COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, May 12, 1998 1:30 p.m. - - - Bill No. 970586 - Amending Section 17-104 of The Philadelphia Code prerequisites to the execution of City contracts by adding a new subsection requiring that businesses contracting with or receiving financial assistance from the City or City-related's agencies pay their employees no 11 less than a living wage sufficient for a family of four to live at or above the poverty level; and provide such employees insurance with family health-care insurance benefits; and requiring that a specified portion of new employees hired to perform work on City or City-related contracts or projects for which financial assistance is granted be former welfare recipients or persons referred by union or neighborhood hiring halls; all under certain terms and conditions PRESENT: COUNCILMAN MICHAEL A. NUTTER, Chairman COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILWOMAN ANNA CIBOTTA VERNA COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN HAPPY FERNANDEZ COUNCILWOMAN MARIAN B. TASCO COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD T. MARIANO COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 I N D E X NYC Councilman Salvatore Albanese. . . . . . . 19 Joseph Rauscher, President, Phila. AFL-CIO . . 66 Art Dougherty, Pres.,, Phila. Postal Workers 66 Rita Rosella . . . . . . . . . . . . . . . . . 69 Hotel Employees/Restaurant Employees Union Kathy Black, Pres., Phila. Chapter, CLUE . . . 75 Joe Shields, SEIU. . . . . . . . . . . . . . . 81 Rosalind Spiegel, Jewish Labor Committee . . . 86 Thomas Cronin, District 47 Head. . . . . . . . 89 Wendell Young, AFL-CIO Vice President. . . . . 97 Charles Pizzi, Phila. Chamber of Commerce. . . 108 Joe Procacci, Procacci Brothers. . . . . . . . 115 Sidney Gable, Industrial Realtor . . . . . . . 140 Leo Goronski, Esq., Barthco International. . . 143 Stan Moat, Owner, Contour Packaging. . . . . . 146 Linda Jensen, Wallace Faberton Todd Designs 148 Lance Charon, President, DocuShred . . . . . . 155 Scott Simons, Founder, Laser Labs. . . . . . . 167 Al Taubenberger, President . . . . . . . . . . 172 Northeast Philadelphia Chamber of Commerce Nick Kromberger, Owner, Kromberger Company . . 176 Edward McBride, PECO County Affairs Manager. . 204 Mickey Rowley, Executive Director. . . . . . . 205 Philadelphia Hotel Association 3 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (Index, cont'd.) Aqil Sabur, Executive Director . . . . . . . . 207 West Philadelphia Financial Services Institution Commissioner Louis Applebaum . . . . . . . . . 215 Procurement Department James Roundtree, Executive Director. . . . . . 218 Minority Enterprise Council, Stanley Shapiro, Chief . . . . . . . . . . . . 222 Philadelphia City Council Technical Services Unit Robert Brand, President. . . . . . . . . . . . 227 Solutions for Progress Donna L. Allie, President/CEO Team Clean . . . 253 Bob Struthers, SFS Correctional Group LTD. . . 258 Commissioner Joan Reeves . . . . . . . . . . . 262 Department of Human Services Carol Hemingway, ACORN . . . . . . . . . . . . 269 Cora Kenlaw, ACORN . . . . . . . . . . . . . . 281 Reverend Fitch, NAACP. . . . . . . . . . . . . 286 William Hankowsky. . . . . . . . . . . . . . . 294 Curtis Jones . . . . . . . . . . . . . . . . . 303 Dr. Howard Wial, Keystone Research . . . . . . 316 Andrew Buck, Temple Univ. Economics Professor 318 Barney Auer. . . . . . . . . . . . . . . . . . 321 Western Pennsylvania Living Wage Campaign 4 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 P R O C E E D I N G S
Good afternoon, ladies and gentlemen. Good afternoon, ladies and gentlemen. It's a pleasure to have all of you here this afternoon. This is a meeting of the Committee on Commerce and Economic Development. I am Councilman Michael Nutter, Chair of the committee. To my right is Councilwoman Fernandez, the Vice Chair. To her right is Councilwoman Donna Reed Miller, and to my left is Councilman DiCicco. Now having a quorum, the committee is in session. I'll read the title of the bill. There is a witness list. If you are concerned about your place on the list, I assume that the young lady to my left, Wanda, from Councilman Ortiz's office, you should get your name to her. Let me read the title to the bill. Bill No. 970586, amending Section 17-104 of The Philadelphia Code prerequisites to the execution of City contracts by adding a new subsection requiring that businesses contracting with or receiving financial assistance from the City or 5 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 City-related's agencies pay their employees no 3 less than a living wage sufficient for a family of four to live at or above the poverty level; and provide such employees insurance with family health-care insurance benefits; and requiring that a specified portion of new employees hired to perform work on City or City-related contracts or projects for which financial assistance is granted be former welfare recipients or persons referred by union or neighborhood hiring halls; all under certain terms and conditions. Let me say at the outset it is cheer that there is a great amount of enthusiasm and anticipation regarding this particular bill. (Applause.)
Having participated in a couple of those, and I think my colleagues will agree, we enjoy and applaud all of your enthusiasm, but we also have a very long witness list. We want everything, to the greatest extent possible, to be heard. And all I will ask primarily, as Chair of the committee and on behalf of my colleagues, that we are able to hear everyone and respect 6 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 everyone. You may or may not hear some things that you do or do not like but that is our committee process and that's the process that we'd like to conduct this afternoon. So to the extent that everyone can hear and listen and get information, we will ask, I'm sure, a lot of questions for a lot of different reasons. Again, some of those questions, you may like, some you may not like, but they are all in the interest and purpose of gathering information so that the Council can do its business. I have just received the newest witness list; it is actually still warm. So we will start with that list, but some of my colleagues on the committee may have statements they may wish to make.
Thank you, Mr. Chairman. Mr. Chairman, today we are here to begin a dialogue about Bill 970586 -- the bill 7 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. " This bill was introduced as another effort by this legislature to level the playing field in terms of wage equity. 15 an hour, a worker who's employed for 40 hours a week can earn $10,712 a year. Such is a salary places that worker below the federal poverty level. It is estimated that percent of 13 Philadelphia residents are living in poverty. 14 After the welfare-reform laws, there has been much 15 talk about back-to-work programs, job training, 16 and placement, and other initiatives in order to 17 accommodate those coming off of the welfare rolls 18 as well as the many thousands that are currently 19 unemployed. 20 These programs, no doubt, are 21 desperately needed. Job creation is fundamental 22 in a city that has been experiencing more job 23 loses than gains. Clearly, there is a need to 24 attract businesses and responsible employers to 25 the City. 8 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. " Philadelphia spends millions of taxpayers' dollars to lure businesses to the City. So Wal-Mart and Marriott have been built, and some limited manufacturing has come back into the federally subsidized Empowerment Zones. But too often, when these jobs are created, they tend to provide low wages and inadequate health benefits, particularly in the service industry. While local government has had limited influence in shaping the private sector, it has demonstrated that it can influence the corporate behavior of those entities that do direct business with the City. Minority business set aside ordinances where businesses are required to hire minority and women contractors. Or prevailing wage ordinances like we just approved the other day are very good examples of this. And by the way, there is very little difference between the prevailing wage that we approved the other day and what we're talking 9 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 about here today. The fight to enact laws which connect wage and benefit requirements to government assistance is becoming a viable alternative to State and local government officials who believe that federally-required minimum wage is inadequate as it only helps to promote poverty conditions. " Today we will explore living wage legislation which ties wages to City contracts. 90 an hour, plus health benefits. But this bill would go one step further. It would propose that 15 percent of new workers hired come from the welfare rolls, a key provision in response to the current dilemma we are facing, and placing former welfare recipients in decent jobs. Mr. Chairman, there will be those who come before this Council and attempt to use scare tactics by alleging that these bills will narrowly be an incentive for business to flee the City. 10 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Mr. Chairman, similar allegations were made against past minority set-aside requirements and prevailing wage legislation. To some detractors of this bill, it seems that it's all right for PIDC to use taxpayers' dollars to provide the private sector with $4 billion in development and financing but it's not all right to ask for a simple return on those dollars. Is it asking too much for companies that benefit from government business to provide way wages benefits which do not perpetuate poverty? Are we saying that, in this day and age, with 34,000 people coming off the welfare rolls, we should not ask for basic concessions which could prevent workers from becoming homeless? I admit, Mr. Chairman, that the establishment of a living wage is no panacea. 90 an hour for a 40-hour week generates an income of barely $16,000 dollars a year; but at least it represents a 48 percent increase over the minimum wage poverty wage. Mr. Chairman, this is an opportunity to establish a positive precedent in the same way 11 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO.
970586 that other cities have. 70 hour by this year there. Milwaukee, New York City, Portland, Jersey City, Des Moines, San Jose, and Los Angeles all have adopted varying versions of living-wage laws. They all have recognized the need to level the playing field when it comes to wage equity. Mr. Chairman, we in Philadelphia should do no less. Thank you very much. )
Thank you Councilman Ortiz. The Chair recognizes Councilman Mariano.
Mr. Chairman, we just heard Councilman Ortiz give the educated Columbia Law School opinion of this bill. Well, I'll give you the blue-collar Juniata Park opinion 12 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 of this bill, okay? Every year, thousands of bills come in front of you and I and the rest of the members of this Council. And a lot of them, frankly, don't mean diddly-squat to my constituents and your constituents and everyone at that table's and everyone that sits in this room's constituents. This is a bill that is very simple. Every year, Philadelphia gives millions of dollars in assistance to companies in a form that ranges from City contracts, from services to tax abatements to loan guarantees. The City is giving these companies a chance to survive and grow. This legislation would do the same for individuals that they are hiring, providing these companies give the minimum wage of 7.90 an hour, plus health benefits. The wage of 7.90 an hour was determined by calculating what a family of four -- a family of four -- needs to stay 100 percent above the poverty line. I view this as a social contract between the companies we help -- and we want to help them, Mr. Chairman, we want to bring them here, we want businesses to come here. 13 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Now, as the Administration brings in Mr. Applebaum and the Steve Mullins of the world -- maybe we'll even get David L. Cohen in here -- and they're going to tell us everything is wrong. It's going to remind you of the Lost in Space robot -- danger, danger, danger, the sky is falling. That does not compute. (Applause.)
Well, that's not what's going to happen here today because I have faith in my fellow Councilpeople. And if there's one bill -- we went and talked about a bill last week till our heads were exploding, and it may have affected 100 people, 100 people. Now, I'm not telling you that bill was bad or that bill was good, but this bill will affect thousands and thousands of people, people that truly need it. (Applause.)
By the way, people that will vote or not vote for all of us next year. So I implore everyone that sits on this committee, Councilwoman, Councilwoman, Councilman 14 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 DiCicco, my good-looking twin -- Frank, pay attention -- Michael, pay attention -- everybody pay attention, because this is going to be important today. Okay, this is going to be real important. What we do here today, and if we don't let the Administration back us off -- I got calls I didn't Charlie Pizzi. I didn't think Charlie Pizzi knew what my name was. Frankly, I thought he thought I was Frank DiCicco. I said we have your attention now Mr. Pizzi. And ya know what? My wife owns a business in Philadelphia, okay? So I'm not trying to chase businesses out of Philadelphia. And Councilman Ortiz. That's not what we're trying to do. So before Mr. Applebaum -- Lou, I know you're in here, one of my constituents. Lou, if I lose your vote on this one, I'm sorry, but this is one that really, really means something. So fairly, sit here fairly and listen. Maybe if we get lucky, the Mayor will come in and tell us what's wrong with it. They told me yesterday that it hasn't worked in Boston. I 15 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 found out today from Steve from ACORN that it hasn't started in Boston till July 1st, the fiscal year. So, obviously, somebody's not telling the truth here. So before we get in these long hearings, think, think what's important to the people that truly sent us here. Thank you, Mr. Chairman. (Applause.)
Thank you, Councilman Mariano. What we'd like to do is to start the testimony. The first witness is the Honorable Sal Albanese, of the city of New York. He is a councilman in the city of New York. While he is coming to the table, Council Ortiz, I understand that you have some amendments which, by agreement, we are not at the moment going to read the amendments in the record, but you will point out where they are and what they are. They may address some issues that could be relevant to some of the testimony or issues that have been raised previously about this bill; is that correct? 16 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Why don't you proceed, and then we'll have testimony from the Honorable Sal Albanese.
Thank you, Mr. Chairman. This is some amendments that go to some of the problems that we had with the bill. They addressed mostly grammatical and some clarifying changes.
Are these amendments in a packet that was circulated, Councilman?
They're part of a packet that was circulated to all members of the committee and all Members of Council.
(Reading.) It says, number one, limited exception for nonprofits. And nonprofits who's highest paid full-time employees earn less than six times the wages of the lowest paid employee are exempt, exempt, because they had been worried that these organizations were going to be put into this package. 17 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And this should exempt all but the largest charitable religious and community organizations. Number two, modification of the living wage amount. The base living wage minimum would be increased from 7.60 to 7.90 an hour. Low to begin with for a true living wage, the wage level should clearly be raised given the effects of inflation nearly a year since the introduction of the legislation. Number three, revised formulation for provision of health benefits. We had been advised that due to the possibility of ERISA preemption, the bill's direct mandate to provide health-care benefits is problematic. The amendment would offer employees the alternative of paying an additional 1.50 per hour wages in the event that health-care benefits are not provided. Following the structure of the recently enacted Los Angeles ordinance, health-care benefits would be defined as the payment of at least $1.50 per hour for health-care benefits. More inclusive definitions of employers -- number four -- of employers and employees. 18 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Employees getting the protection of the bill would specifically include those classified as full-time, part-time, temporary, and permanent. The definition of employers required to pay the living wage would be clarified to include subcontractors, lessees and sublessees as long as their work is funded by a City contract or City assistance. Number five, only contracts for services -- not those for goods -- would be covered. It is recognized that application of the bill's provisions to contracts for the provision of goods would be impractical at this time. Thus, contract coverage would be narrowed to those dealing with services. Number six, Council would get information annually from City agencies implementing the legislation and holding public hearings thereafter. To ensure the legislation works as intended, Council would get detailed reports from all City agencies with covered contracts for grant programs. And the Commerce Committee -- this committee that is hearing this legislation -- would hold public hearings at least 19 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 once every year on the success of the program. We believe that these amendments provide improved tools and a clearer focus for the basic concept of this bill, all of which are fully preserved. If you have any questions or comments, we'll be available, and the technical staff will be around. Thank you.
Thank you. (Applause.) (Councilman Sal Albanese, New York City, comes forward.)
Councilman Albanese, welcome to Philadelphia City Council. Please identify yourself for the record and begin your testimony.
Sal Albanese, from New York City. First of all, Mr. Chairman, thank you for allowing me to testify, and I want to commend you and members of the committee for entertaining this legislation. Let me begin by commending 20 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Councilmember Ortiz and the other sponsors for having the courage to sponsor a living-wage bill. (Applause.)
Hopefully, Philadelphia will join New York City and other 7 municipalities in adopting living-wage 8 legislation. 9 When I introduced my bill in February 10 of 1995, I was only able to muster 3 cosponsors 11 out of 51 Councilmembers. The Mayor of my city 12 called it too frivolous to comment on, and some of 13 my colleagues thought we wouldn't even get a 14 hearing on the issue. 15 On July 11, 1996, the legislation 16 passed by a vote of 41 to 7. The Mayor vetoed the bill, and we easily overrode his veto. New York City struck a blow for working people, placing our town on the cutting edge of a national effort to provide a living wage for the men and women who are working harder than ever and falling further and further behind. I believe that our victory in New York and the publicity that it generated nationally played a strong role in inspiring other municipalities to adopt similar ordinances. 21 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 I'm hoping that my appearance today contributes to passage of the law in this City. (Applause.)
Now, this is a spirited crowd. Just like at New York, I feel right at home, Mr. Chairman.
Living-wage legislation plays a strong symbolic role in shifting a city a low-wage economy to a living-wage economy. It not only allows workers who are contractors who do business with the City to live with dignity, but it benefits all workers. Additionally, in New York City, it marked the beginning in the battle to reverse the slide toward a city of the very wealthy and a majority of poor working people having a harder time than ever trying to uplift themselves into the middle class and into the working class. This phenomenon is reflected nationally. Despite the fact that the new economy has created many jobs, the prime issue for most Americans -- and I'm sure that it's true in Philadelphia as well -- is not how many jobs there 22 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 are, but what kinds of jobs, what kinds of lives they let people enjoy, and what kind of future is ahead for their children. Passage of the bill in New York City would not have been possible without a strong coalition across racial, ethnic, and religious lines. Besides our Mayor's vehement opposition, all the daily newspapers in New York editorialized against my bill, and many in the business community spoke out against it. However, with a strong push by community-based organizes, organized labor, and some visionaries from the business community, it sailed through the City Council. One of the strongest arguments for passage was made by a business group representing the General Contractors Association. They pointed out that a living wage not only increases a worker's dignity, but also their productivity. In other words, if you pay workers a fair wage for an honest day's work, they tend to perform better. The arguments against the bill were predictable and easily rebutted. They included hypocritical critics that claimed government has 23 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 no right to tinker with the marketplace. However, many of these laissez-faire proponents did not have a problem with the hundreds of millions of dollars in corporate welfare that our city was doling out. The argument that the living wage will increase costs to the city is a faulty one as well. In New York City and Baltimore, the pioneers in this area, the costs have been negligible. Furthermore, what is never calculated is the increase in disposable income the workers who recycle additional dollars to the city's company enhancing the tax base. Additionally, workers who earn living wage are less dependent on public subsidies. Some of the bill's critics claim this legislation will stifle privatization. But if privatization, as its advocates claim, is really about creating competition to deliver quality services, they should welcome this bill with open arms. By establishing a living wage for private-sector contract employees, true competition is created between the private and public sector. And the focus will be on 24 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 efficiency and productivity rather than driving down wages and benefits. The minimum wage has eroded over the past decade. You can help reverse this trend by passing this bill. More importantly, a message will be sent out that no one who works full-time should be mired in poverty. (Applause.)
This is the essence of living-wage legislation. Passage is the morally-correct thing to do, it is the fiscally-right thing to do. It's fiscally prudent to pass living-wage legislation, as I pointed out. I urge this Council to swiftly adopt this legislation and strike a blow for economic and social adjustments. Thank you, Mr. Chairman.
Councilman Albanese, just one quick question. From reading some of the materials, was it your bill that was passed in September 1996 in New York?
It was passed in 25 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 July of 1996.
July of 1996. And is it my understanding that the bill -- that your bill covers employers of city contractors for security services, temporary, cleaning, and food services, that they be paid in applicable, I guess, living wage --
-- for the industry to be determined by the city comptroller in New York, is that correct?
That is correct. And it includes security as well. It's four areas.
Right. Security temporary, cleaning, and food service.
It's four areas, which basically are the areas where there's the most abuse in the city of New York, where people COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 are being paid minimum wage with no health benefits by contractors.
Okay. How are the other city contractors for what I assume is a wide variety of services that people provide businesses provide to the city of New York? Are they covered by the bill?
In the construction trades, we have a prevailing wage law which covers all construction workers throughout the state of New York.
The other contract employees are not covered but there's pending legislation to expand to those other workers. My bill impacts about 16,000 workers in the city of New York, and those are the areas where the most abuse was taking place. But there is a bill right now pending for the City Council to expand it to day-care workers in the city and nurses' aids as well.
Okay. (Applause.) 27 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
All right. So lastly, and I mean obviously, we weren't in New York when you were crafting the legislation. You chose to go after a number of particular industries or sectors of the larger employment picture in New York, either based on egregious activity or where you thought this kind of legislation might have the most benefit? I mean, was that the --
That was the objective. Obviously, as you know, the original bill was much broader in scope.
And, as you know, with all legislation, my bill covered all city contracts.
But, as you know, in the give and take of the legislative process, we basically compromised to hone on those areas 28 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 where the most abuses were taking place and hope to expand into the other areas into the future.
That was some of the questions I had. What were some major differences between the bill as we see it today with the amendments, if you had a chance to look at it, versus the bill that actually passed in New York?
Well, as I heard Councilman Ortiz's amendments, they're basically -- most of what passed in New York really included those amendments. The only thing, as the Councilmember pointed -- out as the Chair pointed out, we did not include all contracts because there was opposition, stiff opposition by some quarters, particularly in the nonprofit sector, which, I think, Councilman Ortiz just referred to. So we pulled away from that, and we're going to expand that into the future. So that basically the differences are the same. Our bill -- my bill was providing for a 29 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 higher living wage of $12.10 an hour because, obviously, New York City is a much more expensive place than Philadelphia, so our bill was higher in scope. And indeed some of the workers, particularly in the temporary area, office temps, are earning about $12 an hour, up from $5 an hour, as a result of our legislation. So one of the differences would be that with our bill in New York, the contract employees will be getting paid more than they would be paid under this legislation.
So would you name the four areas again? Security --
Security, all temporary workers. The city contractors out a lot of office temps. They hire many contractors to provide clerical help. Janitorial and cleaning services, and food processors. Those are the four areas.
And what about areas of your community development block grant? Did that fall into it?
They were not 30 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 included.
Because most of the entities are nonprofits that are involved with that. And I happen to think nonprofits should have been included, but we'll fight another day on that one.
And then other kinds of contracts under what we might call broadly "economic development," you know, any projects -- if I'm reading the bill before us here in Council, it could be any contractor who in any way gets public dollars.
Let's say, for a housing development, for a development of an industrial park, where there's any public dollars involved.
Any tax -- any tax abatement -- I see what you're saying. No, we did not include it. That was in the original bill; we did not include that in the final version. But, once again, there is legislation 31 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 pending to address that. My personal opinion is that it should include any grant money that a contractor receives. Any largesse from the city should include a living-wage component. That is my personal view. (Applause.)
What I'm trying to get at is if we wanted to figure out what kind of effect your bill that passed had on New York City.
It was much narrower that than this current bill?
It's limited to services we call -- that have been privatized or directly contracted out, many of which used to be city functions but now were privatized or contracted out.
Right. 32 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
That's correct. As a matter of fact, the city, under Mayor Giuliani, privatized services like custodial, like clerical help. We used to hire more civil servants in the city of New York since the Mayor came into office. Some of those services were privatized, particularly in those areas -- security. And these contractors, by and large, were not paying the workers a living wage. And those -- that's why we targeted those four areas. It includes a lot of workers 15 to 16,000 workers. And it's in those areas where those services were privatized that we saw the largest abuse by contractors.
Okay. And security people. Those -- here we have -- I mean, did -- are these like private security guards.
Right. 33 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
For example, homeless shelters in the city, they have to hire security officers at those homeless shelters. Prior -- a few years ago, maybe ten years ago, the Human Resources Administration provided those employees. They were civil servants. As of late, they were privatized. So those security officers were being paid $5 an hour, whatever the minimum wage was. As a result of our bill, it increased. But there are a number of areas where security officers are used -- in welfare centers, in hospitals. The city does a lot of contracting out because security is an important service. And that is an area that we focussed in on.
And has your office or the city or the Mayor's office in New York made any analysis of the effect -- of the economic effect of the bill?
That's interesting. 34 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
It's been in effect two years now. And it's interesting because one of the primary arguments against this bill is that it will cost the city an awful a lot of money -- $16 million, which is a drop in the bucket, in a $34 billion budget was laid aside to deal with this alleged increase to the city of New York. I can tell you that the increase was negligible. I don't think we even came close to spending more than 10 million. And the other interesting aspect of this is that the administration who opposed this bill won't even release the numbers. But we do have numbers from Baltimore. It's been in effect there since 1994, and there's been virtually no increase to the city's expenditures as a result of this legislation. And we maintained early on that many of the contractors could absorb the increase -- slight increase in wages. And, as you know, they can choose not to bid for these jobs, but there's been no 35 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 shortage of these people bidding for these jobs, which means the profit is there, and it's handsome. No one has said, since this bill has been passed, "We don't want to bid on this work anymore." The bidding continues and it continues extensively. So what we said originally, the proponents of the bill, was accurate; it had no 10 economic impact at all. There's been no move to reverse the legislation. The only move is to expand it to other areas. (Applause.)
So are you saying that the city of New York, the government of the city of New York, has or has not done any significant analysis of the effects?
The controller's office has done a preliminary analysis which shows very little impact, almost no impact at all, but we're still collecting data as we go along.
Is that a 36 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 public document?
So it's the controller's office in New York. CO0UNCILMAN ALBANESE: Right. Allen Hennessey (ph.) is the controller. His office was charged with doing the analysis. You can certainly solicit it from him.
Councilman, one last quick question, at least for myself. What's the total workforce for the city of New York?
The civil service workforce? It's 190,000. These are civil servants, municipal workforce, 190.
Yes. It's more people than live in my district. Okay.. 37 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Are you asking about the contracting-out workforce, is that what you're asking about?
Well, yeah, because you mentioned, I think, the figure of 16,000.
And I just kind of want to do complete the rest of that equation.
We do not -- one of the problems that we have in New York City, which we're trying to address, is the contracting-out budget of the city is a huge budget, $8 billion.
And there's very little information of how many employees are, what they're paying these employees. We will know now, in these four sectors, how many employees there 38 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 are and what they're paying these employees. As far as the rest of --
-- for private contractors, people who are not members of the municipal workforce --
That's right. Now, I happen to believe, and some others, that there's of fraud and there's plenty of collusion involved in the whole contracting-out budget. And it's almost like a dark hole. No one can really find out how many employees there are, what the contractors are paying people. And there's a lot of work that has to be done in that area. So I can't -- I cannot give you any numbers as far as how many are working for 39 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 contractors, but we do know -- we do know that in those four areas, we'll have accurate information. And one of the objectives of this bill 5 was to help the taxpayers as well because the taxpayers have a right to know how many people work for contractors and what they're paying these contractors.
It was almost like a Sunshine Law kind of effort. Not only was it to help the workers but also to help the taxpayers discover what is going on.
Are there any abuses going on, we need data, we need information. And that information is still not available, with the exception of these four areas.
Okay. The Chair recognizes Councilwoman Tasco and then Councilman Cohen.
I'm not clear on 40 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the four areas that your legislation covers in New York.
