The New Wage Movement

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In this city, there are home health care aides bathing sick people for $6.55 an hour. There are people making $7.82 an hour to feed and play with children. And then there’s Bertie Caraway, still living from paycheck to paycheck on $7.49 an hour after 26 years of cleaning house, running errands, doing laundry and preparing meals for people too sick to take care of themselves. “Sometimes I get very angry. I think ‘Oh my God, I’ve been doing this all these years, and look at my wages,'” she admits. “But I keep working, because I care about my clients.”

Helpless victims of hardhearted bosses? Just more casualties of corporate greed?

Hardly. These workers and more than 100,000 others all work for human service nonprofits, and the money in their paychecks comes from the city of New York. Their employers hold more than $3 billion in city contracts that pay them to care for many of the city’s poorest, most powerless residents–mentally retarded children, the homebound elderly, teens in foster care group homes, parents with AIDS.

The fundamental mission of these employers–the city’s biggest charities and social service nonprofits–is to help the most unfortunate, to extend a hand to the needy. But they are caught in the grip of a cruel dilemma. Their mandate may be to help the poor. But with tight contracts and huge payroll costs, they can’t even keep their own employees out of poverty.

It’s an inequity that a band of labor and community activist groups is determined to stamp out. Smack in the middle of a election season guaranteed to be the most chaotic in recent history, a coalition of mutually suspicious activist and labor groups have banded together to make living wage the litmus test of the 2001 municipal elections.

They’ve crafted a groundbreaking bill that goes far beyond the moderate measures that many cities have instituted. This living wage ordinance would force any business that gets contracts, subsidies or tax breaks from the city government to pay their workers at least $10 an hour–a proposal that would cover everyone from the janitors at Columbia University to child care workers in Bed-Stuy to the hot dog salesmen at Yankee Stadium. But it doesn’t stop there. The bill would also require the city to pay contractors enough to offer their workers a decent salary, a “pass-through” increase in contracts that could hike the city budget by hundreds of millions of dollars. Already, the bill has the backing of some of the most powerful progressive interests in town–ACORN, the Central Labor Council, the Working Families Party, health care workers Local 1199, and the hard-bargaining janitors union Local 32B-J. They are putting together a campaign that is savvy, intricate and quite possibly doomed. In order to get a law passed this year, the fledgling Living Wage Coalition will have to pull off something close to a political miracle. And that’s exactly what they are preparing to do.

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Before this year’s Living Wage Coalition can make progress, it first has considerable damage to undo. To this day, nonprofits resent the 1995 living wage campaign, which forced them to take a public stand against their own workers.

The 1995 push was the brainchild of the Industrial Areas Foundation (IAF), a national network of church-based grassroots groups led in New York by the Rev. Johnny Ray Youngblood. By all accounts, the Reverend was never one to ask for favors where a little public humiliation would do. Youngblood pressured unions, religious leaders and community organizations and politicians to declare whether they were for the bill or against it. “Reverend Youngblood ruffled a lot of feathers,” recalls former City Councilman Sal Albanese, the first bill’s sponsor.

In what became a Sunday ritual, IAF arranged for pastors at politically influential churches to conduct public grillings of elected officials. Even potential allies found themselves the subjects of surprise interrogation. Albanese remembers seeing Councilmember Priscilla Wooten get the treatment from the pastor at St. Paul’s Church in East New York. “I don’t think she knew that it was going to be the topic,” he recalls. “I remember the crowd–it was a huge, huge crowd–booing and hissing.”

Through the relentless application of pressure both cruel and kind, IAF built strong support for the bill. By the time Albanese introduced it in February 1995, he had 29 councilmembers backing it. “We even had a Republican on board, Al Stabile from Queens,” recalls Albanese.

A whole lot of other players-including every daily newspaper, major business groups and, of course, the mayor-declared it economic suicide. “Why don’t we just dust off The Communist Manifesto?” sneered Deputy Mayor Rudy Washington.

