Could you provide us with that information, Commissioner? 269 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 COMMISSIONER REEVES: Yes, we will.
Okay, thank you. It is my understanding that a number of individuals from ACORN wish to speak. I have a name, although not on my list, but on a sheet of paper. Is that Andrea or Anthea Hall? (Applause.) (Carol Hemingway comes forward.)
No, I'm Carol Hemingway, I'm on the list, the testimony list.
Okay. We have a couple different ACORN-associated people on the list that I have in different places. Miss Hemingway, I do have you, and-- UNIDENTIFIED WOMAN: And I'm Cora --
I thought I had mentioned your name earlier. Okay, please give your names for the record, and start your testimony.
Good afternoon Councilmembers, community members, labor friends and ACORN members. My name is Carol Hemingway, and I am a resident of Philadelphia, an ACORN 270 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 member, and strong supporter of the Philadelphia living-wage ordinance. From what I have seen in my life and what I have learned in this past year working to pass the living-wage bill, I could tell you that this City and its hard-working people need this ordinance. For the past months, I have met with 10 representatives from various City agencies and I 11 have studied City policies. The conclusion I have 12 come to really very simple: There are too many 13 poor people in this city who are working for 14 companies that benefit from our public tax 15 dollars. What I am saying is that our tax dollars 16 are really going straight into the pockets of 17 businesses who turn around and pay poverty wages. 18 I know Philadelphia does not have enough money to give everyone in the City a living-wage job, even though that is what is needed. But what I am saying is that we should be very careful that the money we do give has the best effect possibly. What they have found in Baltimore and Los Angeles, among other cities, are that 271 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 living-wage ordinances are an excellent way to put more money into the hands of workers without costing the city money or driving away businesses. We ask City agencies two simple questions: Before you give a company any assistance, do you ask them to create any jobs? And do you ever ask that what they would pay? They looked at me like I was crazy. Here was my city giving out billions of dollars in taxpayers' dollars and not even asking companies to do anything positive in return. What's even more unbelievable is that the City does not seem concerned about this. It is clear that the agencies charged with handing out this money are not concerned with whether or not companies benefitting from these subsidies are committed to creating living-wage jobs. Revenue using our limited public resources to leverage decent, family-supporting jobs and training and future, our City seems content contracts to the lowest bidder and provide tax abatements with no questions asked. This is only morally wrong, but it is fiscally irresponsible. 272 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 It in this spirit that ACORN began research over a year ago, to find out what money the City was giving away. And, you know, by the way, you know, I listened to a lot of questions that was being asked to the Administration. It's just too bad that we didn't speak first because we probably couldn't have answered those for you 'cause there aren't a lot of -- (Applause.)
I'm sorry, ma'am, I didn't hear the last thing you said. There aren't -- there aren't --
There's not a large collection of data and information available about where our tax dollars are going in this city, okay, in terms of these contracts and what the people are doing with them. The results that we found were not comforting at the least. We asked contracting agencies for a list of contracts and economic development agencies like PIDC to give us information on businesses who had received loans and grants. We also talked to the Tax Board folks 273 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 about tax breaks in Philly. In all cases. The responses were slow as molasses. The information we finally received was bare-bone minimum, and we were never given any information on wage levels paid. The most extreme example of stonewalling was from PIDC, probably not an accident, since they are the prime source of financial assistance to for-profit companies in the City. Four months and several follow-up phone calls and after our letter of request for information, we still had no response. Finally, Councilmember Cohen offered to send a letter from his own office asking for much of the same information and reminded Commerce and PIDC of his Council Committee's investigation into whether or not the City's economic development policies were effectively addressing the economic insecurities of our working citizens. Although PIDC did eventually respond, they failed to produce the information by ACORN or Councilman Cohen. While the response from the contracting department was a little faster, though not 274 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 impressive, it was clear from the information available and from conversation with the Procurement staff that data about what these private vendors paid their employees on City contracts was not an important issue. What we were told was that the City doesn't interfere with what the companies pay their workers. It is almost as if they were proud of this fact. Here you have tens of thousands of people in this city working full-time, living in poverty, and do you not even stop to ask a company giving out City tax dollars to pay a living wage? This is unbelievable. Despite Philly's policy granting automatic tax abatements to businesses located in Center City, there are no requirements that companies benefitting from these breaks do anything about jobs and wages. The City also does not require any proof that an abatement was necessary to attract the company, and cannot document whether the abatements actually do increase the tax base at this time. Speaking as a small-business owner, I would never make a blind investment, and I find it 275 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 hard to believe that the City and its citizens are being asked to do just that. It was like the City had some sort of don't ask/don't tell economic development policy when it comes to jobs and wages. (Applause.)
It was like, Don't ask a business up front what it would do to create living-wage jobs for Philly residents, and don't ask the business if you've done so after you handed them the money. Apparently, if you ever ask any questions or require any minimal performance, then you are interfering with the business. We were told it was not necessary to ask these companies for even minimum performance. So what I say today is: If creating good-paying jobs to Philadelphia residents is unnecessary, then exactly what is necessary? If trying to support yourself and your family on a low-paying job isn't a burden, what is? The way I see it, we have limited resources, and we should spend them in the most responsible way. People need jobs -- and jobs that they can live on. There are already too many 276 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 jobs that pay poverty wages. We don't need to subsidize more of them with our tax dollars. (Applause.)