Food processors, people who process food and serve food in the city, who work for contractors. For example, there's a company called Marymount (ph.) that makes meals, prepares meals for homeless people in homeless shelters in the city. They're food processors. They work -- there's a company --
Who subcontract with the city. 41 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
In other words, the city of New York has an agency, Human Resources Administration. They're responsible for general welfare for the welfare program in the city of New York. They contract out with contractors to prepare food, and I'm just giving you the example of one company 'cause that was -- there was a scandal involved called Marymount. The other area are janitors, custodial workers who take care of buildings for the city of New York. And a lot of those services have been contracted out. Security guards that are hired by contractors who are in contract with the city. And office temps. There's a huge army of temporary workers the city's hiring. We had a witness who testified he was being paid $5 an hour by a contractor. The contractor was being pay by the City $16 an hour to provide the service -- the worker got $5, the contractor got $11. So that under our bill, he will be earning $12 an hour, or $10 an hour in that particular area. 42 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 So that's what we're talking about. Those are the four areas. Is that clear or --
Sure, that's clear. Now, you said you might want to go to day care.
You run day-care programs, the city runs day-care programs?
For day-care services. There are many contractors who provide those services. Those workers are not covered by this legislation. There's pending legislation to help those workers. Home health aids, for example, that take care of senior citizens are not covered by 43 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 this legislation. There are thousands of those workers that are being paid $5 an hour, or whatever the minimum wage is now, 5.25 an hour, and we want to see their wages elevated as well.
But these are home health aids workers who would have employed by the city but you contract those out?
So all of the work that your legislation covers has to do with --
-- with contracts with the City of Philadelphia (sic).
Tell me about the nonprofits. We have community development block grant providers with the City of Philadelphia. Are they covered in New York? People who have community development block grant money run programs funded by the city, are they covered?
No nonprofits are covered by this legislation in New York. I think they should be covered, but they're not covered. 44 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Okay, let me see Wait a second here. . . Now, who monitors the program in New York? The reports are filed with what department?
The New York City controller. We have a controller who's been charged with the auditing of city services and certifying the budget. He's elected by all of the people in the city, and he's charged with reporting mechanisms for making sure that the information is accurate. And we have some stiff penalties in there for contractors trying to get around the law, stiff fines. And, also, if you're a repeat offender, you could be jailed. So it's a pretty hard and fast effort to make sure that they comply with the law. But he's in charge of that audit.
This question may have been asked earlier, I thought it was. My hearing is not too good, I'm getting old ears. Did you say that there was no 25 significant increase of the cost of him to do 45 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 this?
That's correct. And the city of Baltimore, which has had this bill 9 in effect since 1994, has even better data which shows very little increase to the city, if any at all.
When a company is bidding on a city contract, do they submit to you a budget for what they plan, how they plan to spend the money? Do they have to submit that? They just bid on the contract?
They bid. They're supposed to -- they bid on the contact. It's the lowest responsible bidder, that's the standard that's used in the city of New York. If an agency puts out a contract, they bid on it, they have to provide some schematic of how they will accomplish their objective. There's a time frame that they have to buy into. But the contract in our process in the 46 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 city could really use some shoring up in New York. I don't know how it is Philadelphia, but the information is of a general nature with a price, and the contractors then are chosen by that standard, the lowest most responsible bid.
Well, wouldn't you be able to get a feel for how they plan or what they plan to pay if, in the bidding process, they outline what they plan to spend on wages? I mean, we need to know how they determine -- how they get to the bottom line of the lowest of the bids?.
There is no -- there is no mandate in the contracting process for demonstrate -- for pointing out what you're going pay today workers. That's not in the document when you apply for a contract for the city of New York. Under our bill, under the living-wage bill that we passed in those four areas, the contractors now have to submit certified payrolls with how many employees they have on staff and what they're paying those employees to make sure that they comply with the living-wage law. 47 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 But, as I pointed out before, the contracted-out budget of the city is huge budget, $8 billion. And a lot of what goes on there, in my opinion, is done in a very -- almost secretive fashion. I mean, it's not clandestine, but there's a lot of -- (Interruption by unidentified person shouting from audience.)
Excuse me, excuse me, excuse me. (Continuing interruption by same unidentified person in audience.)
Ma'am, I said earlier, we are trying to conduct a dignified public hearing. If you have something that you'd like to say, please put your name on the witness list, we'll be pleased to hear you at the table. The Councilwoman's asking a question, the gentleman's trying to respond. These kinds of outbursts are not helpful. Thank you.
If. . . Oh, is all of your subcontracting done through your procurement department, or can individual 48 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 departments contract out?
The general contractor hires the subcontractors, and they're covered under our legislation. In other words, there's a general contractor; he or she can hire subcontractors.
And that's what I wanted. The question is: The contractors that do business with the city, are they -- do they all bid through your procurement department, or can they bid through individual city agencies?
They bid through individual city agencies, but there's a policy procurement board that oversees the whole process. They bid through individual agencies. The bid goes through those agencies. And then they're also under an umbrella of the policy procurement board, which checks to make sure that the contract is of a reasonable price. But, as I said before, the oversight is really skimpy at best, but it's through the direct agencies.
What was the average wage that was being paid during the course 49 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 of your hearings? Did you discover the average costs being paid to the average worker?
We had many witnesses that came forward during this period of testimony. And in the office temp area, it was $5 an hour at that time 'cause the minimum wage was 4.25 an hour. While in the private sector, in the non-contractor sector, office temps were being paid $12 an hour. In the area of security guards, it was $5 an hour. In the areas of janitorial services, it was the minimum wage.
So you were paying minimum wage, but they were paying more than that in the private sector.
A quick question from Councilwoman Fernandez, which, I think, was a follow-up to Councilwoman Tasco, and then Councilman Cohen. 50 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Okay. Councilman, in your bill that passed in New York, how do you -- what formula do you use to continually adjust the amount of what's considered a living wage? Do you gear it to the consumer price index or poverty level? Or what id you use?
We used the federal poverty guidelines for a family of four. In New York City, it was about $24,000 a year. Under the bill that passed, what the controller does is, he does a survey of the prevailing wage in the private sector in those four areas to also weave that into the equation, into the formula for adjusting wages in those areas.
Councilman DiCicco. 51 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
You may have said this earlier, but I may have missed it also. I, too, like Councilwoman Tasco, am getting a little bit older, and my hearing's starting to fail. What was the living wage in New York now as a result of your bill?
It varies based on what they're paying in the non-contract private sector. In the area of office temps, it's between 10 and $12 an hour. In the area of security, it's about $8 an hour. So it varies based on the controller's analysis and audits.
Do you have any idea as to what the cost of living in New York versus the cost of living in Philadelphia? And do you know how that would relate to the number that you reached to determine what the living wage should be for a particular job?
Well, my original 52 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 bill called for wages of $12 an hour for contract employees with the city of New York based on the federal poverty guidelines. I think Councilmember Ortiz's bill is doing is calibrating that to the cost of living in Philadelphia, which is about $7.90 an hour, which would bring a family of four over the federal poverty guidelines.
That's right. And it's much more expensive, as you know, in New York City. The rents are through the roof and --
Would you happen to know if there was any increase to the city's budget that was realized as a result of the implementation of the living-wage bill?
I can tell you 53 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 there were $16 million that were laid aside that were budgeted for the living-wage bill. And I don't think it went over million. As a matter 5 of fact, I'm trying to get the information now. I 6 believe it might be even less than 5 million. 7 The costs have been negligible because 8 -- the Administration, who vetoed this bill, 9 would have used that information by now and would 10 have said, Look, we told you so. This is going to cost an astronomical sum of money. It certainly hasn't gone over what we budgeted. Now, in New York City we have a $34 billion budget. And we give away literally hundreds of millions of dollars in tax breaks to corporations and real estate developers in the city. I mean, even if it cost $16 million, I mean, look at the inequity here. When it comes to workers who live in the city of New York, who have to survive in the city of New York, they're going to make a big issue of $16 million? And some have. Well, we're giving away the store to big business in the city. They should be balanced. But my point is that it's negligible in 54 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 terms of cost because the contractors usually eat the increase, which is the way it's been working in other cities.
I recognized them earlier -- Councilman Cohen and then Councilwoman Miller.
Tell me if this is working. You know, whenever we discuss tax breaks in Philadelphia, and it's frequent, when the money is going to corporate groups, we always have visitors coming from other areas of the country to tell us how good it is. I can just tell you it's very 55 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 refreshing to have somebody here to speak on behalf of some advances on behalf of ordinary people, working people. (Applause.)
And we want to thank you for that. Incidently, when this matter was discussed in New York, did you have visitors like yourself coming from another city, testifying?
We had several witnesses from Baltimore that we brought in to testify because they were the first city to implement the law.
Yes, to testify on the progress of privatization in Philadelphia.
Not during these hearings but during other hearings. It was a 56 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 pleasure to meet him.
We often heard from David L. Cohen when he was the Chief of Staff for Mayor Rendell. But, apparently, the income from the city job wasn't high enough, and he's now back in private practice. Let me ask you first, your city budget includes school teachers, doesn't it?
I think, relatively speaking, the budgets of Philadelphia and New York are comparable when you take into account the fact that New York City has a population 4-1/2 times what that is in Philadelphia. And if we assume that you were budgeting $16 million, we'd have to divide that figure by about 4, 4-1/2, or 5 to get a picture of what it might cost in Philadelphia. And the cost of to million in Philadelphia was once described by Mayor Rizzo -- and this was a long time ago -- by his Finance Director as saying, "Don't bother me with little trivialities," because in a budget of several 57 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 billion dollars a sum of a few million is meaningless, except when it comes to providing additional benefits for working people. Now, when a working person -- I assume you went into the area of -- when working people earn money, doesn't that money get spent in neighborhoods businesses?
Absolutely. That was one of the arguments that we made. They never calculate that. Most of the people in New York city that are affected by this legislation are city residents. They're going to recycle those dollars into the city's neighborhoods, the local merchants, who will then of course pay tax to the city. So you're absolutely right. I think that it actually is a net gain for the city rather than a loss. Because in New York City, we have a lot of civil servants who live outside the city of New York, many of these contract employees who live within the city's borders and spend their money there.
You know I just think -- I think you're absolutely right. That's 58 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 why when then there's tax on Social Security, among the strongest supporters, in addition to senior citizens and families that have senior citizens, are local businesses.
Because they know that when a worker gets money, he or she doesn't get enough money to salt it away; it goes right back into the economy.
And these are working-class people that tend to shop in their neighborhood. They don't get tend to go to New Jersey or out to suburbia to shop; they tend to shop in their neighborhoods. With the extra income, they patronize local stores. And it will, in turn, of course, enhance the city's economy and tax base.
And the last point, Mr. Chairman, and it may be more in the form of a comment. I, for the life of me, can't understand how anybody can argue against a living wage of $8 an hour. (Applause.) 59 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Well, I always thought that paying people a living wage for an hones day's work was as American as apple pie. Apparently, the values have changed so much in American that now we have a newspaper in New York City called The Daily News that used to be the working-class newspaper that called my plan to pay people $8 an hour a radical idea. That's how bad things have come in terms of balance and looking at this stuff. I mean, I think it's a sad commentary on people that are running this country and people that are running these newspapers when they consider a decent wage a radical idea. Something is wrong somewhere.
Did the labor leadership in New York City support this bill?
All labor leadership was strong in its support strongly, as well as the community-based groups, and some 60 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 business people. There are people in the business world that have vision and have compassion and realized that's what good for workers is also good for the economy. A living wage is good for the economy, it's good for families, it's good for business. There are a lot of people with myopia in this country. (Applause.)
Thank you, Councilman. That is a great segue into our next panel.
Councilman, before you leave, I think Councilwoman Miller has a question.
Thank you, Councilman Nutter. I have two questions of you, Councilperson. What kind of impact did this bill 24 have on small and minority businesses in New York? 61 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
None that I know of. We had -- we didn't have opposition. There was some concern from minority contractors at the beginning of the process. But at the end of the day, there was broad-based support. We already have a prevailing wage law that affects all construction contracts in the city and throughout the state of New York. And I maintain that the argument from the General Contractors Association made is the best argument for paying workers a living wage. If you're a small contractor, you want to be able to have -- you want employees that are happy, that have high morale, they're not throw-away workers, they could pay their rent, they could put food on the table because eventually they'll perform better, and you'll continue to get contracts. If you hire people and pay them a minimum wage, and they can't pay their rent, they can't put food on the table, those workers are not going to be happy campers. So it makes no sense not to pay them a living wage. (Applause.) 62 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
So, therefore, the passage of this bill in New York did not drive small and minority businesses out of business?
Okay. I have one other question. Did it have an impact on whether businesses continued to want to do business in New York or not even be interested in coming to New York at all
None whatsoever. As I said before, the interesting thing about the bill is that there has not been a reduction in the number of bidders for these contracts. The competition remains stiff in those four areas, by the way. There hasn't been a contractor who has come forward and said, I can't pay these wages, I'm can't not going to make any money. They're paying decent wages, and they're making money, as we maintained they would.
Okay, one other question. Of the $16 million that New York put aside, and you said you think they may have spent about 5 million. 63 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
I think -- I mean may -- you know, we -- all I can tell you is that we're trying to find out exactly what it is.
Okay. Well, what did they spend it on, whether its 5 million, 10 million, or 16 million?
Probably maybe the bids went up a little bit because the contractors increased their bids. That's really -- that's the assumption behind the increased spending, that the city's going to have to pay a little bit more for contracts, that's the assumption. I don't believe it happened. I don't believe it has happened. As I said before, Councilmember, if it did drive up costs, we would have a lot of people pointing fingers and saying, We told you so. People like Albanese are going to drive contractors out of business in this town. It hasn't happened, and I'm looking forward to seeing the data.
Thank you. (Applause.) 64 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Have you seen -- noticed any companies cutting down on the number of employees as a result of having to pay the higher wage? Have you seen a decline in productivity?
'Cause they have cut the number of employees to raise the wage?
We haven't seen any of that, we have not seen any of that, and I don't believe we will.
One other question I have. This bill impacts full-time and part-time employees in New York?
All employees that work for contractors under those -- in those four categories, whether they be part-time or 65 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 full-time.
Seeing no other questions, Councilman Albanese, thank you very much for coming to Philadelphia.
The next panel will be a group of labor leaders or representatives from various labor constituencies: Mr. Tom Cronin, Mr. Joe Rauscher, Joe Shields, Art Dougherty, Joe Fisher, Wendell Young, Reggie Muldon, Van Cooper, Kathryn Black, Rosalyn Spiegel and Rita Rosella. (Applause.)
I also have on my list a J.J. Johnson, from Service Employees Union. If we could have all of those labor representatives come forward. (Members of labor representatives panel come forward.)
Welcome to all of you. Please identify yourselves for the record. I'm sure that in the great labor 66 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 tradition, you have figured out amongst yourselves who's going first, and I will not attempt to make that decision. UNIDENTIFIED PERSON: (Inaudible, off mike.)
We are going to try to do this in some semblance of order. We're usually accused of being labor and not too organized, but I think we're going to be very well-organized.
With that, I would like to start off with the President of the American Postal Workers here in Philadelphia, Art Dougherty. Art? (Applause.)
Thank you very much for the opportunity to testify on behalf of the living-wage bill. 67 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And, basically, I just want to echo what Councilman Mariano and Councilman Cohen and Councilman Ortiz have already said. Basically, are we in a race to the top or are we on a race to the bottom? And, in fact, I'm proud to be here on behalf of the 4500 members of the American Postal Workers Union here in Philadelphia. (Applause.)
And I want to thank the brothers and sisters in ACORN for raising this issue and pursuing it in a diligent way. (Applause.)
In fact, lowering the wages puts pressure on good employers, like the Postal Service. That's not to say that we don't have disagreements with the Postal Service over specific issues such as privatization. But the fact is, the Postal Service and the American Postal Workers Union require that the Postal Service pay a living wage. Every employer in the City of Philadelphia who doesn't meet that requirement puts pressure on the Postal Service to lower their wages. We are in favor of the living wage in 68 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Philadelphia. We recently -- and we're having a demonstration on May 27th, at 30th Street. I want to invite all Councilpersons and people from ACORN to attend our demonstration. (Applause.)
We have recently lost 200 jobs in Philadelphia at the air mail facility basically as a result of privatization and contracting out. And we are opposed to the lowering of wages. And, basically, the debate over a living wage and health care is, as Councilman Cohen has said, really unfathomable to me. So I would urge the Council people to adopt this living-wage proposal. Thank you.
Thank you, Art. Now I'd like to introduce Rita Rosella from HERE Local, the Hotel Employees/Restaurant Employees Local 274. (Applause.)
Just an aside. Rita's 69 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 whole slate of local officers were reelected yesterday, so you'll be dealing with Pat Coglin (ph.) and a full slate of Local 274 officers for three more years.
Thank you, Joe. Thank you for giving us the opportunity to be here today.
I'm Rita Rosella from Local 274 Hotel Employees/Restaurant Employees. We do support this bill. We urge you to pass it. It would have a great impact on the lives of many of our members who, as you know, are employed at Veterans Stadium and the CoreStates Center, as well as many other areas. But in this particular instance, those City contracts and this bill would affect those members. They don't make 7.90 an hour. In fact, they make lifetime commitments for part-time jobs. Many of those people have been down there for 20 years. They work other jobs to subsidize the income that they make. The reason that it is tolerable down 70 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 there is because they have a union contract. Yes, they have a pension fund. Yes, we fight for them, and they grievance procedure, and that is why it's tolerable. But would this affect their lives in a great way? Yes, it would. And do we urge you to support it? We do. (Applause.)
As the Councilman said, they do vote in the area. In the Vet alone, there are over 600 of our members who return season after season. So thank you, ACORN, for giving us the opportunity to be here, and Joe Rauscher and labor. And, again, we'll be watching this, and we are urging your support on it. Thanks.
Thank you. Miss Rosella, quick questions for Miss Rosella.
You mentioned that you have some of your members, I guess, who contract with whatever company is down at Veterans Stadium. 71 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
That's a different hearing. Are there other members that work or have contracts with other parts of the City government?
Sure. The CoreStates Center is one off the top of my head right now.
Right, we don't own the CoreStates that's right not the CoreStates Center.
Okay. 72 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Mr. Chairman, the foods service at the prison is contracted out. (Inaudible, off mike.)
Yes. Could you supply us with, unless you know it off the top of your head, the current wage scales and any kind of benefits your union employees get at particularly the Vet and the airport? CoreStates, I would have to check because I don't think that's a City-owned facility.
That's correct, that was my mistake. I could supply that information to you. At this moment in time, I don't have it.
And, also, any kind of benefits they get or don't get.
Following 73 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Councilperson Fernandez's question, I suppose -- just a ballpark figure, what does somebody make selling beer down the Vet?
$6 an hour. How much does beer cost down the Vet? I don't drink it.
Okay, so two beers your hourly pay's done, that's pretty much it. (Applause.)
Mr. Chairman, on that note, the woman that sells peanuts and hot dogs down the Vet, how many beers can you sell an hour? I mean, I just graduated college the last couple of years so my ciphering's not that good. I'm sure Councilman Cohen's looking at me, and his computer's already working. How many beers can you sell an hour, Dave? Now, it wasn't Connie Mack's -- it was Baker Bowl when you worked down there. (Laughter.)
But what was it, 74 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 beers an hour? The ratio's incredible. SO I mean if we can't do 7.90 an hour for the poor person that's stuck in a part-time -- a part-time union, job by the way that's represented greatly, and we're not even talking about health-care benefits, are we, Rita? Do you get any health-care benefits?
When you supply all of that to Councilwoman Fernandez, can you give us all of that so we can how much the health-care benefit package is and everything.
Thank you, Mr. Chairman. Thank you, Miss Rosella. (Applause.)
Mr. Chairman and panel, I would now like to introduce Kathy Black. Kathy is the Regional Director or the Regional President of CLUE here in the Philadelphia, the Coalition of 75 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Labor Union Women, and she's also a member of the staff of District Council 47. Kathy? (Applause.)
Thank you, Joe. Good afternoon. Thank you for the opportunity to appear today and speak to you in support of living-wage Bill No. 970586. My name is Kathy Black. I am President of the Philadelphia Chapter of the Coalition of Labor Union Women, better known as "CLUE," and the Health and Safety Coordinator for District Council 47. CLUE is a national organization of union women, with chapters in dozens of cities around the country, which works to improve the lives of working women through national legislation and local action. Our national president, Gloria Johnson, has spoken publicly in support of living-wage ordinances generally. And our sister chapters in other cities -- notably Los Angeles, Oakland and Boston -- have been coalition partners working for passage of bills similar to this one, as we have been active here in Philadelphia. 76 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 On behalf of thousands of union women in the Philadelphia area, I am here today to voice our absolutely enthusiastic support for the Philadelphia wage bill. On average, union women make about 30 percent more than women in similar nonunion jobs. And, for the most part, this means we make a living wage. It also means we are more likely to experience pay equity with men in similar occupations. However, this is not the case for the vast majority of women workers in this country. Nationally, the median annual earnings for year-round full-time women workers were only 73.8 percent of men's earnings. There's been a gradual closing of this pay gap over the last years, 18 but when I say "gradual," it means it will be 19 another 35 years or so, at this rate, before the 20 wage gap is closed. Minority women, of course, fare much worse, earning only 67 percent of what men earn. And, unfortunately, here in Philadelphia, women fare even worse than that. Statewide, women earn an average of only 65.5 percent of men's earnings 77 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 placing, placing us an embarrassing 38th among the 50 states in pay-equity ranking. Nationwide, women make up almost 60 percent of low-workers; that is, those who are making less than 6.15 an hour. In 1995, 77 percent earned less than $25,000 a year. And that's a whopping percent higher than the 9 percentage of men working for those wages. 10 Once again, Pennsylvania lags behind 11 these national averages as well. In 1995, 74 12 percent of our state's working women were earning 13 these poverty wages. And while these statistics 14 are Statewide and not Philadelphia-specific, 15 frankly, there's no reason to believe that we do 16 not conform to the State model. 17 Given the level of the poverty in our 18 city, as you're going to be hearing about from 19 other speakers today, it's a safe bet that 20 Philadelphia statistics would not be any better. 21 These wage gaps exist in part because 22 women and people of color are still segregated 23 into a few low-paying occupations. More than half 24 of all women workers hold sales, clerical, and service jobs. Studies show that the more an 78 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 occupation is dominated by women or people of color, the less it pays. Part of that wage gap results from differences in education and experience, but a significant portion cannot be explained away by any of those factors. It is attributable strictly to discrimination. In other words, certain jobs pay less simply because they are held by women and people of color. Many of the jobs that would be affected by this proposed law are exactly these kinds of jobs -- low-paid service and clerical positions, a large percentage of which are likely to be filled by Philadelphia women. Many of these women will be single mothers struggling to provide adequate child care, food, shelter, and clothing for their families. They cannot possibly do so on 5.15 an hour, no matter how many hours they work -- (Applause.)
-- no matter how many part-time jobs they manage to string together, and no matter how much family support they might have. Although we're calling 7.90 a living wage for purposes of this bill, those of us who 79 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 are making comfortable middle-class salaries know, if we're honest, that attempting to support a family of 4 on $16,000 a year is excruciatingly difficulty. Also, parenthetically, as a Philadelphia homeowner and a single parent, I make a lot more than that. I make a comfortable middle-class living, I'm the sole support for two teenage girls, one of whom is in college, and I'm barely making it. And how these women do it on $16,000 or less is just a miracle. (Applause.)
Even opponents of minimum-wage increases are the first to admit that the increase over the past years haven't kept 17 pace with inflation, not even close. 18 As a homeowner and taxpayer and citizen 19 of this city. I want to see my city government 20 provide greater accountability how tax dollars are spent. I do not want my tax dollars spent subsidizing low-wage jobs which force Philadelphia families to live in poverty. (Applause.)
Passage of a living-wage 80 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 ordinance will not eradicate poverty and pay inequity in Philadelphia, but it will help. It could help lift thousands of families above the threshold where they must make weekly choices between paying the rent or the electric bill. (Applause.)
Between buying school shoes or groceries. It will send a message to citizens and businesses that the City's elected officials oppose pay discrimination, that they're concerned about the welfare off or poorest citizens, that they recognize that families cannot thrive on poverty wages, and that they believe that they have an obligation to voters and taxpayers to use their hard-earned dollars in a socially- responsible manner. The members of CLUE calling you to vote yes for a living wage for Philadelphians. We ask to make sure that Philadelphia joins the 19 other cities who have passed similar legislation. Philadelphia voters are watching, the nation is watching. Please make us proud.
Thank you. (Applause.) 81 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Next, Mr. Chairman, I'd like to introduce Joe Shields, from SEIU, Service Employees Union Local 36. Joseph? (Applause.)
Good afternoon. My name is Joe Shields. I'm an organizer with SEIU Local 36. On behalf of SEIU Local 36, I'd like to thank you for being here today and for holding this hearing and for ACORN's work and all of the communities and religious organizations and labor unions that have come together to fight for a living wage for the workers of the City of Philadelphia. We strongly support this bill that's before City Council. Our union has done a great amount of work trying to see this ordinance pass. And SEIU has also taken the front road in terms of organizing a Statewide effort for a living wage for workers. We represent some of the lowest-paid workers in Philadelphia, the people that are struggling to take care of their kids, the people that are struggling to put food on the table, the people that are struggling to just get by. 82 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And the only reason that they're able to get by is because they make a living wage 'cause they're union (unintelligible.), and they took the responsibility for themselves to fight for something and to win a living wage. (Applause.)
Unfortunately, not everybody in this city and not every worker in this city is in that situation. We are currently organizing a massive suburban campaign of janitors in suburban Philadelphia where most of our work has gone in the last 5 to 10 years, where people make as low 60 to $80 a week, where $20 of their paycheck each week goes to SEPTA just to get to and from work. (Applause.)
These are people who are struggling -- janitors who are struggling just to get by. And, again, they're standing up for themselves and taking the responsibility on themselves to earn and to fight for and to win a living wage. And, basically, as we see it, the question before City Council is: Are you going to 83 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 go with them? Are you going to step up to your responsibility to do what workers have already started to do to win a living wage for themselves and support their effort? It's our taxpayer dollars that are going to the City contracts, tax abatements, the different dollars that have supported corporations and businesses in this city. And all we're asking for is a small piece of that back. (Applause.)
At a meeting last week with religious leaders and clergy on living wage in our suburban organizing campaign, our president, Mike Russo, said it simply: "We're not looking to get rich, we're just looking to live." (Applause.)
We hope Council hears our concern and takes the responsibility that they should be taking and acts on this ordinance and passes a living wage. Thank you. (Applause.)
Mr. Shields one quick question. As I had asked Ms. Rosella, can 84 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 you tell me some of the contractors that your members work for, that have contracts with the City of Philadelphia?
