An Anti-Poverty Program for Syracuse

from the 2005 campaign for Mayor

High levels of poverty and unemployment have become entrenched in recent decades as service and retail jobs have replace many of the jobs in manufacturing. 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 approaches economic development and shares its benefits, there is no reason to believe poverty and unemployment in the city will be reduced. Syracuse needs a new approach.

Matt Driscoll says his policies are working, but it is hard to find any signs of change in depressed neighborhoods like the Near South Side where I am releasing this position paper. Joanie Mahoney's anti-poverty program merely seeks better coordination of existing service agencies that provide services to the poor and calls for twenty-five student interns from Maxwell School to help with economic development as they get on-the-job training. We need stronger and quicker remedies than these.

There are many measures that can help alleviate poverty, from improving our schools and steering disadvantaged youth away from criminal enterprises with 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. However, I want to focus today on the four measures that address poverty and unemployment most directly:

Affirmative Action for Equal Employment Opportunity – Raise the city's affirmative action goals for minority employment by the city and its contractors from 10 percent (established in 1973) to 40 percent to reflect the composition of Syracuse today. Add a 50 percent city resident employment goal.

Community Hiring Hall – Require the city and its contractors to hire from a Community Hiring Hall if necessary to meet these goals.

Expanded Living Wage – Expand coverage of the living wage ordinance to cover all city and city contractor employees initially and eventually all workers in the city, private as well as public.

Municipal Bank to Develop Community-Owned Businesses – Create a city-owned bank with a strong development department that helps plan, finance, and advise new community-owned businesses.

Poverty and Unemployment in Syracuse

A June 2004 study by the Children's Defense Fund reported that the poverty rate for Syracuse children is over 35 percent. 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 live in poverty. More than half of Syracusans live in low-income households, defined as less than two times the federal poverty line.

US Census data show that overall Syracuse poverty rate is 27.3 percent. In the census tracts in the economically depressed Near South Side and Near West Side neighborhoods, household poverty rates are in the 40 to 55 percent range, with child poverty often approaching 60 percent. Among residents in 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. The minority population in these census tracts is 70 to 90 percent.

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 63,674 people employed by city contractors in 2004, only 11,158, or 17.5 percent were people of color in a city were people of color are over 40 percent of the population. African Americans held only 5,470 of those jobs, or 8.6 percent when they are 25.3 percent of the city's population. Moreover, people of color are clustered in the lower paying job categories. (See the chart appended at the end for a detailed breakdown of these numbers by ethnicity, gender, and occupation.)

City Ordinance 302 (1973) created an Equal Employment Opportunity Program suggesting that the Purchasing Department 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 or 10 percent minority employment (the HRC web site says 10 percent, the HRC 2004 annual report says 8 percent). 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 or 10 percent dates from the 1970s when this program was first set up. It no longer corresponds to the over 40 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, under which the city is still operating. 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. Blacks were only 9 percent of the officers in the Police Department. Both of these numbers are well below the 25 percent black population of Syracuse .

The goal of 10 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 keeping track of 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; in 2004 the combined total was 20 percent.

Affirmative Action for Equal Employment Opportunity

As Mayor, I would create a vigorous program of affirmative action for equal employment opportunity and provide it with the necessary resources and staffing to meet its goals.

I would raise the 10 percent minority employment goal to 40 percent to correspond to the minority population in the city.

Within that 40 percent overall minority employment goal, there would 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. Moreover, city residents are more likely to provide better service since they live with the residents who receive them. Hartford CT has combined city resident with minority employment goals in its contracting process.

Community Hiring Hall

I would also establish 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 that 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. The minority workers organizations like 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-offender, 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.

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 earlier this year is not what I had in mind 10 years ago. The living wage ordinance only covers 50 to 100 workers and exempts city employees, non-profit contractors, and recipients of economic incentives. A few of the Common Councilors said it needed to be expanded at the time it was adopted.

I would make moving rapidly to expand the coverage of the city's living wage a top priority. The city cannot credibly claim to be fighting poverty when it permits its own employees and the employees of most of its contractors to be paid poverty wages.

The first step should be to include all city employees and employees of city contractors in the coverage. 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 idea, but first, the city needs to set a better example, or a county living wage will be just as token.

