Excerpted from Mayor Bloomberg’s speech yesterday, explaining his decision to veto the prevailing- and living-wage bills.
The City Council has recently passed a bill, and is about to pass a second bill, that imposes costly conditions on businesses — that will make it harder for government to encourage job creation and harder for businesses to grow.
Those bills — the so-called living- and prevailing-wage bills — are throwbacks to the era when government viewed the private sector as a cash cow to be milked, rather than a garden to be cultivated.
We can’t afford to go back to those days. We can’t take our economy for granted.
Think about it this way: If you want to encourage a business to open in a particular location that no one’s been willing to invest in for decades, you can’t tell them that they have to pay a higher minimum wage than the competitor across the street. They won’t do it.
And those jobs will be lost, and so will the tax revenues they would’ve generated.
Under the prevailing-wage bill, if the city leases space in a private building, the building’s owners can’t pay its service workers the going rate — as any other building would, including a building next door. Instead, they must pay whatever the city comptroller decides.
Now, no building owner would sign a lease with the city unless the city pays the owner’s added costs from having to pay the higher, government-mandated wage. So, as a practical matter, New York City would pay part of the wages.
The living-wage bill would be even more costly to taxpayers. It would require businesses that get more than $1 million in tax abatements or other incentives from the city to pay all of their workers at least $10 an hour with benefits, or $11.50 an hour without benefits — even though a business across the street wouldn’t have to pay those higher wages.
That means one of two things:
* Either those businesses will decide not to proceed with their investment because of the costs, which would kill all the jobs that would have been created — hurting job-seekers and taxpayers.
* Or city government — meaning the taxpayers — would have to pay for those wage requirements by offering more generous financial benefits.
Look at FreshDirect: The City Council delayed the living-wage bill to ensure that it wouldn’t apply to FreshDirect, because it was clear that the bill would threaten FreshDirect’s plan to relocate to The Bronx, expand and create thousands of jobs.
But what about the next FreshDirect? It may decide not to stay — or not to come at all.
From Hunts Point to Willets Point to Coney Island, we’re working to revitalize long-neglected areas by attracting new investment. These bills would make that harder and more costly.
They’d make it harder and more costly for businesses to start, harder and more costly for businesses to stay — and harder and more costly for businesses to thrive.
I share the desire to see people earn higher wages and salaries, but there are no short cuts. Government can’t bend the laws of the labor market without breaking the bank — and destroying job prospects for people who most need work.
These bills also send a signal to the private sector that New York City may move to adopt even more requirements on wages — and more onerous regulations on their business — in the future.
When businesses lack confidence in what future conditions are likely to be, they sit on the sidelines. Some will leave — and others will decide to make their investments in another city. We can’t afford to lose out on those jobs.
Just about 30 years ago, I started a small business here in the city. Most people told me I was crazy, but I believed in my idea — and in the future of the New York City market.
My business turned out to be successful, due to a lot of reasons — including a lot of luck. But the most fundamental is very simple: After a terrible decade in the 1970s, New York City was succeeding in getting people and businesses to come and stay, and invest in their futures.
That is still true today — thanks to an awful lot of hard work. But we can’t take our economic growth for granted. As soon as we begin imposing costly conditions on companies to do business here, the smallest entrepreneurs and the biggest companies will decide to build their future elsewhere.
We just can’t allow that to happen. We’ve come too far over the past 10 years to turn back now. New York’s future could not be brighter — but that’s only true if we allow businesses to help us build it.