Opponents will argue that the living wage will cost the City too much money. Well, the truth is the bill doesn't call for the City to spend any new money at all. What it does do is target our tax dollar to the problems that do cost the City money -- poverty an unemployment. Let me ask you a question. Where does a poor person go when their children are sick? To a public hospital. And who pays for that? (Applause.)
Where does a poor person go when they can't pay their utilities? To the utility company assistance. And who pays for that? And where does a poor person go when they can't get enough food to eat for their family? For food stamps and to neighborhood food banks. And who pays for that? When people are poor, they have no 277 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 money to spend, and they often rely on public assistance for food, housing, medical assistance, and emergency services. On the other hand, when people are paid decently, they are more productive workers, happier families and community members, more likely to be self-sufficient, and not relying on our already-strapped social services, and more able to spend more money in the local government; which, by the way, as a small-business person, this is where I'm at, the local level. One way or another, as taxpayers, we are paying to support the worker poor. So why should my money go out of one pocket to subsidize a company while it's going out the other pocket to subsidize one of their workers? This truly is maddening. (Applause.)
Even requirements to create any jobs are rare. The job-creation figures we did find from reports to the federal government indicated that several companies have failed to create the jobs they promised when they got the assistance. Since these companies have 278 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 never been asked what wages they were paying, we can't even guess at what that is. In short, the City agencies that are responsible for the contracting and subsidizing decisions seem committed to not to asking any tough questions to companies that are asking for our taxpayer handouts. This kind of hands-off approach helps no one. People weary (sic.) of the living wage often ask for proof that the policy will work. Instead, I challenge the City to prove that its current economic development and contracting policies actually do anything to help low-income and working residents of this city. (Standing ovation.)
I know what my neighbors would say. I live in South Philadelphia, and our neighborhood is torn apart by poverty. Not many people in my neighborhood are feeling the effects of this blooming economy that the President keeps bragging about. Too many people in this city are unemployed, and too many people that are employed are working at jobs and can't make ends meet 279 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 because they're stuck in low-wage jobs. These poverty-wage jobs are destroying our families and devastating our communities. I know that there will always be jobs pay below the poverty line. But I am here today because I want to see my tax dollars used to subsidize the companies that pay a living wage. This bill is simply the right thing to do, and that's why a living-wage movement is building as these ordinances have passed across this country. A living-wage ordinance would not only help a lot of the families in this city make ends meet, but it would also help us as a city make better decisions about how we spend our limited resources. As a taxpayer, I want to see my tax dollars leveraged to create jobs, but I want them to be family-supporting jobs. I can't think of one job where a worker should not be earning enough to support a family of four above the poverty line, can you? (Applause.)
If you work, you should not be poor. It's that simple. 280 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 It is time for Philadelphia to award those businesses that care about Philadelphia and pay a living wage. At the same time, this would send a message to all working poor families that we do care and that there's hope for a time when working hard means you can raise your family with dignity. If Philadelphia is truly "the city that loves you back," let's start with the men and women who go to work every day by paying them a living wage. (Standing ovation.)
Thank you very much for your testimony. Councilwoman Fernandez.
Thank you, Miss Hemingway. Most eloquent testimony. I would hope that we could get copies of that, maybe the staff or people could arrange to make sure that we have copies.
No problem. 281 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And, secondly, Chairman Nutter, I asked to be excused for about an hour. I have a meeting that I must go to. My staff will stay here and continue to listen.
I understand. Thank you. Please identify yourself for the record.
Members of City Council, my name is Cora Kenlaw (ph.). And I live at 2527 West Oxford Street. I was born in Philadelphia and have lived here all my life. I am a member of ACORN and a supporter of the this bill. I worked as a security officer at the Municipal Building Services, making $6. An hour with no benefits. I will not name the company in public, but I do know they were receiving a City contract at the time I was working for them. As a matter of fact, the company I am speaking of has many contract across the City and employ many people like me -- low wages and no benefits. I will tell you what it was like for me working for this company and other security companies like them. Every day I would get up and 282 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 travel to the site they assigned me to. If I was sick or if one of my children was sick that day, they didn't want to hear it. I didn't get paid if SEPTA wasn't running or if I had errands to do and I was late, they didn't want to hear that either. Many of you here today know what I'm talking about. Maybe some of you on City Council also know what I'm taking about if you have ever worked at one of these companies. I would work 40 hours a week, 52 weeks a year, and the most money I would broken home was $154 a week after taxes. My rent was 300 a month, which meant I had to work half the month just to keep a roof over my head. I also had gas, electric, telephone, when I could afford it, and transportation just to survive. In order to survive, I had to register for food stamps and medical assistance, even though I was working full-time. I could not even think about taking my children to the movies or to a nice restaurant. I just had to think about getting by. When I tied to work overtime and earn a little bit extra money, the company wouldn't pay 283 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 me time and a half; they would give me a separate check instead so that it was almost not worth putting in the extra time because that meant paying for a babysitter. I am telling you this today because I am not alone. Many of my friends and family are stuck in jobs that pay too little money and aren't going anywhere. We want to work; we just want to be paid a living wage. (Applause.)
