WNYC covers rent regulations

Adam Davidson, appearing on WNYC's morning "Brian Lehrer Show" discussion program, gave his strongest argument for rent deregulation without any analysis at all. Instead, he appeals to authority: economists on all sides agree that rent regulations are bad for the housing market and harm the middle class. 

True, economists agree on across-the-board rent regulations, but that's not New York's model. New units in NYC are not required to be regulated, so rent regulations here incentivize new construction. Deregulation would remove that incentive since raising rents and evicting tenants are cheaper and easier than construction. The New York model is actually healthy for the market.

Davidson refers to one economist, Christopher Mayer, but Mayer completely forgets that deregulated tenants don't simply disappear from the rental pool. If they have to vacate, they move from upscale neighborhoods into middle class neighborhoods and create a tighter market, raising rents there. So deregulation will hurt the middle class especially. In aggregate: 

deregulation = same # of units, same # of renters, just more wages going into rent, a windfall for landlords and no incentive to construct or ever ease the market. 

A land tax would help, tagged to upzonings in selected neighborhoods that can withstand increased development. 

The Times at it again

Rent regs in the Times again. Amazing to me that they can print baldfaced lies. 

This was empirically studied in Boston:  when rents were deregulated, all rents rose. 

Mayer's key assumption is false. When the deregulated renters vacate, they don't disappear -- they have jobs and family in the city. They move to cheaper neighborhoods where their numbers create a much tighter market in those lower-income neighborhoods, raising rents, displacing more renters who in turn move down the ladder creating a tighter market down the line.

So deregulation would raise rents steeply for the middle class and those below. The highest renters alone might get a break. Deregulation is a win for landlords and maybe the wealthiest renters, a lose for everyone else. 

Building new units will increase supply and ease market rates. Since new units are not required to be regulated in New York, our rent regulations incentivize new unit construction. Deregulation would end that incentive: raising rents and evicting tenants are cheaper than building new housing. Deregulation will likely raise rents steeply across the board while tightening the market even more, driving the middle class out to the further reaches of the metro area. Deregulation is a gift to landlords at the expense of nearly everyone else.

NYC's rent regulations are healthy for its housing market except it's deeply unfair for new arrivals. The state should really get back into housing of all kinds -- upscale to low -- using the upscale housing to finance the rest.

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. 

Reading incomprehension

Apparently 7-Eleven Corporation worries that its foreign ownership will impair its public image among Americans, according to unhappyfranchisee, a website that monitors franchises. I had to laugh.

The corporation is Japanese-owned, but here it promotes its national corporate headquarters in Texas. Now, given a choice between Japanese ownership and Texan, any New Yorker would choose Japan over Texas, unhesitatingly. New Yorkers, cosmopolitan to the core, all seem to partake of some Nipponophilia. We admire Japanese art, respect its religion, envy its corporate management style and we can't seem to get enough of its cuisine. Texas, with its gun culture, executions, religious fundamentalism, its flag-waving, anti-Darwinist textbook industry, its wealth, growth and political influence, inspires us with something between dread and terror. We even deplore its unhealthy cuisine. Texas is the anti-New York. Texas art?

It's a measure of just how distant 7-Eleven is from New York that it plays down its Japanese ownership. Not that it matters: even if it promoted itself as an efficient, streamlined, innovative minimalist Zen-like Japanese import, it wouldn't make their corporate packaged foodstuffs more palatable.

The role of the Fed

At a recent Occupy Alt Bank (Occupy's Alternative Banking think tank) there was this exchange. 

'Banks find ways to skirt any regulation whatsoever," said one member.

"Jailing the CEOs will curtail their risk behavior," replied another.

I wondered: "They can't be jailed for skirting the law unless they break it. But there is a way to curtail risk outside regulation and law entirely -- the Fed." 

