City Contracts Need Wage Standards

Intro 18: Amendment to the Prevailing Wage Law

New York City Council, May 11, 2010

Thank you for the opportunity to testify today. Pratt Center for Community Development works to create a more just, equitable and sustainable New York City through the provision of technical assistance to low and moderate income communities in support of their efforts to plan, build and shape policy that will affect their future.

We speak today in support of an important bill that is a necessary stepping stone to a more comprehensive citywide policy on prevailing wage standards. Through the development of the One City One Future platform, which brought together more than 50 diverse organizations, from across the city and across sectors, to envision what equitable growth looks like and how to ensure it, we embraced the principle that underlies Intro 18: The city should use of all of its economic development tools to create living wage jobs, by making wage standards formal conditions for the receipt of public benefits. We must move beyond a deal-by-deal approach and make it formal city policy to ensure that all jobs on all subsidized economic development projects pay at least a living wage or a prevailing wage, whichever is greater.

Pratt Center has been involved in several of the recent major land-use review procedures where the issue of prevailing wage for building workers has arisen: the Greenpoint-Williamsburg rezoning; Willets Point; Hunters Point South; Coney Island. The track record of incorporating standards into these developments represents two things: 1) an acknowledgement by the city that its investments should not be used to support poverty wage jobs 2) an extraordinary amount of effort by stakeholders in the land-use review process to accomplish a result that should be determined by an over-arching policy. Codifying wage standards for new developments and lease arrangements in the way that Intro 18 specifies would:

- move the city toward a consistent and rational policy;
- provide a certainty of enforcement that side-letter agreements do not always accomplish;
- create additional space for stakeholders – including communities and Council Members – to focus on features of development proposals that are distinct to each neighborhood and each application, rather than placing a generic policy question into the mix of debated issues

We were also active participants in efforts to reform the 421-a tax abatement program in 2006, where similar requirements were written into the conditions that developers must meet in order to receive the benefit. We believe that this represents an important precedent that offers insights into how the pending legislation should be both considered and modified.

- First, participation in the 421-a program since 2006 has been robust, with more than 1,400 buildings in the program built from 2008 to date , even amidst the economic decline, indicating that the requirement has not had an adverse impact on development.

- Second, special efforts were taken in the crafting of 421-a reform to ensure that the new requirements would not adversely affect the creation of the most affordable housing, which is subject to different economic constraints than other types of development and which serves a portion of New York City’s population that is the most vulnerable and in need of housing and supportive services. The language included in 421-a reform with regard to protections for specific types of affordable housing is a good starting point for arriving at what is an appropriate modification to this bill.

- We support the efforts of leaders in the non-profit affordable housing sector, such as Association for Neighborhood Housing and Development (ANHD), to ensure that a final version of this bill does not erect an unintended barrier to the creation of affordable housing.

Finally, Intro 18 is a vital step that will dramatically impact the lives of building service workers and the city’s tax base. In an analysis that we conducted for the Greenpoint-Williamsburg rezoning in 2006, we found that while including building wage requirements in the development would have little impact on the developer or on the production of affordable housing, the difference between a non-union building service job and one that paid prevailing wage was approximately 30%. More significantly, this 30% represented the difference between a family of four living below 200% of the poverty line – and requiring public benefits – and the same family having the opportunity to experience a decent and more secure quality of life.

Creating jobs that pay prevailing wages are essential to forming stable communities. With a modification for the most affordable housing, we support this bill, and see it as an important step to an even more comprehensive policy that ensures that public dollars that support economic development only support quality jobs.

NOTE: This testimony was prepared by the Pratt Center for Community Development. It does not necessarily reflect the official position of Pratt Institute.