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Bloomberg’s Legal Tantrum on Wages

Ari Paul Aug 7, 2012

Mayor Michael Bloomberg lived up to his promise. City Council passed–and overrode a mayoral veto–mandating that private companies receiving public subsidies pay specific classification of their workers be a “living wage” of $10 per hour ($11.50 if no benefits are included). So enraged by the legislative rebuke and by the prospect of having a slightly larger portion of taxpayers’ money going to the workers who physically create development projects, the mayor – the  city’s richest resident – has mobilized his army of publicly-funded lawyers to file suit to block the institution of the law.

Legally speaking, Bloomberg’s cases rests on the idea that city lawmakers overstepped their boundaries. Corporation Counsel Michael Cardozo said in a statement, “For good reason, the Court of Appeals has held that minimum wage regulation is a subject matter reserved to the State. To the extent that the local laws frustrate the purposes of State laws and interfere with State economic development programs, they are pre-empted. The local laws are also invalid because they purport to set the terms under which the City may acquire an interest in real property or may dispose of real property for development projects, thus improperly limiting powers given by the Charter to the Mayor.”

Back in the USSR

Rhetorically, Bloomberg sees the notion of forcing the beneficiaries of public subsidies to share the wealth with those who do the work as an affront to free enterprise, comparing such laws to the acts of the Soviet Union. It is not the government’s role, he has said, to dictate operational spending for the private sector.

This stance ignores the fact that these laws specifically apply to private companies receiving public money. In fact, Bloomberg recently boasted his Keynesian endeavors in a July radio address, saying, “Even in the depths of the national recession, our city never stopped investing in our future. From creating new parks and pools to renovating old bridges and schools, we did not walk away from investments that are critical to the long-term health of the city. And now, we're beginning to see more of those investments pay off.”

On July 29, Bloomberg announced that the city would grant a $15 million financial package (some of it in the form of loan forgiveness) to Columbia University to enhance its engineering facilities. The New York Times reported that, “The city said that its investment in Columbia would result in $4 billion in economic growth in the city and 200 new small businesses.”

Paul Sonn, legal co-director of the National Employment Law Project said, “There's a real inconsistency between his visceral dislike of these living wage and prevailing wage laws on these subsidized projects and his more pragmatic policies elsewhere.”

Keep in mind, as well, that the living wage bill was in fact a compromise between labor groups at the City Council that specifically excluded retail workers who would benefit most from living wage protections.

Sonn, who declined to comment on the mayor’s legal reasoning, believes that the pressure is coming from the city’s powerful real estate industry, as well as the Economic Development Corporation, which could very well live with the wage standards but fears setting a precedent of having the City Council make such legislation.

“The counter view is that there's a lot of public money in these programs and the City Council already requires all sort of regulation on how the money is spent,” he said. “On top of that, other cities, such as Los Angeles, have folded in job standards in their economic development program.”

Sonn pointed out that on the same day Bloomberg launched his lawsuit, London -under Conservative Party Mayor Boris Johnson – enacted a living wage ordinance specifically for the Summer Olympics. He added, “I think New York, for political reasons, has been slow to gather that part of the public agenda.”

Conservative Critics

It isn’t just the labor left who is pointing out Bloomberg’s hypocrisy. Nicole Gelinas, a fellow at the conservative Manhattan Institute, said the practice of doling out development subsidies unfairly helps big companies and are usually rewards for political favors.

“There's no reason for the city to be picking and choosing certain businesses,” she said. “The government’s job is to provide infrastructure. Do mass transit and bridges, and businesses will come. We don’t need to pay businesses to come here.”

For Gelinas, the wage mandates simply add on to the operational costs for developers, which will inspire them to seek even more subsidies. She added, “The pattern roughly in New York is the big developers often get something and its the small business that don’t get anything because they’re not politically connected. If you don’t offer these subsidies you can use the money to lower taxes overall. That helps the smaller businesses.”

And despite believing that living and prevailing wage laws, along with development subsidies, are “misguided,” Gelinas thought the mayor’s lawsuit was going too far. “It’s bad when we start to go to court and fight over this stuff,” she said. “The City Council has spoken pretty loudly. People should look to who they elect, and not go to the courts.”

A Man of His Class

Examining Bloomberg’s tenure, the “inconsistency” of the Bloomberg approach to development, as Sonn called it, can be explained through class benefit. Writing checks to well-endowed corporations and major universities is the proper role of government, but mandating workers on these projects share in some of that money is a socialist nightmare. Bloomberg doesn’t think the government has the right to tell a retailer that has benefited from city assistance how much to pay its workers, but if that retailer is a restaurant and even thinks about selling large sodas, then they’re in for a heap of trouble.

Bloomberg has made it clear that he likes public works projects in that he wants them to be publicly funded, but not for the benefit for all New Yorkers. In June, Bloomberg invoked the spirit of Montgomery Burns when he said in his weekly radio address that he had abandon an aerial tram to connect Manhattan, Brooklyn and Governor’s Island, noting “you could charge market rate rather than having the city come in and say ‘Oh, it has to be available to everybody.’”

City Council Member Letitia James pointed out Bloomberg’s arrogance, telling the New York Daily News, “The waters are there for everyone, not just the rich.”

Bloomberg’s inability to accept the City Council’s veto override is the stuff of a man in his last term who has all but abandoned his presidential ambitions. Without the need to gain endorsements, he doesn’t need to keep his patrician image in check, and class warfare is fair game.

But labor advocates see this lawsuit as a bump in the road to a more just labor policy in the city. “We're confident that the living wage and prevailing wage laws will be upheld by the courts,” Sonn said. “I would expect these policies will be the real spur a new approach to job creation. The new mayor is likely to implement these policies. No one questions that they can adopt these policies on their own.”


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