EDC Annual Investment Report Critique Based on Job Quality

Obsolete Economic Development Strategies of the EDC New York City Economic Development Corporation (EDC) is the Citys primary agency for economic development. Its principal mandate is to encourage investment and attract, retain and create jobs in New York City.1 In order to bring about accountability and transparency to its mission, Local Law 48 requires the EDC to submit an investment report every year containing descriptive data on ongoing economic development projects. According to its mission, the Corporations economic development model can be broken down into two agendas which justify its financial assistance efforts to encourage investment and retain and create jobs. On the investment side, as detailed in EDCs Annual Investment Projects Report FY 2010, EDCs economic development agenda has only cost the city roughly $900 million and brought about $28 billion in benefits for a cumulative net benefit to the city of roughly $27 billion in city investment.2 As for employment the Investment Report summarizes that four percent of total private employment in New York City occurs on EDCs investment project locations.3 At the intersection of the two development approachesinvestment and job growthlies one of the fundamental goals of any economic development program: affordable, attractive, and vibrant neighborhoods and communities. And while EDCs reported investment numbers appear to benefit the city ($27 billion net benefit to the city) they mask a development strategy that does not create quality jobs that pay a sustaining, livable wage and is, therefore, harmful to neighborhoods and benefits the city that much less. Job creation is the principal mandate of the Corporation. However, the over 500 page EDC Investment Report only slightly focuses on employment data. From what little employment numbers are published in the report, the discussion below attempts to calculate job creation costs. Table 1 in the appendix was drafted from the 2010 Annual Investment report and presents employment data for the nine main EDC economic development programs. In order to obtain a more accurate cost to

1 2

NYCEDC, Annual Investment Projects Report, Pursuant to Local Law 48 FY 2010, Volume 1, pg. 2. ibid. pg. 1. 3 ibid.

taxpayers of EDC development projects a common calculation4 is a cost per job created. The three worst performing programs on a cost per job basis are: Economic Development Program Manufacturing Facilities Bond Pooled Bond Commercial Growth Project Cost per Job Created $284,099 $188,643 $183,036

Unpacking this, it is important to note that Commercial Growth Projects receive nearly half of all public assistance given by the EDC ($406,707,000) with a cost to the city of $183,036 per job. But worse than this, the low-wage jobs created by this program increase this cost greatly as such jobs undermine family and community wellbeing. It is easy to see through the rhetoric of jobs at any cost for a typical job created through an EDC Commercial Growth Project costing the city $183,000 often pays poverty wages. Basing economic development on job numbers rather than on job quality is an obsolete development strategy beneath the status of a global city such as New York. EDCs fetish on employment numbers masks over the devastating effects of low-wage jobs on workers, their families and New York City communities. The Economic Development Corporation has capitulated its responsibility for job creation to corporations and developers leaving job quality up to entities whose central goalprofitdemands lower labor costs. Mayor Bloomberg and his Development Corporation claim that the government should not intervene in the market, and in particular in the business of setting wages. But economic development is direct government intervention in the marketplace when city government provides public subsidies and tax breaks to corporations. How can they stop short on developing and supporting working families by providing quality jobs that pay decently when they give billions to corporations. By creating too many low wage workers the EDCs economic policy is a failed economic policy.

Interestingly the EDC does not make this calculation in its Annual Investment Report.

Appendix

Table 1: Cost of Job Creation

Employment Total Program Category Manufacturing Facilities Bond 42 152 43,183,000 284,099 56% 3,875 Projects Increase from Project Financial Assistance Cost per Job % Earning <$25,000* Construction Jobs

Not-for-Profit Bond

136

1,763

48,627,000

27,582

20%

3,826

Pooled Bond

60

14

2,641,000

188,643

29%

237

Exempt Facilities Bond

11,864

85,601,000

7,215

5%

5,125

Liberty Bond Small Industry Incentive

7,125

9,661,000

1,356

0%

296

71

527

34,417,000

65,307

NA

1,980

Industrial Incentive Commercial Growth Project

109

5,120

185,132,000

36,159

29%

7,757

29

2,222

406,707,000

183,036

5%

35,969

Land Sale

70

5,625

53%

1,780

* Reporting employment earnings are only required for companies with more than 250 employees