Austin is poised to require any company seeking city financial incentives to pay all workers, including construction workers, at least $11 an hour under all but exceptional circumstances.
Three City Council members say the city should add a “living wage” requirement to any economic development deal that involves waiving city taxes. City officials, labor advocates and business groups have been wrangling over the idea behind closed doors for nearly a year, even as a high-profile wage dispute dragged on between the city and the developer of a downtown JW Marriott hotel. Ultimately, the unusual Marriott incentive deal fell apart; after hasty negotiations about what the developer would pay its workers, the city concluded some workers were being paid less than required and canceled $3.8 million in fee waivers, a decision now being disputed in court.
Council Member Mike Martinez is now proposing an overhaul of the city’s economic incentive policies, a move that would include setting an $11-an-hour minimum wage for such deals, among other requirements. Under the new, more sophisticated template, he said, companies might have to pay workers more, but can also secure a bigger tax discount.
“We have a proposal that not only benefits workers … but offers a great opportunity for companies to come to Austin,” Martinez told the American-Statesman. “We’re trying to get the city’s expectations (articulated) on the front end so we’re not negotiating at the 11th hour.”
With Council Members Laura Morrison and Kathie Tovo co-sponsoring the proposal, it needs only one more vote to pass. The measure is scheduled for a vote on Thursday. The only council member to have come out against the idea is Mayor Lee Leffingwell, who said last year an $11 minimum wage would add costs and complications for companies that could drive them elsewhere and undercut Austin’s economy.
Last year, several minority contractors also said the $11 minimum wage would be difficult for them to deal with. Subcontractors often are responsible for hiring and paying construction workers, but they also often have to wait months for the main contractor to send the check that balances the books.
To deal with that issue, Martinez, Morrison and Tovo are asking City Manager Marc Ott to establish a program that would help subcontractors secure loans to cover the predicted cash-flow difficulties. Paul Saldaña, a spokesman for Austin’s Minority Trade Association Alliance, said that he hadn’t seen the specifics of the proposal but that the contractors were initially skeptical.
The living-wage requirement came from surveys the city and other community groups have done in recent years concluding that $11 an hour is the minimum a family of four needs to live in Austin. It is a goal that groups such as Austin Interfaith and the Austin-based Workers Defense Project have been seeking for years.
The new standards would help ensure that “those receiving economic incentive packages are treating their workers right,” said Greg Casar, a Workers Defense Project spokesman.
A living wage isn’t the only new requirement included in the proposal from Martinez, Morrison and Tovo. Companies seeking economic incentive packages also would have to provide health insurance and domestic-partner benefits. And $11 an hour would be only one wage requirement; companies also would have to pay a “prevailing wage” when a prevailing wage would be higher. For instance, some electricians would make $25 or more under prevailing-wage standards, which are established by the federal government.
The new policy also would lay out nine “community benefits” a company could provide, such as committing to building to certain environmental standards or filling at least 75 percent of new, full-time jobs with current Austin residents. The city would use a matrix to determine the value of those benefits and the overall economic impact of a company; a high enough score could result in the city waiving all of its property taxes over the life of the deal.
Finally, the new economic development policy would allow the council to waive the $11 minimum and other requirements for companies that offer something of much greater benefit. The basic idea is to provide a way to accommodate companies such as U.S. Farathane, which signed a $212,000 incentive deal in 2011 to manufacture car parts here. U.S. Farathane agreed to hire people with criminal convictions and others who have difficulty finding work, a task that people skeptical of a living wage said would be difficult if not impossible at $11 an hour starting pay.