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Commentary: Held Hostage by Business

By Allison Duwe

Buffalo, NY – Private projects made possible by public subsidies should be responsive to the needs of the public. The investment that we - the public, the taxpayers - make in businesses through tax breaks and incentives needs to be matched with an investment in workers on the part of those businesses.

It is clear that our current economic development scheme (i.e. - corporate welfare), is broken. We have an overwhelming (and all too uncoordinated) myriad of entities providing incentives in order to lure or retain business. New York's Industrial Development Agencies or IDAs are part of our broken system. New Yorkers gave up over $450 million in tax revenue through our IDAs in 2006. What did these tax breaks get us - it's hard to tell. The reporting standards currently in place are meager. The return on investment in terms of job creation is poor, with 2/3 of subsidized projects failing to live up to job creation promises. Our IDAs in the Buffalo-Niagara region have contributed to sprawl, subsidizing job creation outside of the region's oldest, most densely populated, and most transit-accessible area - exactly the area most in need of jobs and reinvestment.

There is currently a battle over subsidy reform raging in Albany. The most contentious piece of this debate is whether or not to attach business standards to projects - requiring employers to pay prevailing wage on construction projects and living wages for permanent positions

Business tax breaks haven't been growing our economy like they should and without significant reform - including wage standards, will continue to fail us. We can't afford this failure any longer. Allow me to repeat myself - New York State's Industrial Development Agencies cost taxpayers $450 million in 2006. $450 million in unchecked corporate welfare.

The type of jobs created by IDAs - many of them low-wage jobs - will not generate economic revitalization in our Upstate communities. We are suffering from a growth of low-wage jobs, often ones that do not provide healthcare or other benefits. The poverty rates we see in areas of the state like Buffalo far outpace our unemployment rates. If we are going to give away our public dollars we should and must set standards to make sure that we are subsidizing quality jobs that combat poverty and work to attract and keep workers and young people in our community.

As key engines of economic growth in New York, IDAs should maintain and uphold a standard of quality jobs for all projects that they subsidize. By mandating living and prevailing wages, IDAs can play a vital role in reversing the proliferation of low-wage work.

Prevailing wage protections exist because the state recognized, rightly so, that unbridled competition among employers to pay low wages in construction would lead to a less-skilled, less-productive, less-safe workforce and by extension to shoddy construction practices and unsafe public buildings and infrastructure. And despite what one might think, prevailing wage provisions lead to lower overall construction costs.

Attaching a "living wage" standard to subsidized non-construction or permanent jobs also makes sense. Taxpayers are paying twice if we subsidize job creation that leaves workers reliant on public assistance.

Over 89 jurisdictions across the country now attach job quality standards to development subsidies. It is time for the New York State Senate and the Governor to get on board and reform our Industrial Development Agencies. Our community can't afford to fund corporate welfare. Advocates will continue to fight until we fix our approach to economic development and focus it on the needs of our people and our neighborhoods.

Listener-Commentator Allison Duwe is executive director of the Coalition for Economic Justice.

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