The MobilityDilemma and the Clearing House Effect

The Asian American Federation, the group that studied Chinatown businesses I mentioned a couple of posts ago, also studied Asian poverty in New York City. Their policy recommendations point up what you might call the mobility dilemma: efforts to increase upward mobility run the risk of displacing their target populations. Here is one of their policy recommendations:

Economic development efforts in enclave economies that encourage a diversified, vibrant business community rather than a hypercompetitive, low-margin, narrow economy would help stabilize the local economy and raise wages and labor standards. 

By "diversified" they mean non local serving businesses: semiotic, outward-looking commerce -- in a word, tourism. To upscale a local-serving produce stand into a high-end restaurant -- necessarily non-local serving since the locals cannot afford it -- will allow, if successful, higher wages for the waiters (if the manager doesn't steal the tips, a wide-spread practice as I've mentioned). But it also crowds out local-serving commerce and attracts more upscale outward-looking commerce. As prices and profits rise, so do real estate values. Soon the neighborhood is in demand from outside and landlord pressure to harass and evict locals increases. Gentrification displaces the local community.

The dilemma is parallel to the urban amenity dilemma: every material improvement in a low-income neighborhood attracts investment that eventually gentrifies and displaces the low-income community. The two horns of the dilemma both seem unacceptable: remain in poverty or be displaced to poverty elsewhere.

The AAF policy recommendation seems to ignore the historical clearing house dynamic of Chinatown. Immigrants arrive there, work hard for several years, spend frugally, save resolutely, then leave for a prettier neighborhood. Upscaling Chinatown may provide higher wages for a few, but it eliminates it as a first destination for new immigrants.

New immigrants most need work they can assume immediately and housing that is extremely cheap so they can both earn and save. AAF concludes that "Making affordable housing more available is critical to alleviating poverty." But current affordable housing programs are all geared towards permanent housing, too expensive for the needs of new immigrants. Only transient housing meets the demand in an immigrant first destination. Permanence is unnecessary and too expensive.

Chinatown today is divided between two communities, one immigrant and transient, another American-born and permanent. Current affordable housing models would change Chinatown into all permanent, but the mobility it provides for the low-income immigrant is not upward, but outward, so the problem is not solved, in Engels' famous words in The Housing Question, "they are merely shifted elsewhere."
See also in this series:
Semiotic neighborhoods vs the authentic and anti-fragile: prestige and its deceptions and betrayals
Prestige and distortion in Chinatown
Suits and betrayal in Chinatown
Authenticity in the East Village

The future of government policy-making and the danger of giant global capital mobility

Walmart threatened to leave DC if their mayor signs the council's living wage bill. 

http://www.rawstory.com/rs/2013/07/09/living-wage-mandate-in-d-c-sends-walmart-running/

Chain store influencing public policy -- when does a chain store become too big to displease? It's the neoliberal dreamstate -- government of, by and for the corporate person. In the piece, Marion Barry called it "a stick-up." 

Walmart argues that raising the minimum wage will drive employers away, causing unemployment. But raising wages also boosts demand, creating more employment. Card and Kreuger's classic survey showed that minimum wage raises actually increased employment. Even more interesting, Neumark and Wascher showed disemployment effects only in large fast food stores, with a rise in employment among small restaurants.  

You can see what's going on. The large corporations disinvest because they are more mobile. They can leave a state with higher wages for a state with lower wages. Small owners are not as mobile, so they are stuck with the higher wages, but eventually reap the benefits of greater demand! 

And you can see where this is going. Walmart has already stated that it will disinvest, regardless of greater demand. After all, Walmart depends on low-wage bargain hunters. If wages rise significantly, the higher demand might not be good for their bottom-end offerings. Walmart has an interest not only in low wages to keep their pricing down, but also to maintain its low-income market demand. They promote themselves as offering low prices, but actually they are in the business of creating low incomes to feed their own market. And its model doesn't move upward as it grows. It grows by spreading the bottom. It's an impoverishment model. Their corporate goal is to vastly increase the bottom.

The DC living wage might have been a test case to see the efffects of demand vs employment cost-cutting, but by stating its intention to leave, Walmart shows up front that it will bias the results. So if employment declines, everyone can blame it on Walmart's political ploy.

Capital mobility is another reason to be wary of the neoliberal giant global corporation. Small businesses have to take the pain. Ironically, they also reap the benefit. 

