Construction workers in central Texas successfully tie living wages to big business tax breaks

by Kim Krisberg

Workers in Travis County, Texas, are celebrating what advocates are calling a landmark victory, after local leaders voted to ensure that economic incentive deals benefit both big business and workers.

In late November, Travis County commissioners approved a new living wage requirement for companies wanting to move into the county and take advantage of the generous tax breaks the region offers to lure new business. The requirement creates a new wage floor of $11 an hour for all employees, including construction workers. On the same day as the county vote, a committee of the Austin City Council (Austin is located in Travis County) recommended a similar policy change that would require an $11 per hour wage floor, certain safety standards and hiring a percentage of workers from local technical schools. The full City Council is expected to take up the matter in January.

The moves are big steps forward in making sure construction workers also reap the benefits of working in one of the country's fastest growing regions. Between 1990 and 2007, the Austin-area construction industry grew by 219 percent. However worker wages lagged behind, with Texas construction workers earning $2 to $3 less per hour than workers in other states, according to a 2009 study from Austin's Workers Defense Project and the University of Texas. The study also found that 45 percent of construction workers in Austin live below the poverty line and about half of workers said they don't make enough to adequately support their families. The prevailing wage for Austin construction workers — people who work in one of the most dangerous industries and in a state with the worst construction worker fatality record — is only about $7.50 an hour, or just 25 cents more than the federal minimum wage.

"There's so much push back on improving construction working conditions, whether it's people being afraid it will disrupt business or think Austin won't be competitive," said Greg Casar, business liaison at the Workers Defense Project, which led a coalition in pushing for the new living wage policy. "But when you hear stories about kids who have to drop out of high school to help their families or of six or seven construction workers living in the same apartment...then we can really see who's benefiting from economic development deals and oftentimes, it's not working people."

Students from Austin's Construction Career Center gather in support of living wages for construction workers during a press conference earlier this week. Photo by Kim Krisberg

Workers Defense Project held a press conference at its east Austin headquarters earlier this week to celebrate the policy victory, honor it partners and local leaders, and rally support as the issue moves before the City Council. Cristina Tzintzun, the project's executive director, noted during the event that with Austin's economic prosperity and growth come new responsibilities and opportunities to "value the work of all residents."

Travis County is among the first wave of municipalities deciding to attach living wage requirements to economic development packages. The National Employment Law Project reports that since the 1990s, more than 120 municipalities have passed living wage requirements for businesses that get public subsidies and contracts. And a 2010 report from the Center for American Progress found that fears of living wage laws deterring business investments haven't materialized. In examining 15 cities with living wage laws, the report found that they were home to the same levels of economic growth as comparable cities without living wage requirements. Authors T. William Lester and Ken Jacobs wrote:

The evidence demonstrates that raising job standards does not reduce the number of jobs in a city. This means that job growth does not have to come at the expense of job quality. Local government leaders can therefore ensure that taxpayer dollars do not subsidize poverty wages by supporting economic development wage standards and feel confident that their local business climate will not be affected.

In Texas, private-sector job growth may be the best in the country, but whether or not that prosperous, tax-and-subsidy funded boom is benefiting all workers is another question. An investigative article in the New York Times earlier this month found that Texas gives out more financial incentives to business than any other state — about $19 billion a year — but is also home to one of the highest proportions of jobs paying at or below minimum wage. Texas also has one of the highest poverty rates in the nation and the largest percentage of residents lacking health insurance.

But now when companies comes into Travis County looking for a tax break, they'll know right away that they have to abide by certain community values, Casar told me — "the rules are upfront now instead of last-minute negotiations that sometimes feel like a game of chicken." For example, when Apple came to Austin earlier this year seeking millions of dollars in tax breaks to build one million square feet of new facilities and touting that it would create six-figure-salary tech jobs, Workers Defense Project and its partners said "What about construction workers?" Because of their advocacy efforts, which typically include testimony and actions from workers themselves, Apple agreed to a wage floor of $12 an hour for the workers who will build its massive facility.

That's the tactic Workers Defense Project has taken with all companies seeking generous tax breaks from the city and county — and Casar said they'll keep up the case-by-case advocacy efforts if the Austin City Council doesn't pass the living wage measure. (Visa also recently agreed to pay a living wage to construction workers in exchange for financial incentives to move into Austin.) Enacting a living wage ordinance within city and county governments will prevent businesses from shopping around the region to find a deal without wage requirements, as both the city and county offer their own economic development incentives.

Aaron Chappell, campaign director at Laborers International Union of North America (LiUNA), told me that while advocates still need to pin down a fourth vote on the City Council to pass the living wage measure, he does believe the "city will find the will to pass this." Students from Austin's Construction Career Center, a project of LiUNA, were among those who testified before local leaders about the living wage policy and will reap the benefits of fairer wage laws.

"For folks like construction laborers who are at the bottom of the pay scale, this could be a $3 per hour increase — that's a big gain," Chappell said. "This shows the power of democracy...it shows that it is possible to make real financial gains through organizing."

In response to living wage opponents, Casar noted that the overall cost impact of offering a living wage is less than one percent of construction costs.

"Companies are making tens of millions of dollars in tax breaks, so they should be reinvesting some of that back into the workforce," he told me. "Texas is giving more incentive money (to business) than any other state in the country. So the real question is: How do we make incentives work for working people too and not just for big businesses?"

To learn more, visit www.workersdefense.org.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for a decade.