Both Barry Eichengreen and George Cooper, independently and from different political perspectives, came to the same conclusion, and even Greenspan in effect admited this: the Fed encourages risk through stabilizing the economy, broadcasting its intentions to keep the money flowing. If the Fed (I know, I know, it's counterintuitive and sounds just awful) were less transparent, played its cards closer to its chest, and threatened to tighten money suddenly and by surprise, letting a few excessively risky institutions fall off the cliff, the banks would learn a piece of Old Testament Fear of the Fed. The threat itself might suffice after one example. It'd have an effect similar to jailing CEO's, but without the need for a law, a court, prosecution, evidence or lawyers. Of course, you wouldn't want the Fed to try this now in the midst of a recession, but during flush times. 

Stiglitz has complained about this as well -- the Fed used interest rates to prevent business cycle downturns, encouraging risk.

The Fed has no oversight, so you can't even effectively lobby them. But it might help for the public to know this stuff and for Occupy to stake out a position.

Alt Bank is producing a book on breaking up the banks. I'm disappointed that they're not including a chapter on the Fed. Including a brief history of its failure in the Great Depression, Volcker's success stemming inflation, and Greenspan's questionable use of rates (in light of the flagging US export economy and the Fed's encouragement to shift to a financial economy -- another issue that should be addressed) would lead to a couple of recommendations: less Fed transparency and yet more oversight and accountability. Difficult to juggle those two...

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.

How doth the little crocodile...

NO711 attended Thursday's Seward Park co-op meeting with the 7-Eleven corporation described in the Lo-down. It was a friendly meeting. 

The co-op has had bad luck with previous commercial tenants. After a long internal dispute, the co-op agreed that a 7-Eleven was the fix they needed to support the co-op financially, though not without qualms about the character of the store. 

Residents expressed concerns about 7-Eleven offerings. The regional manager committed, as a "local-friendly neighbor," to selling just about whatever the locals might want -- lox, kimchee, you name it, 7-Eleven will stock it for you. But when a couple of residents asked if the 7-Eleven would refrain from selling pizza so as not to threaten the local pizza places (there's a really excellent one right there on Grand), the friendly mask was drawn aside. Even after the co-op offered to promote 7-Eleven in the media as a local hero if it took pizza out of its offerings, the manager refused without hesitation. These smart and savvy co-op residents had cornered the corporate spokesperson in a checkmate. The meeting was really an opportunity for 7-Eleven to expand its offerings and compete better in the local market. I don't see this as friendly at all, but actually dangerous. 

I'd suggest that the co-op residents not ask 7-Eleven to expand its offerings, but limit itself to its basic services. Otherwise the 7-Eleven is going to take the profit margin out of really unique and wonderful stores like the Pickle Guys, and meat off the table of their employees. If 7-Eleven starts selling pickles successfully, you may never again see the full variety of dills, or pickled garlic, peppers and tomatoes. 

Someone else in the audience asked whether 7-Eleven will kill local bodegas. The regional manager's response: 7-Eleven will help convert any bodega into a 7-Eleven if the owner feels the competition is too stiff. 

I hope the residents didn't accept this explanation. Many bodegas -- probably most -- are too small to convert to a 7-Eleven. Even more obvious, if a 7-Eleven opens directly across the street from a bodega, the corporation is not about to allow a conversion. Two 7-Elevens on opposite sides of one street? As the spokespersons said last night several times, they choose their locations based on data analysis. Despite the friendly PR presentation last night, they're there to compete, not be friends. It's a business. 

After the presentation, the real estate rep confirmed to me that the corporation guarantees the rent of the store. That's great for the co-op but it's exaclty the kind of monopolistic ploy that encourages landlords to raise commercial rents beyond the capacity of the old, ethnic stores and local services. The corporation can blame it on the landlords, but the incentive to evict comes straight from the corporation. 

