Archive for the ‘Unions’ Category

A Boost for Prevailing Wages in Ohio

August 29, 2008

Strong, healthy communities are built by workers who are paid fair wages for their labor. In Ohio, the administration of Governor Strickland will see to it that this occurs on more projects in which public money is involved.

Strickland reportedly will soon mandate wider application of the state’s prevailing wage rule. A recently circulated Department of Commerce memo indicates that the state will require prevailing wages on privately funded projects that also involve partial public funding. This interpretation of the Ohio’s Little Davis-Bacon Act could indicate big changes for wage treatment of almost all subsidized development in the state. According to a spokesperson for the governor, the directive, originally slated for a Labor Day announcement, will be released soon thereafter.

In addition to the Davis-Bacon Act, which applies prevailing wage to all federal development and subsidized construction in the District of Columbia, 34 states have their own Little Davis-Bacon Acts. However, only a handful of states apply prevailing wage rules to projects involving economic development subsidies. Expansion of the laws to economic development financing tools tends to be politically divisive.

For an issue so mired in political partisanship, this is a bold move by Governor Strickland. Prevailing wage laws have been relentlessly attacked by their opponents since the passage of the Davis-Bacon Act in 1931. (Interestingly, Senator Davis and Representative Bacon were both Republicans and passed the Act through a Republican controlled Congress and Republican President Herbert Hoover.) Attacks on prevailing wage take many different forms, including attempts to directly repeal the laws, legislative proposals prohibiting prevailing wage on specific categories of construction projects, and non-enforcement of existing laws by adversarial administrations.

Ohio’s prevailing wage rule has weathered each of these attacks, but the Strickland Administration’s move could bring new controversy to the issue. An Ohio Department of Commerce memo obtained by Good Jobs First lays out a series of guidelines intended to clarify the application of prevailing wage rules. Common scenarios that will subject entire projects to prevailing wage include:

• publicly financed machinery or equipment in a newly constructed or remodeled private structure;
• infrastructure improvements on private land;
• remediation of environmental hazards for an identified end-user; and
• construction of multiple building projects in which only one building is subsidized.

The memo states that prevailing wage would be triggered when the funding comes in the form of bonds, grants, and loans but not by tax abatements, tax credits, or job training grants.

Happy Labor Day, Ohio!

Accountable Development Victory in New Jersey: Major Project to Include Housing and Job Quality Standards

August 5, 2008

The redevelopment of the Military Ocean Terminal in Bayonne will now promote good jobs and affordable housing in northern New Jersey. Much of the credit for this goes to the Garden State Alliance for a New Economy (GANE), which persuaded local officials to include job quality and housing affordability language in a Request for Proposals (RFP)to redevelop the decommissioned army facility.

The $10 billion 16 million-square-foot mixed-use redevelopment project—which is expected to create some 3,000 waterfront residential units, up to 1,000 hotel rooms and commercial and light industrial space—is eagerly anticipated in the community. Kate Atkins, executive director of GANE—a recently formed affiliate of the Partnership for Working Families —said involvement in the project was too important to pass up: “It will have a major impact on the region’s economy for many years to come.”

Representing a coalition of five unions and four community groups, GANE testified at local redevelopment authority meetings and held meetings with Mayor Terrence Malloy and other local officials. According to Atkins, “The coalition has been united on making sure that throughout the project the larger public benefit is really kept in mind–for example, making sure that construction jobs are good union jobs, and the permanent jobs are also high quality jobs.”

GANE’s goals are not only to educate public officials about their capacity to set high standards for developers, but also to send the message that it is possible to promote economic development that is financially beneficial to the community both in the short-term and in the long-term.

While GANE is pleased with its impact on the RFP, its job is not done. The group will monitor the process of selecting the developer to make sure that the project continues to promote equitable economic development.

Denver Adopts Job Quality Standards for TIF!