These businesses will say that they can't afford to pay any more, but businesses are always saying things like that to scare people. Don't believe the hype. (Applause.)
What I want to know is who Philadelphia businesses are for? The people with welfare reform right around the corner. Many people are being forced to leave their kids at home and go and find a job. Many people are dropping out of school and leaving training programs just to make a $6-an-hour wage and keep their medical assistance and welfare. I don't understand how you can take and 284 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 take from the poor people who need so much, and never give back. What I think people is that people have a tendency to forget where they come from. (Applause.)
I hear all the time about welfare. Well, what about a corporate welfare? (Applause.)
Why are we cutting off assistance to poor people who need it while we keep giving assistance to big companies, and we don't ask for anything in return? We are being told over and over again that in order to get welfare, you have to do this, that, and the other thing, or else they don't give you your check. What I am saying is: Why shouldn't the same thing be true for companies that want our tax dollars? Why can't we say to them that in order to get corporate welfare, you have to at least pay a living-wage, with benefits? (Applause.)
I have read that the United States is the richest country in the world 285 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and that we are living in high economic times, but that is not true in my neighborhood. In my neighborhood, I see abandoned houses, I see people being victims of crime, and I see people turning to drugs and alcohol because they are scared of the future. I have talked to my friends and they know welfare is coming. I ask them what they are going to do, and they tell me people will survive by any means necessary. Members of City Council, I am asking you today to do something for the people, people who go to work every day and try to make a living. Don't let only the rich get richer while the poor get poorer. (Applause.)
Please pass this bill so that we can survive. Thank you. (Applause.)
I will ask the last panelists to start in a few moments. I want to 286 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 let the next panel -- Mr. Hankowsky, Mr. Mullin. I saw Mr. Curtis Jones and some other members of the government, as well as Mr. Shapiro and Mr. Feder. I would like them to return when Reverend Carl Fitch is done. Reverend?
City Council, I've come today on behalf of the Philadelphia Branch of the NAACP. But before I start I'm also the Pastor of the Mount Mariah Temple Baptist Church located in South Philadelphia. And if you've been here all day, you've noticed that we've had more than 50 young children running around this chamber. No one has mentioned them. I started supporting the minimum wage -- I mean -- I started supporting this living-wage bill nearly two years ago because of the children. And that's why I'm here, because of the children. (Applause.)
I am testifying today representing the Philadelphia Branch of the NAACP. As the oldest civil rights organization in 287 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the United States, the NAACP has been on the forefront of all issues affecting poor people and people of color since its founding in 1909. The principal objective of the NAACP is to ensure the political, educational, social, and economic equality of minority-group citizens of the United States. The NAACP has consistently demonstrated a commitment to and a concern for the dignity of Black workers and their right to equal access to decent employment and wages support self-sufficient individuals and families. The NAACP members have consistently supported and been leaders in the fields of equal education, anti-poverty work, anti-discrimination work, equal employment advocacy, and community economic development work, among many others. We strongly believe that it is the individual citizen's right to have the opportunity to pursue a life devoid of poverty wages. Under employment an unemployment. To deny this right condemns individuals and families to the horrible consequences of poverty and condemns neighborhoods to steadily decline. We understand that it is critical to 288 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 engage -- it is critical to engage members of the communities in organizing for their own needs, and we are committed to providing the resources needed to support this important work. The NAACP's Labor Division was created in 1949 as the primary national resource to community groups working to improve the economic status of Black Americans. The Labor Division works to eliminate discriminatory employment practices in the private and public employment sectors, and promotes community-based job fairs, local branch labor, and industry committees, implements job-readiness programs, and conducts studies on and promotes affirmative action and equal-employment-opportunity programs. The Labor Division also promotes coordination and cooperation between the NAACP and organized labor. Of course, the NAACP has also been the primary leader in the area of seeking justice, whether it be educational, economic, social, and/or political through legislative means and avenues. We understand the importance of 289 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 legislative policies and the particular impact they have on the lives of poor people of color. Without the organizing of communities around unjust policies that make life almost unbearable for the working poor, for the unemployed, and for the underemployed, there are many policies that would never have been changed and that would continue to keep all poor people living literally from hand to mouth. Without the marching, the public demonstrations, the organized selective buying campaigns, and the use of ballot to win justice on the job front, many unjust legislative laws would still be on the books and still be yokes around the necks of our poorest members of our communities. Councilmembers, today you have the opportunity to begin the process of passing legislation that will affect thousands of Philadelphia's workers and their families. There are too many workers currently working for less than living wages in this city. Isn't it time that City Councilmembers use their power to directly help those who go to 290 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 work every day, work hard, are paid as a result of the investment of City tax dollars, and are still condemned to live in poverty at the end of the day? These workers are essential to the future of our City, to its leading industries, to our health and safety. Yet, these workers still live in poverty. The marketplace cannot help them. Only wise public policy can end their poverty.