When asked whether the corporation cares about a community that doesn't want a 7-Eleven, the real estate rep explained that they choose their locations based on foot traffic. NO711 had to point out that foot traffic is not always local. If there's a nightlife strip nearby, the foot traffic will be largely non local, and no local voting-by-their-feet will make a lick of difference in the profit margin. In other words, 7-Eleven's business model cares about access to consumers, not community sentiments. 

None of this is surprising. It's a business. But it's not just a business. It's powerful, monopolistic, unstoppable and non local. It's the neoliberal future around your corner. It's an omnivorous shark that cannot rest, its drive and motive, inaccessible and remote.

I was surprised at a couple of residents complaining about bodega pricing. Shopping at a bodega is an art, folks. They're all distinct as each bodega identifies its local market. One sells ice-cream sandwiches to the local kids $.50 @, a better buy you cannot find anywhere in the city. Another will fix you an egg-and-bacon sandwich folded into a roll for $2.50 -- you can't beat that either. But the chips will all be list-price. It takes a bit of a flaneur to appreciate the side-ways of a great city. 

[As an addendum: I asked them whether they will employ part-timers (of course you'd expect that they hire part-timers, and in fact they advertise lots of part-time jobs on their website and elsewhere, but I felt compelled to confirm) and at what ratio to full-timers. He said there would, of course, be part-timers but he didn't have any ratio stats. I asked if that's because it's up to the franchisee. He said yes.]

The 11th Street Block Association will probably have to invite 7-Eleven to such a meeting eventually, but the situation will be quite different. 7-Eleven on A is not dependent on local consuming as it is on Grand. Here the store will be playing to the barflies, not the locals. 

Local credit

At Occupy's Alternative Banking think tank you'll find a mix of economists, ex-Wall Street quants (the redoubtable Cathy O'Neil among them), labor reps and assorted socialists and Marxists, and also young idealists reminiscent of the late '60's. One of these latter presented for us some recent work on alternative money -- not bitcoin stuff, but relational local credit/debit systems. The sharpest head there pointed out that these are already used by airlines as frequent flier miles. The consumer gains credit by buying but can use it only for the local purveyor.

The idea is half-baked. After a couple of minutes I asked: what prevents a large corporation from offering to undercut the local credit with an economy of scale (we'll fly you farther!)? The consensus was, the locals would have to keep faith with the local purveyor. But of course if the local exchange is maintained by faith, there's no need for this alternative credit at all. We talk about capital as if it were a system, and we look at systemic supports in capitalist nations, but really it's just human opportunism wherever there's private property and a market.

The notion of local credit belongs to the youthful idealistic spirit of Occupy. Maybe they can get it to work, but locality seems underlyingly Luddite to me or at best old-style anarchism. The notion of alternative credit, though, that's got appeal. What are the possibilities? It's not so far-fetched. The gold standard was a kind credit limit. Fiat money, by contrast, has turned out to be an unleashed beast, difficult to tame. It could be tamed in flush times, but in bad times, monetary policy, as Keynes said, is like pushing a string. Something to think about.

NeverNeverLand

Some years ago (14? 15?) I was walking back home through TSP from a civil disobedience arrest -- earlier in the day I'd intervened with a cop giving a bike ticket to an elderly Latino who'd innocently biked through the intersection of 11th and B on a Saturday morning with no traffic anywhere in sight (except the cop car). The cop was already incensed, since he'd been barking orders over his car megaphone trying to get the old man to get off his bike, this cop too dim (nothing against the force -- some are smart, others not) too dim to grasp that the old man obviously didn't know a word of English and had no clue he'd done anything wrong and the cop too lazy to get out of his car and use gestures to explain himself. I knew the old man -- he bagged groceries for the local supermarket. A $100 fine would be more than he could afford, probably ten times more than the price of his funky third-hand bike. After I tried, nicely, to persuade the cop to let the old guy go, the cop brushed me off insultingly when he'd done with the ticket. I yelled back at him, "Get out of my community," for which he arrested me. I'd already been arrested for civil disobedience a couple times before (was this civil disobedience or just self-expression?) so I didn't think much of it, but my roommate, a gentle soul not from New York, who saw it from down the block, was terrified. If you break the law and are arrested for it, at least you know what the charge will be and something of what to expect from the police. But if you're arrested for nothing illegal but for angering the arresting officer -- well my roommate was convinced he'd never see me alive again.)

