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Union helps write living wage ordinance that could cost taxpayers millions

By   /   January 10, 2014  /   No Comments

WHO'S HELPING WHOM?: The Service Employees International Union collaborated with Milwaukee County Supervisor David Bowen in writing a living wage ordinance that tries to improve union revenues while potentially costing taxpayers millions.

WHO’S HELPING WHOM?: The Service Employees International Union collaborated with Milwaukee County Supervisor David Bowen in writing a living wage ordinance that tries to improve union revenues while potentially costing taxpayers millions.

 

By Adam Tobias | Wisconsin Reporter

MILWAUKEE, Wis. — Big Labor has helped a Milwaukee County Board member write a union-boosting minimum wage proposal that could cost taxpayers more than $27 million over the next six years.

The “living wage” ordinance also could bankrupt the county’s Department of Family Care, stunt job growth and hinder future development, according to a fiscal analysis by the county’s nonpartisan comptroller’s office.

County Supervisor David Bowen wrote the legislation in collaboration with the Service Employees International Union.

Bowen, endorsed by the SEIU Wisconsin State Council in his 2012 election, worked with labor union representatives on about 15 drafts and met with them several times in his office at the county courthouse, County Supervisor James “Luigi” Schmitt confirmed.

“SEIU, they’ve been lockstep with it,” Schmitt told Wisconsin Reporter.

The proposed law would set a living wage of $12.45 per hour for 350 county employees and hundreds of others who work under contract with the county.

The proposal, however, offers contracting firms an exemption from the wage hike, but only if their workers are covered by a collective bargaining agreement between the employer and a bona fide labor union.

“This is obviously an attempt to strengthen unions that have pretty much gone to the wayside,” Supervisor Steve Taylor said. “It’s frustrating that, for their own self-interest, they are going to drive jobs out of Milwaukee County. They are more focused on their own membership and their own power and strength than they are to the average working people of the county.”

The living wage ordinance also could remove close to $27.4 million from the tax levy through 2019, according to a report by Milwaukee County Comptroller Scott Manske.

Annual costs could reach more than $8 million after 2017, the year when the Family Care program’s reserves are expected to run out.

Expenses also will continue to increase as contracts expire and the bidding for new agreements requires compliance with the minimum wage ordinance.

Additionally, the living-wage rate increases, on average, by about 2.5 percent every year.

If a developer chooses to receive financial assistance of more than $1 million from the county, that company and their site’s tenants also would be subject to the minimum wage ordinance.

Manske said the county’s minor role in economic development would then become “non-existent.”

That could lead to the county losing out on an estimated $34.5 million in land sales, $11 million in additional tax revenue and 8,700 new jobs.

“There is no free lunch,” said Chris Edwards, director of tax policy studies at the Cato Institute. “Every dollar of mandated increase in wage is a dollar coming out of somewhere else in the economy. These politicians seem to think money grows on trees and it just doesn’t. There’s no Santa Claus here. All of this has to be paid for.”

Santa would instead visit the homes and offices of officials and members of an SEIU hit hard since Wisconsin in 2011 passed Act 10, Gov. Scott Walker’s signature law that reformed collective bargaining for government employees.

The Milwaukee SEIU reported revenue of $1,878,513 in 2010, $938,478 in 2011 and $780,923 in 2012, according to IRS tax documents.

If all of the approximately 2,400 employees who work for the Family Care program’s Supportive Home Care Employment Services were to join the SEIU, the union could see hundreds of thousands of dollars in additional income every year.

And that’s just one piece of the puzzle. The ordinance also includes contracted food, security, janitorial and clerical services.

While Bowen says the goal is to help Milwaukee County residents move above the federal poverty line, union dues and other contributions would cut deeply into wage increases.

A vote on the living wage law has been delayed until February, Bowen said.

Bowen is trying to get a veto-proof majority of 12 votes to prevent County Executive Chris Abele from blocking the legislation.

Milwaukee County Executive Chris Abele

Milwaukee County Executive Chris Abele

“This mandate will cost taxpayers millions of dollars, thousands of jobs and ultimately risk the county’s important safety net services,” Abele said in a December memo to supervisors.

Abele last summer vetoed a development agreement with Hospitality Specialists Inc. on an $8 million extended-stay hotel in Wauwatosa because of a provision forcing the firm to provide starting wages of about $14 an hour.

Hospitality Specialists co-owner Jim Mann told the Milwaukee Journal Sentinel the clause would have made the hotel uncompetitive and killed the project.

Contact Adam Tobias at atobias@watchdog.org or follow him on Twitter @Scoop_Tobias

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Adam Tobias, a 2004 graduate of the University of Wisconsin-Milwaukee, joined Wisconsin Reporter in 2013 after working for two daily newspapers for nearly 10 years. In addition to winning first-place awards from the Wisconsin Newspaper Association and West Virginia Press Association, Adam’s stories have appeared on Fox News, the Washington Times, National Review Online, Human Events, Breitbart and Right Wing News. Contact Adam at atobias@watchdog.org or follow him on Twitter @Scoop_Tobias.