Those members of our community who do not have a voice to fight their poverty, who do not have the legal representation at their disposal when faced with racist, unjust labor practices and policies, those members of our community who do not have health-care insurance when a member of their family falls ill, and those members of our community who do not have many of the support networks that many of you in City Council and those who have testified on behalf of the commerce take for granted need to see and know through your actions that you are working on their behalf. During these conservative times which 291 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 demand that individuals and families be economically self-sufficient, whether or not the systems have been designed for this to occur, it is imperative that you take every available step that you could lead individual members of our communities closer to attaining a level of economic self sufficiency. Fighting poverty cannot happen without the support of publicly-elected officials and your commitment to ending City government-created poverty in Philadelphia. It cannot happen unless we together agree to change the way things have been in order to change the way things will be in the future. Philadelphia simply cannot afford to have as many people living in poverty as we currently have today. Poverty wages paid as a result of City investments and contracts and economic development is a disgrace. This bill sets a basic standard of conduct for companies that voluntarily seek to do business with the City of Philadelphia. No 24 corporation is coerced by this ordinance. We just want our government to state clearly that if 292 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 anyone wants the help of taxpayers' dollars, then join us in fighting poverty in the paychecks of Philadelphia workers. )
With all of these things in mind, the NAACP has endorsed the jobs and living-wage campaign, and are supportive of the passing of Bill 970586. We know that the issues of a decent living wage will directly affect many members of the NAACP and many friends and neighbors of the NAACP members. We understand there are issues that are covered under the living-wage ordinance that should be improved. For example, full family health insurance coverage in addition to the barely living wage of 7.90. But our commitment to start the progress is strong and unwavering. Bill 970586 is an important step towards the elimination of the vast numbers of working-poor Philadelphians and the creation of economically self-sufficient individuals and families and economically sustainable communities. 293 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Thank you very much for your time and attention. (Standing ovation.)
Thank you. Thank you very much. Mr. Hankowsky, Mr. Applebaum, Mr. Jones, Mr. Mullin, Mr. Feder, Mr. Shapiro. For any other individuals who are here, if your name was on the list to testify, if you still feel that you have comments that you wish to make or things that have not been said or communicated, please see Wanda. I would anticipate that this would, more than likely, be the last panel for the hearing at this point in time. There were a number of requests for information and other matters that need to be clarified. Mr. Hankowsky, a number of issues were raised by previous witnesses regarding what information the City government, PIDC, PCDC, the Commerce Department may or may not request from various individuals when they come either seeking assistance or financial support or contracts from the City of Philadelphia. 294 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 For instance, do you ask companies how many jobs they anticipate either creating or retaining prior to granting any loans or financial assistance to them?
And do you review those statements or those -- are they made as commitment, are they made as projections, are they made as best guess or hope or. . . ?
The answer is it depends. We operate now different loan 13 programs that are either federal or State, local 14 or regional in nature. And they carry various 15 requirements among them. 16 In some cases, they require the filing 17 by the company of employment reports by which the 18 firms are required to document the number of 19 employees they have existing. 20 And then if they project creation, how 21 many they create over what period of time. Some 22 of the programs require that that be broken down 23 by the nature of the employee; i.e., were they low- and moderate-income when they were hired? They would, hopefully, not be that afterwards. 295 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And they need to document that. And that information is compiled, it is presented annually in the Grantee Performance Report, a fairly obscure document that the Office of Housing as to provide to the Department of Housing and Urban Development. The State Pennsylvania Industrial Development Authority ("PIDA") Program doesn't have low and moderate requirement. It has a "did-you-create-X-number-of-new-jobs" requirement that needs to be reported. We then, in turn, further report that to the State. The State does have the advantage -- because people file unemployment insurance -- of being able to confirm the numbers unless, obviously, people are committing fraud. So it depends on the program and the nature of the activity as to what exactly we get. We also, in some cases, require financial information, financial statements, to make sure the company is still viable. That does, in some cases, give us information about salaries, wages, etc. 296 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 But that information is confidential when they provide that to us. And that is not shared publicly.
In that regard, do you normally ask for that information? Do you wait until they offer it? Or does it depend on the deal or the company? Or is there a particular policy?
Yeah, there are policies, and I'd be place pleased to provide the committee with sort of a breakdown. It would probably be easier to do that than to try to walk through the steps, just given the lateness 15 hour. 16 We always ask, How many jobs do you 17 have, how many do you plan to create? We, in some 18 cases, then require a reporting mechanism to 19 document that over time, but it will depend on the 20 nature of -- in some cases, the nature of 21 program. The program may not require it. SPA-504 22 is an example. It is generally not based on job 23 creation. So the numbers are obtained, but we then don't require the firm to subsequently 297 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 document it in terms of, you know, what happened a year later.
Do you think -- before receiving the potential assistance, do you think a potential company would not respond or would refuse to provide information regarding the rates that they pay their employees, either salaries or hourly wages?
I mean, again, understanding that in some case we're dealing with companies confidentially. There have clearly been cases where there were companies that have declined the assistance on the basis of the reporting that's required. They don't want it in the public domain.