But what guaranteed the legislation’s defeat was a vocal anti-living wage campaign by the 200-plus nonprofits of the Human Services Council, including heavy hitters like Catholic Charities, United Jewish Appeal, and Federation of Protestant Welfare Agencies. Among them, these giants held hundreds of millions of dollars in city contracts.

The bill, as Albanese introduced it, would have guaranteed $12 an hour to everyone working for the city. In a devastating statement to the City Council, executives from these big nonprofits testified that paying the higher wages would be a hardship for its members, especially smaller human service nonprofits. Layoffs, closings and worse would follow.

To this day, they say that was no false alarm. “There would have been a court battle, no question,” says Suri Deitch, who as lobbyist for the Human Services Council wrote the statement opposing the bill. “Because it was unenforceable. It was like the ultimate unfunded mandate.” Deitch says it would have forced groups to lay off administrative staff, along with anyone who was “not completely essential.”

Even so, a number of the players on the Human Services Council were deeply conflicted, and debated among themselves what course the group should take. “In principle, most of us were in favor of the living wage legislation,” says Monsignor Kevin Sullivan, Chief Operating Officer of Catholic Charities.

“Look, these people are paid abysmally low wages,” concurs Deitch. “You have mothers with families making $18,000. You have people under the poverty level in these jobs. You have line workers who are very dedicated to their work; in certain fields, they’re often former clients.”

The Giuliani administration would have vetoed the living wage law regardless. But active lobbying against the living wage by religious nonprofits provided perfect cover, far better than the hardhearted objections of business groups. Then-mayoral advisor Richard Schwartz, certainly no friend to grassroots nonprofits, declared that the bill would “translate into massive service reductions that hurt precisely the kinds of people the bill’s proponents claim they are trying to help.”

To this day, the opposition by the nonprofits still smarts. “These were powerful groups, and it wasn’t a laid-back effort,” says Albanese. “They were really out to defeat it.”

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And that’s where the city’s living wage efforts have remained–stuck in the standoff of 1995. Unions think nonprofits are hypocrites for claiming to serve the poor while paying their front-line workers so little. And nonprofits think the unions are crazy for thinking they can squeeze any more money out of their painfully tight budgets.

But this time, swears ACORN’s Bertha Lewis, the campaign won’t get blindsided. She’s been stumping for the proposal for almost a year already, determined to get buy-in from all corners. She’s met with black church leaders to secure grassroots support. She’s met with union leaders to talk tactics. Last fall, she took the living wage on a test drive and got a promise from mall developer Bruce Ratner, who receives subsidies from the city, that if the proposed law passes he will require his retail tenants to hike their workers’ pay.

Perhaps the most important strategic victory so far has been convincing David Jones, head of the Community Service Society, to help recruit nonprofits to fight for the living wage. Yet as much as it has to gain from bringing politically influential nonprofits into their orbit, the Living Wage Coalition also has a lot to fear from them. Lewis and the Central Labor Council’s Ed Ott are working hard to remake history–to make sure their living wage proposal does not meet the fate of the one that came before it. That means a lot of delicate negotiations, a lot of sweet-talking, and a whole lot of meetings.

On one bitter January morning, ACORN’s Bertha Lewis and the Central Labor Council’s Ed Ott make the living wage pitch to a rabbi, a nun, an Episcopalian priest and the various union leaders of the Labor-Religion Coalition.

Ott is neatly suited and tied. Lewis wears a saffron dashiki. Both are visibly nervous. People in this room picket or preach for the labor cause. Some also work for or serve on boards of major human service organizations. And Lewis and Ott are in serious need of their help–to write the hundreds of letters, and sponsor the dozens of meetings that this bill will need to pass.

In order to get this bill through Council, in a city that is home to some of the most powerful businesses in the universe, the Living Wage Coalition will need an army of converts. “This spring, when we go after all the politicians, I want the religious leaders to be there, I want the labor part to be there, and I want to have it wrapped up with a bow on it,” Lewis tells the religious group. “When people begin to tear this apart, we need to have our sails at the ready, because we know what’s coming at us.”

