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VOL. 124 | NO. 52 | Tuesday, March 17, 2009

Council, Commission Mobilize Against State Wage Bill

By Andy Meek

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“What we’re saying in this is … ‘Local government, you don’t know what’s best in your community. We know what’s best up here in this room.’”
– Jim Kyle
State Senator, D-Memphis

A bill passed by the Tennessee Senate Thursday and sponsored by a state lawmaker from Germantown would prohibit local governments from requiring private employers to pay their workers a living wage.

Meanwhile, the measure has generated a political backlash in the backyard of the bill’s sponsor, Republican state Sen. Paul Stanley. It also has raised questions about how the local area’s premier economic development tool – tax breaks offered by the Memphis-Shelby County Industrial Development Board – might be affected.

The strongest reaction has come from the legislative bodies of Memphis and Shelby County, which want to defeat the legislation in the state House of Representatives, where it’s now pending. The Memphis City Council is expected to approve a joint resolution today in partnership with the Shelby County Board of Commissioners asking that the Shelby County legislative delegation and the state Legislature oppose the bill.

The council likely will vote on the joint resolution at the body’s executive session today at 2 p.m. at City Hall, 125 N. Main St.

“The Board of County Commissioners of Shelby County, Tenn., and the Memphis City Council believe that each local government should be able to preserve its autonomy and be allowed to decide at the local level whether wage measures should be instituted,” reads a draft of the resolution.

Careful machinations

Paul Stanley

The text of the bill proposed by Stanley does not use the phrase “living wage,” which is not specific and can vary from place to place. The phrase generally describes wages that are higher than the federal minimum of $6.55 per hour. That minimum will be raised in July to $7.25 per hour.

The goal of the bill is to prevent local governments from doing what’s done in Memphis, which requires that city contractors pay their workers a living wage.

“We all want workers to make as much as they can, and the free market system does the best job of establishing those wage rates,” Stanley told his fellow lawmakers prior to Thursday’s vote. “If the living wage is such a great idea, why don’t 95 counties in this state recognize it? Why don’t most of the counties in the nation? Why don’t most of the states?”

Political realities in Nashville have done much to shape reaction to the bill thus far. The bill passed 18-13 in the state Senate, reflecting the larger majority Republicans enjoy there than in the House. The makeup of the state Senate is 19 Republicans and 14 Democrats.

In the House, the split is an even 49-49, with House Speaker Kent Williams casting himself officially as a “Carter County Republican” after having been stripped of his state Republican Party affiliation.

The legislative makeup of the General Assembly appears to have something to do with why local leaders haven’t weighed in on the bill in a major way. After a discussion with county commissioner Steve Mulroy, Shelby County legislative liaison Dottie Jones told other local economic development officials in an e-mail that it might be prudent to watch the bill’s next movement “before we go out on a limb in opposition to the Republicans right now.”

Big government – or small?

Various members of the Shelby County delegation in the state Senate, though, hammered supporters of the bill before last week’s vote by claiming it chips away at local sovereignty. State Sen. Jim Kyle, D-Memphis, invoked the name of Ronald Reagan in criticizing the idea behind Stanley’s proposal.

“Everything that goes around comes around,” Kyle said. “When I first came to this Legislature, what did I hear this side of the room talk about? – and we quote Ronald Reagan – ‘We don’t need the centralized government telling us how to live.’ Government that governs least governs best. Local control. Railing against federal mandates.

“What we’re saying in this is … ‘Local government, you don’t know what’s best in your community. We know what’s best up here in this room.’ (Living wage requirements in Memphis and elsewhere) were enacted by elected officials who have to get re-elected.”

State Sen. Beverly Marrero, D-Memphis, was more direct in her opposition.

“Our City Council and our County Commission have deemed to pass a living wage bill, which pays people $10 an hour,” she said. “They represent my city and my county, they were elected by the people in my city and my county, and they are accountable to the people that live in my city and county.”

The text of the bill prohibits local governments from setting the variations in wage rates, and it defines local government as any county, metropolitan or municipal government “or any agency or unit thereof.”

It is not yet clear what that would mean for the local IDB, which has a living wage requirement among the recommendations for companies that apply to the board for tax breaks. The board’s current policy stipulates that the target wage for project jobs is $35,000.

At the current federal minimum wage level, a worker paid that amount earns a little more than $13,000 a year.

That extra mile

On one hand, IDB officials could argue they are not forcing any company to apply for their program and adhere to a living wage requirement. The living wage component is only one piece in a mix of factors when deciding whom to grant tax breaks.

On the other hand, there might be an opening for companies applying to the program to resist the living wage standard on the grounds that in any other setting, a private company would not have to adhere to it if the bill becomes law.

Charles Gulotta, executive director of the city-county Office of Economic Development, said his office is still looking over the terms of the pending legislation.

“The philosophy we see is the PILOT (payment-in-lieu-of-taxes) is an incentive for companies to locate and expand here,” Gulotta said. “And in order to get the great tax benefits, we want them to provide living wages, insurance, we want them to support locally owned, small businesses and minority businesses and women businesses, so we support provisions that make companies go a little bit further to securing the incentives.”

PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396