So they come in seeing assistance, and based on whatever procedures and protocols are, they decline the assistance because they do not want certain 298 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 information out there?
Right. Either in the public domain for competitive reasons, for employee-to-employee reasons, all the salaries may not be known, even among the employees, and they just don't want it out there, and the refuse to provide it. And we, in some cases, therefore, cannot assist them. That's the exception, I wish to point out, but it does happen.
Yeah, it's -- it doesn't -- I mean, many companies -- I mean, for example, if you have collective bargaining in your agreement, you know, the wage rates are public anyhow.
Do you have any general information based on the, I'm sure, hundreds of deals that have been done just over the past four or five years? Do you have any general information on 299 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the average wage rates of the various companies that we provide assistance to and whether they are below the proposed living wage or above?
Again, I perfectly understand your not having an interest in hearing my testimony at this point in the day, but we actually -- we don't have it in a way that I could just push a computer button and get it. We did take a couple of snapshots in preparation for this hearing. We looked at, for example, out of the first four months of this calendar year, what number of the transactions we undertook would be affected by this bill. And it would be 61 percent of the transactions we undertook. And the average PIDC client has about 70 employees and is doing a project that's roughly a million dollars in scope.
The other 39 don't qualify because of the dollar amount or the size of the company?
The size of the -- they might be smaller. We took a snapshot of -- let's see if I can find it. We took a snapshot of 20 300 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 firms. We had to actually pull the files and sort of do it just to get a snapshot. From November of '96 to July of '97, again, understanding that often we do the transaction and nothing -- the requirement doesn't trigger for six months to a year. They build the building or have to buy their equipment. The event hasn't occurred.
So we try to push it back a little bit. And out of the 1,030 employees affected in transactions we took as a sample. So we 14 just took 1,030 employees and found that 25 15 percent earned less than the 7.60 which was at 16 least the number I was working from. 17
Right. The median wage 20 was $10. The average wage was 13.88. We also looked at a couple of case studies. So I looked at one firm we did last year which now, I gather, might not be included, but it's an MBE nonprofit that we did a project in West Philadelphia, and 50 percent of its employees 301 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 were less than 7.60. And it's a kind of a service business operation. Then we took a look at another firm that we --
Do you know whether that company provided benefits to those employees?
I don't sitting here. We might in our records. We took a look at a manufacturing company that we did in October of '94 and actually tracked 'cause they had to report for three years. We actually should have looked at what happened to those salaries over time. And in that instance, when they started out with us, 14 of the 48 employees were less than 7.60. By March of '97, that had declined to 24 percent. The average rate had risen from 7.80 to 8.50. And 33 of the 94 were employees still with them in '97. And they now, because they had moved up the wage scale, were at 8.89 on average. And about 8 percent -- a minority of 8 percent were female. And this is a company where half of the salaried employees were also minority. I mean, it 302 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 was a -- it's in an older section of Philadelphia. Again, some of this is based on looking at their financial records, so I, you know, don't want to identify who they are, but I tried to look at -- tried to just get a feel of what this would all mean and how it would work.
Okay. What I would ask you to do, in anticipation of future hearings, if you could possibly, more than a particular snapshot, take a look at the transactions over the past three years, all the various companies involved, and whatever information and data you can gather on those transactions, how many jobs, what the average was, what the ranges are in terms of salary at those companies, what the assistance, was what was their connection, was it a loan, did they end up in the Empowerment Zone, was it a TIF, anything for your particular agency.
And, Mr. Mullin, 303 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 anything that didn't get done between the two of them, I'm going to ask the Commerce Department to be generally responsible for getting all of that data and information to me so that I can distribute it to members of the committee and all other Members of City Council. Mr. Jones, you look like you want to say something else?
No. Only that I want to thank this Council for amending -- or at least considering amending some of the bill. When we looked at this late evening yesterday, we were in a panic because the clients that we serve in our portfolio are not your big companies; they are your smaller companies. The vast majority of them are family-owned. The vast majority of them are 19 employees or less. 20 This bill, as it may be amended, will 21 only deal with 22 percent of our portfolio at this 22 point. I don't want to mitigate the fact that 23 they are an important 22 percent of our 24 portfolio. 25 The vast majority of retail businesses 304 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that are minority-owned in the fast-food area, we helped finance. A lot of them employ more than 4 people, and many of them would not qualify under 5 this particular bill and would be penalized under 6 this bill. 7 We support a living wage, but we 8 support small businesses' ability to grow to the 9 point where they can afford to do that. 10
Mr. Chairman, one other 12 comment just to amplify what I said earlier. 13
As I said, I'm happier 15 to come later and testify further if you'd like. 16 But there was a comment made earlier 17 today by the representative of the Service 18 Employees Union. He talked abut the fact that he 19 has seen a lot of his jobs go to the suburbs. 20 And the one concern I have here is this 21 balancing act between two very valid public-policy 22 purposes, many of which are buried in the bill -- 23 implicitly living wage, Welfare-to-Work 24 initiative, health benefits for all employees, 25 and the fact that we're in a very fragile economic 305 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 situation in this city. And one of things we did was, for example, we looked at -- and I'm not sure I can do this for every deal in the last three years, but just to give a sense of our magnitude, we took a look at the benefit of our less-expensive money, what was the incentive we provided and contrasted that to a company -- actually, the same one I mentioned earlier where I did the three-year tracking -- what would have happened if they had had to raise their wages, in compliance with the bill. And it by times, the bill 15 outstripped the benefit we had provided them. 16 Now, that is not going to be the case in every 17 instance, but I think we just have to be careful 18 about casting a net that's so wide that we're 19 trying to catch the sharks and get the dolphins 20 too.
