How to Fight Poverty in Syracuse

Community Hiring Hall, Green Jobs, Living Wages, Municipal Development Banking

Labor Day, September 7, 2009

by Howie Hawkins
Green Party candidate for 4th District Councilor

Studies of the 2005 US Census Bureau survey show that Syracuse has the third highest overall poverty rate (31.3%) - and the very highest black poverty rate (42.5%) - of the central cities in America's 100 largest metropolitan areas. They also show a child poverty rate of 45%.

High levels of poverty and unemployment have become entrenched in Syracuse recent decades as jobs in manufacturing with decent wages and benefits have been replaced by low-wage, low-benefits service and retail jobs. These problems are more concentrated among, but not exclusive to, African Americans and other people of color in Syracuse.

Without basic changes in how Syracuse does economic development and shares its benefits, there is no reason to believe poverty and unemployment in the city will be reduced. The prevailing approach for decades has been the "trickle down" approach - public investment in the form of tax breaks and subsidies to wealthy, often absentee, owners hoping to stimulate private investment and economic activity, and hoping that, indirectly, the resulting benefits of economic growth will trickle down to poor, working, and middle class people in the city. The poverty statistics, as well as other indicators of economic stagnation, show that the trickle down approach has been an abject failure.

Syracuse needs a new approach. I advocate a direct approach of targeting economic development resources to low- and moderate-income people.

There are many measures along these lines that I advocate, from improving our schools and preventing crime with youth job and recreation programs to reducing utility costs with public power and making the local tax structure progressive by shifting the burden of taxes from property and sales to income. But I want to focus here on the four measures that address poverty and unemployment most directly through living wage jobs and cooperative ownership of productive assets for low-income people.

Community Hiring Hall - Raise the city's affirmative action goals for minority employment by the city and its contractors from 8 percent (established in 1972) to 40 percent to reflect the composition of Syracuse today and require the city and its contractors to hire from a Community Hiring Hall if necessary to meet these goals.

Green Jobs - Provide a skilled work force for green energy, construction, and other green tech industries through a Green Tech Training Center and a Green Job Corps housed at the Community Hiring Hall, especially for at-risk youth and ex-offenders.

Living Wages - Expand coverage of the living wage ordinance to cover all employees of the city and city contractors initially, and eventually cover all workers in the city, private as well as public, through a municipal minimum wage that is a living wage.

Municipal Bank - Create a city-owned bank with two departments: (1) A consumer loan department provide home mortgage and improvement and other consumer loans to neighborhoods that have been redlined and discriminated against for decades, and (2) A business development department to help plan, finance, and advise new community-owned businesses.

After providing some background information on poverty and unemployment in Syracuse and on minority employment by the city and its contractors, I will discuss these five measures in more detail.

Concentrated Poverty and Unemployment in Syracuse

A June 2004 study using 2000 US Census data by the Children's Defense Fund reported that the poverty rate for Syracuse children is more than 35 percent. As noted above, 2005 US Census data found the child poverty rate to be 45 percent. But the Children's Defense Fund report gave an indication of the degree of extreme poverty. It found that one in six Syracuse children live in extreme poverty in households with less than $8,000 annual income. Nearly one-half of black children and more than one-half of Latino children lived in poverty in 2000. More than half of Syracusans lived in low-income households, defined as less than two times the federal poverty line.

The concentration of poverty can be seen by looking at 2000 US Census data for particular census tracts. In the census tracts in the economically depressed Near South Side and Near West Side neighborhoods, household poverty rates were in the 40 to 55 percent range in 2000, with child poverty rates up to 60 percent. Among residents of these census tracts in their prime working years of 25 to 54 years old, only 40 to 60 percent of both males and females have jobs, indicating a real unemployment rate of about 50 percent. The minority population in these census tracts is in the 70 to 90 percent range.

Minorities Under-Represented in the Workforce of the City and Its Contractors

Minorities are underrepresented in the workforce of city contractors. According to data compiled by the Syracuse/Onondaga Human Rights Commission, of 42,184 people employed by city contractors in the years 2004 through 2008, minority employment ranged between 16 and 20.3 percent in a city where people of color grew from 40.9 to 44.9 percent of the population. African Americans held only between 6.9 and 9.7 percent of these jobs when they grew from 25.8 to 27.5 percent of the city's population. Moreover, people of color are clustered in the lower paying job categories. See the charts appended at the end for a detailed breakdown of these numbers by ethnicity, gender, and occupation, for the years 2004 through 2008.