So I was coming back from this arrest -- as it turned out, the two hours I spent in the holding cell was passed with talking to the cop, intermittently explaining why ticketing old immigrants just to raise city revenue or personal quotas is really shameful. By the time the two hours were done, he was embrrassed enough that he wrote up the charges intentionally so that the judge would throw them out instantly -- disorderly conduct for talking back to an officer. Several weeks later in court, the senescent nonagenarian judge did dismiss it along with a doddering admonition to me that I should be more respectful, young man.

Well, coming back home I ran into Hippie. "Hippie" is not actually his name, of course. From Puerto Rico, here he was called "Hippie" for his long, flowing, reddish pony tail. I asked Hippie what he was doing back in the neighborhood. Since he'd been released from prison -- some stupid drug charge I suppose, I say stupid because Hippie was one of the most honest, decent, charming, pleasant men I've known -- he'd been diagnosed with Hep C, so the Dept of Social Services had arranged a free apartment for him in Brooklyn, yet here he was homeless and couch-surfing in Loisaida. "Hippie, you have an apartment, you're seriously sick and then some, why are you hanging here homeless?"

"I always come back to this neighborhood. I come back here for one reason and I can tell you why. Because it's mixed. I don't want to live in a ghetto. I always liked that this place is mixed. It was mixed back then. It still is."

That was about 14, 15 years ago. I don't see Hippie anymore. So many of the best are gone.

I grew up in a white 'ghetto.' Sometimes I ride my bike past it, but I never stop. It wasn't much interesting back then, and it's just as uninteresting today. For a while I lived up in Inwood -- huge, bright apartment, immense rooms; the hallway between the livingroom and the den so wide I had a piano in it -- a view of the Cloisters from my bedroom window, and cheap rent too. I was never happy there.

It's only been in Loisaida that I've found that urban mix, even when it was most abandoned -- because it was abandoned, abandoned by ownership, abandoned by commerce, abandonned by law and all authority. Landlord? Invisible. Work? No one worked except the dealers. The only people who cared about what you did were the people you lived with on the block. It was scarier than it was dangerous, but it was too scary for slummers. The place drew only outcasts, loners, misfits and marginals. And artists -- blacksmiths, poets, muralists, brilliant muralists, their work all gone.

Some places are more interesting than others, some more extreme, some more free; few are all those together. Never say NeverNeverLand never existed if you never lived there once.

David Graeber's recent book on debt ends with a defense of the chronic unemployed. He hints that maybe the economically unproductive are actually busy with useful services to their local communities.

Previously
the feeling for place -- the sacred and the profane; 

sacrificing for progress

The work of Martin Wong, the only way to understand what we saw. Photography captures nothing -- nothing -- of a space so emotionally rich.

Rent regulations

Thinking about the construction boom and the Rent Guidelines Board rent hike, I went back to a piece I did for Met Council refuting the claim that rent regulations artificially raise market rate rents. The key insights were two: 1) in New York, newly constructed apartments are not required to be regulated, so regulation doesn't add to the tight housing market (in fact, rent regs are one of the few incentives to construct in NYC); 2) deregulation doesn't flood the market with new apartments since evicted tenants don't leave the local pool of renters, and wherever they go they tighten the housing market there, displacing lower-income renters. 

Looking back, I'd want to explain explicitly why it is that displacement always shifts downward, and not just a musical chairs of apartments among renters. Deregulation eviction implies that the tenant can no longer meet the high market-rate rent. In a tight housing market, if they go to a lower-income neighborhood, they will find an apartment by displacing someone who was renting at a lower rate. The displaced renter does the same in the next lower-income neighborhood and so on.