July 31, 2008
Members of the Prevailing Wage Committee

Members of the Prevailing Wage Committee

The Denver Urban Renewal Authority (DURA) took a big step forward this month in helping to ensure that TIF-funded projects are built by construction workers employed in high quality jobs. The adoption of two policies linking job quality standards to subsidized development projects represents a key economic development reform for Denver. The credit for this shift goes to the Prevailing Wage Committee, a grassroots organization composed of representatives of the building trades, and FRESC (formerly known as the Front Range Economic Strategy Center) who have been working toward this achievement for more than a year.

For over 50 years, Denver has had a law requiring the payment of prevailing wages for construction and other site maintenance work performed by private contractors and subcontractors on projects that are publicly owned or “financed in whole or part” by the city. This law wasn’t applied consistently, however, and the city spent nearly a half of a billion dollars on TIF projects over the last decade, many of which didn’t require the payment of family-supporting wages.

DURA’s new rule applies Denver’s Prevailing Wage Policy to trunk infrastructure construction on TIF-funded development. Trunk infrastructure includes any work done on roads, public utilities, parks, police stations, libraries and more. The policy includes provisions for regular and overtime pay, fringe benefits and timely payment of employees. DURA further adopted the Enhanced Training Opportunity Policy, which requires all projects to dedicate one percent of their TIF allocation towards workforce training of existing and potential workers as well as small or disadvantaged construction business owners.

Though there are numerous types of development subsidies to which reforms such as job quality standards may be attached, there are not many specific to TIF projects. Denver joins Maine; West Virginia; Davenport and Des Moines, Iowa; Hartford, Connecticut; Missoula, Montana; and Los Angeles as jurisdictions that mandate such standards.

As one of the largest purchasers of construction services, government has significant power to bolster wages in the industry. The move by DURA toward guaranteeing good jobs in TIF projects represents a solid investment in stronger communities and more accountable development.

Volkswagen’s Tennessee Subsidy Deal: Are Taxpayers Being Taken for a Ride?

July 24, 2008

Tennessee officials are still celebrating Volkswagen’s announcement last week that it will build a new assembly plant in Chattanooga, describing it as a big step toward their state becoming the nation’s number one auto producer. The state has apparently at least gained the more dubious status of providing the biggest subsidies to date for a foreign-owned carmaker–a package reportedly worth at least a half billion dollars.

According to reporting by Chattanooga Times Free Press reporters Andy Sher and Dave Flessner, the state and Chattanooga-area local governments have pledged the following to land the $1 billion investment and related 2,000 jobs:

1,350 acres of land worth $81 million.

At least $30 million for worker training improvements, and a $6 million technical training center.

$43 million in road and highway improvements, and $3.5 million for rail connections.

$200 million in job tax credits over 20 years.

Between $150 million to $350 million in property tax breaks over 30 years, depending on how well Volkswagen meets job and investment targets. However, VW will pay the education portion of property taxes, about $5.5 million yearly.

Other subsidies of unspecified value, including machinery sales tax exemptions, and low cost loans and energy credits from the federal Tennessee Valley Authority.

Michigan and Alabama were reportedly Tennessee’s main competitors for the VW plant, although the strong United Autoworkers presence in Michigan seems to have made that state a distant third.

Putting the cart before the horse, Tennessee’s economic development commissioner said the University of Tennessee would do a cost-benefit analysis of the VW deal later this year, after its costs are fully known. That this evaluation will be very critical may be doubted since a previous UT study of the Nissan headquarters deal (which cost Tennessee state and local governments $197 million) reportedly attributed to it an unlikely economic benefit of half billion dollars a year.

Tennessee Governor Phil Bredesen, a Democrat and former Nashville Mayor with a history of getting big subsidies for computer giant Dell, Nissan and a football stadium is unembarrassed by the deal’s cost:“I don’t know whether it’s fair that a Mercedes Benz costs $90,000, I just know if I want one that’s what I’ve got to pay.”