City Ordinance 302 (1973) set up an Equal Employment Opportunity Program instructing the Purchasing Department to collect and forward to the Human Rights Commission data on minority employment by city contractors. The Human Rights Commission (HRC) monitors this data to see if contractors are meeting a goal of 8 percent minority employment. The Human Rights Commission can recommend to the city that it deny contractors failing to meet this goal the privilege of bidding on future contracts. The goal of 8 percent dates from the early 1970s, but it no longer corresponds to the 45 percent minority population in the city.

A goal of 10 percent for black employment in the Police and Fire departments dates from a 1980 consent decree resulting from an anti-discrimination lawsuit. The city still operates under that consent decree. As of April 2005 according to the city's Personnel and Labor Relations office, the Fire Department had surpassed this goal, with blacks comprising 15.3 percent of the workforce. But blacks were only 9 percent of the officers in the Police Department. Both of these numbers are well below the 28 percent black population of Syracuse.

The goal of 8 percent minority employment for city and city contractor employees apparently dates from the "Syracuse Plan," a federally approved equal opportunity program adopted April 7, 1972 pursuant to a federal executive order and federal regulations set forth at that time. It covers city contractors, including unions with city contracts, according to City Ordinance 302 (1973). As far as we have been able to determine, no one is tracking and reporting on the composition of the city's direct workforce, except for the Police and Fire departments, which are covered by the 1980 consent decree. Indeed, there does not seem to be any city staff person responsible for an affirmative action or equal opportunity program with respect to minority employment by the city or its contractors other than the monitoring done by the Human Rights Commission. There is a staff person working to insure that women receive at least 6 percent and minority contractors receive at least 9 percent of the value of city construction projects over $20,000 and in 2004 the combined total was 20 percent.

The Joint School Construction Board has adopted a Diversity Plan, which calls for a 10 percent minority employment goal for the $1 billion schools renovation project. Again, this is far below the 45% minority population of the city.

Affirmative Action for Equal Employment Opportunity

As the 4th District, I would propose a vigorous program of affirmative action for equal employment opportunity, with the necessary resources and staffing to meet its goals.

The minority employment goals should be raised from 8-10 percent to at least 40 percent to correspond to the minority population in the city.

Within that 40 percent overall minority employment goal, there should be a goal of 25 percent black employment because blacks are the most underrepresented group among the workforce of the city and its contractors.

In addition, I would establish a city resident goal of 50 percent. City residents should be first in line to receive jobs with city tax dollars and have preference in hiring among otherwise qualified candidates. Hartford CT is an example of a city that has combined city resident with minority employment goals in its contracting process.

Community Hiring Hall

I also advocate the creation of a Community Hiring Hall from which the city and its contractors would be required to hire if they could not meet their affirmative action goals from their own workforces and recruitment efforts.

Community Hiring Halls have been established in several cities. Some were organized by minority workers organizations like Harlem Fightback and the Chinese Construction Workers Association in New York City, which tried for many years to break down racial barriers to construction jobs and the building trades unions. Others were organized by community and religious activists to help temporary laborers.

Some of these Community Hiring Halls were funded by foundation grants to support their work. Others funded themselves by functioning as non-profit temp agencies. Harlem Fightback and the Chinese Construction Workers Association became a significant source of workers for construction contractors, particularly minority contractors. They advocated, but never received, municipal funding of their programs.

According to the AFL-CIO, at least 10 US cities, including Boston, New Haven, Detroit, Minneapolis, St. Paul, Cleveland, and Pittsburgh, encourage or require the use of Community Hiring Halls in hiring for public contracts to meet minority and city resident employment goals. These Community Hiring Halls were established as part of municipal living wage ordinances, which the AFL-CIO calls a "living wage plus" provision.

In addition to serving as a source of labor, Community Hiring Halls often provide other services to the workers who sign up for jobs there, including job and life skill training, health insurance, referrals to other services, and social support for workers, particularly youth, ex-offender, and minority workers, who may be entering new and sometimes hostile work environments.

The Community Hiring Hall would support the city's affirmative action goals and help youth, ex-offenders, and minority workers find and retain jobs. It would provide the support services that many Community Hiring Halls do as well as employment services. A board of labor, community, minority, and business representatives would govern it.

Green Job Corps and Green Tech Training Center

It seems everyone across the political spectrum in Syracuse these days agrees that green technologies are an industry cluster in which the region is strong and should be supported as a platform for sustainable economic development. From the SUNY's Environmental Sciences and Forestry Center for Excellence and Onondaga Community College's new green tech training programs to the many firms developing specialization in green engineering and construction and the green emphasis of the school renovations and Carousel Mall expansion projects, a green tech boom is already underway.