But what's more shocking than the impoverishment model that Walmart is admitting to here, is Walmart's threat to public policy-making. When will corporations become so big that we can't say 'no' to them ever again? Think of the consequences for food (Monsanto), the environment, fracking -- it's not just about wages. It's the entire fabric of life. 

Yet another chain store scam

Chains like McDonalds and Walgreen's have replaced their employees' paycheck with a prepaid ATM/debit card, generating fees that eat up the already close-to-minimum-wages.

http://www.nytimes.com/2013/07/01/business/as-pay-cards-replace-paychecks-bank-fees-hurt-workers.html?pagewanted=2&hp&_r=0&pagewanted=all


Chain stores screw their employees again. This time it's a collusion with banks. It's as if the corporate headquarters have no conception at all of a low wage or ATM/Credit card abuse. Just disgusting.

Pickets, boycotts and strikes

Labor faces a challenge in both chains and small entrepreneurs. On the one hand, there's an economy of scale for public protest against a chain. A boycott against the Gap can target many stores at once. Using social media it might even be possible for cashiers, say, across Walgreens city-wide to co-ordinate a job action. But the larger the corporation, the more resources it has, including greater mobility, which counterbalances the scale of public and the labor organizing. Stella D'Oro picked up and left NYC rather than negotiate. The garment industry left the country rather that pay a minimum wage and rent here. Retail chains can't leave, but they can hold out, and those employees that aren't unionized don't have much of a chance.

On the other hand, pickets and boycotts can succeed easily against a small business with a narrower profit margin. But it's rare to hold an action against a truly exploitative small owner because the profit margin is so narrow that the owner might have to close rather than capitulate, and closing the store puts the employees out of a job; everyone loses. So even the loudest activists somtimes have looked the other way. What made the fight against Jing Fong was the size of the restaurant.

A chain like 7-Eleven hires almost no one, so there are no benefits to the local economy to having them here. They're just easy, the way a Citibank on every corner is easy. And now you can even Citibike directly from it to 7-Eleven. Corporate heaven.

De-romanticising mom and pop

One response to Yglesias' post The Tragic Inelasticity of Bar Supply points to the great virtue of the growth model: 

It's not just bar owners and land-owners that make good money if a sport-bar becomes popular. Workers benefit to. People will probably leave bigger tips if the drinks are more expensive. And if an entrepeneur wants to keep his bar high-profile he will need to invest in hiring the best workers possible. (They might have to offer better pay then a generic fast-food chain: if you pay good money for your drink, you expect good service) Those workers will spend their extra money on all kind's of stuff which will benefit the economy.

but another posted the inevitable response: 

Nobody goes there anymore. It's too crowded. - Yogi Berra

My favorite responses to Yglesias' post: 

Learn to love chains? The chains that tend to pay as little as possible, use the cheapest products possible and charge the maximum price possible in order to increase margins and make their shareholders happy rather than the customers? No thanks!

and

Why learn to love chains? Why not just encourage more lovable local dives to start up? Aren't we better served by true small, personal businesses than big corporate impersonal monopolies?

This is a bit unfair to chains, since small businesses have to keep costs down too, including labor costs. But the old-style mom and pop bore that burden entirely on themselves and their kids. However, increasingly small businesses are not mom and pops -- they are small entrepreneurs starting up, hiring employees and even managers to handle the day-to-day.

There are still true mom and pops in the LES: shoe repair, printing/copying, bike repair, a couple of bakeries and butchers, locksmiths, a drugstore here and there, hardware, an exterminator (he keeps a tank full of a hissing Madagascar cockroaches). Most of those cannot be replaced with on-line services. It would be shame to see them replaced with chains.

Incisive comments from the NO 7-Eleven petition

The petition comments have been full of intelligence and succinct eloquence. Of the many brilliant, here are a couple that stood out for me:

From Mark Lepage
Aside from the killing of local businesses and character, and the other pernicious effects of corporate chains, it must be recognized that there is nothing naturally "free market" about this incursion. It is meant to redesign NYC as a massively low-wage, high-rent zone. Locals have every right to resist a backroom-mandated corporate disfiguration of the neighborhoods in which they live and raise their children.

And an exerpt from Adam Weiner:
...While evolutionary change is inevitable and healthy, mass chain invasions as explictly planned (and already executed) by the likes of Subway, 7-11, Starbucks and Dunkin' Donuts have the effect of diminishing the difference between living in New York City and living (much more cheaply!) in the 'burbs....If you want to drive me and many others out of Manhattan or out of New York City entirely, keep on letting the chains have their way with the city.