So this time around, the living wage bill will offer the nonprofit power brokers something they’ve always wanted–a way out of the compensation conundrum.

With New York-sized chutzpah, the coalition is calling for the city to foot the bill for wage hikes for underpaid human service workers. A provision in the bill would increase the dollar value of nonprofit contracts to cover the additional cost. With that, the coalition hopes to recruit the nonprofits as loyal allies, who will stand up and collectively demand more money from the city for their own workers. After all, it’s in their own best interest to have less turnover and more qualified staff, and best of all to pay them more than poverty wages. “Nonprofits get caught on a moral horn, believing that they’re dedicated to helping the poor,” says Penelope Pi-Sunyer, who helped found the budget watchdog group City Project. “But they themselves are not paying the people who work for them. Many of them are poor.”

But it won’t be so easy to get nonprofits to sign on to what amounts to a multimillion dollar budget request. Most of these groups lobby only for their own interests. And even more vital than getting more money is making sure they hold on to the valuable contracts they already have–with contracts doled out at the city’s discretion, nonprofits don’t like to complain in public about the agencies that hold their purse strings.

Now the living wage coalition is offering nonprofits a chance at redemption–with only an astronomical risk attached. A living wage law will take a major change in business as usual. And from everyone involved, a tremendous leap of faith.

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Six years ago, the idea of a living wage bill was a joke. “I was told by my colleagues that we would never even get a hearing on it,” says former City Councilmember Albanese.

Back then, such sentiments were understandable. At the time, brave little Baltimore was the only city with a living wage law. But since then, a remarkable wave has rippled across the country. Chicago, Los Angeles, San Francisco, Boston, St. Louis and nearly 50 other cities now have laws that require city contractors pay $7, $9, even $12 an hour.

“They’ve really become the norm,” says Paul Sonn of the Brennan Center for Justice, who has drafted the proposed legislation for the Living Wage Coalition. “New York is conspicuous in not having one.” Technically, New York does have a minimum wage for city workers, but not much of one. Albanese’s bill, as it collapsed, spawned another that requires city contractors to pay the prevailing wage to janitors, security guards, food service workers and temporary clerical staff. It covers only an estimated 1,500 workers in all, but for them, the passage of that law in 1996 was no defeat. Many are now making twice as much as they were before. “It was a difficult decision, whether to water it down, or to try for everybody–and lose,” recalls Mike Gecan, the chief organizer for IAF. “And we made the decision to go for what was doable.”

The proposal Sonn has written is considerably more ambitious. It would create one of the most encompassing living wage laws in the country, requiring every nonprofit or large business with a city contract to pay $10 an hour with health benefits, $11.50 without. New York would join just a handful of other cities that pay nonprofits extra to help them cover the higher wages.

And in a measure that is sure to be the proposal’s lightning rod, the living wage mandate would apply not just to city contractors but to any company that gets a sizeable tax break or other subsidy from the city–and to all of their on-site subcontractors and business partners. If that company is a landlord, then janitors, cafeteria workers and building services workers all would have to pay their workers a Jefferson an hour.

Extending the living wage mandate to companies that receive subsidies to keep jobs in the city makes perfect sense, says Sonn. “Given how scarce these taxpayer dollars are, it makes good sense to hold them accountable and make sure they really deliver quality living wage jobs,” he says. “It’s just the fiscally prudent thing to do.” Such a demand would be nothing short of revolutionary. Other cities have imposed such terms, but none near New York’s weight class, and none with so far a reach. New York’s law would cover the cafeteria line attendant at Lincoln Center’s employee cafeteria, who, after 11 years on the job, makes $8.80 an hour. It would cover the grill cook at the Metropolitan Opera, a single mother who, on her $7.75 an hour salary, lives in a homeless shelter. Even the janitors who sweep slips off the floor of the New York Stock Exchange would be covered.

As of January no one, not even the economists working with the coalition, had figured out how much this is going to cost city businesses, but it’s safe to say that it will be in the hundreds of millions.

