Requiring fair wages is only fair
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National and international leaders are finally recognizing that Pittsburgh is a dynamic and growing city. As manufacturing has declined, we have reinvented ourselves as a health-care innovator, banking center and national sporting powerhouse, and our potential for further growth and development is strong.
Strategic economic development -- and the tax dollars the city, county and state put behind it -- is critical to continuing our growth. But unchecked, the same dollars meant to spur growth are unleashing a flood of low-wage jobs that leave Pittsburgh's working families struggling and are preventing us from realizing the full potential of these major developments.
The city's economic development policy should be building the middle class by ensuring newly created jobs do not undercut the private-sector prevailing wage. To be clear, prevailing wages are not high-priced salaries that would deter new business from coming into Pittsburgh. They are simply the "going rate" -- what most workers in a particular job are making and what it takes to make ends meet and support a family. For example, most office cleaners in Downtown Pittsburgh earn a prevailing wage of $14 an hour and receive health care. No one is getting rich on these wages, but with these steady paychecks workers can feed their families and pay their rent without depending on public programs, as low-wage workers and their families often do.
Because more than 90 percent of Downtown office buildings are paying their cleaners the same prevailing wage, businesses that pay this rate are not at a competitive disadvantage -- that is, until the city allows new developers to undercut the going rate by paying their workers less than what most others are earning. This practice actually penalizes existing businesses -- most of which operate without public financing -- that are making their workers' livelihood a priority.
The good news is many leading Pittsburgh businesses that receive economic development subsidies are already paying prevailing rates to the service workers who maintain and operate their properties. Take PNC Bank, for example, which received tax increment financing from the city for its new Downtown office building. In addition to paying prevailing rates to the construction workers who built the new office tower, the company has committed to hiring hotel operators and property service companies that will pay workers the prevailing rates.
But without a legal requirement, other businesses, such as Continental Real Estate Co., have shirked their responsibility to the community. Although the city sold it the land on which the new Del Monte headquarters stands for far below market rates, Continental has not given back to Pittsburgh. In fact, the workers who clean the building are paid as little as $8.25 an hour. On this kind of take-home, workers qualify for subsidized housing and their kids depend on the SCHIP program for their health care.
The question is -- how can the city justify giving tax breaks to developers who don't pay workers the going rate?
We must demand more from our tax incentive programs, and in some instances we already do. For years, Pittsburgh has required developers who receive public subsidies to pay going-rate wages to the construction workers who build their sites. This requirement has not deterred development. What it has deterred is the poverty that ensues when the city allows newly created jobs to pay barely more than minimum wage.
Working people in Pittsburgh don't want a handout; they want a decent wage for their hard work and fair use of their tax dollars. The going rate is the prevailing rate, and if the city continues to allow developers who receive handouts to undermine the business standards that have already been set, we will all lose out on what could be a resurgence of our middle class.
First Published August 12, 2009 12:00 am