If only chain stores would drive people away from New York. Rents would decline, the tax base as well, undermining municipal services like transportation and policing, yet more of the entitled who expect services would leave, and soon we'd be back in the '70's when New York had a wild spirit and its people were here, not to file blithely into stores, be served hand and foot and spend money, but to join in the anarchic edginess of it all. If it didn't include the drug addictions and drug trade, it would be perfect. 

But chain stores will not drive the new New Yorker away. They have so much disposable income that lower costs in the suburbs do not register on them at all. They come to the city primarily to party, to socialize with each other in bars, to get laid. In ten years New York bar conversations will begin not with the excessive rents (as today) or crime (as in the '70's and '80's) but complaints about the latest chain store incursion as the downside and cost of living in New York. But it will be a complaint in name only. Underneath it'll be just a pick up line. 

NO 7-Eleven city-wide petition on line!

NO 7-Eleven: resist chains and corporate control has a city-wide petition on line. Take a look at the great comments along with the signatures. 

To the New York City Planning Commission and City Council: Allow community self-determination to resist chain stores.

To: 

The New York City Planning Commission and City Council 

There are over 7,200 chain stores in New York City with more opening every year. 7-Eleven Corp alone is planning to open 100 new stores in Manhattan by 2015. Chain stores raise commercial rents, crowd out our commercial variety, our choices our mom-and-pops and our diversity. They efface our neighborhood character, erase our ethnic roots, erode our community relationships. They leverage wages down and, once cornering their market, leverage prices up. I call on the City Planning Commission and the City Council to amend the city's zoning text to require that no corporate formula store or bank open a new location without approval from the local community board. Such a zoning amendment will not only allow communities to restrict the number and location of chain stores, but also allow community boards to negotiate legally binding stipulations on all elements of chain store character from signage and closing hours to wage scale.

Allow community self-determination on chain stores, franchises and banks.

Sincerely,
[Your name]

http://www.change.org/petitions/to-the-new-york-city-planning-commission-and-city-council-allow-community-self-determination-to-resist-chain-stores?utm_campaign=signature_receipt&utm_medium=email&utm_source=share_petition

7-Eleven and jobs

NO711 has pointed out that 7-Eleven, with its self-service model, minimizes employment. Here are the figures to compare.

[I've deleted a paragraph here. The information was not authorized. Please see instead this post.]

I ran into a local resident who owns a restaurant in the LES. It's a small space, single storefront (12.5 ft across). I asked him how many people he employs there. 20, he said. I asked how many are being paid at minimum wage. He replied with pride, none, not one. He went on about how important this is to him. It's an upscale place, so the waiters' tips are significant as well.

Since the restaurant is less than half the size of a 7-Eleven, he provides 4 to 6 times as many jobs as a 7-Eleven would in an equivalent space. 

I also looked at Fresh&Co, which is about the size of a 711: 20 people per shift, 2 shifts, including weekends, all behind-the-counter (no waiter/tips) and well over minimum wage (except the delivery guys -- they get tips so the law exempts them from the minimum wage, like waiters). Total: 56 full time equivalent positions, not counting delivery staff. It employs 5-8 times (!!) as a 7-Eleven. 7-Eleven is actually one of the worst franchises from a labor/employment point of view.

But this is kind of obvious, no? Huge store, self-service: minimal jobs, close to minimum wage. Isnt' that what 7-Eleven is all about? And corporate packaged junk food. What an asset to the global landscape!

7-Eleven and wages

It's important to consider what would replace a 7-Eleven on 11th and Avenue A. Since there are three liquor licenses within 500 feet of the site, it would be difficult for a bar owner to get passed the State Liquor License's constraints on license density. The next likely candidate would be a restaurant, judging by the local commerce in the EV. So how would a restaurant affect labor?

7-Eleven store associate hourly wage can be as low as $7.25/hr; $8.44 average (from Payscale and Glassdoor). 7-Eleven store associates are required to have English fluency: "Must be able to communicate clearly and effectively with customers and coworkers." They are also subjected to background checks -- no undocumented immigrants allowed.

Mean average for a cook's wage, nation-wide, $11.20/hr; median: $10.29/hr; lowest 10%: $8.14/hr (BLS). No language requirement, no background check. 

