Sponsors and speakers to call for systematic reform of New York’s $2.6 billion Corporate Welfare program

Forum on Corporate Welfare and Corporate Accountability to be held in Troy at 7 pm on Wednesday, May 3, 2000.

For more information, contact Mark Dunlea at 518-434-7371 or Frank Mauro at 518-786-3156.

The Fair Budget Campaign will be conducting a forum on Corporate Welfare and Accountability on Wednesday, May 3rd at 7:00 PM at the First United Presbyterian Church, 1915 5th Avenue, Troy (2 blocks east of the Uncle Sam Atrium). The event is co-sponsored by Troy Area United Ministries.

The forum will feature a presentation by Greg LeRoy one of the nation’s foremost experts on economic development subsidy accountability. Mr. LeRoy is the Director of Good Jobs First, a national clearinghouse of information on the best state and local government practices in this field and the author of the 1994 classic No More Candy Store: States and Cities Making Job Subsidies Accountable. When it was published, No More Candy Store was the first only compilation ever of grassroots remedies for corporate welfare abuse — remedies like money-back guarantee “clawbacks,”requirements that corporate welfare recipients pay fair wages and benefits, rules for full disclosure, environmental protection and “anti-piracy” safeguards against “paying Peter to rob Paul” with taxpayers money.

Other speakers will include Elmer Bertsch an active member of two organizations that are dealing with subsidy accountability issues on a day-to-day, grass roots basis in Schenectady (Citizens for the Preservation and Revitalization of Schenectady and the Schenectady Greens),and representatives of two of the organizations that have been involve in the Fair Budget Campaign’s efforts at the state level: Frank Mauro of the Fiscal Policy Institute and Mark Dunlea of the Hunger Action Network of New York State.

The forum will include a discussion of several controversial economic development projects in the Capital District, including Metroplex in Schenectady, Garden Way in Troy and Sysco Foods in Halfmoon.

The forum will also highlight the steps that an be taken by state and local governments to hold companies more accountable for the $2.6 billion in various forms of tax credits, subsidies, loans, grants and low-cost energy they receive annually from the state and local government in the name of economic development. The Fair Budget Campaign is supporting a series of state bills to ensure that corporate tax subsidies result in the creation or retention of living wage jobs; to require performance standards for companies receiving such subsidies; and, to require standardized reporting regarding job creation and retention from firms receiving tax subsidies.

Members of the Fair Budget Campaign include Citizen Action of NYS, Citizens’ Environmental Coalition, Environmental Advocates, Fiscal Policy Institute, Hunger Action Network of NYS, The Interfaith Alliance of NYS, New Yorkers for Fiscal Fairness, NYS Labor and Environment Network, SENSES, StateWide Senior Action Council of NYS, and the Student Association of the State University.

The forum is free and open to the public.

Street Addict

The city is less dependent on the stock market than in ’87, right? Wrong. Almost 20 percent of the city’s income is made on Wall Street — which could mean catastrophe in a crash.


When the long-running bull market took a week off in the middle of April, many New Yorkers couldn’t help indulging in a little schadenfreude. After all, the Internal Revenue Service reports that 75 percent of the capital gains earned during the recent boom accrued to just the richest 2 percent of New York taxpayers. Many of the rest of us have often felt shut out, like hired help at a dot-com launch party.

Well, be careful what you wish for. Because if you live in the city, the New York Stock Exchange bell tolls for you, too. We all know that Manhattan’s fortunes rise and fall with the movements of the Dow: Every major recession in the city’s economy since the Second World War has closely followed a sharp contraction on Wall Street. But during the recent boom, few have noticed that instead of diversifying, the New York economy has actually become more vulnerable to upheaval on the Street.

According to a recent study by the Federal Reserve Bank of New York, the city is four times as dependent on Wall Street as in 1969, before a bear market pushed the city to the brink of bankruptcy, and half again as dependent on it as in 1987, when Black Monday on Wall Street dragged the city into a deep recession that hit New York City a year earlier and far harder than the rest of the country. “Because Wall Street represents a much larger share of the city economy than at any time in the past, a significant downturn in the industry could result in more severe employment and income losses than those recorded in the 1970s or the early 1990s,” Fed economists Jason Bram and James Orr warned in their little-noticed report.

“Wall Street’s share of the economy is probably as high as you can get in terms of a city’s dependence on one industry. What’s unique is the volatility. You don’t see 50 percent swings from year to year in Hollywood.”

Consider the numbers. In 1987, 157,800 people, or about 4.4 percent of the city’s workforce, worked for investment banks and brokerage firms in New York. In salary and bonuses, they took home 11 percent of the total earnings paid to anyone who worked in New York — more than one dollar in ten of the city’s total payroll. To many in the other 95.6 percent of New Yorkers, the wages of Wall Street’s “Masters of the Universe” seemed excessive, even obscene. Little did we know.

