Amid push for minimum wage hike, city officials have let living wage laws slide

While New York City Mayor Bill de Blasio was dining with his wife and son at La Morada restaurant in the Bronx’s Port Morris neighborhood this spring, a crowd of protesters gathered on the sidewalk outside, chanting a riff on his campaign slogan – “No more tale of two cities!” – and confronted him about government subsidies for Fresh Direct’s new Bronx headquarters.

The mayor told the protesters that his administration “really tried” to halt a deal, which was inked under former Mayor Michael Bloomberg and maligned by de Blasio on the campaign trail because it did not include a living wage mandate. All his administration could do now, the mayor said, was avoid similar arrangements in the future – but he pledged to have “someone set something up” with the coalition.

Three months later, the South Bronx Unite coalition said it is still waiting for a meeting with the mayor – and for an explanation about why his administration cannot seize on an estimated increase in government subsidies to reopen the project’s contract and demand higher pay for personnel. City law requires projects receiving substantial government benefits to pay workers a so-called living wage, currently set at $11.65 an hour with benefits or $13.30 without, but Fresh Direct and other projects received exemptions when the law was passed in 2012. Now, activists question whether de Blasio and city officials are using all the tools provided by the living wage law when it comes to increasing income for workers like Fresh Direct personnel.

Buoyed by support from many New York City politicians and advocates, de Blasio has taken several steps to elevate wages. He even made a $15-an-hour federal minimum wage the headlining item in his national policy platform and extolled its virtues in speeches from Washington, D.C., to Des Moines.

City Comptroller Scott Stringer shares the mayor’s enthusiasm for the $15-an-hour campaign and living wage expansion and has questioned living wage policy changes he said stripped monitoring duties from the Comptroller’s Office and handed them to an agency less prepared to handle alleged violations.

Yet advocates contend the administration and comptroller are not utilizing two living wage laws already on the books to minimize income inequality and elevate pay rates for as much of the city’s workforce as possible. Required reviewshave not been conducted. The Comptroller’s Office, for example, only recently began producing annual reports on living wage among contracted personnel, even though such studies have been required for more than a decade. Similarly, the city Department of Housing Preservation and Development is still setting up living wage compliance procedures for projects. And the sheer frequency of living wage exemptions in the city has raised eyebrows.

“Many of us want to see the minimum wage increase, so we are trying to figure out all the tools we can use,” City Councilman Brad Lander said. “It’s a bunch of patchwork. We need to come back and do a pretty comprehensive look into where things stand.”

New York City has two measures referred to as living wage laws. The first,enacted in 2002, requires city agencies contracting out services in certain sectors, such as home care and day care, to select firms that agree to pay personnel a so-called living wage – currently $10 an hour with health benefits or $11.50 without – or prevailing wage, whichever is higher. The city comptroller sets a prevailing wage for several industries every year.

The second measure, the Fair Wages for New Yorkers Act, enacted by the City Council in 2012, mandates that projects receiving $1 million or more in city subsidies pay a living wage. The law applies to benefits doled out on a discretionary basis by the New York City Economic Development Corporation and the city Department of Housing Preservation and Development, and resulted in the even higher $11.65-to-$13.30 pay rate. The measure, however, was not enforced until de Blasio dropped a court challenge initiated by Bloomberg. De Blasio then signed an executive order nine months into his mayoralty raising the pay rate and broadening its scope to include future developments in the Hudson Yards district as well as commercial tenants in subsidized sites.

But some elected officials and advocates are urging the city to revisit the measure. They say the exemption rate for New York City Economic Development Corporation projects suggests not all contracted organizations that can afford to boost pay are obligated to do so. In fact, about 76 percent of EDC projects signed off on from de Blasio’s inauguration until mid-May were not subject to living wage rules because they involve nonprofit organizations, spanning everything from elite prep schools to social services organizations whose sole revenue comes from city contracts.

The de Blasio administration did not directly respond to an inquiry about whether the city plans to study shoring up living wage measures. Mayoral spokesman Wiley Norvell said it would take time for the benefits of the 2012 law to become evident. “Analyzing the impact of the living wage law and the subsequent executive order will take time,” Norvell said in a statement. “The universe to which the former applied was limited, and projects subject to the executive order won’t be constructed or tenanted for some time.”

The de Blasio administration has committed to bolstering wages for many city contractors, though not via the living wage law. The administration announced it is raising wages to $11.50 an hour – the city contractor living wage rate – for all nonprofits hired to perform work for city agencies. Still, some City Council members and advocates, including the Fiscal Policy Institute and the Federation of Protestant Welfare Agencies, want the whole spectrum of human services workers, such as those in foster care and homeless services, added to the seven industries currently covered by the living wage law’s contracting provision: home care, building services, day care, Head Start, food services, temporary services and those assisting those with cerebral palsy. They are also pushing for the administration to enact a $15-an-hour pay floor for municipal workers and contractors.

James Parrott, chief economist at the Fiscal Policy Institute, estimated this expansion would involve between 60,000 and 80,000 people. “Nassau County’s living wage is like $15.54,” Parrott said. “That’s a county where the county Legislature and the county executive are controlled by Republicans. … In New York City, the contract living wage is $11.50 an hour. That’s pretty stark.”