My understanding is that most of the contracts with the City is with (unintelligible) and cleaning companies. In City Hall, the janitors here are with Local 36. I don't have all the available information in terms of who the various City contracts are with, but like I said, most of the contracts that we have and most that our janitors have are long-term employees. So the effect of the living wage, quite honestly, would be negligible on our membership. It's more --
Because they're already making more than a living wage or close to it. The issue with us is sort of sending a message to the City of Philadelphia and setting a standard. Largely most of our work that we've lost, and that has gone out in the public sector -- in the private sector. It's gone out to the 85 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 suburbs. And that's really where our battle is, below sub-poverty wages, where people are making 5.50, you know, an hour without any health benefits or anything like that. I can get more of that information as well.
It would be helpful if you know of other places where SEIU workers are working for contractors and those contractors have contracts with the City of Philadelphia. It would be helpful to have that kind of information.
I was just reminded that the hotel workers also represent the people in the Convention Center.
Next, Mr. Chairman and committee, I would like to introduce Rosalind 86 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Spiegel, who's with the Jewish Labor Committee. Rosalind? (Applause.)
Thank you, Joe. And thank you, ACORN, for arranging this today. Thank you, City Council, for these hearings. And for all my colleagues here in the labor movement, Kathy, thanks for those remarks about women. I think that's important to know. My name is Rosalind Spiegel. I'm the Area Director of the Jewish Labor Committee here in Philadelphia. It's a national agency and we have an office here. I just have a brief statement. Respect for the dignity of labor and support for workers' rights stems from biblical commandments and the social justice imperative in the Bible and other ancient Jewish sacred texts. There are repeated decisions in the Talmud concerning workers. And many decisions were interpreted in order to favor workers in the (unintelligible). Take, for instance, the issue of shared compensation for work. Linking wages to a living 87 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 wage would sustain a flexible realistic wage, wages that would be spent in our community and only strengthen our economy. A living wage reflects the Talmudic principle that everything should follow local use or custom. These incomes can add whole range of benefits to minimum-labor standards and prevent employers from making agreements less favorable from prevailing wages and benefits. The living wage adds just enough compensation to lift a worker out of poverty according to our local customs and economic conditions. How can we, in good conscience, allow employers come into the City and pay Philadelphians poverty wages? Can this be considered fair compensation for work? How can it be good for Philadelphia if an employer pays a wage so low that it's own employees can't buy the services they are provided? Obviously, we can't rely solely on business to ensure the conditions that would lift families out of poverty, but we can and should rely on you, the government that represents us. 88 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 On behalf of the Jewish Labor Committee, we urge you to pass the living-wage bill. (Applause.)
Next, Mr. Chairman and committee, it's my great pleasure to introduce a good friend and one of the driving forces of this legislation, somebody that's been there every time people less fortunate than ourselves, less fortunate than union members, have needed a friend, and he's always been there. And I don't even think I have to mention his, name but I'll do it anyway. The head of District Council 47, Thomas Cronin. (Applause.)
Also known as the movie star for Blue Cross, right? (Laughter.)
Let me just add that if I can stay in Joe Rauscher's good graces, the next time I want an introduction, I want you to be the person to introduce me somewhere. Mr. Cronin. 89 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Thank you, sir. Members of City Council, ladies and gentlemen, that we are assembled here today on behalf of a campaign called "Living Wage" as we stand on the threshold of the 21st century says volumes about the priorities of America's economic management for the last two decades. For I can assure everyone, and most of us in this chamber need no such assurance, that the name "Living Wage" is not an exaggeration, hyperbole or even mild rhetoric. It is, rather, a plain fact of brutal irony, perhaps even an indictment of an economic system out of control. (Applause.)
Millions of Americans are working to maintain a level of poverty. That is the definition of despair and a formula for disaster. Is that the new American dream? A type of debt-soaked high poverty that is a half step above outright indigence? Full-time employment at a single job at the current minimum wage guarantees economic failure. A minimum wage of 5.15 per hour is an obscenity that flies in the face -- 90 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (Applause.)
-- of the landmark legislation that originally created minimum-wage protection. The minimum-wage level in the United States is a burden that is destroying hope. City Council Bill 970586 is a first big step for Philadelphia to begin to fight through this dilemma of guaranteed poverty. (Applause.)
It is the City of Philadelphia standing firm and stating that if you do business with us, you pay us a fair wage. (Applause.)
It is saying that the government of almost 1.5 million people will not be a party to enforce poverty. (Applause.)
And this is how the living wage will succeed city by city, region by region. We are saying to Washington that a great nation demands economic justice, that communities across the country are dealing with a problem that can no 25 longer be avoided. 91 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Bill 970586 will not harm Philadelphia. There are entrenched interests. Doom-sayers who will always claim that a fair wage will destroy a competitive economic environment. But, in fact, a fair wage creates a healthy environment and is really essential for one. Living wage is the ultimate family-value issue. It is the ultimate community issue. With Bill 970586, Philadelphia has an opportunity to leverage economic fairness and to join with other communities in sending an unmistakable message to Congress. We must take advantage of this opportunity and pass this bill. Thank you. (Applause.)
Thank you, thank you very much. I don't know, Mr. Rauscher, whether you saw or not that Wendell Young had come in so -- he had come in behind you. Just one very basic question. And any of the union leaders or representatives can respond. I got the impression, from some of the 92 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 questions asked back and forth, that some of the union workers may make more than what's being proposed as a living wage, some apparently make less. Do we have any estimates or any information on what the general wage rate is for union people in this city? And would you generally be affected by this directly, or is there more an indirect effect if not benefit?
It's more an indirect benefit. It's our role of being part of the community and to look out for people that are less fortunate than ourselves.
So while some of your members may very well make more, you are lending your support to the effort to drive wages generally and kind of, in the phraseology of "a rising tide lifts all boats."
I mean, as wages go up, there is some benefit to the union movement even if you're not directly affected.
Just as though the labor movement was instrumental all the time with the 93 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 minimum wages.
And I think another point to make is the fact that we believe that this particular bill will make a healthier community and a healthier tax base. Certainly, when you have a healthier tax base, I think you have better and improved city services. That's certainly one thing. (Applause.)
Above and beyond that, and I've often said this, that the first principle of the trade union movement, the labor movement, is solidarity. And so although our folks in our union, for the most part, make well above this wage, I believe it is in our self-interest as well as in the interest of labor movement of solidarity that the interest of one is the interest of all. So that if we can help workers, no 23 matter where they are, no matter what occupation, whether they're organized or unorganized, make a decent standard of living, I believe that that 94 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 improves the quality of life for all people. (Applause.)
Hi. Mr. Rauscher, and then perhaps, Tom, you could also view this. Let me start with Mr. Cronin. Do you know of any City employees that make less than the living wage?
I would say that with respect to the City employees in District Council 47, I do not think that that is the case. However, there may be workers that are in District Council 33 jurisdictions that may come close to that. I'm not sure. I know there is someone from District Council 33 that may be here right now. There are folks that are here that could give you the more accurate information on that.
And also HERE, as you heard testimony, they're below that level in some areas.
Okay. 95 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And SEIU is a little below in some areas or right on that borderline. So, yeah, it's -- we do have some union members that fall in this category.
Could you provide to the Chair that information, including the building trades?
'Cause I'd like to know, you know, the numbers in each union that fall below the 7.90 an hour plus health benefits. Because that's what this bill provides for.
So I'd like to know, you know, within unionized employees in the City --
You know, the numbers and from what unions and from what kinds of jobs that fall below that.
See, you're not just talking about City employees now, you're talking about -- 96 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Well, I'm particularly concerned about City employees, but that could be part of this since all of these unions are a part of the AFL-CIO, right?
Well, I mean, what I'm saying, Councilwoman, is that unionized employees, I believe, that are represented by private nonprofits in some cases that may make less than that wage.
Well, my one question is: Of any City employees on the City payroll, are there any that -- I know they all get health benefits. Are there any that are not getting the 7.90 an hour? My second question is: In the union movement of people providing services within the City, which unions and what types of employees and how many are not getting the 7.90 or do not get health benefits?
You'll have that 97 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 information.
As you stated, Mr. Chairman, there's always somebody comes late as far as the labor movement, but you can't get too mad at him because he's turning out sons that just happen to run for City Council positions. One is doing that right now in California, so Philadelphia might be next, so be nice to him. With that, I'd like to introduce a Vice President of the AFL-CIO, the President of the largest United Food and Commercial Workers Local in the state, and a good friend of many in this room, Wendell W. Young, III.
Thank you, Mr. Chairperson. Thank you, Joseph, Tom, and the other supporters. I'll be very brief, I'm not going to make a big speech, just a small one.
Before you get started, though, I'd like the record to reflect that I only announced that you were here. I did 98 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 not announce that you were late. Your brother to your left announced that you were late. You are always on time.
Even when I'm on time, I'm late. I'm about my father's business many times, so. . . So what happens is -- I also want to put in a plug for WHAT-1340 on the a.m. dial. (Applause.)
We do that every Friday from 7 in the morning till 10. The living wage, as enhanced in Bill 14 970586, is something that is necessary not only in city government and in Philadelphia, but is necessary in most companies that I do not represent and some companies I represent because of competition. The historic battle we're having three years now with Wal-Mart is a battle of a company coming in, making -- giving 5.15- to $6-an-hour wage increases, not giving increases other than 5 and 10 cents, turning over whole workforce in months to months, and they are making millions and millions of dollars throughout this country. 99 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (Applause.)
I hear on every show the people who live in poverty, who have a problem with drugs, and health and welfare and benefits that have been stripped away from them, and we wonder why we have crime when we have people making $40 million a year, $50 million, and closing and consolidating companies. We're hearing what's happening to the Bell system now. Yes, there's a lot of progress, but people are getting hurt time and time again. They work two and three jobs. The City should set an example, it should be an example, especially in Philadelphia where this democracy started. All throughout this country -- and probably previous testimony has shown that living-wage bills are sponsored in City Councils in government -- in some instances, in state government. I urge the Council to consider this, to be leaders, to let the message go forth that we're tired of people working two and three jobs at McDonald's and things like that. (Applause.) 100 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
That the City should set the example so that we could let the charge out. There's many of us that don't have to worry about the living wage. We don't make enough. I looked at my contracts. In 1978, started at $6 an hour, and after months, we 8 were making $12 an hour. 9 Know what? We haven't progressed 10 much. We have trouble just keeping within the 11 contracts that we presently have. 12 So I urge that this City Council take 13 the leadership in Pennsylvania and show the world 14 that we're progressive council, a progressive 15 city, and vote for the 7.90 plus benefits for Bill 16 No. 970586. Please do it. 17 Thank you. 18 (Applause.) 19
Are there any 20 questions for Mr. Young? 21 I think Councilwoman Fernandez has a 22 question for Mr. Rauscher. 23
When you prepare 101 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that information, could you be sure to include employees that live in the City of Philadelphia? In other words, the unions might have people all over the region. So in your numbers, include only unionized members who live in the City of Philadelphia.
I don't really have a question for Mr. Young; it's sort of a question for Mr. Cronin and Mr. Rauscher. It's just an observation, it may be a question. When I started out in the labor movement in my early 20s, there was a lot of division, and we have Mr. Cronin sitting here who is losing employees, he's losing members, and it's being picked up by the guy from SEIU over there. So that's how you know, and I tried to 102 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 explain this to the reporters over there, that labor is here, and that they have nothing to gain here. Because he's going to be losing the work that the Mayor, in his infinite wisdom, and this Administration understand that has to be subbed out. And privatization, we won't talk about that, Mr. Matthews isn't here. But we all understand -- we in labor understand that, but very many times, the things we understand that we learn at the breakfast table or at the dinner table, a lot of people don't understand. So you got to understand, if labor's here, there's religious people here, there's community groups here. And, believe me, the building trades are here through me 'cause it's something that's important to the building trades because it's part of the labor movement in the whole. Pat Gillespie talked to me before I came in here, and he said, Look, Rick, I don't want to come down and testify because I'm busy doing something, but I want you to let everybody know we're for this. 103 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 This would not affect the building trades whatsoever, but it affects the labor as a whole. If we can get Cronin and the gentleman from SEIU and Pat's person there, Rita Rosella, and everybody in the same room, that's what labor's about now. So that shows you how important this issue is and why we have to move forward. And as sit here today, we're going to just get all kinds of phone calls and all kinds of people are going to be telling us about how terrible it is, how this is the worst bill. I mean, there is nothing wrong with this bill. The Councilman from New York came up here and spoke, and he spoke from the heart. Everything -- I talked to him before he came to this room. I said, Christ, Councilman, I'm scared about this because they've been telling me -- he said, Rick, I went through it. I spoke with Councilman Roach (ph.) in Boston, I went up to see him, who, by the way, was the police commissioner in Boston before he was a councilman, so you figure that one out, and he cosponsored this legislation to help poor people, 104 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 okay? He told the same thing in November, when I was up there, that Sal told us today, that Rauscher and Ortiz are saying here today. So if labor's on this and political people are on this, I can't tell my colleagues -- and this is probably going to be -- again, I know I said this a couple hours ago, this is the most important vote that we will ever make. So shame on anybody, before they start telling us about deals they're doing, shame on anybody that can't make vote today to get this out of committee. Thank you, Mr. Chairman. (Applause.)
The good councilman's come a long way since being an electrician. (Laughter.)
Mr. Chairman, if I may, I have seven pages of testimony, and if it's okay with the chairman of the committee and my colleagues, I will submit that in writing and just make a brief statement. I don't want to be redundant.
It is certainly all 105 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 right with us. Okay, we'll have the Sergeant-at-Arms pick those up.
You're going to be hearing very shortly from the Chamber of Commerce, the business community telling you how bad this is. And we understand that. I mean we know, you know, that's their job, to tell you things like that. But, personally, I sit on the board of the Private Industry Council. I sit on the board of Philadelphia Housing Authority. I watch contractors come in, feed at the public dole, make all kinds of money, turn around and leave town, and our people are still below the poverty line. That is something that's got to be stopped. (Applause.)
As the good Councilman Mariano said and Tom Cronin said and many others have said already, labor's only stake in this is as citizens and members of the community, that we care about people. We have fights with people in this building, whether it's the second floor or the 106 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 fourth floor -- 99 percent of the time it's the second floor, but that's something we can deal with -- as far as negotiating contracts, whether it's District Council 43, whether it's 47 or anybody else that deals with the City Administration. We are here to say that we can fight those fights. That's what we're about. We can sit down and negotiate contracts and bring 'em to a conclusion, which we're going to do very shortly with TWU, but that's another story. But we're tired of things happening in this town where banks close, banks merge, put 7, 8, 9,000 people out of work that weren't -- half of 'em weren't even making this poverty amount of money. There were tellers in banks making 6.50, $7 an hour. The hospitals, the mergers of the hospitals, there's no caring there for people, the people that work there. They're just out to destroy, to make the profits, and then run out of town. (Applause.)
But if we got the 107 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 support and we got the backing of City Council to pass this bill and to show people that they're not going to come into town and make exuberant (sic.) profits and keep people under their thumb, then there's something wrong with this great City of Philadelphia, and labor's not going to let it happen. Thank you, Mr. Chairman. (Applause.)
Thank you very much. Thank you, all of you, for coming this afternoon. We greatly appreciate it. Thank you. (Applause.)
Next, we will have representatives from many sectors of the business community. I would like to call all of them up. They will figure out among themselves their order. Charles Pizzi, Scott Simmons, Donna Allie, Mickey Rowley, Leo Goronski, Stan Moat, Mr. Procacci, Sonny del Grand, Ed McBride, Al Taubenberger, Al Edwards, Aqil Sabur, Lance Charen, and Curtis Jones. Can we have those individuals at the witness table, please, right now. 108 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (Panel comes forward.)
Mr. Chairman, before you start with the business people, and this is a little out of the ordinary, but I brought this box shaped like a heart, with cookies that my wife made. 'Cause I want the business here from the Chamber and Mr. Pizzi -- and by the way, my wife's company is in the Chamber of Commerce. I brought 'em today. (Applause.)
Have some heart, 7.90 an hour, $16,000 a year, that's all we're asking. (Applause.)
Sort of like the Wizard of Oz. You have to have a heart and you have to have a brain, and you have to have courage. So that's what this is all about today.
Okay. Good afternoon, Mr. Pizzi. Please identify yourself for the record and proceed with your testimony.
Great. Well, we want to thank you, Mr. Chairman. My name is Charlie Pizzi. I am President of the Greater Philadelphia 109 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Chamber of Commerce, and it is Pennsylvania's largest business association. On behalf of our members, I appreciate the opportunity to comment on Bill 970586, the living-wage bill.
Mr. Pizzi, I'm sorry to interrupt you. Ladies and gentlemen, there may be some who are leaving or who are just coming in. If you could do that as quietly as possible, we would all like to hear. I'm sure that everyone wants to hear all of the various people who have to testify, so I would appreciate indulgence, if we could have quiet. Please proceed.
The business community is greatly concerned about the negative impact that the bill will have on Philadelphia's business environment. First, let me acknowledge the good intentions of the bill's sponsors. I appreciate and share their interest in seeing full employment in the City. In fact, that is largely why I stand here today wearing two hats. 110 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 I stand before you not only as President of the Chamber of Commerce, but also as the newly-appointed cochair of the Private Industry Council. In that role, I have been charged with the challenge of leading the City's Welfare-to-Work initiative. I am working daily with companies that have stepped forward and stated their willingness to hire former welfare recipients. The Chamber has served as a model, hiring and promoting welfare mothers in its own organization. But I can tell you right now, if you mandate this type of activity, businesses will balk and they will walk. (Boos from audience.)
Put simply, if you want to eliminate people's effort to volunteer, tell them how to do it. We should provide businesses with incentives to hire former welfare recipients, not mandate it. Currently, the only thing growing in this city is the population of the poor. As reported in yesterday's Daily News, the number of abandoned properties in Philadelphia may have been 111 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 more than doubled in just the past decade. Our population is diminishing, our houses remain abandoned, and a number of the poor expands daily. Yes, we need to find jobs for the poor. No. The answer does not lie in legislation. I do not disagree with the goals of the bill. I am concerned that the implementation would impede, not foster, our efforts to bring employment to this city. Make no mistake, the solution to this problem lies in one thing -- jobs. This bill is a barrier to job creation. No businesses want to be told by government how to operate, particularly when businesses in Philadelphia are making commitments to the community on their own. Additional mandates, coupled with the tax burden, will only deteriorate the business employment. In an ever-competitive market for jobs, we cannot create obstacles to economic development. Unfortunately, this bill does just that. The City officials must realize the damage done by anti-business legislation. 112 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Consider the personal property tax and the tax increases of the past. Rather than suffer the consequences of higher taxes, banks started moving their trust departments out of town to show that they don't need to be here. Consider the idea of mandating health benefits. President Clinton tried this with his proposed health-care plan, which was rejected by this country. Consider the fact that between 1969 and 1995, the number of employees in the City of Philadelphia fell from over 900,000 to under 700,00. I want to show you on here just what I mean. 1969. Now, prior to this, 1950 to 1969, we've lost hundreds of jobs. Now we start at 1969 and we take the course to 30 years later. We've lost over 250,000 jobs. This other line shows the rate of growth of jobs in this city. Only for three years, from 1984 to 1987, did we have a positive job growth. You can see, just in the last few years, we had a negative of below 4 percent in job growth. We're losing jobs rapidly, we're losing 113 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 because of the barriers to attracting companies in this city. There is a direct correlation between anti-business legislation, wage taxes, local tax increase, and the like. If you mandate business again, you will see them leave the city again. Last month, Mayor Rendell characterized the transition from Welfare-to-Work as the fight of our lives jobs. We are involved in the daily struggle of finding jobs for thousands of City residents. We are fighting with other parts of this country and our suburban neighbors for new jobs. We cannot win that fight if we do not make Philadelphia attractive and appealing to business, both those currently in the City and those we hope to lure here. Over the years, we have used the services of PIDC to make Philadelphia more attractive, and it worked. PIDC has developed financial incentives that try to make Philadelphia competitive. Under this bill, many companies will lose those incentives. As a result, Philadelphia will lose jobs. 114 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 In fact, this bill will most significantly impair the very companies targeted by its sponsors for assistance -- small, minority, and women-owned businesses. Many such firms receive assistance through PIDC. And we are all familiar with the City's efforts to contract with the requisite number of such firms for services. Most of these companies would be in violation of the living-wage bill and most likely would be forced to lose part of their business.
If anything, this bill is a throwback to policies of ten years ago, when there no vision for this city. For most of this decade, we have reversed that trend. We cannot revert back to our old unproductive ways. The bottom line is that this bill will drive up the cost of doing business in Philadelphia. It will make our areas less attractive. It will remove existing incentives as we develop and replace them with additional barriers to business development, leaving Philadelphia in a much less competitive light. We have set our sites on becoming a 115 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 world-class city. Unfortunately, those are not the characteristics of a world-class city. People want to be in environment that fosters growth and productivity. This bill does not foster growth; it stifles it. For those reasons, the Chamber urges your opposition of the living-wage bill. Now, I would like to ask members of the panel who will just take up a short amount of time, a minute apiece. These are small businesses that we have talked to so that you can hear the story directly from them.
Do we have copies of Mr. Pizzi's statement, Mr. Chairman?
I do not believe I have a copy of the statement. I have received a letter in the past day or so. I doubt that the letters the same as the testimony that was just given.
Good afternoon. My name is Joseph Procacci. I'm employed by Procacci Brothers Sales Corporation, in South Philadelphia, 116 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 in the Food Center. Our business has been in business for -- this is our anniversary this year -- for 50 years. We are a private employer employing seasonally 500 to 600 employees to pack fruits and vegetables in the Food Distribution Center. We currently own 32 acres of the Food Distribution Center, so we are, by far, the largest single employer there. We have enjoyed a relationship with PIDC. We currently -- we just recently purchased the Oscar Meyer building, which was a dead facility for many, many years, with the aid of PIDC. We renovated it. And we kept our commitment with the City. We went from 280 jobs in 1983 to currently 600. We're a unionized workforce currently under a collective bargaining unit with Teamsters Local 929. This collective bargaining unit arranges so that we can have for the first year entry-level positions. We fully health and welfare; all our workers enjoy the same health and welfare benefits that I have. We are 117 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 self-insured. We pay nearly a million dollars in health and welfare benefits. The collective bargaining agreement contains wages equal or more to -- our average wages are more than the 7.90, so we're not affected by that. We are affected because of the PIDC loans. We have more acres to develop. I'm shocked to hear New York come here and speak. New York is New York. Philadelphia is Philadelphia. PIDC -- (Boos from audience.)
PIDC is an organization that will be pretty much put out of business to attract the growth in the city. We currently pay high City wage taxes to attract office staff and other managers to come to Philadelphia. We're currently paying to percent more than our neighbors in Montgomery County, Delaware County, and across the river in 118 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 New Jersey. This bill will create a beltway around the City of Philadelphia, of which entry-level positions will be moved outside the City of Philadelphia. This is where those jobs will go. We have four other locations -- in North Carolina, Florida, Georgia. Many of our jobs will move south where the standard of living can have $6.50 an hour -- that's what our competition is paying. Just in New Jersey, the average wages are much lower for the same work that we're putting here. We have people making well over $10 an hour working for Procacci Brothers. And, again, as I said, our average is over $8 an hour. The City of Philadelphia, what are they going to do with the thousands of people that are going to come off the welfare system in the Clinton reform act in the next couple of years? Where are those jobs going to go? Are those welfare people going to have to move out of the City to find jobs in entry-level jobs? We're responsible for much of the business of the Food Center, and the Mayor of 119 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Philadelphia recently said, in 1996, that he was proud that he created 200 more jobs for the first time than in the years previous, the first time that jobs didn't go down -- jobs available didn't go down in the City of Philadelphia. And that's largely in part by people who come to this city to create jobs with the help of the PIDC. This bill is a step backwards in time when Philadelphia was an economic wasteland. I currently urge Council to defeat this bill.
Okay, just a couple quick questions. You indicated that you now have 600 -- approximately 600 employees, is that correct?
And did I understand your testimony to be that you pay somewhere in the neighborhood of average of $10 an hour.
No, we pay an average of -- currently, our average is $7.95 an hour. 120 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (Applause.)
We have jobs paying as high as 15.50 an hour. And we are currently under labor contract, but we do have entry-level positions.
They pay -- we pay -- we have not paid minimum wage for over years in 11 our business. We pay above minimum wage. And 12 within a year's time, these people work their way 13 up to above -- above. 14 (Boos from audience.) 15
Ladies and 16 gentlemen. 17 All right, so your entry-level wages 18 are somewhere between minimum wage and possibly 19 the 7.90 figure. 20
And so your concern your entry-level jobs, you would have to boost --
Our season-adjusted jobs, we pack fruit baskets at Christmas time. We hire 200 people. We hire temporary workers every 121 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 day, okay. We have some people -- and frankly, a lot of people come and go in our business because the food business is a demanding business.
Okay. And they -- there's a lot of overtime. Our biggest complaint for not working is the overtime.
All right. And lastly, do the temporary workers -- and maybe I missed this. Do the temporary seasonal workers, do they also get health benefits, or is it just your full-time people?
They're -- within a year, everybody's on health and welfare.
Thank you, Mr. Chairperson. Mr. Procacci, first of all, thank you, thank you for coming here. Thank you for bringing your business into Philadelphia, and thank you for sticking it out. 122 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And I understand, I really do understand. We're not all leftist guerillas here. I consider myself very, very pro-business and very, very conservative.
About your Teamster contract though, I think -- correct me if I'm wrong. Your concerned about your entry-level jobs.
You sat down and negotiated in good faith with the Teamsters. And they said, you know, we understand, you make 7.95 an hour, but for the people that start, they make $7 an hour or 6.50.
$6. 123 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Okay, they make $6, no health benefits. Now, I know the Teamsters, and the Teamsters are great. So, say I start there tomorrow, it's around Mother's Day, we did a lot of fruit baskets or whatever. And I start there and I make $6 an hour, and I'm helping unload trucks, or whatever I'm allowed to do with your contract at $6 an hour. How long do I stay there before I can get to be a permanent Teamster? I mean, are you taking Teamster's dues out of my 5, $6 an hour like you're taking --
No, no, this is serious. I mean, I understand a little bit about this, and I'm trying to feel what he feels. I mean, the guy doesn't need to be in business in Philadelphia. He's absolutely right. And we're not here to kill him. I'm 124 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 not here to kill anybody. I'll take my name off this bill if that means we're going to drive people out of business. In my heart of hearts, I'm not here to drive people out of business, and I don't think Councilman Ortiz is or anyone of the signers of this legislation is. We need business. I was a business agent, a business agent for a labor union. That was my job, I was an organizer. We need business. We can close the doors on the union halls if there's no businessmen. These guys are the guys that put their ass on the line every day -- excuse my language, Mr. Chairman. It's easy, as an electrician, to make $25 an hour and come home at 4 o'clock. These people do it, they put their rear ends on the line. But back to my question. When you become -- how long do you get to stay there before -- do you ever get a chance to be like a Teamster and moving up and make 7.95 an hour?