Okay. That's a -- I think may be the first time that analogy has been used in this chamber. It may not be the last. Mr. Applebaum, let me ask you this 306 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 question. You've had some time, I don't know how much, to read the bill. You were here for most of the testimony today, and you've heard about proposed amendments. Do you have a way presently of making any determination of the number of companies that presently do business with the City who might be affected by the proposed legislation? COMMISSIONER APPLEBAUM: We know and we can get the number of businesses -- companies that do business with the City of Philadelphia. That could be people who bid with the City of Philadelphia and also people who are awarded contracts, so there is a great pool of people out there.
Right. COMMISSIONER APPLEBAUM: To try and determine what their wage rates are would be very difficult, if not impossible. It's not the type of information that we request on any bid document. So the wage rates that these companies pay -- local companies, companies out of our market, companies who bid, and companies who are 307 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 awarded contracts -- would be impossible to get.
Well, the earlier discussion was that Procurement, in some instances, has set rates. COMMISSIONER APPLEBAUM: There were some contracts, some bids --
Right. And what I'd like to ask is that you get us all the information on those particular companies as a start. COMMISSIONER APPLEBAUM: Sure.
And then, secondly, you indicated that there were some industries that you didn't particularly set a rate because you either couldn't figure it out or did not know, almost in your words, what the market would bear or what the market is on those particular services, so you left that open. Is that accurate? COMMISSIONER APPLEBAUM: Right. The Bureau of Labor Standards under the Managing Director's Office, that's deputy Mayor Jerry Murphy, his department would inform us on specific RFPs or bids that we were putting out they had 308 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 interest and knowledge of that particular industry and would recommend that we put in minimum prices, minimum labor wages on those particular contracts.
Let me ask this question, and you might not be able to answer this. It might be more for Mr. Shapiro. Do we have any general lists of businesses that we know of that currently have contracts with the City that would be in violation of the proposed bill or the proposed rates today?
Mr. Chairman, as Council, we have asked many times for a list of contracts. We have not gotten them. We have no 15 way of knowing that. That's the type of data that we need from the City. However, I'm intrigued by the statement that was made by the Procurement Commissioner just now saying that if we give contracts and we hire companies, why would it be impossible for us to say to them, These are the parameters of wages and benefits that we are looking for? COMMISSIONER APPLEBAUM: Councilman, I didn't say it was impossible to do that. My response was to a question, do we know today what 309 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 those companies are paying their employees on contracts that have been awarded by the City?
But what I'm saying is -- COMMISSIONER APPLEBAUM: We would have to go back and ask each company, Can you please provide us with a list of names of the people and the amounts that you pay your hourly workers on these particular contracts? We could do that, sure.
Well, you know, and why isn't it also possible for us later on to be able, in different contracts, to be able to set a minimum base in order to give out a certain contract? COMMISSIONER APPLEBAUM: I never said it would be impossible to do that. If this ordinance is approved and passed, we would be doing that. And the reporting process for every company would have to report back to the Procurement Department the list of people and the wages and their benefits. This is information that we would be getting. That's nothing -- none of that is 310 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 impossible.
I mean, you know, bringing it down to the simplest level, this is all that this ordinance really requires. COMMISSIONER APPLEBAUM: We, the City of Philadelphia, could do that. But what I mentioned earlier, one, it could be a burden to someone like Donna Allie who has, I believe one or two people in her office. And they work primarily on preparing payroll and doing all of the things to run the business. We are now throwing another project at them, and whether she could do that with her present staff or not, I don't know.
I'm sure that, under the regulations and under the aspects, that we can find ways to ameliorate certain of the problems that may accrue to some companies. You know, it's not insurmountable, is it? COMMISSIONER APPLEBAUM: No, nothing is insurmountable, of course not.
Just a couple other 311 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 questions. There's a provision in the bill which talks about certain percentages of -- it's (.3)(i) on -- at least percent of 5 persons receiving assistance under the Temporary 6 Assistance for Needy Families Act. 7 And then later on, in item number 3, it 8 says, Preference for hiring should be given to 9 persons referred by union or neighborhood-based 10 hiring halls. 11 First, just for further clarification, 12 Mr. Shapiro -- or I could probably ask my 13 colleague. What exactly is a neighborhood-based 14 hiring hall? 15
It's either union hall or something that might be set up in a -- even in a welfare office. It's a job placement such as the Hispanic Chamber of Commerce is trying to set up today, to be able to go ahead and do certain things. It's where, in essence, people who are not -- do not have access to employment and other places may go and require information as to what employment is available if there's employment 312 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 available by the City.
