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.