[Update: on second thought I think I was right in the original, not as in the paragraph immediately above. Obviously deregulation evictions out of prime locations also allow high renters to move upward -- upward displacement. That displacement doesn't ease market rates: the evicted have created a tighter market down the line. On the other hand, if new upscale renters are entering the market from outside the pool, they would increase downward displacement pressure.]

Some of those deregulation-evicted tenants can pay higher rents than they'd been paying under regulation, just not quite as high as the market rent where they'd been. No one will seek a cheaper apartment -- if there was something cheaper suitable to them they'd have decamped long before deregulation. But some will seek apartments somewhat more expensive than what they'd been paying under regulation. So the only change in the economic equilibrium is the added funds available for rent among the deregulated. 

At the end of the day, deregulation increases the aggregate funds available for rents taken from whatever else the regulated tenants had been spending on in the economy. All of that increase goes to the landlords. Deregulation is just a pointless shift from the non real estate economy to landlords and a downward spiral of displacement, while more upscale renters flow into the city to raise the luxury rates. With more funds flowing into the real estate market, developers construct to meet those upscale renters, who then recreate the commercial economy in their own image, buying upscale items. 

So rent regulation is just a restriction on upscale real estate speculation and upscale commerce. It doesn't raise market rate rents, but actually dampens them. And it's good for non upscale commerce.

So here's the article. The point about the rent pool seems to have grown legs -- I've heard it repeated by lawyers as well New Yorkers on the street. 

Why Rent Regulations Don't Raise Market Rents 

By: 

Rob Hollander

Published: 

June 2011

"If rent decontrol would mean a fairer, less insane market, then it is a just cause," the libertarian-conservative Cato Institute argues.

In every debate over rent regulations, someone—often an angry tenant paying outrageous rent—argues that regulations are responsible for pushing market-rate rents way up. If those regulated rents were brought into the free market, the market would level down, allowing a fair rent for all.

This argument has had wide currency among conservatives in their effort to undermine rent regulation and promote developers and landlords, the market suppliers in the real-estate industry. It appeals directly to people who, bitter over their heavy rent burden, welcome a convenient scapegoat: their own neighbors. And the authority, the landlord, is conveniently exculpated.
This argument is false. It is based on these premises:
1) Rent regulation discourages housing construction, restricting housing availability;
2) landlords make up their losses on regulated rents by gouging market-rate renters; and
3) deregulation would level the playing field, lowering high rents

Its conclusions have been demonstrated to be empirically, factually untrue. It is time to put this claim to rest.

Let's start with the basics. Not only conservative think tanks like the Cato Institute, but the consensus of economists, even the liberal Paul Krugman, accuse rent regulation of discouraging new housing construction. Without new apartment units, the supply can't keep up with demand, and fierce competition for the few remaining units pushes market rates up.

Their observations are true where rents for new construction are regulated. But in New York, it isn't.

New construction is exempt from rent regulation in New York. Building new affordable housing is entirely voluntary in New York, and developers only provide it where the city gives them special incentives, such as allowing construction beyond the zoning restrictions or giving tax breaks. In fact, rent regulation encourages new construction, as the Citizens Budget Commission has pointed out, since new units can garner far higher rents than older regulated units. If landlords can't cash in on regulated units, the only other means to make money is to build new, unregulated units. Rent regulation is an incentive for construction.

The difficulty of building in the city has many causes—the cost of land and construction, restrictive zoning laws, building codes, permits and bids, and, not least, the private and political graft involved. Nevertheless, New York continues to see housing construction. Even during the recession year of 2008, the city issued 33,911 permits for new housing, the greatest number since 1972. In a city of obstacles to construction, rent regulation is one of the few encouragements to build.