Do the various unions run these neighborhood-based hiring halls? I mean, who's in charge, how do the people know about them?
Their distinct -- unions have some of them and neighborhood groups have some of them. ACORN, for instance, has one or several of them in various -- I don't actually believe that there are many in the City of Philadelphia, but there are some.
Right. The Hispanic Chamber is trying to put forward the Hunting Park (unintelligible) has a job placement unit, Congreso, for instance, as part of its job training part has a job-placement unit. These are places in which the City can plug to and, in essence, expand its own resources to be able to bring in -- into the labor pool individuals who today we may not have access to.
Okay. And just lastly on this same point. When you take small letter i and small letter 3 together, I wonder whether there is any potential conflict between 313 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 them, only from the standpoint that if the preference for hiring is given to persons referred by union or neighborhood-based hiring halls, could that in fact fill up the entire number of people before you ever get to the percent requirement 7 as it relates to TANF individuals, or do we have 8 any information that indicates that the unions 9 have a number of TANF members? 10
I don't believe so 11 because that again would come into how we 12 structure that process, and that's implementation 13 and how we are able to set the 15 percent. It's 14 more of a technical matter than anything else. 15
And I think that's to be -- it's a technicality that I believe the Department and the City can take care of.
. . . rules and regulations to specifically give guidelines in terms of how the provisions mesh with each other, but I think the overall objective is basically to hire 15 percent. And to the extent that there are 314 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 hires available from these hiring halls, that those hires also be hired.
Okay. What I'd like to do is, because I will myself literally have to leave in a few minutes, the various agency heads, I think we've asked them for a fair amount of information in anticipation of another hearing. And I'd ask you to get that material to myself, and I will distribute it to all of the members as quickly as possible. I think that there are one or two other last nongovernmental people that we're going to be able to hear tonight, and then I really will, fortunately, have to leave. We will then recess this hearing. There will be another hearing set up to hear either additional testimony and to deal with proposed amendments and the like. Excuse me for one second. I'm sorry? (Councilman Nutter briefly confers with a staff member off the record.)
All right, this is the situation. One, to our government friends, you are, for the moment, excused. I guess as they say 315 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 in court, you remain under -- under jurisdiction, you're under oath. Do not do anything between now and the time that you return here that will get you in further trouble. Thank you very much. I'm sorry? COMMISSIONER APPLEBAUM: We can take off tomorrow?
You can do whatever your hiring authority allows you to do, but I will take no responsibility for it. COMMISSIONER APPLEBAUM: But you're not reconvening tomorrow.
I'm sorry? COMMISSIONER APPLEBAUM: You're not reconvening tomorrow?
We're not reconvening tomorrow. I'm going to deal with that in a few seconds. I believe I have four individuals who, unfortunately, will have about a minute. I really have to leave. We will adjourn this hearing until May 27th, at 10 o'clock a.m. If there is any change 316 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 in that, people will be notified, or the usual notification will be provided, but we expect to recess to that date certain. Dr. Howard Wial, Professor Andrew Buck, Barney Auer, and Lance Haver will be the last. UNIDENTIFIED SPEAKER: Mr. Chairman, I can easily come back.
That's very gracious and magnanimous on your part. First let me say, gentlemen, that I greatly appreciate your staying. And, second, I apologize that it went on so long. And, third, be as quick as possible. Please state your name for the record.
Yes. My name is Howard Wial I work for the Keystone Research Center, a nonpartisan, nonprofit research organization, with offices in Upper Darby and Harrisburg, that conducts research on the economy and labor markets of Pennsylvania and its regions. I am an economist. I just want to very briefly provide you with an overview of the extent of poverty among working people in Philadelphia, in Pennsylvania, 317 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and the context in which that exists today. The most recent Census Bureau data for the years 1995 through 1997 show that about 37 percent of all employed people years of age and 6 over in the City of Philadelphia earn less than 7 7.90 an hour. That's over 152,000 people. And 8 over 80 percent of them are adults, age 21 or 9 over. 10 There are about 216,000 poor families 11 with children in Pennsylvania. And, shockingly, 12 over 55 percent of them have one or more working 13 parents. So that amounted to an incredible 14 472,000 people in working-poor families throughout 15 the State. 16 We've been for the last seven years or so in a period of general prosperity. Since between 1988 and 1987, in the five-county Philadelphia metropolitan area, the median wage adjusted for inflation gone up by about 6 percent. Some workers who make less than that have benefitted as well. Workers at even the 25th percentile of wages have seen their wages go up by a little over 2 percent. Very high-wage workers, those in the 318 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 90th percentile have seen their wages go up by over 46 percent. But the problem -- there's still a problem for people who are making very, very low wages, workers at the 10th percentile of wages saw their real inflation-adjusted wages drop by over 3 percent between 1989 and 1997 -- that's throughout the metropolitan area. I'll provide additional material in a written statement in order to keep this short.
If you provide your written statement, we will include it in the record as if it had been written in the record. DR. WIAL thank you.