My longer-range goal is 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 was narrowly repealed in referendum heavily financed by tourism business interests, the other three laws 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 a state court. Whether it takes litigation or legislation to get that decision overturned, it is something I would pursue as Mayor.

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 Bank to Develop Community-Owned Enterprises

The city and its contractors cannot be the sole providers of employment for low-income and minority workers. We also need to create many additional 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.

As Mayor I would create a municipal bank with a strong development department that can help plan, finance, and advise new community-owned businesses. Under the concept of community-owned businesses I include owner-operated small businesses, worker and consumer cooperatives, and community corporations where voting shares are restricted to residents, like the Green Bay Packers.

I am releasing this position paper on the same corner where 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. Twelve years later, this and other inner-city neighborhoods still suffer from high unemployment and depressed business activity.

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 to promote economic development without much success. The more recent targeting of these benefits to low-income neighborhoods with various forms of enterprise zones has met with even less 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. With local community ownership, assets and wealth accumulate within the community instead of being siphoned out when absentee-owned corporations establish franchises and branches here.

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.

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 that we propose for the Municipal Bank.

The development banking is the unique feature of the Municipal Bank we propose. Its business planning department would be staffed with experienced business planners with expertise in different fields, from retail to manufacturing. They would also research what new businesses could be developed to employ Syracusans and meet community needs and then begin to develop those businesses.

The bank's business planners would also respond to requests for businesses that neighborhoods decide they want in the neighborhood-directed planning process based in the Neighborhood Assemblies we have proposed. For example, while the upscale grocery recently announced for downtown is fine, there is still the long-expressed 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 Municipal Bank develop that supermarket.

The bank would be capitalized with the deposits of city funds, city residents and businesses, and hopefully the county and unions, foundations, and religious organizations. Additional capitalization could come from city bonding. As it got up and running, the bank would generate its own income from its lending activities and from payment by affiliated community-owned businesses it has helped of a small portion of their net income, as is done by the cooperatives to their cooperative financial institutions in Mondragon , Spain and Emilia-Romagna , Italy .

To develop a new community-owned business, the planners would draw up a business plan, arrange the financing, hire and train the staff 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 a owner-operated proprietorship if was small or, if was larger, as a worker cooperative, a consumer cooperative, or a community corporation. 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 successful 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 42,000 worker-owners. Its consumer cooperative has some 300,000 members and employs 32,000 people. Gross revenues are today approaching $5 billion annually and it administers over $5 billion in financial 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-Romagna 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 cooperatives employing over 80,000 manufacturing workers. They have transformed the once depressed agricultural region of Emilia-Romagna from one of Europe 's poorest at the end of World War II into the 10 th highest 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, as well as conventionally structured firms in the region, compete for contracts, but owing to the co-op's ethic of cooperation as well as reasons of sheer practicality, the winners often hire the losers as subcontractors. Workers move easily among firms (as they do among the Mondragon cooperatives) as demand shifts from one product to another, creating employment security despite changing markets that impact some firms negatively.

Rather than a central Working People's Bank as in Mondragon, the Emilia-Romagna 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 member co-op.

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. The project would have created a business incubator that provided business planning assistance and spin 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. A central purpose of the Municipal Bank would be to focus on development in the most distressed neighborhoods.

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 closest thing to a 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 that have been focused on the development banking we are considering here for Syracuse . They may have lessons for a Syracuse Municipal Bank.

A third successful example about which we know more is the only publicly-owned development bank in the United States . The Bank of North Dakota is a state-owned bank established in 1919 after the Non-Partisan League swept into power in the previous election. The bank's the mission is “promoting agriculture, commerce and industry� in the state. The Bank of North Dakota has consistently returned a surplus to the state treasury over the years. It has remained popular through the subsequent administrations of both Democrats and Republicans. It now provides student loans as well as loans for farmers and businesses in the state.

Learning from these experiences, the Syracuse Municipal Bank would prioritize its development efforts on three 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 advocated throughout this campaign.

Finally, we want the Municipal Bank to adhere to this mission during succeeding administrations, unlike the state public authorities which have become vehicles for patronage and corporate welfare because the governor and legislature appoint their leaders to run the agencies autocratically. To promote the independence from patronage and the democratic accountability of the Municipal Bank, its board would be publicly elected as we elect school board. Each of the Neighborhood Assemblies would elect a bank board member.

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