The second premise contends that if landlords can't raise regulated rents, they will raise rents on unregulated units to make up for the lost revenue. Unfortunately for the landlords, the free market doesn't work that way.
Market rates depend on renters' willingness to pay, not on owners' costs or losses. Rents can't rise above what renters are willing and able to pay, and the nature of the profit motive ensures that market-rate rents will rise exactly to that level of renter willingness, regardless of what other renters are paying.
In a city where construction lags behind demand, it may be legitimate to ask whether deregulation would free up apartments and ease the market down—the third false premise. Quite aside from the consequences of displacing individuals or even whole communities, the answer is a surprising no.

Rent deregulation, believe it or not, raises market-rate rents. The conservative Manhattan Institute, in its 2003 study of deregulation in Cambridge, Massachusetts, found that, following deregulation, landlords invested in improvements to attract the highest possible market-rate renters. The result of the 1994 deregulation in Massachusetts has been better-quality housing, but higher market rents across the board.

That shouldn't be surprising. A tight housing market implies that many renters can't find apartments in their preferred locations. That's the meaning of a housing crunch. Renters can't find the spaces they want, and the ones they have to live in become overpriced. But when vacancies appear, those renters are willing to pay exorbitant rents for the locations they prefer, and landlords will meet their willingness.

The market value depends on three general factors: demand, supply, and the aggregate available funds for rents. If regulated renters are paying less than their available rent funds (the excess of which presumably goes into the goods and services economy), when they are forced to pay more, it will increase the aggregate funds going to landlords as rents, since most of those renters are tied to the metropolitan area by work, family, or preference. If their rents are deregulated, these people will force rents up wherever they go in the metropolitan area.

That's a recipe for disaster. When renters can't afford their location as a result of deregulation, they move to lower-rent neighborhoods, where they create a tighter rent market, raising the rents there and even gentrifying the area. Some of the longtime renters in those neighborhoods will be priced out and move to even lower-income neighborhoods, tightening those locations in turn.

More affluent longtime renters will see their rent increases as an opportunity to move to a more desirable location. But wherever they go, landlords will raise their rents as high as they are willing to pay. If the market is tight and people are not leaving the metropolitan area, the market rates will remain high.

Market rates only go down if demand goes down—if people leave the city entirely or excess housing is built. But New York's population is increasing, not decreasing, and construction is costly and difficult. Deregulation here will not ease the market any more than it did in the Boston area.

It's not even certain that in a tight market like New York, landlords would invest widely in improvements, as they did in Boston and Cambridge. Unregulated renters have few rights, so if they complain to the city about lack of services or repairs, the landlord can retaliate by refusing to renew their lease when it expires. Regulated renters can compel repairs without that fear. So it is possible that deregulation in a tight market would result in lowered quality of housing and a degrading of services, as well as higher market rents. That's exactly what happened in New York when vacancy decontrol was imposed in 1971.

Regulated rents actually help to depress market rates. Renters who pay exorbitant rents may think it's unfair that regulated tenants pay so much less than they do, but the source of exorbitant rents is not regulation. It is landlords' profit motive and New Yorkers' desire to live here. We are the market that sustains high rents.

So what is the effect of deregulation? It provides a cheaper means of placing money into landlords' hands than construction does. The chief effect of deregulation is an increase in the aggregate funds available for rents. It doesn't ease the market, it won't improve the quality of housing in New York, and it won't create more housing. It will give more money to landlords, it will raise rents all over the city, and it will wreak havoc on communities as markets are tightened even in low-income neighborhoods, causing a spike in gentrification and displacement.

Rent regulation does create an unfairness—the lucky get to spend their money on the local economy, not just on rent, while their market-rate neighbors have to suffer. But forcing everyone to suffer doesn't solve the suffering of the overpriced. It just makes life worse for everyone. Two wrongs don't make a right. Deregulation is a lose-lose. 