Right. Is there a pecking order? I mean, I was a Teamster at once 125 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 too. I worked at Pembrooke Dairies right near where you are, you might be in the same place. And they used to hire us in the summer for the City of Philadelphia. And I used to drive truck when got out of high school to deliver food for the federal -- City money all funded into this. And I made good -- I still have my withdrawal card from the Teamsters 'cause at that time, that was years ago, but I was pretty 11 happy about what I was bringing in, but I was 18 12 years old. I mean, $16,000 a year is not a whole 13 lot of money. 14 But my question to you is: Do these 15 people, do they ever stay long and become 16 full-time employees? Do you ever get a chance -- 17 if I work for you a couple days next week and a 18 couple days next month, do I ever get a chance to 19 make the big money? 20 And I'm not saying that to make you 21 look back 'cause I understand. 22
We have provisions of 23 which there are different tiers of pay. 24
Okay, there's 126 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 entry-level, then there's the next level next level and the next level.
Once they're working for me for so many years, if they are not making what the top wage is, they will get an increase immediately to cover that top wage. And that's what I want.
Okay. Now, as far as -- I'll ask you, the labor movement, why don't you go to central Jersey, why don't you go closer to New York where my competition is doing the same job making minimum wage?
I can answer that only for me. I didn't get elected in central Jersey. I live in Juniata Park. I got elected for the 7th Council District. (Applause.)
Hopefully Councilpeople in New Jersey -- no, you don't have to clap every time I talk, I'm not that elaborate. Hopefully, somebody in New Jersey can grab a set of "cahoonies" and go over there and 127 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 run for Council or State Legislator and do this. This is important to me. And I understand, believe me, I understand. I live here. I'm not going to ask you, like Councilman DiCicco would ask you if you were a teacher in the School District of Philadelphia, Do you live in Philadelphia? I'm not going to ask you that, because that's not fair. The guys in New Jersey -- just like your question is not fair to me. I can't legislate New Jersey. Let the men and women in New Jersey do in New Jersey what New Jersey does, and let New York do what New York does. But let me tell, that councilman was from New York. The councilman I talked to from Boston, the councilman I talked to from Baltimore, what do we all have in common with them towns? All big eastern sea ports. Baltimore, Philadelphia, Boston, New York. Believe me, take New York out of the loop. There is no -- I lived in Boston for a while --
Well, I'd like to ask 128 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 you one question now.
You have a councilman -- I really felt it very ludicrous to hear from a Council from New York. Philadelphia feeds New York. The food industry is larger in Philadelphia than it is in New York and they pay less wages than we do.
I hear you. Listen, you're talking to the wrong guy 'cause if it was up to me, anybody that ever lived in New --
My competition is paying less than I am -- in New York, Philadelphia Baltimore, in South Jersey, they're all paying less wages than we are.
Leave New York out of it. I'm sure in South Jersey they are 'cause in --
What's the difference between South Jersey and Philadelphia, between Pennsylvania and Jersey.
But -- no. 129 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Why do people leave and go there, why? 'Cause the ground's cheaper.
The point is, you are going to drive business out of this city by not attracting us to do business and create growth. This is about growth.
This is not about -- there are two union meat packers left in the eastern sea board, and both of them are in the City of Philadelphia.
It's not about the labor movement in Philadelphia, it's not about the living wages in Philadelphia so much as it's about growth in Philadelphia.
Joe. 130 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
They may not be, in your opinion. But in my opinion and in the opinion of these sponsors, it's all trickled down. I mean, all that money's going to stay in Philadelphia.
Councilman, you want to raise the minimum wages, make it equal for the United States, both in South Jersey and in --
But, Joe, I'm not elected to the United States Congress.
I'm not a part of what goes on in the United States Congress.
I'm only here in this little body, that's it. I mean, I'm in this little body. Now, I'm trying to be nice to you. You can come here and say this and that and this and 131 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that, but you know what happens?
I don't want to be a Congressman, I want to be a Councilman. These people are my constituents. (Applause.)
Okay? And like I say, I didn't ask you where you lived, I didn't ask you where you -- you probably live in Medford Lakes, I'll bet, huh, huh? How can I tell that? 'Cause I know. That don't make you a bad guy. That's your God-given right, Joe. But it's our God-given right as elected officials to sit here and hear that, and we heard. And I appreciate what you said, but you can't confuse it by talking about the labor movement. 'Cause the labor for me is here, in here -- like your business is in there. Thank you, Mr. Chair. Thank you, Mr. Chair.
Councilwoman 132 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Fernandez. Thank you, Councilman. Councilwoman Fernandez.
On a different note. The councilman who testified from New York noted on this record that the bill that they passed was much more limited than this bill. It was only essentially for some services that used to be city services that were then contracted out or privatized. The bill, as I understand the one before us, is much broader and would include all contract, subcontracts anyplace there's public -- city public dollars going to any public project. If I heard your testimony, what particularly concerns you about the understanding of the current bill is that you would be getting some loans perhaps from PIDC to expand your business, and that is what you would find damaging to your position, is that correct?
Yes. I think that the PIDC has produced a great avenue for growth and being able to expand our operations in a very -- 133 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 listen, most of the PIDC loans that are out there were at a time when interest rates were crazy. Right now, interest rates aren't that crazy, but we could return to those dates where they could be. And one of the things -- that and I'd like to make one thing clear. We are about jobs. Our family owns and operates a business that we don't -- that we enjoy for one reason. We create more jobs. And I've been known to say more than not to both the labor movement in this city, we're pretty proud of the fact that we went from 280 jobs to 600 jobs in Philadelphia. And we want to put everybody on notice that this is about growth. And I think that the loan system -- if there's certain areas of the business that this can be limited too, I'm sure that it would be a much more palatable bill, but the way it is right now, it encompasses everybody who has the single interaction with the City of Philadelphia. If I want to sell you a pound of tomatoes, every one of my employees has to make $7.90 an hour. I don't think that that is what is intended in this bill. 134 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Okay. Well, just for the record, one amendment that the sponsors had already introduced. (Interruption by unidentified person shouting from audience.)
Let the Councilwoman finish her statement, and then you can talk about your point of view.
One of the amendments that the sponsors had already introduced was to limit it to services, not goods.
Selling tomatoes -- it has been changed. I think it would be very important for all of us to keep track of the original bill, the amendments that have already been added, and then other amendments that might also be added, depending on how this Council reviews the bill. But let me just for the record be clear. Right now, is the only -- are the only City dollars you get through any kind of contract 135 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 or loan through PIDC?
Do you get any City dollars to help your business other than through PIDC?
Point of clarification for Mr. Procacci. By the way, the sale of goods, such as tomatoes and so on, will not be affected. You will not be impacted by this bill in that sense. However, one thing, your organization, your corporation has been helped by taxpayers' dollars. (Applause.)
This is a -- we are here not to hurt business but to help, but we always want a level playing field in terms of business. Mr. Pizzi said that we don't want to go 136 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 back to ten years ago. Well, let me tell you what happened ten years ago and what -- the Convention Center, the Marriott Hotel, Liberty One, and Liberty Two, all of that building that has taken place in Center City was begun by the City Council and proposed by the City Council of ten years ago, not by the current Administration. Those were fostered by tax breaks, tax abatements, TIFs, all of those things. We are not saying -- and that's why in this bill, the small business entities are vastly exempted from the impact of this bill. That's why nonprofits are vastly exempted from the impact of this bill, because we understand that small business needs a hand up, not a hand down. And I think the workers that are coming from welfare need a hand up, not a hand down. (Applause.)
So -- and I appreciate what you're saying that you will and you are currently paying an average wage of 7.95, which is very good. That is the type of situation. If you get a $200 million dollars tax abatement, you should be able to pay a 7.90 137 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 minimum wage. (Applause.)
I believe that's fairness. If you get a tax break of over a hundreds of million dollars, you should be able to pay a 7.90 wage. (Applause.)
The Kvaerner industry is coming in, and we appreciate it. They're going to create 700 jobs. I would hope that over the millions of dollars that they have gotten from State, City and federal, that the average wage that Kvaerner is able to pay the guy who is sweeping the floor in the building is 7.90. I would hope that out of that huge subsidy that they're getting, that 7.90 will not bring Kvaerner down to its knees. (Applause.)
You've taken 138 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 tremendous advantage of a point of order, which is normally very short.
Last week -- last week, we had a bill before Council, and we had a lot of people coming in saying that marriage would disappear as we know it. Today, we're going to hear that capitalism, if we pass this bill, will disappear, as we know it. I don't think so.
Thank you, Mr. Chairman. And thank you, Mr. Procacci for being here and thank you for your commitment to Philadelphia. The former restaurateur that I was, I had on many occasions the opportunity to shop at your facility. You indicated that at one point, you had 230 or 80 jobs, I believe?
And a business decision, I believe, was being made at that time whether to expand to accommodate the growth in 139 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 your business, whether to stay in Philadelphia or possibly to leave.
PIDC, the public funds that we keep hearing about today, were obviously instrumental in your company making the decision. Had it not been for that public investment of taxpayers' dollars, and it really doesn't work that way, but for the sake of this conversation, what alternative did you have and what other considerations were you thinking about at that time?
At the time, in 1993, it was my decision, and I finally, after a lot of soul-searching, I decided that we built our business in Philadelphia and I would stay in Philadelphia. We had plans to move to Elkton, Maryland.
So, in essence, then the PIDC loan was instrumental in your decision to stay. And as a result of that, taxpayer investment, you have expanded your job employment by 320 jobs or so. 140 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Do you happen to know, of the 600 employees at Procacci Brothers, the number that are Philadelphia residents? Do you happen to have a ballpark figure to that? (Unidentified speaker answers inaudibly answered off mike.)
So as a result of the public investment of City taxpayers' dollars, 560 or so employees are Philadelphia residents?
Let the record reflect that Councilman DiCicco is a very quick mathematician. The next person, please . State your name for the record.
My name is Sidney Gable. I'm an industrial Realtor. I have been in Philadelphia doing industrial real estate for 42 years. I was President of the Philadelphia Board of Realtors 141 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 about ten years ago. I served on Mayor Goode and Mayor Rendell's committees to retain business, to attract business. And I would greatly appreciate it if Councilman Ortiz would listen to what I have to say instead of having a sidebar conversation. This bill will be counterproductive. This bill will be counterproductive. I would love to see that all workers receive a liveable wage. However, if you legislate wages, you send a message to business to move from the City. The businesses move and their jobs go with them. I have witnessed this trend for the last 40 years. We are struggling today because hundreds and thousands of companies have moved from the City and from our area. The businessman wants to be competitive. They don't feel that they are competitive if they are dictated to by City Council, City government, State governments. They leave. I have witnessed industry and business closing, such as the textile industry, the sewing, the weaving, the dyeing, the metal industry, the 142 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 machine shops, car production from the City, the food industry, the wood industry. Look at the empty buildings, look at the lost jobs. I used to make a living in Kensington. Kensington is a wasteland. Kraft Foods on Erie Avenue is building a million and a half square feet now in town. Why can we not keep 'em? Businessmen perceive all these problems, whether they're problems or not. They want to have the freedom to run their companies. This bill will result in losing jobs. This bill will not help, but hurt workers. Each individual and each employer will have to work their own negotiations and hope that it will be a liveable wage, but this legislation will drive jobs to New Jersey, to Delaware, and to the Philadelphia suburbs. And if you want, I only had an hour's notice of this meeting, I can come up with a list a mile and a half long of companies that I worked with that left. Procacci was a good example of a company that stayed in Philadelphia. They looked to move to New Jersey, they looked to move to 143 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Delaware. They had a feeling they wanted to stay here. Roosevelt Paper, Mr. Koslov Sr. wanted to stay here. The next generation, business dictated for them not to pay Workman's Compensation in the state of Pennsylvania, which was ten times the amount in Kentucky, and twice or three times the amount in New Jersey. We lost a couple hundred jobs. We got to stop thinking we're the businessmen and tell them how to operate so that we keep jobs in our area, especially manufacturing job.
My name is Leo Goronski. I'm counsel to Barthco International, Inc., and I'm here at the request of Mr. Dennis J. Culligan (ph.), the Chairman and CEO of Barthco International, Inc. Barthco International Inc. is one of the nation's largest customs brokerage and freight-forwarding firms, with 17 offices 144 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 nationally. It has its headquarter offices in Philadelphia, at 721 Chestnut Street, and 7575 Holstein Avenue. Of its 400 employees roughly 150 employees currently work in Philadelphia. The company has been expanding very rapidly. Barthco Logistics Inc. is a subsidiary, Barthco Trade Consultants, Inc. is another subsidiary. The principal of the company, Mr. Culligan, has been a substantial investor in the (unintelligible) program as well as the rail port intermodal facility. Barthco strongly objects to the proposed legislation as being contrary to the best interests of business in Philadelphia. It is -- the company is a past recipient of PIDC funds for both of its headquarter buildings in Philadelphia, so it has made a long-term commitment to Philadelphia. However, Barthco could locate its offices anywhere. It is a service company. Most of it is high-skilled computer technology or customs brokerage and those related transactions. So its offices in Newark, JFK International, 145 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Miami, Los Angeles are extremely active. But we think that this proposed legislation will have a chilling effect on business in Philadelphia. Why would Barthco International, growing as rapidly as it has been growing and being a service company, what incentive does it have to stay in Philadelphia or to grow in Philadelphia? The company is in a very competitive national environment. It does not another partner in the way in which its business is being operated. Philadelphia, we feel, should be creating incentives for new jobs and not disincentives. We feel that this proposed legislation is contrary to the best interests of business in Philadelphia, particularly when viewed in terms of competition on a national basis. Thank you.
Thank you. And, again, just for some information, I get the information, Mr. Goronski, that the impact on you would be primarily because of your financial contact or relationship with PIDC, not necessarily 146 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 because you have a contract with the City of Philadelphia to provide services, is that correct?
Yes guess, Mr. Chairperson, I would say that PIDC would be considered immediately for future development in Philadelphia and has been recently.
My name is Stan Moat. I'm the owner of a company called "Contour Packaging." We're producers of plastic containers, one of the remaining manufacturing companies with a future. We've been here 30 years, hacking it out. We started with less than 12 people in Manyunk, got chased out of there by Hurricane Agnes in nine feet of running water. We've been in Olney ever since. We now have 70 people, and most people don't even know we're there. 147 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Good. Our average wage among the pickers and packers of bottles is about -- is approaching $10 an hour. We buy them 80 percent of single coverage. We have six months of sickness and accident and life insurance as benefits; paid holidays; the usual vacations, 12 starting with two weeks after the first year. 13 I've got people with me generally on the average of 12 to years. Over half of our 15 workforce has been there over 10. So I think we run a good business. It's no license to steal, nor a place to get rich. But we still have all the rungs on our ladder. I can guarantee you -- and I should say that we've had help from the PIDC along the way. In fact, I wound up on the board of the PIDC for six years. I am not going to have any loans now because I don't need anybody telling me that that's a condition of employment here. And I can 148 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 guarantee you that if somebody had passed a law like this -- in our case, 20, years ago -- I 4 wouldn't be sitting here, because we had to have 5 that freedom to bring people in at something 6 usually above the minimum wage, but to have some 7 kind of progression. 8 I would suggest one thing to the 9 Council. I believe two or three years past, there 10 was something that we in the business community 11 referred to as the "Hostage Law," where if we're 12 going to pull out of here, we have to give six 13 months' notice. And then all of a sudden, 14 everybody gets interested in why we would consider 15 such a thing. 16 They would only have to have a single 17 answer now -- the living-wage bill. And you'd 18 have to explain it. 19 Thank you. 20
Thank you for your 21 testimony. 22 Please identify yourself for the 23 record. 24
My name is Linda Jensen 25 (ph.). I'm here from Wallace Farberton Todd 149 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (ph.). We're a design firm in the City of Philadelphia.
I'm going to have to ask you to pull that microphone much closer, and if you could speak louder.
I'm representing a design firm in the City of Philadelphia, and we're a very specialized company, with very narrowly-defined and highly-qualified skills. I am here to say that if you blanket an order to hire so many people, we maybe would not be able to have the City contract because of my workforce, which is headquartered in Philadelphia, 15 percent -- only 15 percent of the workforce is a support staff, which means the rest of the workforce is highly qualified, high-degreed, specialized individuals. Of the 15 percent, 80 percent are also college-degreed professionals in just support. So for us to be mandated to hire a quota would be difficult. We have to be able to hire qualified people.
I understand that. I think you're referring to a provision in the 150 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 bill that talks about for new hires, percent would have to be TANF-qualified. In your case, you've got -- 15 percent of your workforce is -- 5
And within that 15 9 percent, 80 percent of them have either a college 10 degree or some higher level of skill. 11
So what you're 13 really what talking about is 20 percent of your 15 14 percent -- I don't know what the number may be 15 because I don't know what number we started out in the universe of your firm. But that's what you're talking about when you use that terminology.
That's true. We have a very small area where -- I only have actually one or two jobs for non-highly-qualified people. So if I were to win a contract to design a park for the City, I don't know -- I have to be able to hire the right kind of people. We would pay anyone at least $7 an 151 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 hour, obviously. We would give benefits to anyone who committed to 40 hours a week, days a week. 4 But it's the quota that as a service 5 firm highly specialized, the quota would be difficult, a hardship on a service firm.
Well, I have two responses. I think, one, there may be -- if I read the bill correctly, there may be a waiver provision to deal with your kind of situation. But also, when we have the City Administration people and the -- by way of the bill, those who would be responsible for its implementation, I think they're here in the room, but we could share that example and see what the ramifications might be.
Because I do support the living wage; I just don't support blanket quota for everyone who it just can't apply to in the full extent of what you're offering.
Could you just 152 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 clarify for the record, how many employees do you have here in the City?
About 80, so about percent of those 80 are your support 7 staff. 8
Actually, 15 percent 9 nationwide. Less than that out of the 80, so 10 maybe 15 percent might be right, but it only comes 11 to or people in my entire firm who don't have 12 college educations, even if they're a secretary, 13 because of type of work they have to do. 14
And so, again, 15 just to be clear for the record, what would particularly trouble you would be the requirement, or the quota as you say, that you would have to hire 15 percent of the people.
Yes, it would be the quota, yes. Knowing that we're a specialized business in the City, we contribute to three colleges, sponsor a scholar, because we know that we need qualified people, and we try to help convince city people, people in the local schools, to go into our field and to commit to our field. 153 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 So we're already privately donating to sources to try to accommodate the need that we have for highly-skilled workers. So it's the quota that I have to object to.
What degree do people actually have there when you say "highly skilled?"
A master's degree in city planning or landscape architecture or urban design.
So it's a six-year program at an accredited school, and the people that would come locally are from -- the University of Pennsylvania has those programs.
Okay. And of your support staff that have college degrees, even 154 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 if they're secretaries, wouldn't have the same type of degree, right?
They don't have the same type of degree. It's just that for them to be able to keep up with the pace, they have to have a lot of great communication skills, they have to have great technology skills, they have to be good with computers, very good communicating. They have to be able to handle situations, think on the spot, make decisions. And a lot of the logical thinking comes with additional education and training. And you're just better prepared.
I agree. But, you know, with the Philadelphia economy that's has been downsizing for years, there are all types of people with college degrees that are also welfare recipients. (Applause.)
So we shouldn't just blanketly think that a welfare recipient would not qualify for that job. We have all kinds of people now that are unemployed and receiving welfare. So you might be able to find someone. 155 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 I understand Council's point about the waiver. And, you know, I agree that your example is a good example, but I just wanted to say that there are all types of people that are receiving welfare now.
And that would be good if that was advertised instead of just blanket they must be off of welfare. Maybe if you, you know, communicated to that, that there were a lot of different skills available.
My name is Lance Charen. I'm the Founder and President of a company called "DocuShred." We located our business, by choice, three and a half years ago from Bucks County into West Kensington. I currently sit on the Board of Directors of the American Street Corridor Business Association. When we moved into the City of 156 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Philadelphia, we had employees; today we employ 3 more than 25. I can tell you that this bill would cripple my business. But more importantly, it would cripple my ability to compete in my marketplace. My company has invested more than three quarters of a million dollars, not one dime from the City, the State, or the federal government in those three and a half years. We have never asked for any help from the City, we have never asked for any help from any government agency. Yet today, approximately 10 percent of our revenue is derived from a City contract. If I was forced to apply this bill to my workforce, it would increase my across-the-board operating costs by almost 15 percent. I would, therefore, choose not to do business with the City of Philadelphia before I would -- as opposed to coming into compliance with this regulation. The net effect on the City, however, would be that even that small piece of business would leave because I don't have anyone providing 157 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 my service remaining in the City of Philadelphia. There's -- this bill would do nothing, nothing to help the people that we've hired. The employees that we've got, approximately 19 of 6 them came to us either directly through job 7 training programs, from Welfare-to-Work, or 8 directly off unemployment. 9 Those employees do not start at 7.90. 10 Those employees start at between 6 and $7 an 11 hour. Those employees take anywhere from 6 months 12 to a year to break through an $8-an-hour barrier, 13 and most of these employees don't receive health 14 benefits for the first 90 days of their 15 employment. 16 More importantly, less than 10 percent 17 of our workforce remains after the course of the 18 first year, and all of those people that choose to 19 leave choose to leave by choice. We have been put 20 into a situation where the vast majority of those 21 people that leave have left us not to take other 22 jobs, but are now back on the unemployment or back 23 on the welfare rolls because they just couldn't 24 compete and didn't have the skills that they 25 needed in order to be valuable employees to our 158 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 organization. This bill is -- I understand that many of the speakers and many of the people that you've heard from are from old, established, large businesses. But as an entrepreneur, someone that has put all of his life savings and life's blood and every moment of waking effort for the last six years into trying to build a business in this economic environment, I can tell you, this would be the final nail in my company's coffin. And I would have no choice but to close my company and return to working for someone else.
Mr. Charen, just a quick question. I must have missed it when you said it. What is your business?
We provide destruction of confidential business records of companies and destruction of obscure -- or obsolete, badly, poorly-manufactured, recalled, or counterfeit products.
And do you have a contract with the City or did you get financial assistance?
We have a contract with 159 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 PGW to destroy the credit and financial records that PGW generates, yes.
We're actually located one block outside of the Empowerment Zone.
Thank you, sir. And thank you for coming today. Of the employees that you have, what 15 percentage of them, or what is the number of 16 employees that you employ from Philadelphia? 17
And are they 20 basically from the community in which your 21 company's located? 22
19 of them -- 19 of our 23 employers were hired either off of welfare or 24 unemployment. My guess is, without looking at 25 addresses, at least a dozen of them are from 160 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 directly within a half-mile radius from West Kensington.
We've been in operation seven years; we moved into the City from Bensalem three years ago.
I think you said your average -- you start 'em out at 6.50 or --
Okay, thank you. I have no further questions, Mr. Chair.
It's hard for you to see me without a board up there. He's in my Council district, he's a great guy. And I heard you talk about 15 percent across the board. The wages -- it's my understanding from the way this bill is written, 161 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 it wouldn't be across the board. Now, maybe you can explain that to me because I'm not sure what you mean by that. But it's only the business that you do with the City, and that may be a problem too. How much of your work do you do for the City?
About percent of our 9 revenue is derived solely from the City. 10
I don't know how you figure that out, but only that 10 percent is what's covered under this bill. So it wouldn't be across the board, right? Is that a fair question?
Well, then what you're asking is to put the onus on us as business owners to try and figure out which hours, which employers are working on City contracts and which hours they're not working on City contracts. Or, worse, to hire some employees that work only on City contracts and are paid at one wage right, whereas everybody else in the company is paid at a different wage rate. And, quite frankly, that creates human resources and accounting problems, which are probably more 162 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 costly and prohibitive than asking us to do this in the first place.
I understand that. And when we were doing the prevailing wage bill, Commissioner Applebaum who's sitting up there in his perch watching these proceedings said -- and got Councilwoman Clark's attention that it would be an administrative nightmare, just like you're saying, for some poor woman, probably some poor minority woman who has a cleaning business in City Hall. I understand what you're saying, but I just don't see how if you have 10 percent of the business, what's that, two workers?
And if them people are making 7.50 an hour, you put the 7.50 hours on there. When they run the machines to shred the stuff for the gas company, they make 7.90 an hour, and your best workers do that.
Maybe we do a pickup for the Gas Works four days a month, so what you're telling me is that those hours for those employees would be at this rate, and every other hour for 163 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 those employees would be at a different rate?
Yeah. And the Mayor's Office of Building Standards is the one that does that.
With all due respect, I am in operation with two administrative employees -- myself and my secretary. I currently work anywhere between and hours a day. There is 10 no way in hell we could handle the additional 11 burden. 12 What you're doing here is you're 13 creating a circumstance where you're taking 14 entrepreneurs and you're taking small businesses 15 that are trying to establish a foothold and a 16 beach head, and you're driving us out with 17 legislation after legislation after legislation 18 that just makes it impossible and impractical to 19 do business in the City of Philadelphia.
Lance, it's sort of like that trailer for the Godzilla movie that's coming where you never really get to see Godzilla, you just see the tail whacking everybody in New York City. (Laughter.) 164 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Well, that's what they're doing here. Lance, we're talking about --
We're talking about 40 cents an hour. 40 cents an hour times 40 hours. One of you math geniuses, what are we talking about, $20 a week?
I know. And I believe you believe that. I don't think you'll walk away.
I think-- $20 a week more for two people, that's $40. (Applause.)
Let's -- if we're going to have a debate, let's have a reasonable debate so people can hear.
It's not administrative 165 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 costs; it's time. There's only a given amount of time in the day, and it's not that I don't want to provide a prevailing wage. We're doing the best we can with the circumstances that we've been prevented and with the business that's been available to us. We could not survive. We would sooner walk away from doing business with the City and give up those employees altogether than we would be able to administer a program like this in a business of our size.
Lance, I've seen your operation, and I know you work hard, and I know you're telling the truth, you're a good guy. But, believe me, I'm not just saying this. He's here, he stuck it out in West Kensington, an area that some people call, "The Bad Lands." I've been to his place in the American Street Business Corridor, and I firmly he believes this. But again, picture Godzilla, the trailer you're seeing where that tail's wanging around. We never see the monster. I don't think you're going to take your whole business away for 166 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 $40 a week.