So replacing a 7-Eleven with a restaurant in NYC would improve the wage prospects generally, and specifically of immigrant workers, documented as well as undocumented. Unless it were a chain restaurant -- a McDonalds cook wage averages, according to Glassdoor, $7.41/hr. That's one reason among many, NO 7-Eleven is trying to curtail all giant chains and franchises. Minimum wage may be fine for a 16-year-old's first summer job, but not a way forward for labor in general. "The majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations." 

Is it easier to organize labor in a giant corporation? Maybe (but maybe not). Giant corps also have greater political clout the larger they are, so there is a danger of promoting corporatocracy. In one way it's the meeting of Stalinism and libertarianism -- "free" market corporatocracy replaces the totalitarian state, the "internal contradiction" of libertarianism, trading one form of control (government) for another (corporate giants). Reminds me of a Maoist friend who voted for Giuliani thinking that his reactionary policies would spark a revolution. Instead we have rampant gentrification.

New blog "Chinatown for Chinatown: a discussion board"

I started a blog about Chinatown planning called "Chinatown for Chinatown"
http://chinatownforchinatown.wordpress.com/

I've avoided blogging about Chinatown while I was involved with a Chinatown planning group. It's not the kiss-and-tell aspect -- I believe in transparency. But journalism gives the writer an unfair advantage within the group. It can bias the process or coerce it. But the Chinatown Working Group has mostly concluded its discussions, now waiting for its planning consultant to come up with recommendations to the group. So I can write as an outside observer.

I've asked several local voices and urban planners to post as regular guest bloggers. I'm hoping to see an open, broad discussion that will be of help to the planning consultants as they dig into the issues and challenges that Chinatown faces.

7-Eleven Legal Defense and Education Fund (SELDEF)

Here's the corporate defense of 7-Eleven with my comments:

1. It provides cheap food for low-income people.

"Let them eat Pringles!"..........

7-Eleven has 48,000 stores worldwide
more than any other retail store

What's this, the 21st century version of "Let them eat cake"? Literally: 7-Eleven promotes every form of sugar possible. 

2. There are empty storefronts in our neighborhood. We must fill them, and 7-Eleven will!

Filling the storefronts serves only landlords. Retail storefronts are not a driver of local labor and the neighborhood isn't lacking in food options. What we'v'e lost here is service variety because nightlife, chains and franchises have upped the commercial rents so that small stores like bookstores (for new or used -- anyone remember Paul's? I loved that bookstore), thriftshops, hardware, stationers&cardshops and curiosities can't stay or get in (does anyone remember places like Celtic Twilight in the 1970's? Where else in NY could you find a copy of Y Gododdin?).

Allowing chains, frachises and bars just encourages landlords to hold out for higher rents. The only way to bring rents down is taking the Big Gulp out of the landlord's hand: no more lifeline to candy, fat and liquor; do some service for the community. Since the neighborhood is dense, so plenty of services can thrive, and service providers will come if the rents ease off. 

3. 7-Eleven prevents gentrification.

There are 7-Elevens on the Upper East Side and the Upper West Side, in the Scarano condo building the one professed "gated" community in the neighborhood.  7-Eleven didn't even arrive in the EV until after the neighborhood was thoroughly upscaled. 

4. Remove the corporate clone stores and they'll be replaced with fancy boutiques.

EV boutiques on 9th & 10th arrived decades ago when rents were cheap. New stores here are not SoHo-style boutiques. New storefronts here are usually either upscale food -- North Korean-style ice cream, artisanal water, Japanese-Canary Island fusion, 387 varieties of peanut butter served on rice cakes and no jelly -- or cheap fast food, felafel, pizza, Asian dumplings, bagels, or a cafe w/wifi, cafe w/wifi w/sandwiches, cafe w/wifi w/sandwiches w/cute singles. Which do you prefer? If you choose 7-Eleven, go back to item 1 above and see Marie. For me, I'll take a felafel w/humus, please. 

5. 7-Eleven doesn't exploit undocumented immigrant labor. 

7-Eleven doesn't employ them at all. The undocumented can die in the street for all the corporation cares. Or ex-felons desperately looking for a second chance. Giant corporate control from afar. It's taking over our streets, our lives, our work, our food, our future.  

The only defense left? You're addicted to the Big Gulp. Sarah's got your back --