Businesses will be sure to take to the barricades as soon as anything resembling this proposal comes before the Council. With campaign season looming, politicians will want to woo corporate campaign contributors, not force them to pay millions extra in labor costs. The subsidy provision is simply “not going to happen,” says one political insider, predicting that it will get “bounced rather hard and rather fast.”

So it’s a safe bet that the law Sonn drafted will change substantially in the tortuous negotiations ahead. Even just getting city contractors to pay a minimum wage will not be popular. It will cost a lot, and how much really depends on who you talk to and how badly they do or don’t want a living wage law. In 1995, the City Council estimated contractors would increase their bids by about $15 million to cover their new costs. The mayor’s office claimed the tab would run up to $750 million.

And that was without extra money for nonprofits. Now that it’s asking for that, too, the Living Wage Coalition knows it’s going to have to prove that the city can pay for it.

The money is going to have to come from somewhere–or, in this case, many somewheres. One possibility is the vast Temporary Assistance to Needy Families surplus, currently at $1.5 billion, which State Assemblymember Roger Green raided last year to give $40 million in bonuses to underpaid day care workers. And since some major sources of human service money, like Medicaid, consist of a mix of city, state and federal funds, the coalition will be making the case that New York City will be able to distribute some of the cost upstairs to Albany and even Washington.

They are also counting on unions to flex their muscle in Albany–particularly hospital union Local 1199 and the statewide Civil Service Employees Association, both of which last year forced the state to make unprecedented budget commitments for their members. “If the unions were to get their act together, and see that their interest is in this, they could get something through the legislature,” says one Albany government consultant.

In truth, however, the coalition is starting out mostly with faith that political will will make the money flow. This year, that won’t be easy; the city’s Independent Budget Office recently reported that the current budget surplus will dwindle over the next three years. And the living wage campaign must get in line behind the city’s powerful municipal unions, which are negotiating big raises right now.

The coalition is also going to have to chart a course through the thicket of bidding laws that regulates the contract process. Any pay change that might give nonprofits an unfair competitive advantage won’t fly. At the same time, they have to make sure that for-profit companies don’t have an edge just because they are less expensive to employ as vendors.

It brings up a serious question: Could the requirement to pay extra to nonprofits discourage the city from awarding contracts to nonprofits? So far, nobody seems to know.

But despite all the drawbacks, coalition leaders say they aren’t going to back off from their demand that the city pay nonprofits for their extra expenses. And realistically, they can’t. Without that help from the city, say executives of direct-service nonprofits, a living wage would be the living end for them. “Oh gosh,” gasps Stuart Kaplan, CEO of Selfhelp, which sends several thousand health care aides into the homes of Holocaust survivors and other elderly patients. “Going from $7.49 an hour to $10 or more means that we wouldn’t be able to operate.”

And without the backing of the nonprofits, the bill will be dead on arrival.

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Very soon, Lewis will have to convince key political contenders this year that supporting the living wage won’t make them the next John Lindsay, sending the city into financial ruin on a liberal pipe dream. She and Ott will be aggressively marketing the bill as a populist vote-getter, not a political poison pill.

Veteran political observers say that even getting the bill in and out of the City Council is going to require surgical skill. If the bill is rushed into the council too soon, members will pass it for political points, knowing that a Giuliani veto is a foregone conclusion. But if it languishes too long, it will die without finding a champion, and a precious chance will be lost. “We will never have another time in this history of this city in which four democrats are running for mayor,” says Lewis. “If not now, when?”

She has her allies. Councilmember Christine Quinn has already shown some interest, speaking at a Working Families Party forum last year about how to win a living wage. But only a handful of potential backers really matter right now–most of all Council Speaker and mayoral candidate Peter Vallone. Vallone will not comment about the proposal. But he’ll certainly have to think about it. Because if Vallone decides not to back the bill, any candidate–for mayor, council speaker or public advocate–can run on the living wage as the champion of working New Yorkers, and steal what is likely to be one of Vallone’s leading campaign themes.

