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Larry Hirsch

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The Right Course on Living Wage

Posted: 11/29/11 02:34 PM ET

Reading the arguments for and against the Living Wage Bill currently before the City Council, there seems to be a logical way to move it forward that will both help workers and protect small businesses. First, one needs to look at the provisions of the bill. The Living Wage of $10 per hour (not exactly luxury wages) will only apply to businesses getting $1 million or more in City subsidies and that make $5 million per year in gross revenues. It is difficult to equate businesses that fall into both of these categories as struggling small businesses. Even if one can argue that $5 million per year in gross revenues can result in slim profits after expenses, getting $1 million in City subsidies helps pad profits.

Anyone that has ever received a government contract knows that there are certain rules and restrictions for receiving that money. The funds usually must serve a social purpose and are under strict accountability rules. One must only look at what has happened to City Council member item funding to see that this is necessary. These are not unrestricted funds like those that would come in during the regular course of business. An organization voluntarily applies for these funds aware of all the restrictions that come with them. Therefore requiring that businesses that get a significant amount of government money pay their workers a living wage does not seem unreasonable. If a business does not want to pay $10 per hour than they do not have to apply for government subsidies.

Looking at the case of the Kingsbridge Armory where the developer was going to get subsidies and the retail tenants were going to have to pay the Living Wage presents a different story. If the retail stores were not getting any direct benefit from the government subsidies, then they should not have had to pay the increased wages. If however, they were getting reduced rents due to the subsidies and therefore benefiting, then it is only fair that they be subject to the same rules as other beneficiaries.

It is a social purpose to ensure that workers get paid a living wage. Therefore using that as a condition for receiving a significant amount of government subsidies seems fair. Subsidies cannot be treated like regular business revenue but must have conditions that ensure that the public interest is protected. It is not fair, however, to require a business that does not benefit from subsidies to be under the same requirements. It is time for a Living Wage bill to be passed, but one that is also fair to all parties.