Oh, no, I'm not going to take my whole business away, but I am going to stop doing business with the City, and the City then has two choice. They either choose to do something else with this material and expose themselves to that liability for which they've hired me to prevent; or they contract with one of my suburban counterparts, and those jobs and those City wage taxes and those business-privilege taxes and everything else associated go with it to Delaware County. Because that's the two alternatives in this whole thing. It's not that I don't respect what you're saying, but it's not practical for a business of our size -- and, worse, you're not creating an environment that's conducive to other small businesses, new businesses which are the life blood of growth for any city to be able to operate effectively.
My last thing on this subject. I'm telling you, the Chamber is doing a good job. But in all their zeal, nobody 167 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 read this bill. And you know what? I don't understand it because I wasn't fortune enough to go to law school. I think I understand it, but if I sat here and said, "Yeah, I understand it," Mark McDonald or Cindy Burton might ask me a question and I find out that I don't understand it. So when they ask me a question I don't understand, I go to one of the lawyers. You didn't read this bill. I'm sure Charlie Pizzi didn't read this bill. We are here to work this out because these people need a decent wage. (Applause.)
And stay in Kensington. Commissioner Timoney, they brought him down from New York, and nobody's complaining about him. We're doing good stuff in Kensington.
My name is Scott Simons. I have a manufacturing company in Northeast 168 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Philadelphia.
Okay. My name is Scott Simons. I have a manufacturing company in Northeast Philadelphia. The name of the company is "Laser Labs." I am a cofounder. Last year at this time, we purchased a building in Northeast Philadelphia, and the Philadelphia PIDC assisted us in purchasing this building. We also looked at a building in Bucks County and also in New Jersey. I can tell you that the PIDC didn't quite come up to what New Jersey nor Bucks County did, but we felt that what Charlie Pizzi, Steve Mullin, and what the Mayor of the city was going to be doing, we felt confident that we were in the right path by purchasing the building in Philadelphia. The long-term growth Laser Laboratories is predicated not only its employees but its ability to do business in the City of Philadelphia with its many vendors and many of its doctors and physicians. I can tell you that their ability and 169 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 our ability to pay $7.90 for minimum wage would be devastating. We currently employ 32 employees, of 5 them were former welfare recipients. We've helped 6 over 15 through the years. I've been involved with Welfare-to-Work for five and a half years, and part of that is to give these individuals a helping hand. I heard one of the gentlemen speak, and he spoke about these people that come into the City, do a contract and leave. Welfare recipients don't need a job for ten weeks; they need a job for life. Laser Labs provides that. Laser Labs gives them the opportunity to grow. Yes, we pay above minimum wage. We pay anywhere from 6 to $6.50 to start. In 90 days, they have an opportunity, and generally they're given an additional 50 cents hour. These individuals then have the opportunity to join in on our Blue Cross/Blue Shield plan. And at that time, they also are enrolled in our incentive program. Welfare recipients don't need a job for ten weeks; they need one for life. We've had 170 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 former welfare recipients for the first time buying new cars, and one of them is buying a home in this Councilman's area. He'll be making settlement very shortly. We are very proud of the fact that these individuals have started with us, some of them right out of high school. They've been at Disadvantaged Youth, some of them didn't finish high school. And those from Disadvantaged Youth that have had the opportunity to work with Laser Laboratories and work their way up through the ranks over the years and now they've purchased homes and are beginning to build a successful life. I know that I look around in the Northeast section of Philadelphia and I look at not long ago what this city was about when I pass the Bud Company that is now shuttered. I look at the Whitman Chocolate building. I look at what is not just around the corner from us, but I remember many of the employees that worked at the Heinz Corporation when they moved to 11000 Roosevelt. These individuals had had wonderfully-paying jobs. 171 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Today those jobs are gone. Small businesses, the backbone of this economy in most of Pennsylvania or along with Philadelphia, I can tell you that today, I do not have any contracts with the City, but tomorrow. I can tell you that my concern after purchasing a building a year ago, I can tell you that I have second thoughts if I made the right decision if this bill is passed. I can tell you that with the long-term growth Laser Laboratories has, we feel we will employ over 100 people in the next several years. We're brining high technology to the Philadelphia area. I would have to concern myself with if I made the right decision and where I go in my future. I thank you.
Let's see. Our next witness is. . . The other two gentlemen at the table, maybe you could identify yourselves for the 172 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 record. If you all are in turn. I know Mr. Jones but the other -- (Unidentified person identifies inaudibly identifies himself off mike.)
Proceed with your testimony. (Unidentified person continues to speak inaudibly off mike.)
You have to speak into the microphone whatever it is you want to say. Take a seat, don't get extremely comfortable, speak right into the microphone.
My name is Al Taubenberger, T-A-U-B-E-N-B-E-R-G-E-R. I'm the President of the Northeast Philadelphia Chamber of Commerce. And to my left is Mr. Nick Kromberger (ph.), of Kromberger & Company, and one of our Chamber members and also a recipient of PIDC support. The Northeast Philadelphia Chamber of Commerce is a private business association of over 173 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 850 members dedicated to the success of our community and the free enterprise system. We applaud. The altruism in the law's purpose; however, we believe it's misguided and extremely harmful. Councilman Mariano, in his recent editorial in The Daily News, stated that the City is getting these companies a chance to survive and grow. Well, quite frankly, I believe very strongly that these companies are giving the City a chance to thrive and grow in producing jobs. You can't raise taxes for the same reason you can't raise the minimum wage. Now, 7.90 is a good -- sounds good; 12.90 sounds better; and $100 an hour sounds best yet. I would support a $100 minimum wage an hour. I think people would think I'm out of my mind. I think the net effect is to drive business out of the suburbs. My colleagues in the Chamber of Commerce work from Bucks County, Delaware County, Montgomery County, and the combined Chambers of New Jersey would be very supportive of this legislation because I think they would be the recipient of many companies. 174 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 I think less businesses would be willing to do business with the City and stay within the City. I think large businesses could possibly skirt the law by hiring temps. And I would like to see if a City agency would monitor a manufacturing firm in St. Louis who is doing the business with the City to see if they're in compliance. I think this legislation, as it is written, is extremely harmful to manufacturing firms and other businesses within the City boundaries. Where we want them to grow and prosper, we're doing the absolute worse effect. Where we would allow them to hire welfare recipients in their growth, we're going to stifle their growth and possibly leave the City. This legislation is intended to force market behavior. Economic forces work in an unfettered manner; they can't be shackled. I would have to agree with Councilman Ortiz in this regard: Capitalism will not disappear from Philadelphia, but it won't be doing very well either. There is no imperial (sic.) data or evidence to support the idea that this 175 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 type of legislation would be helpful. Quoting from the Boston Business Journal, in the city of Boston, which enacted a living-wage ordinance on July 30, 1997, the growth rate in city jobs went from 2.31 percent in the first half to 0.10 percent in the second half of 1997. While it's still too early to draw any hard conclusions from this data, it is clear that the living-wage effort in Boston has been subject to reconsideration because, in quotes, basically, you have to decide whether you want to do business in a city that passes such a law. From the Boston business Journal, August 18, 1997. There's an election every day on economic growth in this city, and the City is losing it. We can talk with great support and admiration for the creation of 700 jobs by Kvaerner Ship Yard where it took the consolidated sources of the Mayor, the Governor, and other union leaders to get them to come here. But I bet you dollars to donuts, this city will lose more than 700 jobs when the year is over. The Northeast Philadelphia Chamber of Commerce overwhelmingly is against this 176 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 legislation.
My name's Nick Kromberger. I'm the owner of Kromberger Company in Northeast Philadelphia. We presently employ 9 people, and none of them would fall under the 10 $7.90 figure. We're a specialized business. 11 I'm concerned about the total business 12 atmosphere in Philadelphia. I'm 72 years old, I 13 was born in Philadelphia. I'm a product of the 14 Philadelphia school system. I'm very proud of that. But when it came time to making a decision last year as to where we would continue to do our business, where we would be located, three of my sons, who have moved out of the City, advocated moving the business out of the City. Fortunately, I talked to Al Taubenberger of the Chamber about this. And through his good offices and Steve Mullin, PIDC, we arranged a buying procedure that kept us in here. Even though the deal looked good, my sons 177 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 were still interested in moving out of the City. They don't have the love for it that I do. I'm concerned in the fact that if this impacts companies that use a high degree of unskilled workers, that we could force those companies either not to locate in Philadelphia or move out of Philadelphia if they're here now. That impacts me as a businessman because I will then be carrying a greater share of the tax burden. I'm concerned about what I consider the fact that one of the sponsors doesn't understand the bill and that I've tried to read excerpts that I've gotten since yesterday. And they use words like "hospitalization," should have "adequate hospitalization." Who's to determine what adequate hospitalization is? I started on day one, when I hired my first employee, to offer health insurance to that employee. So I'm in favor of it, but who's going to tell me what it is. To me, it doesn't look like a nightmare for the business owner as much as it is who's going to regulate this, who's going to make the 178 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 decision on what is adequate on hospitalization, who falls under that 7.95 figure. I sympathize with these people. I don't know how anybody can really raise a family of 4 with $16,000. (Interruption by unidentified person shouting from audience.)
I am telling the truth, but I don't think the bill, as it's presently constructed from what I see, really is a strong enough bill to effectively do what I think Council is trying to do. I would have to say that as a citizen, as a businessman, I'd be opposed to the bill as it is now written. I thank you.
I would just like to add for the record just so everyone is clear, a bill is drafted by one or more members, introduced, and then public hearings are held. So right now we're in the public hearing stage so that we can hear all the sides. 179 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And as far as I'm concerned, this has been one of the more interesting debates we've had because, obviously, people have a lot of strong feelings, about, as you know, a very complicated bill. In fact, after the earlier discussion, I had to go back and read it because I think my interpretation would disagree with one of my colleagues. So this is the hearing process. So I think you should see this as a bill before Council and a committee of Council so that we can hear facts from all sides. It would be incorrect to say this is a Council bill. This is a bill that's been introduced to Council for a hearing and for discussion. So right now we're in the hearing and discussion stage. Unlike the state legislature, we don't just rush things through, very important things through without absolutely any discussion or debate or hearing from all sides.
I appreciate that, Councilwoman. And I appreciate an opportunity to speak. 180 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Thank you, sir. I have one question also. What is the nature of your business?
I'm in the incentive, promotion, and advertisement specialty business. We have supplied things to the Chamber of Commerce at times. We've never gone on the bid list for the City. We find it a little onerous to do that. We try to build up long-term relationships with people like ARCO and ARA and Sun and perform well. So that's with why our wage scale is relatively high, because we need sophisticated people talking to them on the phone. We -- incidently, we do at times get promotional programs that entail assembly of various things. And we would run into a problem there because 7.95 doesn't really do it for us if we're into that type of assembly. That isn't a -- that's not something we seek because we don't feel that we're equipped to consistently handle that presently.
Do you happen to 181 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 know whether or not any of the companies that are related to your business would fall under this legislation? And if you do, what impact would that have on your business? I mean, would that ultimately translate into an increase on your part as to your services to that company as a result of what they may have to do to increase their costs? Do you have any -- I'm looking for some comparison here.
Well, it's difficult. We sell incentive messages, let's say, or advertising on products, and they have a price. I don't see where it would impact except for the fact that many of the companies that we supply things to may fall into the same problem area that I'm discussing.
Councilman, the firm that is providing, let's say, the ceremonial Liberty Bells that were given out by the Mayor's office and Councilmembers, they certainly would fall into this legislation as a vendor to the City of Philadelphia. I don't know who that is, but it would. 182 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
We'll hear some testimony later on. I'm not absolutely sure on that kind of situation because of a proposed amendment by Councilman Ortiz to exclude goods. I think the -- and you may or may not have been here, I think the primary focus now, and we'll get into that shortly was on services. Thank you for your testimony. I'm sorry, hold on for a second. Councilman Mariano and Councilman Cohen.
Thank you. Mr. Taubenberger, Mr. Kromberger, you can't get away that easy.
Yeah. 183 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Girard north to grant south, of the Boulevard in most areas -- Kensington, Juniata, Castor --
We would be amigos if you still lived there. Now, here's my question. And this isn't an observation; it's a question that -- Mr. Taubenberger, you quoted the Boston Business Journal.
Since you're with the Chamber of Commerce -- and Al and I are friends. I mean, we're not going to kid each other, and we hope some day to play the World Cup against each other, but it looks like we're both going to --
I think so, we're all on the same team. But anyhow, according to the Boston 184 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Business Journal, you said that the this legislation was enacted in Boston, and it went from 2.3 -- what did you call that?
The job growth. It wasn't enacted yet; it just passed. So the perception of the fear that it might happen here in business caused this to happen? 'Cause that doesn't start in Boston.
No, wait, no, no, no. According to the -- I read it several times before I quoted it. It went into effect July 30th.
It doesn't start until July 30th of this year, of '98. That's what I was told.
Well, I have it in writing here, and the source is cited. August 18th, from The Boston Business Journal. And August 18th also happens to be my birthday, so 185 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 there's something --
Well, we're getting conflicting reports from what Councilman Ortiz -- I mean Councilwoman Fernandez. As Councilwoman Fernandez said, this isn't a bill yet and there's always compromise. But my question to you is: Do you believe that the perception of this bill being so bad for business 'cause I admit it here, I admitted that I thought I understood but I didn't really understand everything. The perception of bill could cause business to go down?
Yeah. I think, really, to be honest, the nuts and bolts of this will thing not be the -- the 7.90, really to be frank about it, is not the important number. I think it is the perception that it throws to the rest of the business community that you are tying the hands of business with yet another regulation.
I think Mr. Kromberger's firms pays higher than 7.90 an hour.
Sure. 186 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
I think many firms do. I would say many in our chamber do.
Well, my question -- I mean not to you now, but to Mr. Kromberger, is: Why do you pay more than 7.90? 'Cause you're a nice guy? 'Cause you don't have to, right?
Because they have to do sophisticated work. They carry the flag of Kromberger Company every time they get on the phone --
It's pride, right? I mean, pride's worth more than $7? Could we say it's pride?
Well, it's recognition 187 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 of what they're worth, okay?
But we're taking about something more than -- I forget what you 5 said you paid, but let's say it's more than 7.90. 6 And you're, obviously, a smart guy, you're 73 7 years old. I hope I can be half as smart as you when I'm 73; I'm only 43 years old. But what happens is it's pride with money. The more people make -- I talked to the guy that was here before you. He was going to leave the City for 50 cents an hour for 2 people $40 a week. I can't comprehend that. I just think you pay more money because -- I could say you're a good guy, but you're a smart businessman. The more you pay people, the more pride they feel. If they need to work somewhere and make $5 or 5.50 or whatever the ridiculous minimum wage is now, they're not going to have a lot of pride. They're going to look to be checking out, going to get a smoke every chance they get, they're going to be looking to go to the bathroom every chance. I mean, we can regulate them that way too. But you're a successful businessman, 188 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and I'm not even going to ask you what your going to ask you what affiliation you are but I bet I know because you're good, you're good at what you do because of pride. Well, these people want pride, too. (Applause.)
That's not on you, but that's what this is about, pride. This is about pride.
This really isn't about the numbers because it's what the market will bear.
With Mr. Kromberger's firm, he knows that to get a person to fill the position he needs, he has to pay above that level. No question about it, this is an economic perception. If it is conceived that the business community is being shackled, is being told over and over what to do, they're not going to come here. 189 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
But perception can change. I mean, if nobody came here today for your side or for the Chamber's side and they said, "Wow, 7.90's not bad. Thank God them idiots didn't make it $10 an hour, then we'd really be in trouble." Well, guess what, guess what, they talked about making it more than 7.90.
I talked about -- in fact, if you reviewed my testimony, I said $100 an hour.
But that's what I'm getting at. And that's what this is about. Not to say he's a good business 'cause he is. Not to say he is not a good business because he pays less. It's what the market bears, but we create -- the people, the business people, union, nonunion management, labor, we create what the perception is, correct?
Yes, but before you 190 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 do that, let me just -- I feel compelled at this moment just to mention the next panel of people will be a combination of City agency heads or people who are responsible for implementation, as well as some who are well-versed in the particulars of the bill. And we want to provide an opportunity to have some detailed discussion the way the Council does its business about the bill. There are still also many other individuals, either private citizens or people who are part of groups and organizations. We obviously want to respect everyone's time and get as much testimony in as possible. So I just wanted to kind of at this point take a check of where we are and the time and caution everyone about our back-and-forth.
I just wanted to say one term that the Councilman used, I take exception to -- that side and that side and us. We're all partners --
I agree. 191 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
I agree with you, and that's what I'm trying to avoid here.
And if the businessman isn't here to provide the jobs, there won't be jobs available.
I said that two hours ago, exactly what you're saying I said same thing you're saying.
All right. I think Councilman Cohen's been trying to get in.
Mr. Chairman, I just 192 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 wanted to take advantage of the fact that -- not a contemporary but somebody more a contemporary than most of the speakers today is the gentleman in the center. And just wanted to make a few observations and maybe get a response from him. I was born in South Philadelphia, raised in Tioaga Nicetown, walked to high school at Eighth and Lehigh eight blocks from Fifth and Lehigh. I'm a native Philadelphian, in other words. I went to all the local public schools, went to the University of Pennsylvania. And in 1937, graduated from law school. Won a fellowship at the law school, and my first case was aiding the professor of labor and corporation law. At that time labor and corporation was taught by the same professor. And my first experience was before the Pennsylvania Supreme Court on the minimum wage. And every argument against this bill that I heard today was heard then. The company was going straight to hell, the whole country, if we ever had a minimum wage. (Applause.) 193 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
What all of these laws have done over the years that have improved the economic life and the social life of people and have given ordinary people some backing on health, on retirement, you know, Medicare, Social Security and so forth, and the minimum wage. All that it's done is took the country out of the depression and began building the kind of prosperity that the people talk about today. And I just want to assure you that your fears, history proves, are totally unfounded. When this Council -- a number of years ago, we had a Mayor Bill Green who denounced the Council then as the worst in the free world because why? We said that before a plant shutters its gates, it has to give 60 days' notice. We were told that's the end of Philadelphia, it will no longer exist on the map, it will be destroyed. You know what happened? Cities and states throughout the country emulated that law. Don't have any fears about this. The stronger we make the community, the more money you can get into the community where the money is spent in the community, Philadelphia will be 194 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 stronger, and your businesses will be better. Thank you. (Applause.)
Just one response to that. I think the Councilman is right when --
Well, let me get his response first. He's my contemporary. Then you can comment, Al.
You lived in those days when, you know, we were just barely coming out of the depression.
The way I remember it, what brought us out of depression was World War II, and I don't want to go through that again. No, I am not in fear. I feel I have a stable company. I've withstood competition. I'm withstanding -- where we used to stand tall at the volume that we do in the country, we're peanuts now to the 60 and $80 million conglomerates that are out competing with us. I'm looking that -- if we don't make some radical moves, and now I'm getting away from 195 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 minimum, that we may literally lose our client base because the large clients that work with are prime targets of these conglomerates, and they come in with an unfair playing field. They can afford to take business at a loss because of the size of them. Business goes where they can make money. That's the -- very few people really set up a business to provide jobs. I feel I did. But most people start a business to make money. I started my business so that I could make enough money to raise my family of six children, and we did that. And they thought dad did pretty well, so they all started to hop aboard. And we have tried to be employee- friendly. I am very proud of the fact that when people say, "Does he or she work for you?" I say, "No, we work together, we work with each other."
And that's what this bill is all about. Permitting for the first time ordinary people to be getting at least a minimal wage liveable wage. (Applause.) 196 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Councilwoman Fernandez straightened me out on the fact that this is a working session. I'm glad I had my impact in it and my input. I hope that the bill that comes out will be fair to everyone, and not just a particular segment.
I just wanted to add one quick comment. I won't take too long. No one's going to argue with Councilman Cohen about having a strong neighborhood. I'd be the first -- I have full respect for Councilman Cohen, working with him on many community issues. But the bottom line is any legislation that's intended to force market behavior when economics have to work in an unfettered and an 197 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 unshackled manner, it just never, never really works. If you look at Philadelphia now, we have the highest unemployment in the five-county region, and I think that's a problem. I think to have industry come back in here, you need to unshackle us, quite frankly. And also, quite frankly, if you look at the Kvaerner Ship Yards, yes, we're going to get 700 jobs, but I'll bet dollars to donuts when the year is through, more jobs will have left this City in small amounts than the entire Kvaerner Ship Yard brings in.
I guess I want to comment on that statement beginning with -- Mr. Pizzi talked about the number of jobs leaving the City. I don't think they left this city because we were trying to give people decent jobs or give them $7.90 an hour. They left for many, many reasons, and they've been going for the last 20 years. And if I remember correctly, when I was 198 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 with the Urban Coalition back in the seventies, it was the Chamber who was encouraging people to move out of the City and into the suburban areas.
It wasn't this Chamber, it wasn't Northeast Philadelphia.
I think it was our Chamber of Commerce, but it was a different climate at that time and a different scenario, and there was encouragement to move to the Fort Washingtons because the Urban Coalition wanted federal government to give some money to -- the money they were giving to SEPTA, we wanted them to provide some of that money for transportation to the suburbs 'cause there was no transportation for jobs in the suburbs at that time. And we're back there right here now, the City asking for transportation to the suburban area now for people who want to go work in the suburbs. The jobs have left for many, many reasons.
A lot of them are chasing cheaper labor, and I don't know what's 199 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 going to happen to all of those jobs when some of these third world countries wake up and begin to understand that they have to demand quality wages for their employees. We'll wonder where these companies will go to seek cheaper wages when these companies start paying decent wages to their employees. I want to ask you a question. This is not for you -- it's not a question for you, it's a statement. I'm reading the Mayor's Welfare-to-Work Program. And this is what we're giving to employers to hire welfare recipients: We're going to give them $1 an hour for jobs paying 6 to 6.99 an hour. We're going to give them $2 an hour for jobs paying $7 and more, and an additional $1 if jobs offer benefits. We're going to give free tax-credit filing services. We're going to give free training for private-sector supervisors dedicated to assuring TANF recipients success on the job, and we're going to give free training for companies that begin workplace monitoring programs to boost the employment retention rate of TANF recipients. So we give, we give, and we give. And 200 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 we're giving people's tax dollars. And all we're saying is to pay the people a decent wage so they can work. (Applause.)
And $7.90 is not a lot of money. One experience I will never forget. I had a young lady who I thought ought to go to work. I got her a job paying her $5 an hour. She had three children. One was in one school, the other one would have had to go four blocks in a different direction for day care, and the baby would have had to go someplace else, and she had no transportation. And when I looked at what she would have realized for $5, I told her to stay home, because she couldn't make it off of $5 an hour. So $7 an hour is not an earth-shaking amount of money. It's only $2.90 more. So we give, we are supportive of business. Business is the life blood of the City, small business is the life blood of the City. But you come and businesses come and the Chamber comes and asks us to give these incentives for the 201 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 companies to come and do business. And we just think that they ought to give and share with us some of the goodness that they get from taking advantage of the tax breaks. And they're using taxpayers' dollars. (Applause.)
Well, let me say this in response, and I think we will both agree that, quite frankly, a good job at a fair wage is better than any program Washington could ever devise. I would agree to that 100 percent. The point of the matter is, the marketplace has to dictate that, and that's what we're opposed of. Quite frankly, if you did an audit of members of the Northeast Philadelphia Chamber of Commerce, Mr. Kromberger sits next to me, you would probably find that they pay in excess already of the minimum wage. It's actually the semantics of it and the fact that it's further restriction. I think if you ask businesses why they don't want to come into the City of Philadelphia and why they leave, it's because it's 202 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 overregulation, overtaxation. And, quite frankly, L&I -- and I know this isn't all on L&I, they're the greatest ambassadors for people to leave and go to South Jersey, to Bucks County, where they're not going to be bothered with these type of regulations.
I don't think that that's -- that's your opinion, and I don't think it -- (Unintelligible -- parties speaking over each other at the same time.)
As you had said earlier, there are many reasons why companies leave. And I think Councilman Cohen knows me well enough that I do cartwheels down Roosevelt Boulevard when a company comes in or decides to stay. I happened to have helped Mr. Kromberger here stay in the City of Philadelphia, got him a meeting with Mr. Mullin. He was looking to go to Besalem. Well, that doesn't do us any good.
What we're saying is this legislation is for companies who decide to 203 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 do business with City tax dollars. This is for businesses who want to do business with the City of Philadelphia -- not in the City of Philadelphia, but with the City of Philadelphia.
But you may have companies that are starting up. In fact, if you look again at the statistics, most people work for very, very small companies. But companies grow into large companies, which is evident every day. And you may be restricting a company that you very much want to help and to support by the type of legislation. I think you need to trust the marketplace.
As Councilman Fernandez said, this is a working session, it is a discussion session.
And we are very pleased to have been here all afternoon to hear various sides of this issue, and we will take it from there, but it is a discussion.
Thank you. 204 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And I thank you for the time, and I'd like to leave now if I could.
What we will now have is representatives from various City agencies and departments who are responsible for implementation or -- I'm sorry. Mr. McBride, do you want to --
Mr. Chairman, my name's Edward McBride. I'm the County Affairs Manager for PECO Energy Company. Our company has quite a large economic development department. A key component to that department is going around the nation and trying to encourage business entities to settle in Philadelphia and the surrounding region. It is a perception that this type of 205 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 legislation stifles economic development. It's a perception. Unfortunately, the way that we read the bill, it's quite confusing, so I can't sit here before you and tell you what that complete impact is. But I would say to you that we can't support it the way it's written because it is too confusing and there is a perception, not only with our people, but with folks around the country about this type of legislation. Thank you.
Mickey Rowley, Executive Director, Philadelphia Hotel Association. The Hotel Association represents the employers of 95 percent of the available rooms in the City of Philadelphia. The average, just under one employee per hotel room. 206 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 In the next two years the supply of hotel rooms at both the airport and in Center City will increase by over 3,000 rooms. And, obviously, the employment will follow. Thank you for the opportunity to address Council. We applaud the intentions of the living-wage bill, but we think it's unnecessary. I'll just give you a snapshot of our business for your consideration in considering the bill. First of all, the average wage of member hotel employees is just about $19,000. That comes out to $9.40 an hour, and that includes the lower wage of tipped employees but not the tipped income that those employees earn. Secondly, 80 percent of our employees live in the City of Philadelphia, so these new jobs that are coming into the City are Philadelphia jobs. And, lastly, the Hotel Association heard Mayor Rendell's call for hiring Philadelphians coming off the welfare rolls. Just last week, our association's human resource directors met with the Private Industry Council, 207 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and we've launched an initiative and have committed to hire for every 50 rooms in the City 1 employee coming off the welfare rolls. And that may come out to 200-and-some-odd jobs. In short, Mr. Chairman and Councilmembers, insofar as the hotel industry is concerned, we think the goals of the living-wage bill are being met currently by our industry. We urge you to acknowledge this, appreciate this, and to resist the urge to impose bureaucratic, inefficient and, we think, unnecessary mandates on our businesses.
