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City Must Attach Strings to its Economic Aid
NY Daily News
Bill De Blasio

January 8, 2010
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Last month, the governor and state Legislature enacted long-overdue changes to the rules governing the state's many authorities - unaccountable, secretive boards and agencies that have broad powers to direct government resources. But unless we make changes, the city's powerful Industrial Development Agency and more than 100 other IDAs across the state will continue to spend taxpayer dollars with virtually no standards for how the businesses they fund behave and perform.

Each year, New York State's IDAs dole out hundreds of millions of dollars in tax breaks and other public subsidies to private companies. New York City has one of the most prolific IDAs, handing out $48 million in incentives to create and retain jobs in FY08 and $128 million in FY07.

With all that hard-earned cash flowing out from federal and local treasuries to jumpstart our economy, greater control over how the money is spent is badly needed, especially in the' city. As of now, we simply trust these companies to expand our economy and treat their workers fairly. As a result, we essentially end up subsidizing some owners ofbig businesses to mistreat workers, keep profits for themselves and suppress fair bargaining.

In some cases, businesses may grow, but those who need economic expansion to help them the most wind up no better off.

Perhaps the best example here in the city is online grocer FreshDirect. City records show the company has received steep income and property tax breaks from the city's Industrial Development Agency over the past decade, with more guaranteed costing taxpayers more than $2.8 million so far. Yet workers at the company's Long Island City warehouse make just two-thirds of what the average refrigerated warehouse worker is paid, according to U.S. Department of Labor statistics. They are forced to work overtime under difficult conditions and are offered health insurance with unaffordable premiums. The company, meanwhile, is seeing record profits.

When workers stood up to fight for themselves, FreshDirect started firing those who attempted to organize - and scared others away with federal immigration officers when it was time to take a vote to form a union.

To prevent such bad behavior in the future, I propose a citywide code of conduct for businesses that receive subsidies from our local government. Before taking public assistance, firms should commit to being neutral when workers seek to form a union, and to paying a prevailing wage. If they don't measure up, they have to give us our money back.

More than 40 states and 200 cities nationwide, including Nassau and Suffolk counties, already have wage standards attached to economic development programs.

Such business standards are not just the right thing to do-, they're also smart economic policy. Well-compensated workers who are protected by a union are less likely to be a burden on the public system, and studies show skilled workers who receive higher wages are more productive.

There are prevailing wage bills and industrial development agency reforms working their way through the state legislature and City Council. They should become law.

But we don't have to wait for legislative action. It's time for a strong code of conduct for businesses that rely on us for financial support. After all, if we don't hold them accountable, then what are we really paying for?

De Blasio is the Public Advocate of New York City.