What's missing in Syracuse so far is a program focused on enabling the residents of low-income, inner city, and particularly minority communities to access these "green-collar" jobs.

The Community Hiring Hall should be a Green Tech Training Center, the point of access for its participants in the community to green tech job training. It should have a Green Job Corps program, particularly for at-risk youth and ex-offenders, where participants can access job training and jobs in public works to restore Onondaga Creek and retrofit the city's energy, transportation, housing, water, sewage, and waste recycling infrastructure for economic and ecological sustainability in an era of rising energy costs, supply shortfalls, and global warming.

The Community Hiring Hall should be the locus of a partnership among unions, community organizations, green tech and other job trainers, contractors, manufacturers, and the city to provide a skilled workforce to the green tech sector and access to those jobs for low-income and minority residents.

Expanded Living Wage

I was the first candidate for public office in Syracuse to call for a living wage ordinance in my race for councilor at-large in 1995. The ordinance that finally passed in 2005 is not what I had in mind 12 years ago. The living wage ordinance only covers a few hundred workers and exempts employees of the city, non-profit contractors, and businesses receiving economic incentives. A few of the Common Councilors said it needed to be expanded at the time they voted to adopt it in its current form. It is now four years later. What are we waiting for?

Implementation has been slow, but the impact on those covered so far is good. Its application to parking lot workers was held up by the city's decision to extend existing contracts with Murbro on a month-to-month basis, thereby supposedly preventing application of the living wage law. The workers sued and won back pay for 20 workers in late 2008. But by April 2009, the city administration found a loophole to change the workers from hires under a city vendor to hires under a state vendor and cut the workers' pay from $13 to $11 an hour.

In September 2007, the living wage law was applied to school bus monitors under a new contract that led to significant raises for bus drivers as well, who now make $16-$18 an hour and were above the living wage minimum to begin with. The bus monitors now make $12.78 an hour. About 300 people were affected, counting the bus drivers as well as monitors. One non-monetary benefit has been a drastically reduced turnover of bus drivers and monitors now that the living wage provides a decent wage and benefits, resulting in better safety for children taking the buses and savings on recruiting and training for the company.

12 employees at Hancock Airport are still fighting for a living wage under their city contractor.

As 4th District Councilor, I would make strengthening the living wage law my top policy priority. First, the existing law must be enforced immediately. Then we must expand the coverage of the city's living wage to cover all city workers and workers with city contractors, including non-profits and beneficiaries of economic development subsidies and tax breaks.

The city cannot credibly claim to be fighting poverty when it permits its own employees and most of its contractors to pay poverty wages. The city should not subsidize low-wage, low road employers. Lawyers said during the process leading to the passage of this year's living wage ordinance that coverage of some categories of workers would require city charter changes. We should make the necessary changes in the city charter to cover those workers.

There is talk now of taking the living wage movement to Onondaga County. I support that. But first, the city needs to be a better example, or a county living wage will be just as limited.

Our longer-range goal should be to pass a municipal minimum wage that is a living wage. Five US cities have done so in recent years, including New Orleans, Santa Monica, Santa Fe, Madison, and Washington DC. While the New Orleans law was overturned by a state court and the Santa Monica law narrowly repealed in referendum heavily financed by tourism business interests, the other three have been upheld in court challenges. The problem in New York is that New York City adopted a city minimum wage in 1961 that was overturned by the state courts. Whether it takes litigation or legislation to get that decision overturned, it is something we should pursue.

As Pres. Franklin Delano Roosevelt stated in his "Statement on the National Industrial Recovery Act," June 16, 1933:

… no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.…and by living wages I mean more than a bare subsistence level—I mean the wages of decent living.

If FDR could call for a living wage for all workers during worst year of the Great Depression, there is no reason why we cannot insist upon it today when the real gross domestic product per capita has increased over seven-fold since 1933.

Municipal Development Bank

The city and its contractors can only go so far in providing employment for low-income and minority workers. We also need to create new jobs in new or expanding businesses.

The best way out of poverty is a good job and ownership of productive assets. While some people can build ownership of productive assets through self-employment in owner-operated small businesses, the way most people will be able to participate in widespread ownership of productive assets is to develop businesses that are widely owned by their workers and/or community residents.

