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?