Until they know what the price tag of a living wage will be, most pols will be terrified to touch the bill. “Look, everybody in the City Council’s running for something,” says another political observer. “They’re going to say: ‘I can just see the editorials in the Post, blasting me for being a toady of organized labor, and turning the taxpayer’s pockets inside out to get [labor’s] support.'”

Being tarred as a spendthrift liberal who can’t be trusted with public dollars is a very real danger. In other cities, business groups have produced wildly inflated estimates of what living wages would cost and alleged that pay hikes would result in layoffs and mass firings.

But if the coalition can get the right candidates to make the living wage their pet issue this fall, that may be what it takes to give the cause legitimacy and popularity that no one can afford to ignore. That’s what happened in San Francisco, where Mayor Willie Brown and Supervisor Tom Ammiano played ping-pong with living wage proposals for two years, spanning a lengthy mayoral race between the two of them.

Under pressure from Ammiano, Brown hiked wages for child care and home care workers and airport security guards, even before the bill was passed. In the end, Brown brought 21,000 city contract workers up to $9 an hour, courtesy of a healthy budget surplus, and agreed to pay $11.7 million extra to help nonprofit contractors pay their workers the living wage, which will go up to $10 this year. He also won reelection.

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In places where political support has been weaker, getting a living wage law to really work has been a challenge. In Detroit, a ballot proposal for an $8.35 minimum provoked a fierce anti-living wage campaign in 1998. As in New York, opponents seized on the plight of small, budget-strapped nonprofits. “There were literally headlines in the local papers saying that 100,000 families were not going to get turkeys because of the living wage bill,” remembers David Reynolds, a professor of labor studies at Wayne State University.

The ballot measure passed in a landslide anyway. According to research by Reynolds and other academics, the results for nonprofits have been mixed. Most weathered the change just fine. But about a third had significant new expenses. Reynolds recommended a remedy much like the New York proposal: that the city cover the additional cost for those nonprofits that couldn’t afford the wage hikes. He calculated that it would amount to less than a third of one percent of the city budget. The Detroit City Council is currently considering such a proposal, but it has stalled, perhaps indefinitely.

Getting “pass-through” money for nonprofits in New York will be difficult, but precedents suggest that the right kind of pressure can make it happen. In a development that Deitch calls “revolutionary,” New York’s Administration for Children’s Services is for the first time telling organizations that provide preventive services to families exactly how much to pay their staff–rates substantially higher than before–and putting enough money in their contracts to do it. The reason? A high-profile lawsuit whose settlement specifically demanded higher salaries and lower turnover for caseworkers. “It takes a crisis, or a tragedy–children dying,” sighs Edith Holzer of the Council of Family and Child Caring Agencies, the trade group for the organizations that won the contracts. “Everybody knows that’s the best way to get the people who make budgets to pay attention.”

Coalition members are hoping to accomplish that by direct action this time. But their efforts rest on a fragile alliance. By ambitiously including both companies with city contracts and those receiving city subsidies, Lewis is getting both sides to pull for each other. Nonprofits get a wage hike at the city’s expense, and the unions’ muscle in helping them get it. And unions get broad backing for their campaigns, already well underway around the city, to get better pay for workers at companies that benefit from city subsidies.

But the two factions could just as easily pull apart. Already, frets Lewis, some nonprofits are worried that “this is, like, too ‘labor.'” And there are also some signs that unions are getting restless: In late January, the union that represents janitors, SEIU Local 32B-J, got City Councilmember Guillermo Linares to introduce its own wage bill requiring city-subsidized businesses to pay workers in their buildings the prevailing wage. It was a not-so-subtle reminder that as far as 32B-J is concerned, its agenda comes first.

Keeping nonprofits from getting restless will be even more of a challenge, but ACORN insists it can be done. Sure, social services have been trying to get that money for years, says national ACORN coordinator Jen Kern. “But they haven’t had a huge campaign, with major unions, religious leaders standing behind a living wage banner, with public sentiment building behind them. That’s a whole different ballgame–we hope.”