I advocate the creation of a municipal bank with a strong development department that can help plan, finance, and advise new community-owned businesses. By community-owned business I mean owner-operated small businesses, worker cooperatives, and community corporations where voting shares are restricted to residents, like the Green Bay Packers.

If the Syracuse Nationals had had the same ownership structure as the Green Bay Packers, Syracuse would still be an NBA city. The owner of the Buffalo Bills, 91-year-old Ralph Wilson, is not optimistic that a successor owner could keep the Bills in Buffalo's "small market" city under the new NFL Contract Benefits Agreement's revenue-sharing system. Perhaps it is time to propose regional community ownership with the Bills playing some home games in Syracuse.

Judge Joe Fahey proposed a community bank for inner-city and minority economic development in front of an abandoned bank during his Democratic mayoral primary campaign in 1993. 14 years later, inner-city neighborhoods still suffer from high unemployment and depressed business activity.

The municipal bank would be a full-service bank where residents could deposit savings and get home purchase and improvement loans and other consumer loans, particularly in the depressed neighborhoods of the city that have been historically redlined. In this area it could provide an alternative to the predatory lenders, increasingly owned by out-of-town giants like Citigroup, in the areas of rent-to-own, car loans, credit cards, and mortgage refinancing.

The municipal bank's consumer loan department would provide home mortgage and improvement and other consumer loans to neighborhoods that have been redlined and discriminated against for decades, going back to the Home Ownership Loan Corporation of the New Deal and the Federal Home Administration since World War II. The discrimination and redlining by banks and insurance companies continues to this day, as evidenced by recent studies documenting predatory lending and mortgage and insurance discrimination against minority neighborhoods in Syracuse. For example, of the 2,169 FHA loans issued in Syracuse between 1996 and 2000, 29 or 1.3 percent went to predominantly minority neighborhoods, while 1,694 or 78.1 percent went to white neighborhoods, with another other 446 or 20 percent going to integrated neighborhoods. (See http://syracusethenandnow.org/Redlining/Redlining.htm.)

We need a much more aggressive and direct approach to developing businesses in Syracuse than the tax breaks and other economic incentives that have been used in recent decades without much success. Some $2 billion in such corporate welfare was doled out by the city over five years in the late 1990s, according to a Forbes magazine article a few years ago. Rather than giving this money away to absentee-owners, we would be better served by investing these resources in community-owned businesses whose ownership structures anchor public investments to the community for its long-term benefit.

This consumer side of the Municipal Bank would complement the work already done in this area by the Syracuse Cooperative Federal Credit Union (SCFCU). Were it not for banking laws passed at the urging of the big banking interests that prevent cities and the state from depositing their money in credit unions and that limit business loans by community development credit unions like SCFCU to a small portion of their reserves, we could support community development credit unions to do the development banking work we propose for the Municipal Bank

The development banking is the unique feature of the Municipal Bank I propose. Its business-planning department would be staffed with business planners who could respond to requests for businesses that communities want. For example, while the upscale boutique grocery now in downtown is fine, there is still a need for a supermarket that serves the working people who live in or near downtown in Presidential Plaza, Pioneer Homes, McKinney Manor, 500 Clinton St., and so forth. The bank's business planners would also conduct market research to determine what new businesses could be created to employ Syracusans.

Three obvious categories of workers in Syracuse to consider assisting to develop worker co-ops are home health aides, temp agency workers, and building trades people. Worker co-ops have successfully been developed elsewhere in the United States in these industries.

The bank would be capitalized with the deposits of city funds, city residents and businesses, and hopefully some deposits from the county and unions, foundations, and religious organizations. Additional capitalization could come from bonding. (As an independent public institution with segregated finances, the city's bonding limit would not apply.) As it got up and running, the bank would generate its own income from its lending activities and the sharing of a small portion of the net income of community-owned businesses it helped to establish, as is done in the Mondragon, Spain and Emilia-Rogmana, Italy, examples we will look at it below.

To develop a new community-owned business, the planners would draw up a business plan, arrange the financing, hire the staff and train them to operate the business, and advise it as it got up and running. When the workers could manage it on their own, they would buy the assets of the business from the bank and own it as owner-operated proprietorship if was small or as worker cooperative or community corporation if it was larger. The proceeds of the sale of the assets would go back to the bank to be used to finance more new community-owned businesses.

Several experiences inform this idea of development banking to promote community-owned enterprises.