Good afternoon, Members of Council. My name is Aqil Sabur. And I am the Executive Director of the West Philadelphia Financial Services Institution.
Before you start Mr. Sabur, let me get this next crew together. The next panel of people, and if they would start approaching the table, is Bill 208 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Hankowsky, Steve Mullin, Joan Reeves, Louis Applebaum, James Roundtree. Those are all City agency heads. As well as individuals who wish to speak to the technical aspects of the bill: Warren Boris, Bob Brand, Carol Hemingway, Andrew Buck and City Council Staff Attorney Stan Shapiro. If you could start coming to the witness table, I would appreciate it. Please proceed.
The Financial Institution is one of the major economic development benchmarks of the West Philadelphia Empowerment Zone. We provide financing and technical assistance to companies located within the Empowerment Zone through a contract that we entered into with the City in October of 1997. First of all, I would just like, before I continue with my testimony, I would just like to provide some backdrop with respect to the comments here. First and foremost, I come from a union family. My mother was a member of the International Ladies Garments Workers Union, my 209 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 stepfather was a member of District Council 33, my sister is a member of the Retail Workers Union, and I'm a former member of District Council 1199C. So my comments are not meant to be anti-union or union-bashing; they're just an attempt to provide some clarity to the bill, which, as it's written in its present form, is extremely confusing. The Financial Institution is opposed to do this legislation for a number of reasons, which include, but are not limited to: an anti- competitive business focus; the appearance of punitive intent against business owners; providing a job training burden on employers; imposition of an arbitrary, capricious, and discriminatory wage rate; and an onerous reporting requirement employers. Now, looking at the legislative intent, the legislation has, as its basis, the privatization of City services. And there's an attempt to gain parity with the new company or the successor company that takes over the various services. Most of the businesses that will 210 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 receive a City contract will not receive that contract through privatization. The companies that we finance in the Empowerment Zone are what are known as "subcontract recipients," meaning that the funds that we lend to applicants immediately cause them to be a recipient of City monies, and they would have the responsibility of maintaining the wage rate and all of the other provisions in the bill. And any astute business person would take advantage of favorable financing and tax incentives to move into an area of the City where employers and financial institutions have already disinvested. The Empowerment Zones are areas where no one wants to come. No one wants to set up there businesses there because of the demographics and other issues, and the Empowerment Zone legislation attempting to reverse that. So if we are offering these incentives to the business on one hand, why should the companies be penalized after they take them? And then, secondly, if a company receives a $100,000 loan from the Financial Institution and their told the project costs are 211 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 4 million from somewhere else, they would have to comply with the terms of this legislation when the business owner decides to locate in the Empowerment Zone, take a $100,000 loan and still be responsible for the increased wages, hiring requirements, and paperwork mandates. We think not. The very people that the Empowerment Zone funding is supposed to help would be irreparably hurt. When an applicant meets the employment criteria of an employee, they're offered an hourly rate and salary and benefits, and they're given an orientation to the work environment. This results in a win-win for both the employer and employee. To force an employer to choose from a certain pool of candidates forces them to provide that candidate with wages and benefits prior to the candidate proving their competency, their skill level, and their commitment to the enterprise. This will result in a poor employer-employee relationship. By way of contrast, the West Philadelphia Financial Services Institution Loan 212 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Committee and Board approved three projects this past April, totaling $975,000.
Over the next three years, just these three projects alone will retain and create 53 full-time jobs and create 6 part-time jobs. 7 And over the next three years, based on 8 extremely conservative estimates, will provide $5 9 million in wages, just from these three projects. 10 And the City, State and federal government will receive about a $1,500,000 in tax revenues. It is also a condition of our loan agreement that all the applicants must comply with the Davis Bacon Act which essentially covers prevailing wage. 1. And I would it like to say to Mr. Mariano that I've read this legislation three times. And again, your point about it being confusing is correct. But this particular provision states in part that each City Council and City-related agency must mandate upon the businesses, in conjunction with the contract, a workforce profile 213 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 containing all of the job descriptions, number of employees, hourly wage of current employees, non-wage economy benefits, and residence of employees by zip code. At the completion of the contact and renewals thereof or every six months, whichever comes first -- and this is on of the legislation -- the business entity shall file a report with the Department indicating the names, addresses, hourly wage rate, and employer contribution to non-wage benefits for all covered employees performing work on City or City-related contracts. , etc. The point here is that this provision mandates that confidential business information of that company will be put in the public domain, and competitors can obtain this information, and this would pose a significant business problem to the companies in which -- to the business entity because the business entity is not only going to be doing business with just the City. So, in summary, Philadelphia must be competitive in attracting and retaining jobs and 214 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 facilitating the creation and retention of businesses. I urge Council not to move forward with this bill in present form because of the competitive disadvantage that it creates for the companies and the limited opportunities for Empowerment Zone residents that will result.
What I'd like to have is Mr. Applebaum, Mr. Roundtree Mr. Feder and Mr. Brand is already there. Mr. Shapiro, and I don't know the other individuals up at the table. At this point, I'd like to talk about some of the particulars of the bill and its potential impact on various City agencies who either have to implement it or maybe are effected by it. Can we have the Sergeant-at-Arms receive the document from Mr. Brand. Good afternoon, gentlemen. Please identify yourself for the record. If you have a brief state that you'd like to make, we'd like to get into question and answers. 215 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 COMMISSIONER APPLEBAUM: Good afternoon, Councilman. I am Commissioner Louis Applebaum, Commissioner of the Procurement Department. I have prepared my testimony prior to this morning, when many changes to the bill were made. I understand we've excluded goods, which is a major impact.
That's my understanding, yes. COMMISSIONER APPLEBAUM: So the items that I had originally reported are somewhat changed. But the impact of this legislation incalculable. Because it would be physically impossible now for all service vendors now to comply with this requirement, they could just cease building with the City of Philadelphia. Lack of competition would drive up costs, and the City could be faced with many no-bidder situations. Vendors, such as Team Clean, and I have a representative that's here today, would be in default of their contract. They are minority subcontractors for work at the Municipal Services 216 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Building, One Parkway, and Vets Stadium. Donna Allie, the President of that organization is here, and she can comment on that. Aramark Struthers Food Joint venture, and Mr. Struthers, who is also here today will comment on his contracts, which would be in violation. They have contracts with the City for prison food services. They also operate the Baines Restaurant at the airport, that also would be a contract that would be in violation based on this new ordinance. The contract requirement burden that this ordinance will attach to our many vendors will be an enormous cost to be absorbed by the vendors who, in accordance with the bill, must submit with the Procurement Department a workforce profile -- and this was mentioned earlier, but I'll repeat it -- containing all job descriptions, number of employees, hourly wages of current employees, non-wage employee benefits, and residency of employees by zip codes. These reports must be filed by the vendors with the Procurement Department every six months. Many of our smaller vendors, many of 217 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the minority vendors do not have the people or computer equipment to prepare these type of reports. I must also note that this payroll information is confidential, and many companies will resist releasing it. As you know, bidding with the City of Philadelphia is a difficult and onerous task, and we heard that earlier from some of the companies that we talked to. This ordinance will just add another level of complications for bidders and would require more bureaucratic City of Philadelphia costs to monitor. And in the end, it will most likely reduce our pool of competitive bidders that we are trying very, very hard to increase. This would have a definite reverse effect on our goal of increasing bidders, increasing competition. Elaine Reardon, an economist with the Milligan (ph.) Institute, expressed serious concern over the possibility that the higher wages might lure a different workforce, and I'm quoting her: I don't think the policy will have the impact they expect because as you increase the 218 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 wage, you'll attract higher-quality workers. So you might get college kids who are now willing to do these kinds of jobs, and the people you'll hurt are exactly the less-skilled welfare-ish population. So that's the end of quote. This concludes my testimony, but I will be glad to answer your questions, and I would like to introduce, after these speakers, some of the vendors who are here today.
Good evening, Mr. Chairman, I'm James Roundtree, and I'm one of the Deputy Finance Directors and the Executive Director of the Minority Enterprise Council, which is charged with the task of administering the City of Philadelphia's anti-discrimination and affirmative action purchasing procedures under Executive Orders 193 and formerly 17-500 of the City Code. As the Director, I have reviewed this bill, this living-wage bill very carefully and (unintelligible) complications, both real and perceived. I respectfully submit to Council that 219 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 this bill is not in the best interests of the disadvantaged business community. The program which I administer create to overcome the barriers that these businesses are facing trying to achieve fair and open competition in City contractings. By enacting this legislation such as this, it would impose Council in creating a barrier for participation for disadvantaged businesses in a way that puts a undue financial hardship. As proposed, a standard minimum wage and health benefits for employees working in the City or on City-funded or approved and related contracts will require these businesses to pass the costs onto the City and others in order to control its overhead. By passing these costs on, businesses which are already perceived as being less competitive cost-wise become even less attractive. Further, in those instances where businesses have contracts both with public and private, it will become necessary to standardize the minimum wage and extend benefits to all employees to provide the same or similar services 220 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 within the company in order to keep harmony among its employees. This living wage bill does not encourage or promote equal access to opportunities for disadvantaged businesses; instead, it creates an additional burden for those businesses struggling to compete in a closed environment. Thank you for allowing me to share my opinions on this bill. I'm available for any questions.
Thank you. Let's enter into the questioning. Mr. Applebaum, you said you've had a chance to review the bill. COMMISSIONER APPLEBAUM: Yes, I did.
Okay. On , under the definitions, it talks about a business entity -- (.1) and (.2) is the City, (.3) is a City agency, and (.4) is a City-related agency. Based on your reading and understanding of the bill, what is City entities are covered? For instance, does this cover the Redevelopment Authority, the Philadelphia Housing Authority, PIDC, the Philadelphia Parking Authority, PAID, 221 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and the School District? COMMISSIONER APPLEBAUM: If you're asking me who is covered, I respectfully request that I don't really know who's covered. I think the folks who drafted the bill 7 would be better prepared to answer questions about the bill than I am. I had difficulty in understanding it myself.
Okay. I appreciate that. The reason I asked you is because, later on in the definition, the department is defined as the Procurement Department -- COMMISSIONER APPLEBAUM: That I saw, yes.
And you would have responsibility for implementation. So I guess I just wondered whether you knew what you might be implementing. COMMISSIONER APPLEBAUM: Well, I understand that there are many, many departments that we would have the responsibility to review, many, many more than we have responsibility today. So we would be crossing over other boundaries that I am not real familiar with. 222 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Okay. Is there a person who was involved in the drafting or proposing of the bill that might be able to answer that question? COMMISSIONER APPLEBAUM: My friend, Mr. Mariano, I would imagine.
I don't really care who answers the question. I'd just like to get an answer.
I'm Stanley Shapiro. I'm Chief of the Technical Services Unit of the Technical Staff of City Council. At the request of Councilman Ortiz and Mariano, I drafted this bill. And it was drafted in this initial draft to be very broad and apply to all Philadelphia government agencies which receive funding from the City of Philadelphia or have contractual relations with the City of Philadelphia. 223 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 So it would include the School District if it has a contract with the City, the Philadelphia Gas Works, the Housing Authority if it has contracts. I mean -- and these things would be determined based on the facts of each circumstance. And I did not make a specific review of all the relationships that the City has so I can't tell you on a factual basis, but the intention basically is that if the City has either a funding relationship with an agency or a contractual relationship with that agency, and it is governmental in nature, then that entity would be covered.
Mr. Shapiro, can you explain the language again on , under (.4), City-related agencies, double small i, have entered into continuing contractual or cooperative relationships with the City. What is a cooperative relationship?
This, by the way, is language which I believe applies -- is the language in the prevailing wage ordinance that the City now has. 224 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And basically, again, as I interpret it, this would be a relationship where the City has services that it receives in exchange for some level of funding. And I think that that would include the School District, I think that it would include the Housing Authority, I think that it would include the Philadelphia Industrial Development Corporation. It's not a defined term. And if it's not a defined term it carries the meaning, the ordinary meaning that the dictionary gives to it. So that if the agencies cooperate through some sort of contractual relationship, then that agency would be covered.
Okay. There was discussion of -- although the actual amendment was not put forward, but for point number 5 on , the definition of a covered employee seems to have expanded from either full-time or part-time to both of those terms, plus on either a permanent or a temporary basis. And then later on --
Now, are you looking at the original or the amended definition?
I'm looking at the 225 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 amended definition.
The amendment is either on a permanent or a temporary basis, correct?
All right. And then later on in the same definition, which, I believe has not been touched, it says: A covered employee does not include any person employed in construction or any person 13 years of age or younger employed during the summer 14 months in the City-funded program to create summer 15 jobs for students and teenagers. 16 Can you just explain for the record the 17 exclusion on persons employed in construction? 18 Why is that? 19
Because they are covered by a prevailing wage legislation. UNIDENTIFIED SPEAKER: They're covered elsewhere.
All right, no 226 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 problem. And in the financial assistance section, point 7, again, just so we understand what's going on here, how is it decided that the threshold would be 50,000 or more and provided to an employer of at least employees? 8
That was difficult. 9 Basically, that seems to be the middle ground of a 10 variety of ordinances which are in place and which 11 have been proposed. 12 The problem, as has been pointed out in 13 the past, is that there's not a lot of data that 14 the City collects in terms of the employees and 15 what their wages are and exactly where the needs 16 are, which is a gap which would partially be 17 filled by this ordinance, which would require -- 18 especially under the amendments, which would 19 substantial reporting. 20 And frankly, it, to some extent, is a 21 number which is there because of a lack of a 22 another number that I'm aware of. Now, there are 23 other -- there are people who work and have 24 examined the bills in other jurisdictions who 25 might be able to give guidance on whether that is 227 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 in fact the best number that we could come up with. So it is not a scientifically selected-number. UNIDENTIFIED SPEAKER: It is a number that's designed to get a majority vote to put the City in the business of trying to --
Oh, I'm Robert Brand. I'm President of Solutions for Progress. I am a very much ashamed member of the Philadelphia Chamber of Commerce, and I run a business in Philadelphia. It was a number designed to help get the City into the business of using its money to end poverty, the greatest threat to the City of Philadelphia. We have sat here for hours listening to people talk about the difficulty of filling out forms and the difficulty of paying wages. (Applause.)
This is a living-wage ordinance because a lot of the jobs that have been talked about don't pay a living wage. And if they 228 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 don't pay a living wage, it means that the people that have those jobs live in poverty. And if they live in poverty, their children are one and a half to three times more likely to die in childhood.
-- of why a living wage is important. And it's not just the problem of filling out forms; it's the quality of human life must.
And it's a question of whether the billions of dollars a year spent by the City of Philadelphia in contracts from people who want to do business with the City and in economic packaging for people who want the assistance of the City will help us get 10,000 families out of poverty.
Right. Now, let me 229 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 -- I think we understand what the -- (Applause.)
I think at this point in the day, we are fairly well versed and have a pretty good understanding of the purpose and intention and need of this legislation. I'm now trying to understand from a technical standpoint and a drafting standpoint and a legal standpoint what the bill is, what it does. And if I don't understand why someone set number at a particular number, I'm just trying to understand their thinking.
The bill has -- I mean, there's a lot of drafting elegance which you can make more elegant, at least Stan can. But at its base, this bill says that the City plays a major role in this economy, in its contracts through the Department of Health, in its contract through the Department of Human Services, in its contracts through all City departments, especially 200-class purchase of service contracts.
And the City provides 230 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 economic financing assistance to the people who ask for it. All we're saying is that when people voluntarily bid on City contracts, and when people voluntarily -- these small businesses, these new start-ups like Marriott come forward and ask for City assistance, ask to go on the dole, that they should pay a wage that keeps families out of poverty. (Applause.)
And, sir, you can write this in as few words as do that, in as few words as get the nearly $2 billion a year that the City spends on contracts and economic development to assure that every worker has a living wage, health insurance, and a pension. That's fine.
Mr. Chair, I think 231 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 to try to be cognizant of the aspect of small business, it's very difficult to seek the definition. But, obviously, a Marriott is not a small business.
A company that has workers or less, I think we wanted to put a 9 fair classification in there vis-a-vis all of the 10 other bills that we have seen in similar cities 11 such as Boston, Baltimore and so on. 12
So in terms of small 14 businesses, it's 25 or less. If you have 500 15 employees, I don't think you're going to qualify 16 as a small business at this point. 17 And, also, the situation -- you know, 18 stated about the MBEC, the Minority Business 19 Enterprise -- by the way, when MBEC was being 20 discussed in this Council, the Chamber of Commerce 21 came in and said that if we approved MBEC, that 22 business would leave Philadelphia, that jobs would 23 run away, that they would take (unintelligible). 24 And, actually, all we are saying was that minority 25 contractors and minority business people had to 232 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 have a level playing field at that point in time. We're saying the same thing in terms of jobs and wages at this time. So I think we should be cognizant -- very cognizant of the history of development and not let ourselves be fooled by the statements of dire consequences that will accrue if we pass this legislation.
Mr. Applebaum, I wanted to go back to your testimony and I'm not clear who's representing the Administration here, so I'll ask it of you. And then if you can't answer it, maybe someone else could. The bill, as I read it, is broadly drafted to include all -- I mean, it could be read all agencies that get -- all agencies and businesses that get public dollars. COMMISSIONER APPLEBAUM: Correct.
In some kind of contractual form of $50,000 or more. I wanted to start back a little bit and 233 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 clarify some other points. I always feel that before we tell someone else what to do, it's always better to get your own house in order. And so my first question would be: Are there any, and if so, who are they and where are they -- are there any City employees who are not earning 7.90 an hour? COMMISSIONER APPLEBAUM: I would have to assume that all City employees are earning in excess of $7.90 an hour there's.
Could you make sure -- COMMISSIONER APPLEBAUM: There's no one here to verify that. But from the best of my knowledge, I would assume that they are. And I can look into that and get that information for you.
That would be my first question. COMMISSIONER APPLEBAUM: I think we should assume that they do, but I'll check that out for you.
Okay, that would be my first data request. 234 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 The second would be: Of all the services that have been privatized or contracted out during this Administration, since '92, do you have any information about how many of those contracted-out privatized services that used to be City civil service employees in those companies are people being paid $7.90 an hour? COMMISSIONER APPLEBAUM: More or less than?
Less than. COMMISSIONER APPLEBAUM: Less than 7.90. I know in many privatization contacts, we stipulate in the RFP a level the wages that must be paid. And generally, they're over that. And others where we have not stipulated that, we do not really know what the wage rates are, and we have no -- we could ask them, but there's no reporting process where these private companies report back to us with their wage levels. So we only know the ones where we have stipulated that they must pay a certain wage rate.
Well, I think that would be important information for this 235 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Council to know as we try to examine what our options are. Because I think what I learned today from the Councilman testifying from New York is they essentially limited their living-wage bill to any contracts that have been contracted out in certain areas. And it sounded to me like they were primarily in areas that we would have -- say, had been privatized, and it sounds like they might have privatized more than we did. So I would think our first responsibility is to make sure that we have no 14 City employees who are paid less than $7.90 an hour, that none of the services that have been contracted out, and then go on from there. So I would like the Administration to provide that information. COMMISSIONER APPLEBAUM: Well, we can find that information for you, but I do know for a fact that the prison food service contract was one that we did privatize. And ARA Struthers -- Aramark Struthers is the vendor. And Struthers has indicated to me -- and they're here, they can comment on it -- that 236 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 they do have a starting wage rate of starting employees at that facility at $7 an hour. So there are a few that we have that the wage rates are less than 7.90. But we would have to do a study of about 40 or 50 contracts, items, initiatives that we have privatized. We would have to make a survey of all of those companies to determine the wage levels. And we can do that.
I'd like to see that. COMMISSIONER APPLEBAUM: Okay.
Mr. Applebaum, I was intrigued by a statement that I think I heard you make, which is that in some cases, you do require certain wage levels in contracts, and in other situations, you don't. Did you say that? COMMISSIONER APPLEBAUM: Yes, I did. There are certain contracts such as many of our security contracts. And in conjunction with the Labor Standards Board in the City of Philadelphia, Deputy Mayor Jerry Murphy and Public Property and Procurement, we have determined certain wage 237 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 levels to assure that we are getting the appropriate people in the appropriate jobs. So yes, that does exist. And in some of the janitorial contracts, we have those in the RFPs and the bids, certain levels of minimum wages that must be paid. And in both cases, I believe they were over the $7.90.
Why don't you do it in all cases? Why do you pick some and not others? COMMISSIONER APPLEBAUM: In some cases, there is not sufficient guidance from the Labor Standards Office to initiate that, and it -- they just do not occur.
Are you saying that the service is so unique that they're the only ones that are providing it and no one else provides that service and we can't figure out what anybody else is paying for that particular service? COMMISSIONER APPLEBAUM: No, I'm not saying that at all. I'm saying that in the specific -- 238 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
So there's data out there, but you haven't -- COMMISSIONER APPLEBAUM: In the specific contracts that I mentioned, we wanted to assure a certain level of service. And in order to ensure that, we were guided to put in certain wage levels that assured us of that level of service.
When we did the privatization of a number of the jobs, assuming that the City employees performing the services prior to privatization were making more than $7 an hour or 7.90 an hour, our assumption when we privatized this workout was that the companies would pay less than 7.90 an hour? That's why they were able to do the work for less money? COMMISSIONER APPLEBAUM: No. 21
And with no 22 benefits? COMMISSIONER APPLEBAUM: No, no, that's not true at all. The economic analysis that we developed 239 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 comparing our total cost of City -- City workforce, City benefits, City fringes, City wage levels, and the cost of the City providing that service, was matched against the cost of the private company. And in every case, the private company's costs were lower. And they were not basically lower because of the wage rates, but lower because of efficiencies, more productivity, better equipment, and -- I have to say it -- better management. So that in the balance, it was not strictly --
Well, those seem like areas where the City might want to beef up and match the companies and try and increase productivity, better management. Why would we want to shirk our responsibility in those areas and give it off to a private company? COMMISSIONER APPLEBAUM: We would love to see the City ramp up. In every case, we gave the City the opportunity -- the City being the union workforce -- the opportunity to bid on those particular privatization initiatives, and they 240 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 never did. If the City workforce could have come back to us at the same cost structure that the private industries had, they would have been given the process.
What impact on the minority participation level in the City, what impact has the court decision had on the participation of minorities in the City?
It has had a very negative impact but it's -- it would depend on the commodities. But also it has had a negative impact. We in public --
What percentage of participation did we have, and where are we now?
Councilwoman, I can -- if you give me a range of years, I can prepare it for you. I don't have it off the top of my head, but I would like to prepare that for you.
But across the board, the level of minority participation in City contracts is very, very low. 241 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Not very, very low. It is not where we think we could be. And I'll give you an example just off the top of my head. On Public Works, I think that minority and women business participation is around to 7 16 percent. 8 Around supply, service, and equipment, 9 it's dramatically lower; it may be around 10 or 11 10 percent. 11 In professional services, we do it very 12 differently. And it's as dramatically low as 13 around 5 to 8 percent. 14
But you would say 15 that prior to the court case, it was much, much higher.
And it was higher, and there was more participation because of legislation.
Right? 242 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
The same thing here. People just don't do things because it's the right thing to do, right? Right?
They do it because there's some reason for them to do it, right?
My only concern, Councilwoman, is that the version of the bill that I read was very broad. And trying to apply it to each of those areas that we were just talking about gave tremendous peaks and valleys. It excludes Public Works, for instance. So it won't affect people in contracts -- construction contractors. It would affect, if we had construction-related companies, supply companies where they would be getting in a participation level or being credited for participation, it would affect them in any service or equipment. Again, I haven't seen the amendment so I would have to assume that for this discussion that they are still in, it would impact them.
So it's not 243 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 totally wrong for Council to try and provide some support and help to its citizens?
I would endeavor to say it's not a problem for Council to take on any kind of obstacle.
Mm-hmm. Construction is not included in this because it's a prevailing wage.
Mr. Applebaum, what -- COMMISSIONER APPLEBAUM: The prevailing wage rule for Public Works contracts has been in existence for a number of years. What was passed last week or two weeks ago had to do with off-site fabrication. But actual prevailing wage for construction has been in effect for I don't know how many years, but that's been in effect.
(Inaudible, off 244 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 mike.) COMMISSIONER APPLEBAUM: You broadened it to include fabrication of materials outside of the work site.
Remember the hearing we had here, and I think you said a couple things there that you got Mr. Roundtree saying today are pretty much the same thing. These poor people that have these small businesses can't fill out papers. I'm shocked. I had to go ask Councilwoman Blackwell because I knew she wouldn't take it wrong. I says, "Can't Black women fill out papers?" Now, I know that's not true -- please don't write that in the papers, but what they're saying.
Councilman, this has nothing to do with filling out papers. This is an additional financial burden. I haven't heard any of the banks 245 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 testify, I haven't heard any of the insurance testify. What my concern is and the reason why you don't see a lot of other minority businesses here today was because I had very little time to prepare for this. But the factors that I'm worried about is that -- that multiply. It a perception that in order, as Councilman Ortiz stipulated, it is a perception to do business with minority women and disabled businesses in this town was going to cost them more money. When you add this incentive on top, as it is written, only as it is written, then the burden for them on their Workman's Compensation increases because they're at a noncompetitive rate as it is. So when you add that to it, it increases. So it has nothing to do with the intellectual portion of filling out the form.
You know I was being facetious, but I got your attention.
Mr. Roundtree. 246 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
In 1978, when I worked as an electrician-apprentice with a journeyman named Larry McCrea (ph.), who's an African-American man.
Because when Larry wanted to go in business, they told Larry that it would be an unfair burden and he wouldn't be able to. But now if we walk out this building and look across the street, Larry's doing the electrical contracting on that building that burned down. So in ten years from now, the people 247 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that you're saying can't do this --
Councilman, it is an unfair comparison to compare it with the construction versus a service. That is an unfair comparison.
Everybody who participates is participating from the same supposedly --
But the union only sets the wage rates here because this is a prevailing-rate town from the federal days.
So it is unfair, it is truly unfair to compare the two industries where you have something that is totally regulated and 248 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 something that you're going to legislate.