My name is Andrew Buck. I'm professor of economics at Temple University. Thank you for permitting me to address the Members of City Council on the issue of the living wage. I've looked at the impacts of the living-wage ordinances in Baltimore and Los Angeles, and I wanted to summarize those very quickly because we've heard some forecasted dire consequences for Philadelphia. In a nutshell, in Baltimore, they found 319 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that the real cost of City contracts, in fact, declined pre- and post-implementation of the living wage. There was no meaningful change in the firms interested bidding on city contracts. On 53 percent of the contracts that were let for bid, the number of bidders declined by a very small number, not statistically significant. On 47 percent of them, the number of bidders increased. And so at the end of the day, it was a wash. Assessable business property, excluding real estate, increased in the year after the ordinance was implemented in Baltimore. A survey of city contractors, those firms involved in working on contracts for the city, found no 17 reduction in staffing. And compliance costs imposed on the city amounted to about 17 cents per year per capita for the residents of the City. In Los Angeles, the cost of the wage increase for the targeted group didn't increase the city budget. There was no observable loss of employment, and there was no loss in city -- no 25 diminution in loss of -- in the provision of city 320 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 services. One of the other interesting calculations that was done for L.A. was that the implementation of the living wage reduced the reliance on public assistance in the targeted group by as much as 50 percent. In Los Angeles, they discovered that even if all the costs of compliance with the living wage were passed onto the city budget, the entire city budget would rise, at most, 3 percent. Doing some thumbnail calculations for Philadelphia on the basis of what's happened in Baltimore and Los Angeles, the incomes of the targeted group in Philadelphia would rise about $22 million. On the basis of some other work that I've done on economic impacts in the City, the result in spending by those households would cause incomes in the city, aggregating incomes in the City to rise by $70 million. And so if we apply our City tax rate to the $70 million increase in household incomes across the City, the income tax accruing to the City would be about 2.8 to $3 million. 321 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 So if we then look at what New York City set aside to cover the increased cost of living wage, which was $16 million, and they said they spent 10, we could anticipate in Philadelphia having to spend an additional $1.8 million out of the City budget in order to cover the pass-along costs in covered contracts. So at the end of the day, the City comes out ahead of the game as a result of passing a living-wage ordinance. (Applause.)
Thank you. Thank you if you could provide with us with any of the data that you've made reference to or if you've produced a report on your studies, that would be very helpful.
My name is Barney Auer, sir. I'm with the Western Pennsylvania Living Wage Campaign. I think my main function here today is to reassure the business interests in Philadelphia 322 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that there will not be a huge runaway because we're going to organization the rest of the State behind the living-wage campaign. (Applause.)
We have at this point active campaign in Berks County, in Montgomery County, and in western Pennsylvania. We have active campaigns in a number of counties in the planning stages. In Allegheny County, in the city of Pittsburgh, we've been battling this for about a year. The legislation that we're working on that was proposed for the city of Pittsburgh was withdrawn at the end of the session in the fall. It is now being -- soon to be proposed for Allegheny County. It will cover all of the things that have been covered in any other part of the country. We think it's absolutely critical, agreeing with your Council colleague, that the City and County pay a living wage. There are, we've discovered, a large number of people, in the hundreds at least, that are part-time temporaries that don't get those benefits and some of whom 323 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 make less than a living wage. We have, by the way, a living-wage number based on a major study, a six-month study at the University of Pittsburgh by an urban policy institute. I would be glad to provide that to Council here. They really looked at what it cost to live in Allegheny County and in the city of Pittsburgh -- not just took the poverty number, which are really bogus numbers in a lot of ways, but really took a look at what a bare-necessities budget would cost. But our campaign looking at the contracted-out work as well as the subsidized employers being covered as well as City and County workers. But in fact, for us, it's almost a secondary interest because although that will cover thousands and thousands of workers, it doesn't get at the hundreds of thousands of workers who need a living wage to be able to make it and to have their families survive. And so we're viewing our campaign as a multi-year campaign with a big emphasis on 324 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 building a huge coalition which is an active coalition in running the campaign. There's no one organization that has control of it. We hope that this coalition -- or plan to have this coalition continue. There many other issues of survival of working people. We are also doing a massive public education campaign. We have a nice 30-minute workshop that takes a lot of the information. And for the first time, a lot of working people no 12 longer feel that it's the failure of them and their family; but, in fact, it's a failure of the system to provide them the opportunities to make it. And so we feel that the reality of living wage is that it's an opportunity, it's an opportunity to make very clear that something's wrong with our economy, something's wrong with the reasons why politicians make decisions about where to put investment dollars, and we feel that it's a call that will unite a very scary coalition to political leaders -- of community, labor, and religious people able to fulfill their messages and their promises in a very concrete way across 325 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 this country 'cause we believe in the longer term a fundamental change in the definition of what our economy ought to be about, which is about working people. Thank you.
Thank you very much. I appreciate everyone's testimony. This hearing is adjourned. Thank you. (Adjourned at 6:58 p.m.) - - - 326 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, May 1998 were reported 8 and accurately by me, and that this is a correct 9 transcript of same. 10 11 12 RE: COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT BILL NO. 970586 __________________________________, JOSEPHINE CARDILLO, RPR