Boomtown

Matt Yglesias comments on US cities leading in construction spending. New York is not only way ahead, it's an outrider way ahead (though not quite at a Pareto distribution -- construction is expensive here, so that may be why there's no Pareto), and it's not correlated (pace Yglesias) with population; LA is next most populous, Chicago, then Houston, all on a Pareto distribution, but LA is low on construction; Dallas is constructing more than Houston even though Dallas doesn't have much more than half Houston's population size. In fact Dallas is about one seventh the size of NYC, but it's constructing at the absolute rate of 60% of NYC's.

In any case, NYC is booming. Given the high cost of construction in NYC, this boom means developers see huge money in development. How much of that do you think is affordable housing?

It also means that developers are not worried about diluting the luxury market. Why? Do they expect high-renters/owners to abandon older housing stock to move into new? Or locations further from the center into closer? Either of those would be good news for low-income neighborhoods -- less displacement pressure on them. But if developers simply expect more high-paying population in the city, then no one benefits but the developers.

A sad task

This post is just to correct some stats that have been floated on another blog about 7-Eleven wages. [To avoid embarrassing him in public, I emailed the blogger indicating where his errors lay, but he's intransigent. Since I don't want misleading information floating out there, I'm posting now.] 

The blogger claims the average weekly wage of a 7-Eleven clerk is $472.64 compared with a local independent restaurant's average weekly wage is $250. 

He gives the hourly 7-Eleven wage as $8.44. But instead of figuring a 40-hour week full time week, he divides the total hours of labor in the store by the number of personnel based on 7-Eleven's "7-10 employees per store."

As a result, his figure is for 56 hours per worker, not a 40 hour full time position (full time as defined by law).

But 56 hours would require overtime, which he didn't include. Correct sum should be:

(40hrs x $8.44) + (16hrs x $12.66) = $337.60 + $202.56 = $540.16

for 56 hours with overtime.

Obviously the franchisee isn't going to pay all that overtime. It's a 60% increase in his payroll! In fact, he doesn't have to pay any overtime. He can hire part-timers instead to take him through the week.

How many part-timers at a 7-Eleven? My guess: all the employees are part-time. If the franchisee uses only full timers, and a shift has to be covered for, say, an illness, the franchisee might have to pay expensive overtime to an employee. If all the employees are part-time, it's unlikely that any overtime will ever be necessary.

When 7-Eleven says it has 7-10 personnel per store, clearly they mean full time equivalences, not 7-10 individual bodies. To compare FTE's:

$337.60 full time at 7-Eleven (7-10 FTE's)
$400.00 full time at the restaurant (20 FTE's)

Perhaps more important, the total payroll of the independent is $8,000 per week if the $10/hr is correct; a 7-Eleven, $4,726.40 (unless the franchisee is an imbecile or a crook). A 7-Eleven occupies about twice the space of this particular independent restaurant, so the indie funnels $8,000 into its labor for a single storefront store, 7-Eleven only about $2,363.20 per single storefront store size. 7-Eleven provides less than a third (29%) of the wages of the independent. 

$16,000.00   per 25 ft wide storefront (independent restaurant)
  $4,726.40   per 25 ft wide storefront (7-Eleven)

At this point the blogger asks whether the independent, providing more than 3 times as much labor value, is sustainable. That question feeds directly to the justification for the NO711 program, since it's the chain stores like 7-Eleven that are raising commercial rents, closing down the indies. His question justifies NO711's program.

(NB -- The restaurant is busy. The 7-Eleven on Bowery looks deserted. The restaurant is staffed with twenty/thirty-somethings -- actors? film workers? students? -- 7-Elevens are staffed with 18-year-olds (?) in orange uniforms. Where are we headed if global capital wins? Everyone working in uniforms eating bad food? The one thing that I like about 7-Eleven is that they do employ a lot of non white employees. It's a shame they have to wear uniforms and work at such low wages with so little advancement.)

Now, I want to be very clear about the following. The blogger's very first comments about NO711 were derisive and smug, describing NO711 as full of "ridiculous claims." He's called us a variety of names that are false and derogatory. Now he has posted an animation that tells us "numbers are not your strong point." He brought a lot of derisive, ugly rhetoric into the space. I really don't want to be in that space, but here I am stuck in it. 