But if Larry could do it, couldn't someone else do it?
'Cause we're going to set the wages here, and we're going to say it's 7.90 an hour. That makes it easy 7.90 an hour. That's what I believe.
You know, that idealogy is not fact. I mean, I have reviewed approximately 5,000 jobs that are now contracted by the City of Philadelphia. They've been contracting these jobs for decades. This isn't privatization. I looked at mental health, mental retardation, drug and alcohol, and human services jobs. Actually, it's about 12,000 jobs, but we looked at good data on about 5,000 of them. The difference between union and nonunion is not at the top. The top rates for doctors and or master social workers are virtually the same. The difference is at the bottom. It's how many workers earn more than $8 a hour. It's how many workers have family health insurance. 249 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 And in the union shops, it's better. It's not better enough. We still have in the $1.1 billion from just those two departments, health and human services, that the City contracts every year thousands of people who get their money one stop from the taxpayers' dollar and who live in poverty, who don't make wages that let them live out of poverty, and who don't have health insurance. And that data can all be prepared by the City. You can count much more elegantly than I've been able to count, but the data that Councilwoman Fernandez asked for, wages is part of it. But another part of it is health insurance and just to have a health-insurance policy that someone has to pay in $200 a month is meaningless for someone making $8.20 an hour. So these data simply establish a floor, and they establish that floor very well. And if you don't establish that floor legislatively, what we have found is that thousands and thousands of Philadelphians paid for with City monies under contracts largely to nonprofit corporations will 250 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 continue to be condemned to live in poverty by City policy.
Well, I think what I'd like to ask at this point -- you've touched on a couple issues -- is to ask our Commissioner of Human Services to switch seats with yourself. I'd like to hear about the impact of the proposed legislation on one of our probably largest City agencies that grants -- that has contractual relationships with outside entities. I'd also -- I think some of our economic development agency people are here as well, and I'd like to get a little better understanding of either their perspective or what their understanding is. So why don't we do that. And what I'd like to ask Mr. Shapiro, while they're getting ready, is the proposed amendment on talks about amending Section 17-104(b) contract requirements. And now it seems to add in not only the business entity entering into the contract but also its subcontractors, lessees and sublessees. Is that correct?
Yes, yes, that is 251 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 correct.
So take me through that in a kind of cascading fashion. A company bids on a contract with the City of Philadelphia, generally, I guess, called "the prime contractor." They then subcontract with other businesses for whatever the particular job is. So the person who wins the contract, they would be subject to the bill and the living-wage component. Then the subcontractor would be subject as well, and the sublessee -- or I guess you technically have a sub subcontractor. Anyone in the chain is subject to the provisions of the bill, is that --
To the extent that they are providing services to the City or are the beneficiary of financial assistance.
Okay, all right, I just wanted to have that understanding. 252 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Mr. Applebaum? COMMISSIONER APPLEBAUM: Yes, Councilman. There were two people here that are minority vendors who we brought in that I think you might like to hear from them before we leave. Could you have them speak now or could you talk with them now? That's Donna Allie from Team Clean, and Mr. Struthers from Aramark/Struthers.
We also have a witness who's a professor from Temple University, who, as I understand it, has analyzed living-wage bills from all around the country, who can compare the impacts of this bill to --
I will do everything that I can to get them all on. It's only a matter of the order. Commissioner Reeves, with your continued indulgence, if we could briefly hear from the business people who have had this kind of impact -- or may potentially have this kind of impact, and then Commissioner Reeves will talk about the department which I think is probably larger than many of the businesses. 253 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 (Donna Allie comes forward.)
My name is Donna L. Allie, and I am President and CEO of Team Clean Incorporated. And, first of all, it is very difficult for me to answer questions about this or even speak about this because I am a former-welfare- recipient-turned-businesswoman. I am in favor of increased wages, but I'm just afraid of the impact that, from what I've been hearing and reading, it will have on my business, number one. There are contract in the City that I am currently involved in that pay lower than the 7.90 an hour. And if, you know, my concern is if in the middle of these contracts that we do have to increase to 7.90 and pay health and welfare benefits, that would just knock us totally off the box. I mean, we would not be able to survive like that. Other companies -- i.e. ISS and Aramark and large corporations like that -- would be able to pay the 7.90 in health and welfare benefits. 254 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 But, as the Commissioner said, for us, it is a hardship. We have -- with the increase in wages, we have things like Workman's Comp., we have cash-flow things that we have to concern ourselves with, other insurance costs. And so it definitely would be a hardship for my company, but I'm glad to hear, like Councilwoman Tasco, that this is just a talking session or. . . So that's really all I have to say.
Let me try to -- very quickly try to understand the nature of the hardship. Is that because the contract that you're operating under, you bid at a particular price, you base your wages, I guess, on either your total revenues or what comes in contract by contract, and are you saying that if you had to change wage rates in the middle of the contract that that would put you in a difficult position?
Oh, yes, yes. Because, you know, we bid based on a certain dollar amount with overhead and burden on top of that. So, for instance, we're in a contract 255 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 now where we do pay less than $7 an hour. And we're in that contract for four more years if we do well. So if you were to change and say well, you know -- if the City says they want us to now pay 7.90 an hour, well, the difference between what we're currently paying and the 7.90 an hour plus health and welfare benefits, that would be a cost to us.
Could I ask what you're paying -- (Interruption by unidentified person shouting from audience.)
Hold on, we will not have that. We will not have back and forth unrecognized. Councilwoman Fernandez.
Could you tell me what you currently pay your employees, and do they have health benefits?
Well, in different -- well, in some contracts that are seasonal part-time contract, we do pay 5.50 an hour, and there are no 25 benefit. 256 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 In other contracts, we do pay up to 10, $12 an hour and benefits. It just depends. It depends on the type of work, it depends on the market, it depends on what the other bidders are bidding. We are in a competitive bid situation.
Some, yes. For example, Veterans Stadium. Veterans Stadium is a contract where we pay 5.50 an hour. Now, they are increased over a period of time, but that is very normal in every city. I heard you mention Baltimore. Well, I've worked at Oriole Park at Camden Yard since the beginning. Last year was the first year that I didn't have it. And, same thing, 5.50 an hour, no benefits. There's others -- Shea Stadium excuse me, I can't say Shea Stadium, but there are other stadiums that are like that. That's the nature of stadium work.
Part-time. It's part-time 257 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 seasonal.
Thank you, Mr. Chairman. Miss Allie, are any of the part-time employees that you have, are any of them working for you on a part-time basis, as a second job? Because I know a lot of stadium employees are people who have a full-time job during the day and take a stadium position at night to earn extra income. Are any of your employees -- do any of them fall into that category?
Yeah, some do, some do, yes. But we have to be very careful about that because if they go over 40 hours, then --
I don't have a problem with that, I'm just curious to know. So there are some employees that would fall under that category --
-- as having second jobs and have full-time jobs during the day with benefits, whatever. And they're just 258 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 supplementing their income by working a second job.
Yes. My name is Bob Struthers, and I'm with SFS Correctional Group LTD. My relationship at the Philadelphia Correctional Facility is we provide food service there. In this particular instance here, it's to the City. At this point in time, we have close to about 20-some employees. We pay about 7.50 an hour. I would say, on average, it's getting to about $9 an hour at this point in time. We do have benefits. The only their lacking is, I would say, a medical plan at this point in time. We are assessing that at this point. Our relationship is a very unique one. Over the years to Jannie Blackwell and a couple of other people in here, Mrs. Tasco, and yourself, 259 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Mr. Nutter, we've formed a strong relationship with Aramark. We look and seek to have a joint venture. A lot of minority companies ask us in terms of how that works. We stand alone in terms of a minority company, in terms of when we provide this particular service, which we're trying to learn correctional feeding at a very high level. To understand the total systems and things, we indicate to any company that we get involved with us to a joint venture that tends to wrap around the medical plan as well as other benefits. So at this point in time, I would say that we live up and beyond the 7.50 or close to $9 an hour at this point. And we have almost all benefits in place at this point, but the only thing lacking is the medical, which we are evaluate at this point in time. And that's about all I can say on that matter.
So just to clarify, you do not necessarily give health benefits to your employees at this time? 260 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
At this time, you do not provide health benefits?
We don't have it at this time right now, that's correct, yes.
It's interesting when you put -- right now, there's a piece of business going out with respect to commissary. I think we, as a minority employer, we would live up to all the expectations if the City or any State agency would put some harder mandates on, I will say, the majority partner or a prime contractor in terms of being creative, let's do a joint venture. Let's look at that, let's give higher points than that. That helps a lot.
Thank you. Councilman DiCicco -- I'm sorry. Councilwoman Tasco and then Councilman DiCicco.
I just want to go back to the young lady. You talked about your 261 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 cleaning service at the stadium. It is part-time?
So you don't require full-time employees to perform that service.
Your other contracts, where the employees make above the minimum wage, they are steady full-time positions?
Do your employees have health benefits in those positions?
Okay. And you prorate those costs when you are bidding on your contracts, right?
As well as other contractors who are competing for that same service?
So we separate the 262 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 full-time employee from the seasonal Vets Stadium, Shea Stadium employee which maybe have a part-time job at night after the cleaning?.
Thank you. I'd like to reconstruct the panel as it was earlier at the table. I think Joan Reeves was at the table. COMMISSIONER REEVES: Good afternoon, Chairman Nutter and Members of City Council. I'm Joan Reeves, Commissioner of the Department of Human Services. And I am here today to give testimony about Bill No. 970586, the living-wage ordinance. First let me say that the ordinance 25 represents a laudable goal for families to have 263 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 incomes above the poverty level. And I also understand that there were some amendments proposed earlier on that I do not have the full information on, so what my comments are on is the bill that we looked at the other day. I think, as you know, the Department of Human Services knows the importance of families living above the poverty level, but I also would like to share with you what we think the ordinance 11 -- the impact the ordinance will have on our private-provider system, which does serve some of the most vulnerable children in Philadelphia. And I would like to also takes some time to comment on what we see as a budgetary impact for DHS and the City and also would hope that Mr. Brand could provide us with some data done of his analysis of salaries in the Human Services contract.
I would be happy to if you would also share your data. COMMISSIONER REEVES: Absolutely. It's public information. Our mainly concern is that the strides we have made to vulnerable children and families 264 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 might be eroded. We have aggressively developed in-home services to prevent placement. We have returned children who have been placed out of the State to Philadelphia, to receive services from Philadelphia agencies, and this has increased the City's provider base. This expansion and program development may not be able to be continued with the enactment of this ordinance as I had seen it earlier. The Department currently purchases approximately $275 million in various social and professional services from 227 private provider agencies. While almost all of these agencies are nonprofit, and they at least partially subsidize the services purchased with their own resources, they would all be covered by the ordinance 18 provisions, and many would be forced to increase their operating costs to comply. These cost increases would need to be fully covered by corresponding increases in the standard rates paid by the Department, or many of these agencies would be forced to stop doing business with the City. For example, few if any of the 35 265 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 day-care agencies presently under contract with the Department would be able to renew their contract serving 341 children without a huge rate increase. Among every -- almost every provider is likely to have some staff being paid at or near the minimum wage. The budgets of these agencies for this year and next have not anticipated this increased costs, and full City reimbursement will be demanded during contract negotiations. Raising the wages paid to an agency's lowest-paid staff could also trigger wage increases to higher-paid staff in order to maintain the existing salary structure, and also increase the base upon which future cost-of-living increases could be calculated. If DHS is required to raise its standard contract rates to reimburse its providers for the costs associated with compliance with this ordinance, the cost of DHS programs will certainly increase in terms of City dollars required for State and federal funding matching. Since many of the low-wage job categories that would be impacted by this 266 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 ordinance involve non-placement services like in-home child care and homemaking services, there would be no increase in the federal revenue currently used to offset City cost. The federal Title IV-A Block Grant is already fully expended. And, thus, any rate increase given to non-placement service-providers would be strictly City and State-funded. In addition, State matching funds would also be unavailable in the short term because every year State Act 148 Allocation is fully accounted for before the start of the fiscal year. No excess State funds will be available for unanticipated provider-rate increases. The State needs base budgeting process, requires plans and budget to be developed more than a year prior to the start of the fiscal year. DHS will need to start planning now if it was going to build rate increases such as these into the City's needs-based budget request for the State DPW Fiscal Year 2000. There's no guarantee, of course, that these rate increases would be approved by DPW. Any form of City-imposed wage increase 267 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 would have to be phased in over time in order for DHS to incorporate this increase in the needs-based budget and to draw down the State and federal revenues necessary to offset some of its costs. Even with the long-term phased-in approach, it is not certain that all of the Department's contract agencies can or will comply, and essential services may become unavailable.
We can envision providers who may opt to utilize part-time employees in order to stay in business and to continue to be considered for City contracts. Others would become discouraged with doing business in the City. DHS would prefer that City Council find another means of enhancing the economic security of low-income workers. I appreciate your giving me this opportunity to testify about this important legislation. Thank you.
No. Just to add for the record, I think the proposed amendment 268 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 relating to nonprofits -- it would be nonprofits who receive a contract of over $50,000, according to the way it's written now. And also nonprofits would be exempt if the gap between their lowest-paid employee and highest-paid employee was not more than --
Also, they'd have to have 25 or more employees to be subject to the ordinance.
Which would -- I mean, once you start to play that out, it would be interesting to know how many agencies then -- 'cause that was certainly an issue I had raised with the designers of the bill, what about nonprofits, particularly small nonprofits. COMMISSIONER REEVES: And I think with the amendments, we'd need to do an analysis of how many of our contract agencies would then become exempt and how many would fall under the bill.
Could you provide us with that information, Commissioner? 269 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 COMMISSIONER REEVES: Yes, we will.
Okay, thank you. It is my understanding that a number of individuals from ACORN wish to speak. I have a name, although not on my list, but on a sheet of paper. Is that Andrea or Anthea Hall? (Applause.) (Carol Hemingway comes forward.)
No, I'm Carol Hemingway, I'm on the list, the testimony list.
Okay. We have a couple different ACORN-associated people on the list that I have in different places. Miss Hemingway, I do have you, and-- UNIDENTIFIED WOMAN: And I'm Cora --
I thought I had mentioned your name earlier. Okay, please give your names for the record, and start your testimony.
Good afternoon Councilmembers, community members, labor friends and ACORN members. My name is Carol Hemingway, and I am a resident of Philadelphia, an ACORN 270 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 member, and strong supporter of the Philadelphia living-wage ordinance. From what I have seen in my life and what I have learned in this past year working to pass the living-wage bill, I could tell you that this City and its hard-working people need this ordinance. For the past months, I have met with 10 representatives from various City agencies and I 11 have studied City policies. The conclusion I have 12 come to really very simple: There are too many 13 poor people in this city who are working for 14 companies that benefit from our public tax 15 dollars. What I am saying is that our tax dollars 16 are really going straight into the pockets of 17 businesses who turn around and pay poverty wages. 18 I know Philadelphia does not have enough money to give everyone in the City a living-wage job, even though that is what is needed. But what I am saying is that we should be very careful that the money we do give has the best effect possibly. What they have found in Baltimore and Los Angeles, among other cities, are that 271 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 living-wage ordinances are an excellent way to put more money into the hands of workers without costing the city money or driving away businesses. We ask City agencies two simple questions: Before you give a company any assistance, do you ask them to create any jobs? And do you ever ask that what they would pay? They looked at me like I was crazy. Here was my city giving out billions of dollars in taxpayers' dollars and not even asking companies to do anything positive in return. What's even more unbelievable is that the City does not seem concerned about this. It is clear that the agencies charged with handing out this money are not concerned with whether or not companies benefitting from these subsidies are committed to creating living-wage jobs. Revenue using our limited public resources to leverage decent, family-supporting jobs and training and future, our City seems content contracts to the lowest bidder and provide tax abatements with no questions asked. This is only morally wrong, but it is fiscally irresponsible. 272 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 It in this spirit that ACORN began research over a year ago, to find out what money the City was giving away. And, you know, by the way, you know, I listened to a lot of questions that was being asked to the Administration. It's just too bad that we didn't speak first because we probably couldn't have answered those for you 'cause there aren't a lot of -- (Applause.)
I'm sorry, ma'am, I didn't hear the last thing you said. There aren't -- there aren't --
There's not a large collection of data and information available about where our tax dollars are going in this city, okay, in terms of these contracts and what the people are doing with them. The results that we found were not comforting at the least. We asked contracting agencies for a list of contracts and economic development agencies like PIDC to give us information on businesses who had received loans and grants. We also talked to the Tax Board folks 273 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 about tax breaks in Philly. In all cases. The responses were slow as molasses. The information we finally received was bare-bone minimum, and we were never given any information on wage levels paid. The most extreme example of stonewalling was from PIDC, probably not an accident, since they are the prime source of financial assistance to for-profit companies in the City. Four months and several follow-up phone calls and after our letter of request for information, we still had no response. Finally, Councilmember Cohen offered to send a letter from his own office asking for much of the same information and reminded Commerce and PIDC of his Council Committee's investigation into whether or not the City's economic development policies were effectively addressing the economic insecurities of our working citizens. Although PIDC did eventually respond, they failed to produce the information by ACORN or Councilman Cohen. While the response from the contracting department was a little faster, though not 274 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 impressive, it was clear from the information available and from conversation with the Procurement staff that data about what these private vendors paid their employees on City contracts was not an important issue. What we were told was that the City doesn't interfere with what the companies pay their workers. It is almost as if they were proud of this fact. Here you have tens of thousands of people in this city working full-time, living in poverty, and do you not even stop to ask a company giving out City tax dollars to pay a living wage? This is unbelievable. Despite Philly's policy granting automatic tax abatements to businesses located in Center City, there are no requirements that companies benefitting from these breaks do anything about jobs and wages. The City also does not require any proof that an abatement was necessary to attract the company, and cannot document whether the abatements actually do increase the tax base at this time. Speaking as a small-business owner, I would never make a blind investment, and I find it 275 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 hard to believe that the City and its citizens are being asked to do just that. It was like the City had some sort of don't ask/don't tell economic development policy when it comes to jobs and wages. (Applause.)
It was like, Don't ask a business up front what it would do to create living-wage jobs for Philly residents, and don't ask the business if you've done so after you handed them the money. Apparently, if you ever ask any questions or require any minimal performance, then you are interfering with the business. We were told it was not necessary to ask these companies for even minimum performance. So what I say today is: If creating good-paying jobs to Philadelphia residents is unnecessary, then exactly what is necessary? If trying to support yourself and your family on a low-paying job isn't a burden, what is? The way I see it, we have limited resources, and we should spend them in the most responsible way. People need jobs -- and jobs that they can live on. There are already too many 276 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 jobs that pay poverty wages. We don't need to subsidize more of them with our tax dollars. (Applause.)
Opponents will argue that the living wage will cost the City too much money. Well, the truth is the bill doesn't call for the City to spend any new money at all. What it does do is target our tax dollar to the problems that do cost the City money -- poverty an unemployment. Let me ask you a question. Where does a poor person go when their children are sick? To a public hospital. And who pays for that? (Applause.)
Where does a poor person go when they can't pay their utilities? To the utility company assistance. And who pays for that? And where does a poor person go when they can't get enough food to eat for their family? For food stamps and to neighborhood food banks. And who pays for that? When people are poor, they have no 277 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 money to spend, and they often rely on public assistance for food, housing, medical assistance, and emergency services. On the other hand, when people are paid decently, they are more productive workers, happier families and community members, more likely to be self-sufficient, and not relying on our already-strapped social services, and more able to spend more money in the local government; which, by the way, as a small-business person, this is where I'm at, the local level. One way or another, as taxpayers, we are paying to support the worker poor. So why should my money go out of one pocket to subsidize a company while it's going out the other pocket to subsidize one of their workers? This truly is maddening. (Applause.)
Even requirements to create any jobs are rare. The job-creation figures we did find from reports to the federal government indicated that several companies have failed to create the jobs they promised when they got the assistance. Since these companies have 278 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 never been asked what wages they were paying, we can't even guess at what that is. In short, the City agencies that are responsible for the contracting and subsidizing decisions seem committed to not to asking any tough questions to companies that are asking for our taxpayer handouts. This kind of hands-off approach helps no one. People weary (sic.) of the living wage often ask for proof that the policy will work. Instead, I challenge the City to prove that its current economic development and contracting policies actually do anything to help low-income and working residents of this city. (Standing ovation.)
I know what my neighbors would say. I live in South Philadelphia, and our neighborhood is torn apart by poverty. Not many people in my neighborhood are feeling the effects of this blooming economy that the President keeps bragging about. Too many people in this city are unemployed, and too many people that are employed are working at jobs and can't make ends meet 279 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 because they're stuck in low-wage jobs. These poverty-wage jobs are destroying our families and devastating our communities. I know that there will always be jobs pay below the poverty line. But I am here today because I want to see my tax dollars used to subsidize the companies that pay a living wage. This bill is simply the right thing to do, and that's why a living-wage movement is building as these ordinances have passed across this country. A living-wage ordinance would not only help a lot of the families in this city make ends meet, but it would also help us as a city make better decisions about how we spend our limited resources. As a taxpayer, I want to see my tax dollars leveraged to create jobs, but I want them to be family-supporting jobs. I can't think of one job where a worker should not be earning enough to support a family of four above the poverty line, can you? (Applause.)
If you work, you should not be poor. It's that simple. 280 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 It is time for Philadelphia to award those businesses that care about Philadelphia and pay a living wage. At the same time, this would send a message to all working poor families that we do care and that there's hope for a time when working hard means you can raise your family with dignity. If Philadelphia is truly "the city that loves you back," let's start with the men and women who go to work every day by paying them a living wage. (Standing ovation.)
Thank you very much for your testimony. Councilwoman Fernandez.
Thank you, Miss Hemingway. Most eloquent testimony. I would hope that we could get copies of that, maybe the staff or people could arrange to make sure that we have copies.
No problem. 281 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And, secondly, Chairman Nutter, I asked to be excused for about an hour. I have a meeting that I must go to. My staff will stay here and continue to listen.
I understand. Thank you. Please identify yourself for the record.
Members of City Council, my name is Cora Kenlaw (ph.). And I live at 2527 West Oxford Street. I was born in Philadelphia and have lived here all my life. I am a member of ACORN and a supporter of the this bill. I worked as a security officer at the Municipal Building Services, making $6. An hour with no benefits. I will not name the company in public, but I do know they were receiving a City contract at the time I was working for them. As a matter of fact, the company I am speaking of has many contract across the City and employ many people like me -- low wages and no benefits. I will tell you what it was like for me working for this company and other security companies like them. Every day I would get up and 282 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 travel to the site they assigned me to. If I was sick or if one of my children was sick that day, they didn't want to hear it. I didn't get paid if SEPTA wasn't running or if I had errands to do and I was late, they didn't want to hear that either. Many of you here today know what I'm talking about. Maybe some of you on City Council also know what I'm taking about if you have ever worked at one of these companies. I would work 40 hours a week, 52 weeks a year, and the most money I would broken home was $154 a week after taxes. My rent was 300 a month, which meant I had to work half the month just to keep a roof over my head. I also had gas, electric, telephone, when I could afford it, and transportation just to survive. In order to survive, I had to register for food stamps and medical assistance, even though I was working full-time. I could not even think about taking my children to the movies or to a nice restaurant. I just had to think about getting by. When I tied to work overtime and earn a little bit extra money, the company wouldn't pay 283 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 me time and a half; they would give me a separate check instead so that it was almost not worth putting in the extra time because that meant paying for a babysitter. I am telling you this today because I am not alone. Many of my friends and family are stuck in jobs that pay too little money and aren't going anywhere. We want to work; we just want to be paid a living wage. (Applause.)
These businesses will say that they can't afford to pay any more, but businesses are always saying things like that to scare people. Don't believe the hype. (Applause.)
What I want to know is who Philadelphia businesses are for? The people with welfare reform right around the corner. Many people are being forced to leave their kids at home and go and find a job. Many people are dropping out of school and leaving training programs just to make a $6-an-hour wage and keep their medical assistance and welfare. I don't understand how you can take and 284 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 take from the poor people who need so much, and never give back. What I think people is that people have a tendency to forget where they come from. (Applause.)
I hear all the time about welfare. Well, what about a corporate welfare? (Applause.)
Why are we cutting off assistance to poor people who need it while we keep giving assistance to big companies, and we don't ask for anything in return? We are being told over and over again that in order to get welfare, you have to do this, that, and the other thing, or else they don't give you your check. What I am saying is: Why shouldn't the same thing be true for companies that want our tax dollars? Why can't we say to them that in order to get corporate welfare, you have to at least pay a living-wage, with benefits? (Applause.)
I have read that the United States is the richest country in the world 285 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and that we are living in high economic times, but that is not true in my neighborhood. In my neighborhood, I see abandoned houses, I see people being victims of crime, and I see people turning to drugs and alcohol because they are scared of the future. I have talked to my friends and they know welfare is coming. I ask them what they are going to do, and they tell me people will survive by any means necessary. Members of City Council, I am asking you today to do something for the people, people who go to work every day and try to make a living. Don't let only the rich get richer while the poor get poorer. (Applause.)
Please pass this bill so that we can survive. Thank you. (Applause.)
I will ask the last panelists to start in a few moments. I want to 286 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 let the next panel -- Mr. Hankowsky, Mr. Mullin. I saw Mr. Curtis Jones and some other members of the government, as well as Mr. Shapiro and Mr. Feder. I would like them to return when Reverend Carl Fitch is done. Reverend?
City Council, I've come today on behalf of the Philadelphia Branch of the NAACP. But before I start I'm also the Pastor of the Mount Mariah Temple Baptist Church located in South Philadelphia. And if you've been here all day, you've noticed that we've had more than 50 young children running around this chamber. No one has mentioned them. I started supporting the minimum wage -- I mean -- I started supporting this living-wage bill nearly two years ago because of the children. And that's why I'm here, because of the children. (Applause.)
