatives pertaining to state and local economic development from around the country:

In Massachusetts, ballot Question 1 proposed a total elimination of the state’s personal income tax beginning in January 2010. Massachusetts state income tax provides $12 billion in annual revenues (40% of the state’s budget), and its elimination would have decimated funding for public education, public safety personnel, crucial infrastructure repairs, and health care for low and fixed income residents. A report by the Massachusetts Taxpayers Foundation stated that passage of the initiative would have required the state to slash 70% of most state agencies’ operating budgets. The measure was decisively defeated with 70% of voters in opposition and just 30% supporting.

Oregonians defeated Measure 59, intended to create an unlimited state income tax deduction for federal income taxes on residents’ individual income-tax returns. The initiative would have reduced Oregon’s tax revenues by $1.3 billion in 2011, with increasing reductions in the future. Defend Oregon, the measure’s primary opposition organization, estimated that 75% of Oregon residents would have seen state income tax reductions of less than a dollar, while the wealthiest 1% of Oregonians would have seen the greatest benefits. Measure 59 was defeated 63% to 37%.

In North Dakota, Measure 2 proposed a 15% reduction in corporate income tax and up to 50% rate reductions in most individual income tax brackets. North Dakota already has the lowest individual income tax in the nation (of the states that tax personal income), and the measure would have provided less than one dollar of tax relief for families earning less than $25,000 a year. North Dakotans voted Measure 2 down by 70% to 30%.

Labor won two major victories in Colorado with the defeat of two ballot initiatives. Constitutional Amendment 47, the “Colorado Right to Work Initiative,” which would have prohibited unions and employers from negotiating union shop contracts under which employees are required to pay union membership or agency fees as a condition of continued employment. The second measure, Constitutional Amendment 49, “Limitation on Public Payroll Deductions,” was created to prevent automatic deductions of union dues (dues check off) from public employees’ paychecks. The amendment would have accomplished this by prohibiting all public payroll deductions directed to private organizations.

A local ballot initiative whose defeat we’re disappointed to report is Austin, Texas’s Proposition 2, known as Stop Domain Subsidies. The charter amendment proposed first that Austin halt its payment of a $63 million subsidy to a luxury shopping mall developed in north Austin, and second, that the city outlaw the provision of subsidies to all new retail development. The charter amendment was widely supported by small and local businesses, which more often than not are harmed by new subsidized retail development. Proposition 2 lost by a narrow 4% margin—48% to 52%.

Have other local results to report? Please let us know in the comments section.

After 65 Years, Union Insurers Will Leave the Big Apple

September 10, 2008

Amalgamated Life Insurance, created in 1943 by the Amalgamated Clothing Workers of America (now part of UNITE HERE) has opted to move to the suburbs north of New York City rather than renew its Manhattan office lease.

Amalgamated hasn’t fully explained why it’s leaving the city. It cited the $480,000 in tax breaks offered by officials in Westchester County and its expiring lease with New York University (a dominant landlord in the area), but it was offered a more generous subsidy from New York City officials hoping the insurance company would stay.

For those of us New York, the competition between municipalities raised some concern since intrastate bidding wars for a company is against state law. Except of course, unless a company is considering relocating out of state. Hence, the report that Amalgamated looked for office space in Newark, New Jersey.  While we may never know if Newark was a serious contender it wouldn’t be the first time a firm used the old tried and true tour of New Jersey to “kick the tires and then go back to New York to negotiate a deal.” Add the legal logistics of moving an insurance company out of state and the claim to move to Newark gets weaker.

Yet, the most troubling aspect of this deal is that officials in Westchester are bucking a positive national trend to increase public investment for jobs located near public transit.  The company’s Manhattan location is right near several subway and bus lines. While the city Amalgamated is moving to, White Plains, is on a commuter train line, the site chosen by Almagamted (the former headquarters of General Foods), is not within walking the train station.

Amalgamated’s plan to move might make the insurance company’s bottom line, but its effect on current employees and environment certainly isn’t neutral.


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