In July 2013, an EDC subsidiary called the New York City Industrial Development Agency approved an estimated $84.47 million in tax exemptions, a mortgage recording fee waiver and other city and state benefits to assist Fresh Direct in moving from Queens to the Bronx. But advocates like South Bronx Unite and Good Jobs New York, a research organization focused on public subsidy deals, noticed the estimated value shifted shortly after de Blasio was elected to $94.94 million in benefits, according to a map on the EDC’s website. The two organizations met with economic development and administration officials twice, but said they were unable to get a coherent sense of what was driving the increase in the projections. They contend that the city may be missing an opportunity to compel Fresh Direct to revise the terms of its agreement, and therefore commit to paying a living wage.

But the EDC said Fresh Direct has not requested any changes to its contract since the project closed in December 2013. According to the EDC, substantial revisions to the original agreement would require approval from the city’s Industrial Development Agency, but the living wage law would only be triggered if the changes resulted in an additional $1 million or more of financial assistance from the city. The EDC indicated that the anticipated value of benefits often changes as projects evolve. “Benefits are a function of the value of the project,” EDC spokeswoman Kelly Magee said in a statement. “When the cost estimates to build a project go up, so does the amount of benefits the project receives.”

De Blasio’s office stressed that it met multiple times with South Bronx Unite and informed the group that the Fresh Direct contract cannot be amended. “It’s been very clear that the mayor would not have inked this deal as it was done in the previous (administration),” a de Blasio spokesperson said. “But unless the company comes back to seek additional city subsidy, it is not possible to reopen and renegotiate the deal’s terms – that’s just a simple matter of fact.”

Details are even even more scarcewhen it comes to how the law applies to projects administered by the Department of Housing Preservation and Development. Because the legislation includes exemptions for affordable housing projects and construction and building service contractors, lawmakers and advocates say they do not understand why the pay mandate would apply to the HPD’s work creating and preserving units for lower- and middle-income New Yorkers. One of the law’s prime sponsors, former City Councilman Oliver Koppell, said he never anticipated it would cover HPD developments.

Department spokeswoman Elizabeth Rohlfing declined to give an example of exactly when HPD would be obligated to pay a living wage, saying, “How the law does or does not relate to all of the various entities operating at the project site can and will vary.”

Understanding the rationale for HPD’s living wage mandate is complicated by the fact that required public documents are not available – HPD is in the middle of setting up procedures for identifying covered projects, notifying developers, monitoring compliance and compiling related reports, since the agency only implemented the measure once de Blasio required it to do so.

Given that de Blasio is relying on HPD to fulfill his ambitious affordable housing expansion plans, clarifying how its work intersects with living wage should be a priority, Koppell said. “HPD should be able to answer these questions,” he said. “This is supposedly central to the mayor’s philosophy, to increase the pay of low-income workers, reduce the disparity, eliminate the ‘two cities’ situation. This definitely should be looked at carefully.”

Although 12 years have elapsed since the initial living wage law was enacted, the government has rarely reviewed it. The measure requires firms to submit a certificate of compliance on an annual basis indicating it agrees to pay living wages and detailing how it plans to do so. The comptroller is charged with using these submissions to compile an annual report for the administration and lawmakers summarizing and assessing implementation and enforcement. About a month after City & State began requesting recent reports, Stringer’s office said it realized the review had never been compiled and retroactively produced a dozen of them. “We can’t speak for previous administrations,” Stringer spokesman Eric Sumberg said in a statement. “With that being said, the comptroller began a review of the reporting requirements of the office last year, and the staff identified this report as one that had not been completed. The data found in the annual reports show that violations have been limited.”

Former Comptroller John Liu said he did not recall the particulars of the report in question and referred City & State to Stringer’s office. Liu’s predecessor, Bill Thompson, said he did not know relevant details offhand.

The de Blasio administration did not respond to inquiries about whether agencies have been soliciting and archiving the certificates in question. The mayor’s office also did not answer questions about whether City & State could review the documents or would need to submit Freedom of Information Law requests to obtain them. Stringer’s office said the database it uses cannot compile information by certificate, and officials did not independently notice a trend in how often the certificates have been submitted.

The Comptroller’s Office suggested enforcement activity may have slowed because compensation rates in the market have risen above benchmarks written into the law for many sectors. For instance, the push to support Medicaid home health aides was an impetus for the law, according to Paul Sonn, program director and general counsel at the National Employment Law Project. He said many of those aides and others have since moved into a state regulatory scheme, so they are less concerned about the city’s law. Still, Sonn and other advocates say it would be worthwhile for the city to beef up its oversight of the measure.

“Most of these are non-union sectors, where there’s not an organizer stakeholder group kind of watchdogging it, so you’d definitely want to improve monitoring and enforcement,” Sonn said. “Once there are complaints, the comptroller can deal with those effectively, but there are various best practices to getting there.”

Such policy changes, however, are unlikely to be driven by politics, according to political consultant Hank Sheinkopf. He said analysis of the living wage laws’ effectiveness will seem academic to the average voter. Sheinkopf added that many of the unions and other supporters of such measures will back de Blasio regardless of the living wage laws’ successes because his comprehensive platform appeals to them.

The mayor must balance the desires of the entire city with the demographics that turn out to vote, which do not traditionally include large numbers of low-income New Yorkers, according to Christina Greer, assistant professor of political science at Fordham University. “That’s why it’s so important for poor people to vote, because everyone looks at the numbers,” she said.

In the Bronx, those who are tuned in to the living wage rollout maintain an allegiance to de Blasio, despite a sense of being jilted. “The candidate Bill de Blasio spoke wonderfully and committed to a variety of progressive things,” said Harry Bubbins, director of Friends of Brook Park, one of several groups affiliated with South Bronx Unite. “He’s alienated almost all of the people who got him elected in the first place. ... But it is far from too late for him to live up to the commitments he made and reinvigorate the populacethat got him elected.”