I am testifying today representing the Philadelphia Branch of the NAACP. As the oldest civil rights organization in 287 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the United States, the NAACP has been on the forefront of all issues affecting poor people and people of color since its founding in 1909. The principal objective of the NAACP is to ensure the political, educational, social, and economic equality of minority-group citizens of the United States. The NAACP has consistently demonstrated a commitment to and a concern for the dignity of Black workers and their right to equal access to decent employment and wages support self-sufficient individuals and families. The NAACP members have consistently supported and been leaders in the fields of equal education, anti-poverty work, anti-discrimination work, equal employment advocacy, and community economic development work, among many others. We strongly believe that it is the individual citizen's right to have the opportunity to pursue a life devoid of poverty wages. Under employment an unemployment. To deny this right condemns individuals and families to the horrible consequences of poverty and condemns neighborhoods to steadily decline. We understand that it is critical to 288 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 engage -- it is critical to engage members of the communities in organizing for their own needs, and we are committed to providing the resources needed to support this important work. The NAACP's Labor Division was created in 1949 as the primary national resource to community groups working to improve the economic status of Black Americans. The Labor Division works to eliminate discriminatory employment practices in the private and public employment sectors, and promotes community-based job fairs, local branch labor, and industry committees, implements job-readiness programs, and conducts studies on and promotes affirmative action and equal-employment-opportunity programs. The Labor Division also promotes coordination and cooperation between the NAACP and organized labor. Of course, the NAACP has also been the primary leader in the area of seeking justice, whether it be educational, economic, social, and/or political through legislative means and avenues. We understand the importance of 289 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 legislative policies and the particular impact they have on the lives of poor people of color. Without the organizing of communities around unjust policies that make life almost unbearable for the working poor, for the unemployed, and for the underemployed, there are many policies that would never have been changed and that would continue to keep all poor people living literally from hand to mouth. Without the marching, the public demonstrations, the organized selective buying campaigns, and the use of ballot to win justice on the job front, many unjust legislative laws would still be on the books and still be yokes around the necks of our poorest members of our communities. Councilmembers, today you have the opportunity to begin the process of passing legislation that will affect thousands of Philadelphia's workers and their families. There are too many workers currently working for less than living wages in this city. Isn't it time that City Councilmembers use their power to directly help those who go to 290 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 work every day, work hard, are paid as a result of the investment of City tax dollars, and are still condemned to live in poverty at the end of the day? These workers are essential to the future of our City, to its leading industries, to our health and safety. Yet, these workers still live in poverty. The marketplace cannot help them. Only wise public policy can end their poverty.
Those members of our community who do not have a voice to fight their poverty, who do not have the legal representation at their disposal when faced with racist, unjust labor practices and policies, those members of our community who do not have health-care insurance when a member of their family falls ill, and those members of our community who do not have many of the support networks that many of you in City Council and those who have testified on behalf of the commerce take for granted need to see and know through your actions that you are working on their behalf. During these conservative times which 291 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 demand that individuals and families be economically self-sufficient, whether or not the systems have been designed for this to occur, it is imperative that you take every available step that you could lead individual members of our communities closer to attaining a level of economic self sufficiency. Fighting poverty cannot happen without the support of publicly-elected officials and your commitment to ending City government-created poverty in Philadelphia. It cannot happen unless we together agree to change the way things have been in order to change the way things will be in the future. Philadelphia simply cannot afford to have as many people living in poverty as we currently have today. Poverty wages paid as a result of City investments and contracts and economic development is a disgrace. This bill sets a basic standard of conduct for companies that voluntarily seek to do business with the City of Philadelphia. No 24 corporation is coerced by this ordinance. We just want our government to state clearly that if 292 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 anyone wants the help of taxpayers' dollars, then join us in fighting poverty in the paychecks of Philadelphia workers. )
With all of these things in mind, the NAACP has endorsed the jobs and living-wage campaign, and are supportive of the passing of Bill 970586. We know that the issues of a decent living wage will directly affect many members of the NAACP and many friends and neighbors of the NAACP members. We understand there are issues that are covered under the living-wage ordinance that should be improved. For example, full family health insurance coverage in addition to the barely living wage of 7.90. But our commitment to start the progress is strong and unwavering. Bill 970586 is an important step towards the elimination of the vast numbers of working-poor Philadelphians and the creation of economically self-sufficient individuals and families and economically sustainable communities. 293 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Thank you very much for your time and attention. (Standing ovation.)
Thank you. Thank you very much. Mr. Hankowsky, Mr. Applebaum, Mr. Jones, Mr. Mullin, Mr. Feder, Mr. Shapiro. For any other individuals who are here, if your name was on the list to testify, if you still feel that you have comments that you wish to make or things that have not been said or communicated, please see Wanda. I would anticipate that this would, more than likely, be the last panel for the hearing at this point in time. There were a number of requests for information and other matters that need to be clarified. Mr. Hankowsky, a number of issues were raised by previous witnesses regarding what information the City government, PIDC, PCDC, the Commerce Department may or may not request from various individuals when they come either seeking assistance or financial support or contracts from the City of Philadelphia. 294 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 For instance, do you ask companies how many jobs they anticipate either creating or retaining prior to granting any loans or financial assistance to them?
And do you review those statements or those -- are they made as commitment, are they made as projections, are they made as best guess or hope or. . . ?
The answer is it depends. We operate now different loan 13 programs that are either federal or State, local 14 or regional in nature. And they carry various 15 requirements among them. 16 In some cases, they require the filing 17 by the company of employment reports by which the 18 firms are required to document the number of 19 employees they have existing. 20 And then if they project creation, how 21 many they create over what period of time. Some 22 of the programs require that that be broken down 23 by the nature of the employee; i.e., were they low- and moderate-income when they were hired? They would, hopefully, not be that afterwards. 295 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And they need to document that. And that information is compiled, it is presented annually in the Grantee Performance Report, a fairly obscure document that the Office of Housing as to provide to the Department of Housing and Urban Development. The State Pennsylvania Industrial Development Authority ("PIDA") Program doesn't have low and moderate requirement. It has a "did-you-create-X-number-of-new-jobs" requirement that needs to be reported. We then, in turn, further report that to the State. The State does have the advantage -- because people file unemployment insurance -- of being able to confirm the numbers unless, obviously, people are committing fraud. So it depends on the program and the nature of the activity as to what exactly we get. We also, in some cases, require financial information, financial statements, to make sure the company is still viable. That does, in some cases, give us information about salaries, wages, etc. 296 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 But that information is confidential when they provide that to us. And that is not shared publicly.
In that regard, do you normally ask for that information? Do you wait until they offer it? Or does it depend on the deal or the company? Or is there a particular policy?
Yeah, there are policies, and I'd be place pleased to provide the committee with sort of a breakdown. It would probably be easier to do that than to try to walk through the steps, just given the lateness 15 hour. 16 We always ask, How many jobs do you 17 have, how many do you plan to create? We, in some 18 cases, then require a reporting mechanism to 19 document that over time, but it will depend on the 20 nature of -- in some cases, the nature of 21 program. The program may not require it. SPA-504 22 is an example. It is generally not based on job 23 creation. So the numbers are obtained, but we then don't require the firm to subsequently 297 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 document it in terms of, you know, what happened a year later.
Do you think -- before receiving the potential assistance, do you think a potential company would not respond or would refuse to provide information regarding the rates that they pay their employees, either salaries or hourly wages?
I mean, again, understanding that in some case we're dealing with companies confidentially. There have clearly been cases where there were companies that have declined the assistance on the basis of the reporting that's required. They don't want it in the public domain.
So they come in seeing assistance, and based on whatever procedures and protocols are, they decline the assistance because they do not want certain 298 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 information out there?
Right. Either in the public domain for competitive reasons, for employee-to-employee reasons, all the salaries may not be known, even among the employees, and they just don't want it out there, and the refuse to provide it. And we, in some cases, therefore, cannot assist them. That's the exception, I wish to point out, but it does happen.
Yeah, it's -- it doesn't -- I mean, many companies -- I mean, for example, if you have collective bargaining in your agreement, you know, the wage rates are public anyhow.
Do you have any general information based on the, I'm sure, hundreds of deals that have been done just over the past four or five years? Do you have any general information on 299 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the average wage rates of the various companies that we provide assistance to and whether they are below the proposed living wage or above?
Again, I perfectly understand your not having an interest in hearing my testimony at this point in the day, but we actually -- we don't have it in a way that I could just push a computer button and get it. We did take a couple of snapshots in preparation for this hearing. We looked at, for example, out of the first four months of this calendar year, what number of the transactions we undertook would be affected by this bill. And it would be 61 percent of the transactions we undertook. And the average PIDC client has about 70 employees and is doing a project that's roughly a million dollars in scope.
The other 39 don't qualify because of the dollar amount or the size of the company?
The size of the -- they might be smaller. We took a snapshot of -- let's see if I can find it. We took a snapshot of 20 300 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 firms. We had to actually pull the files and sort of do it just to get a snapshot. From November of '96 to July of '97, again, understanding that often we do the transaction and nothing -- the requirement doesn't trigger for six months to a year. They build the building or have to buy their equipment. The event hasn't occurred.
So we try to push it back a little bit. And out of the 1,030 employees affected in transactions we took as a sample. So we 14 just took 1,030 employees and found that 25 15 percent earned less than the 7.60 which was at 16 least the number I was working from. 17
Right. The median wage 20 was $10. The average wage was 13.88. We also looked at a couple of case studies. So I looked at one firm we did last year which now, I gather, might not be included, but it's an MBE nonprofit that we did a project in West Philadelphia, and 50 percent of its employees 301 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 were less than 7.60. And it's a kind of a service business operation. Then we took a look at another firm that we --
Do you know whether that company provided benefits to those employees?
I don't sitting here. We might in our records. We took a look at a manufacturing company that we did in October of '94 and actually tracked 'cause they had to report for three years. We actually should have looked at what happened to those salaries over time. And in that instance, when they started out with us, 14 of the 48 employees were less than 7.60. By March of '97, that had declined to 24 percent. The average rate had risen from 7.80 to 8.50. And 33 of the 94 were employees still with them in '97. And they now, because they had moved up the wage scale, were at 8.89 on average. And about 8 percent -- a minority of 8 percent were female. And this is a company where half of the salaried employees were also minority. I mean, it 302 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 was a -- it's in an older section of Philadelphia. Again, some of this is based on looking at their financial records, so I, you know, don't want to identify who they are, but I tried to look at -- tried to just get a feel of what this would all mean and how it would work.
Okay. What I would ask you to do, in anticipation of future hearings, if you could possibly, more than a particular snapshot, take a look at the transactions over the past three years, all the various companies involved, and whatever information and data you can gather on those transactions, how many jobs, what the average was, what the ranges are in terms of salary at those companies, what the assistance, was what was their connection, was it a loan, did they end up in the Empowerment Zone, was it a TIF, anything for your particular agency.
And, Mr. Mullin, 303 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 anything that didn't get done between the two of them, I'm going to ask the Commerce Department to be generally responsible for getting all of that data and information to me so that I can distribute it to members of the committee and all other Members of City Council. Mr. Jones, you look like you want to say something else?
No. Only that I want to thank this Council for amending -- or at least considering amending some of the bill. When we looked at this late evening yesterday, we were in a panic because the clients that we serve in our portfolio are not your big companies; they are your smaller companies. The vast majority of them are family-owned. The vast majority of them are 19 employees or less. 20 This bill, as it may be amended, will 21 only deal with 22 percent of our portfolio at this 22 point. I don't want to mitigate the fact that 23 they are an important 22 percent of our 24 portfolio. 25 The vast majority of retail businesses 304 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that are minority-owned in the fast-food area, we helped finance. A lot of them employ more than 4 people, and many of them would not qualify under 5 this particular bill and would be penalized under 6 this bill. 7 We support a living wage, but we 8 support small businesses' ability to grow to the 9 point where they can afford to do that. 10
Mr. Chairman, one other 12 comment just to amplify what I said earlier. 13
As I said, I'm happier 15 to come later and testify further if you'd like. 16 But there was a comment made earlier 17 today by the representative of the Service 18 Employees Union. He talked abut the fact that he 19 has seen a lot of his jobs go to the suburbs. 20 And the one concern I have here is this 21 balancing act between two very valid public-policy 22 purposes, many of which are buried in the bill -- 23 implicitly living wage, Welfare-to-Work 24 initiative, health benefits for all employees, 25 and the fact that we're in a very fragile economic 305 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 situation in this city. And one of things we did was, for example, we looked at -- and I'm not sure I can do this for every deal in the last three years, but just to give a sense of our magnitude, we took a look at the benefit of our less-expensive money, what was the incentive we provided and contrasted that to a company -- actually, the same one I mentioned earlier where I did the three-year tracking -- what would have happened if they had had to raise their wages, in compliance with the bill. And it by times, the bill 15 outstripped the benefit we had provided them. 16 Now, that is not going to be the case in every 17 instance, but I think we just have to be careful 18 about casting a net that's so wide that we're 19 trying to catch the sharks and get the dolphins 20 too.
Okay. That's a -- I think may be the first time that analogy has been used in this chamber. It may not be the last. Mr. Applebaum, let me ask you this 306 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 question. You've had some time, I don't know how much, to read the bill. You were here for most of the testimony today, and you've heard about proposed amendments. Do you have a way presently of making any determination of the number of companies that presently do business with the City who might be affected by the proposed legislation? COMMISSIONER APPLEBAUM: We know and we can get the number of businesses -- companies that do business with the City of Philadelphia. That could be people who bid with the City of Philadelphia and also people who are awarded contracts, so there is a great pool of people out there.
Right. COMMISSIONER APPLEBAUM: To try and determine what their wage rates are would be very difficult, if not impossible. It's not the type of information that we request on any bid document. So the wage rates that these companies pay -- local companies, companies out of our market, companies who bid, and companies who are 307 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 awarded contracts -- would be impossible to get.
Well, the earlier discussion was that Procurement, in some instances, has set rates. COMMISSIONER APPLEBAUM: There were some contracts, some bids --
Right. And what I'd like to ask is that you get us all the information on those particular companies as a start. COMMISSIONER APPLEBAUM: Sure.
And then, secondly, you indicated that there were some industries that you didn't particularly set a rate because you either couldn't figure it out or did not know, almost in your words, what the market would bear or what the market is on those particular services, so you left that open. Is that accurate? COMMISSIONER APPLEBAUM: Right. The Bureau of Labor Standards under the Managing Director's Office, that's deputy Mayor Jerry Murphy, his department would inform us on specific RFPs or bids that we were putting out they had 308 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 interest and knowledge of that particular industry and would recommend that we put in minimum prices, minimum labor wages on those particular contracts.
Let me ask this question, and you might not be able to answer this. It might be more for Mr. Shapiro. Do we have any general lists of businesses that we know of that currently have contracts with the City that would be in violation of the proposed bill or the proposed rates today?
Mr. Chairman, as Council, we have asked many times for a list of contracts. We have not gotten them. We have no 15 way of knowing that. That's the type of data that we need from the City. However, I'm intrigued by the statement that was made by the Procurement Commissioner just now saying that if we give contracts and we hire companies, why would it be impossible for us to say to them, These are the parameters of wages and benefits that we are looking for? COMMISSIONER APPLEBAUM: Councilman, I didn't say it was impossible to do that. My response was to a question, do we know today what 309 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 those companies are paying their employees on contracts that have been awarded by the City?
But what I'm saying is -- COMMISSIONER APPLEBAUM: We would have to go back and ask each company, Can you please provide us with a list of names of the people and the amounts that you pay your hourly workers on these particular contracts? We could do that, sure.
Well, you know, and why isn't it also possible for us later on to be able, in different contracts, to be able to set a minimum base in order to give out a certain contract? COMMISSIONER APPLEBAUM: I never said it would be impossible to do that. If this ordinance is approved and passed, we would be doing that. And the reporting process for every company would have to report back to the Procurement Department the list of people and the wages and their benefits. This is information that we would be getting. That's nothing -- none of that is 310 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 impossible.
I mean, you know, bringing it down to the simplest level, this is all that this ordinance really requires. COMMISSIONER APPLEBAUM: We, the City of Philadelphia, could do that. But what I mentioned earlier, one, it could be a burden to someone like Donna Allie who has, I believe one or two people in her office. And they work primarily on preparing payroll and doing all of the things to run the business. We are now throwing another project at them, and whether she could do that with her present staff or not, I don't know.
I'm sure that, under the regulations and under the aspects, that we can find ways to ameliorate certain of the problems that may accrue to some companies. You know, it's not insurmountable, is it? COMMISSIONER APPLEBAUM: No, nothing is insurmountable, of course not.
Just a couple other 311 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 questions. There's a provision in the bill which talks about certain percentages of -- it's (.3)(i) on -- at least percent of 5 persons receiving assistance under the Temporary 6 Assistance for Needy Families Act. 7 And then later on, in item number 3, it 8 says, Preference for hiring should be given to 9 persons referred by union or neighborhood-based 10 hiring halls. 11 First, just for further clarification, 12 Mr. Shapiro -- or I could probably ask my 13 colleague. What exactly is a neighborhood-based 14 hiring hall? 15
It's either union hall or something that might be set up in a -- even in a welfare office. It's a job placement such as the Hispanic Chamber of Commerce is trying to set up today, to be able to go ahead and do certain things. It's where, in essence, people who are not -- do not have access to employment and other places may go and require information as to what employment is available if there's employment 312 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 available by the City.
Do the various unions run these neighborhood-based hiring halls? I mean, who's in charge, how do the people know about them?
Their distinct -- unions have some of them and neighborhood groups have some of them. ACORN, for instance, has one or several of them in various -- I don't actually believe that there are many in the City of Philadelphia, but there are some.
Right. The Hispanic Chamber is trying to put forward the Hunting Park (unintelligible) has a job placement unit, Congreso, for instance, as part of its job training part has a job-placement unit. These are places in which the City can plug to and, in essence, expand its own resources to be able to bring in -- into the labor pool individuals who today we may not have access to.
Okay. And just lastly on this same point. When you take small letter i and small letter 3 together, I wonder whether there is any potential conflict between 313 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 them, only from the standpoint that if the preference for hiring is given to persons referred by union or neighborhood-based hiring halls, could that in fact fill up the entire number of people before you ever get to the percent requirement 7 as it relates to TANF individuals, or do we have 8 any information that indicates that the unions 9 have a number of TANF members? 10
I don't believe so 11 because that again would come into how we 12 structure that process, and that's implementation 13 and how we are able to set the 15 percent. It's 14 more of a technical matter than anything else. 15
And I think that's to be -- it's a technicality that I believe the Department and the City can take care of.
. . . rules and regulations to specifically give guidelines in terms of how the provisions mesh with each other, but I think the overall objective is basically to hire 15 percent. And to the extent that there are 314 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 hires available from these hiring halls, that those hires also be hired.
Okay. What I'd like to do is, because I will myself literally have to leave in a few minutes, the various agency heads, I think we've asked them for a fair amount of information in anticipation of another hearing. And I'd ask you to get that material to myself, and I will distribute it to all of the members as quickly as possible. I think that there are one or two other last nongovernmental people that we're going to be able to hear tonight, and then I really will, fortunately, have to leave. We will then recess this hearing. There will be another hearing set up to hear either additional testimony and to deal with proposed amendments and the like. Excuse me for one second. I'm sorry? (Councilman Nutter briefly confers with a staff member off the record.)
All right, this is the situation. One, to our government friends, you are, for the moment, excused. I guess as they say 315 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 in court, you remain under -- under jurisdiction, you're under oath. Do not do anything between now and the time that you return here that will get you in further trouble. Thank you very much. I'm sorry? COMMISSIONER APPLEBAUM: We can take off tomorrow?
You can do whatever your hiring authority allows you to do, but I will take no responsibility for it. COMMISSIONER APPLEBAUM: But you're not reconvening tomorrow.
I'm sorry? COMMISSIONER APPLEBAUM: You're not reconvening tomorrow?
We're not reconvening tomorrow. I'm going to deal with that in a few seconds. I believe I have four individuals who, unfortunately, will have about a minute. I really have to leave. We will adjourn this hearing until May 27th, at 10 o'clock a.m. If there is any change 316 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 in that, people will be notified, or the usual notification will be provided, but we expect to recess to that date certain. Dr. Howard Wial, Professor Andrew Buck, Barney Auer, and Lance Haver will be the last. UNIDENTIFIED SPEAKER: Mr. Chairman, I can easily come back.
That's very gracious and magnanimous on your part. First let me say, gentlemen, that I greatly appreciate your staying. And, second, I apologize that it went on so long. And, third, be as quick as possible. Please state your name for the record.
Yes. My name is Howard Wial I work for the Keystone Research Center, a nonpartisan, nonprofit research organization, with offices in Upper Darby and Harrisburg, that conducts research on the economy and labor markets of Pennsylvania and its regions. I am an economist. I just want to very briefly provide you with an overview of the extent of poverty among working people in Philadelphia, in Pennsylvania, 317 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and the context in which that exists today. The most recent Census Bureau data for the years 1995 through 1997 show that about 37 percent of all employed people years of age and 6 over in the City of Philadelphia earn less than 7 7.90 an hour. That's over 152,000 people. And 8 over 80 percent of them are adults, age 21 or 9 over. 10 There are about 216,000 poor families 11 with children in Pennsylvania. And, shockingly, 12 over 55 percent of them have one or more working 13 parents. So that amounted to an incredible 14 472,000 people in working-poor families throughout 15 the State. 16 We've been for the last seven years or so in a period of general prosperity. Since between 1988 and 1987, in the five-county Philadelphia metropolitan area, the median wage adjusted for inflation gone up by about 6 percent. Some workers who make less than that have benefitted as well. Workers at even the 25th percentile of wages have seen their wages go up by a little over 2 percent. Very high-wage workers, those in the 318 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 90th percentile have seen their wages go up by over 46 percent. But the problem -- there's still a problem for people who are making very, very low wages, workers at the 10th percentile of wages saw their real inflation-adjusted wages drop by over 3 percent between 1989 and 1997 -- that's throughout the metropolitan area. I'll provide additional material in a written statement in order to keep this short.
If you provide your written statement, we will include it in the record as if it had been written in the record. DR. WIAL thank you.
My name is Andrew Buck. I'm professor of economics at Temple University. Thank you for permitting me to address the Members of City Council on the issue of the living wage. I've looked at the impacts of the living-wage ordinances in Baltimore and Los Angeles, and I wanted to summarize those very quickly because we've heard some forecasted dire consequences for Philadelphia. In a nutshell, in Baltimore, they found 319 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that the real cost of City contracts, in fact, declined pre- and post-implementation of the living wage. There was no meaningful change in the firms interested bidding on city contracts. On 53 percent of the contracts that were let for bid, the number of bidders declined by a very small number, not statistically significant. On 47 percent of them, the number of bidders increased. And so at the end of the day, it was a wash. Assessable business property, excluding real estate, increased in the year after the ordinance was implemented in Baltimore. A survey of city contractors, those firms involved in working on contracts for the city, found no 17 reduction in staffing. And compliance costs imposed on the city amounted to about 17 cents per year per capita for the residents of the City. In Los Angeles, the cost of the wage increase for the targeted group didn't increase the city budget. There was no observable loss of employment, and there was no loss in city -- no 25 diminution in loss of -- in the provision of city 320 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 services. One of the other interesting calculations that was done for L.A. was that the implementation of the living wage reduced the reliance on public assistance in the targeted group by as much as 50 percent. In Los Angeles, they discovered that even if all the costs of compliance with the living wage were passed onto the city budget, the entire city budget would rise, at most, 3 percent. Doing some thumbnail calculations for Philadelphia on the basis of what's happened in Baltimore and Los Angeles, the incomes of the targeted group in Philadelphia would rise about $22 million. On the basis of some other work that I've done on economic impacts in the City, the result in spending by those households would cause incomes in the city, aggregating incomes in the City to rise by $70 million. And so if we apply our City tax rate to the $70 million increase in household incomes across the City, the income tax accruing to the City would be about 2.8 to $3 million. 321 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 So if we then look at what New York City set aside to cover the increased cost of living wage, which was $16 million, and they said they spent 10, we could anticipate in Philadelphia having to spend an additional $1.8 million out of the City budget in order to cover the pass-along costs in covered contracts. So at the end of the day, the City comes out ahead of the game as a result of passing a living-wage ordinance. (Applause.)
Thank you. Thank you if you could provide with us with any of the data that you've made reference to or if you've produced a report on your studies, that would be very helpful.
My name is Barney Auer, sir. I'm with the Western Pennsylvania Living Wage Campaign. I think my main function here today is to reassure the business interests in Philadelphia 322 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that there will not be a huge runaway because we're going to organization the rest of the State behind the living-wage campaign. (Applause.)
We have at this point active campaign in Berks County, in Montgomery County, and in western Pennsylvania. We have active campaigns in a number of counties in the planning stages. In Allegheny County, in the city of Pittsburgh, we've been battling this for about a year. The legislation that we're working on that was proposed for the city of Pittsburgh was withdrawn at the end of the session in the fall. It is now being -- soon to be proposed for Allegheny County. It will cover all of the things that have been covered in any other part of the country. We think it's absolutely critical, agreeing with your Council colleague, that the City and County pay a living wage. There are, we've discovered, a large number of people, in the hundreds at least, that are part-time temporaries that don't get those benefits and some of whom 323 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 make less than a living wage. We have, by the way, a living-wage number based on a major study, a six-month study at the University of Pittsburgh by an urban policy institute. I would be glad to provide that to Council here. They really looked at what it cost to live in Allegheny County and in the city of Pittsburgh -- not just took the poverty number, which are really bogus numbers in a lot of ways, but really took a look at what a bare-necessities budget would cost. But our campaign looking at the contracted-out work as well as the subsidized employers being covered as well as City and County workers. But in fact, for us, it's almost a secondary interest because although that will cover thousands and thousands of workers, it doesn't get at the hundreds of thousands of workers who need a living wage to be able to make it and to have their families survive. And so we're viewing our campaign as a multi-year campaign with a big emphasis on 324 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 building a huge coalition which is an active coalition in running the campaign. There's no one organization that has control of it. We hope that this coalition -- or plan to have this coalition continue. There many other issues of survival of working people. We are also doing a massive public education campaign. We have a nice 30-minute workshop that takes a lot of the information. And for the first time, a lot of working people no 12 longer feel that it's the failure of them and their family; but, in fact, it's a failure of the system to provide them the opportunities to make it. And so we feel that the reality of living wage is that it's an opportunity, it's an opportunity to make very clear that something's wrong with our economy, something's wrong with the reasons why politicians make decisions about where to put investment dollars, and we feel that it's a call that will unite a very scary coalition to political leaders -- of community, labor, and religious people able to fulfill their messages and their promises in a very concrete way across 325 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 this country 'cause we believe in the longer term a fundamental change in the definition of what our economy ought to be about, which is about working people. Thank you.
Thank you very much. I appreciate everyone's testimony. This hearing is adjourned. Thank you. (Adjourned at 6:58 p.m.) - - - 326 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, May 1998 were reported 8 and accurately by me, and that this is a correct 9 transcript of same. 10 11 12 RE: COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT BILL NO. 970586 __________________________________, JOSEPHINE CARDILLO, RPR