Whether a half billion dollars, or $250,000 per job, is in fact the real going rate for an auto plant is less clear, however. The exact importance of subsidies in a company’s location decision remains locked in “a black box”, but is generally limited. In fact, VW spokespeople acknowledged the attraction of the incentives but stressed the particular importance of those for worker skills and site preparation, which form a comparatively small part of the mammoth package.

Successive interstate competitions for big auto assembly plants–which began in the Midwest in the 1970s and have occurred repeatedly in the South over the past decade–have often led to overspending as states try to outbid each other, and then to a sense of fiscal hangover when the competition is over.

Although the euphoria and industrial recruitment folklore surrounding the deal—Senator Lamar Alexander serenading VW executives with a rendition of “Chattanooga Choo-Choo”– seem to have at least delayed that hangover’s onset. The euphoria has also muted concerns about whether, how and when Tennessee will recoup its “investment,” but those concerns are real.

For example, Tennessee officials promise that new auto supplier firms —which may themselves get subsidies to locate near VW– will help offset the deal’s costs. But Business Week has suggested that numerous such firms already located in Alabama and elsewhere in the South could serve the plant with existing capacity. And Alabama is already scheming to land suppliers for the new plant. Continued intense competition like this between Tennessee and other states, and between VW and its competitors, may eventually make the state’s huge subsidy deal seem more like a costly gamble.

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.

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:


Chicago Nixes Second Wal-Mart: The End of Its Urban Strategy?

March 25, 2008

Apparently to preserve Mayor Richard Daley’s détente with organized labor, Chicago government has nixed a renewed effort by Wal-Mart to build a new Supercenter in the predominantly African-American Chatham neighborhood on Chicago’s South Side.

In vetoing the bid, Chicago’s planning commissioner–who must approve stores bigger than 100,000 square feet– cited the 2004 promise by the original lead developer that Wal-Mart would no longer be part of the Chatham Market retail development, which is located at a former industrial site in a Tax Increment Finance (TIF) district. Since the company has been effectively shut out of Los Angeles, Boston, and New York City, Chicago has been described as “ground zero” in Wal-Mart’s strategy for moving into untapped urban markets.

In 2004, the company’s effort to put a store in Chicago’s impoverished West Side provoked a bitter battle in Chicago City Council. Unions and community organizations including ACORN mounted a citywide effort to block the notoriously anti-union, low-wage company from operating in the city. Wal-Mart succeeded only after Mayor Daley wielded his first-ever veto against a union-backed bill that would have required “big box” stores like Wal-Mart to pay a “retail living wage” or provide compensating benefits. However, Wal-Mart’s success in getting a West Side location was not duplicated in its simultaneous bid for a South Side store in the Chatham development. Support for the proposed Wal-Mart from the Chatham neighborhood’s local alderman could not overcome organized community opposition.

In order to win zoning changes needed for the larger Chatham project, and a reported $33 million in TIF funds for environmental clean-up, Monroe Investment Partners LLC told city government Wal-Mart would no longer be part of the Southside development. But when Archon Group, a unit of investment bank Goldman Sachs, became lead developer for the Chatham site, it renewed the bid to include a Wal-Mart store.

Backers of the proposed Southside Wal-Mart claim the store would provide new grocery options for a depressed area, although there are already a Food 4 Less and Jewel-Osco located nearby. Other residents in the South Side and elsewhere in Chicago cite Wal-Mart’s anti-labor stance and conservative politics as a reason to continue to keep it out. Having spent at least $2.5 million in the aldermanic elections that followed the Mayor’s veto, Chicago unions have threatened to reintroduce the retail living wage measure if a second Wal-Mart is approved.

The experience of the existing West Side store is decidedly mixed. The store’s sales last fall were reportedly “good, not great.” Independent businesspeople near the West Side store have mixed feelings about Wal-Mart’s Jobs and Opportunity Zone Program, with some worried about being run out of business while others are happy to have a big player’s presence in an economically depressed area. At the moment, the West Side store looks like it may remain Wal-Mart’s only Chicago experiment.