One is the Mondragon Cooperative Corporation in the Basque region of Spain. Over the last forty years, its Working People's Bank has developed 160 affiliated industrial worker cooperatives employing over 104,000 worker-owners. Its consumer cooperative has some 500,000 members and employs 32,000 people. Overall sales are today approaching $24 billion annually and it administers over $44 billion in assets. Each affiliated co-op contributes 10 percent of its net income to finance the bank. While the planning and development of new cooperatives was originally done within the Working People's Bank, the bank has used some of its assets to endow three research and development institutes to perform that function today and a Mondragon University where 4,000 students are enrolled in technical and management studies to prepare them for work in the cooperatives.

Another more decentralized example is the flexible manufacturing networks organized by worker cooperatives in the Emilia-Rogmana region around Bologna and the Po River Valley in Italy. Since World War II, an extensive network of both craft-based and high-tech manufacturing cooperatives has developed. Today there are about 8,000 of these worker cooperative employing over 250,000 manufacturing and construction workers. They have developed the Emilia-Rogmana region from one of Europe's poorest at the end of World War II into the 10th in per capita income among the 122 regions in the European Community.

They are called flexible manufacturing networks because these small co-ops with an average of 10 workers compete for contracts, but owing to their ethic of cooperation as well as reasons of practicality, the winners hire the loses as subcontractors. Workers move easily among firms (as they do among the Mondragon cooperatives) as demand shifts from one product to another.

Rather than a central Working People's Bank, the Emilia-Rogmana cooperatives have been supported by regional government-financed industry-specific service centers that provide research and development consultations, technical services, and business planning, marketing, and management training. The cooperatives also have established their own Co-op Fund, which supplies capital and is funded by a 3 percent contribution of net income from each co-op.

The flexible manufacturing network of worker cooperatives may be particularly applicable to the green tech sector, whose support is widely advocated in Syracuse. Given the competitive bidding for research and development and construction contracts by many smaller firms that characterizes this sector, the flexible manufacturing network model would enable green tech co-ops to compete for contracts and then cooperate as contactors and subcontractors in their execution.

Syracuse almost had a small demonstration project for this kind of development of worker-owned businesses when the Westside Innercity Association received a grant at the end of the Cuomo administration that was rescinded by the incoming Pataki administration. It would have created a business incubator that would have provided business planning assistance and spun off worker-owned small businesses on the Near West Side. In the intervening years, the conventional economic development practices of the city have done next to nothing for neighborhoods like the Near West Side. The central purpose of the Municipal Bank would be to focus on development in the most distressed neighborhoods.

Worker cooperatives are an underutilized economic form in the United States. In Europe there are approximately 50,000 worker co-ops with more than 1.4 million worker-owners.

A Legislative Analyst Report on municipal banks authorized by the San Francisco County Board of Supervisors in a resolution introduced by a Green Party member of the board, Matt Gonzalez, found that the only municipal bank in the United States is the Maine Municipal Bond Bank, which was created by the state legislature in 1972 to help Maine towns and other governmental entities access national money markets for public borrowing needs. The Report found there were four municipal banks around the world in Berlin, Moscow, Beijing, and Jakarta, but they, too, were focused on municipal financing or, in the Beijing case, strictly consumer lending. A more relevant example of public development banking in the United States is the Bank of North Dakota, a state-owned bank established in 1919 when the Non-Partisan League captured the state legislature with the mission of "promoting agriculture, commerce and industry" in the state. The Bank of North Dakota has remained popular through the subsequent administrations of both Democrats and Republicans and consistently returned a surplus to the state treasury over the years. It now provides student loans as well as loans for farmers and businesses in the state.

Learning from these experiences, the Municipal Bank would prioritize its development efforts on four over-lapping areas:

Developing community-owned enterprises in the depressed neighborhoods of the city like the Near South Side and Near West Side.

Developing community-owned manufacturing plants that provide $40,000 a year incomes on average in the light industry zones along the old Erie Canal and the near South Sides, particularly in the green technology fields as we have proposed in our Sustainable Syracuse development strategy.

Developing businesses that neighborhoods decide they want in the neighborhood-directed development process based on Neighborhood Assemblies we have been advocating.

Home and consumer credit and other financial services for the inner city communities that have suffered massive disinvestments due to decades of discrimination and redlining.

Finally, we want the Municipal Bank keep to its mission over succeeding administrations and not become the kind of patronage and corporate welfare vehicle that the state public authorities have become because the governor and legislature appoint the leaders who run the agencies autocratically. To promote the independence of the Municipal Bank, its board should be independently and publicly elected as we elect the school board. We should have each of the Neighborhood Assemblies we have proposed electing a bank board member.