Wall Street employment and compensation shrank drastically in the aftermath of Black Monday in October 1987, and then swelled again through the past decade. This time, however, many of the lower-paid jobs were relocated out of New York, leaving a purer distillation of the industry’s highest-paid. And that elite grew rich enough to put the Masters of the Universe to shame.

In 1998, Wall Street employed 166,000 people, up slightly to 4.7 percent of the city’s workforce. Now, however, those one in twenty New Yorkers take home 19 percent of the town’s total pay — nearly a fifth of citywide earnings and a more than 50 percent larger portion than in 1987. Last year, Wall Street’s fourth-quarter bonus payments alone rose 20 percent, to total $13 billion. The big firms’ equity-underwriting fees alone came to about $12.1 billion. By comparison, the sum of all the paychecks in the city came to about $250 billion.

“Wall Street’s share of the New York City economy is probably as high as you can get in terms of a city’s dependence on one industry,” says James Parrott, chief economist at the labor-funded Fiscal Policy Institute. “What’s unique is the volatility — you don’t see 50 percent swings in earnings from one year to the next in Hollywood or the federal government.”

In his previous job, as Carl McCall’s chief economist, Parrott was the first to charge that New York’s booming economy was built on a precarious foundation. Charting the city’s recovery from 1990 to 1997, he discovered that 97 percent of the increase in the city’s total paychecks went to workers on Wall Street.

Mayor Giuliani and Governor Pataki instantly blasted the numbers as partisan propaganda. They pointed to the fact that although Wall Street began to rebound in 1990, the rest of the city didn’t turn around until 1992. So measuring from 1990 is like starting a race when one of the contestants is still in the locker room. (Parrott acknowledged that, starting from 1992, when the recovery had begun to spread, securities firms accounted for 56 percent of the total increase in citywide earnings by 1997 — which is still a rather remarkable number.)

In part because of this partisan controversy, the New York Federal Reserve Bank’s Bram and Orr conducted a study of their own, and essentially concurred with Parrott. “People think this recovery is more broad-based,” says Bram, “but the fact remains that Wall Street is actually more important to the city than ever.”

When Bram and Orr released their results last summer, they carefully couched their findings to avoid partisan controversy, and their report was largely overlooked as the market broke new records. “Every time the stock market swoons, we say to each other, ‘Oh, now people will start dusting off our report,’ ” says Bram. “But as long as the market’s going up, people think, ‘Everything is great.’ ”

Robin Hood in reverse

May 1, 2000. An editorial in the Albany Times-Union:

New York state is taking federal welfare money to pay for middle-class subsidies

It’s been a while since a welfare scandal made headlines. Something like a welfare mother driving a Cadillac or someone collecting checks under several different names used to make for such easy political points. All that stopped, ostensibly, when President Clinton and Congress made good on their determination to end welfare as we once knew it.

Misuse of welfare funds is now as different as the new laws are from the old ways. The money being squandered now is federal funds sent to the state capitals to run the very program that the federal government has otherwise washed its hands of. Billions of dollars that could be going toward job training and other programs for the hard-core welfare population instead are being spent on tax cuts and municipal aid. Sadly, New York leads the way.

At least $1 billion in money intended to fund anti-poverty efforts has been indirectly diverted to uses more likely to appease the middle class, according to a New York Times report. The state can do this because the amount of available federal block grants is well in excess of the $1.7 billion a year that it is required to spend on welfare.

Only wait until Washington catches on. How easy it would be to cut such funding, on the grounds that it isn’t needed.

But it is. New York still has more than 800,000 people on welfare, even as the deadline — five years and your benefits are exhausted — looms so close for any of them. Less than half of those on welfare now have a high school education. At least a quarter, it’s estimated, have drug and alcohol problems that could make it hard to hold down a job.

Self-sufficiency won’t be nearly as easy a journey for them as it’s been for the more than 540,000 who have left New York’s welfare rolls since the new federal law took effect. Whatever it is that the state intends to do when their public assistance runs out will cost, yes, money. Now might be the time to heed the warning of Roberto Ramirez, D-Manhattan, chairman of the state Assembly Committee on Social Services: “What the state is doing here is subsidizing other areas of government at the expense of welfare recipients. … We are being penny-wise and pound-foolish.”

The Pataki administration counters that the state has spent $10 billion of its own money on the welfare class since 1996, and stresses how that’s a lot of money.

And it is. But it might not be enough, especially when federal anti-poverty funds can be spent elsewhere.