$4,726.40 published as the weekly average for a 7-Eleven clerk?

56 hrs/wk with no overtime?

At this point, NO711 deserves an honest apology. 

Here are the mistaken calculations on his blog:

Restricting global corporate access from the local level

Following up on the last post, I'm posting a cool piece Robert Reich wrote on his blog:

Comparative advantage is nice in theory, but in a world where powerful global corporations are using every strategy imaginable to maximize their profits and powerful governments are strategically employing market access to develop their economies, it’s just theory.

Economics writers like those affiliated with Forbes Magazine surely are sophisticated enough to know this as well. So why are they so eager to trot out such economic nonsense?

Perhaps because so much profit is at stake that those who pay their salaries – and who have also put many academic economists on retainers – prefer that they mislead the public with simplistic economic theory that appears to justify these profits rather than to tell the truth.

 and

Many of the world’s most successful economies – among them, China and Singapore – owe their successes in part to their conditioning market access on certain kinds of jobs and investments, including research and development. That’s the way they have come to use global corporations, rather than be used by them. 

In other words: resist corporate control by restricting corporate access. That's the NO711 program in a nutshell. He's thinking of restrictions from above. We're thinking of it from the local level.

 

Restrict access?

Saw this comment on EV Grieve about a street cart become a new store that everyone likes:

This is how it starts. The cart moves inside, the store becomes two, then three, and eventually an evil franchise that must be stamped out -- a symbol of "corporatocracy". Meanwhile, somewhere else, the process begins again, and is cheered.

EXACTLY!!! Just think, if we had a zoning law restricting chain stores (usually defined as 12 stores or more), then NYer's could enjoy places like this without watching them turn into huge global corporate human smuggling operations. 

We *can* improve the world if we speak out and take action. Resist corporatocracy, restrict global corprorate capital's access to our our streets. Join NO711! Join Occupy! (Yes, it's still active -- headed to a meeting tonight about coordinating all the local neighborhood Occupations in the city and all the Occupy policy groups.)

Emergency fund for local crash victim

From the Bowery Alliance of Neighbors:

Dear Bowery Neighbors & Friends,   Below are details re an emergency fund set for the bodega worker critically injured this week when a drunken driver racing down 2nd ave at 80 miles an hour careened onto the side walk mowing down a tree, Muni Meter, fire hydrant, and flower stand, injuring a biker and 3 bodega employees, most seriously 62-year-old Mohammed Akash Ali, who worked 7-days-a-week outside at the flower stand. The well-liked, always friendly Mr. Ali has a wife and 3 sons. Any support you can help out with will be greatly appreciated by all.   Direct link to fund:  "Aid for Akkas Ali and Family": https://www.giveforward.com/fundraiser/mvk2/aidforakkasaliandfamily   Many thanks to CB3 member Chad Marlowe who moved with lightning speed to set up the fund.  Thanks also to neighbors Bill Koenleinand David McReynolds who got the word out so quickly.   EV Grieve article about the fund effort: http://evgrieve.com/2013/06/campaign-launched-to-raise-money-for.html EV Grieve initial article about the incident: http://evgrieve.com/2013/06/report-car-smashes-into-east-village.html   East Villager article about the crash: http://thevillager.com/2013/06/20/drag-racing-driver-careens-onto-sidewalk-injuring-4/       Sincerely, David Mulkins, Chair Bowery Alliance of Neighbors 184 Bowery, #4 New York, NY  10012

Honestly, I shouldn't have to deal with this

The blogger who purveys misinformation about NO711 has taken to harassing me. On his blog, he posted graffiti he found somewhere with my name, implying that it was by me or about me. When I mentioned this on another popular local blog, he quickly deleted the graffiti post without leaving a notice or trace -- pretending that he never posted it. Worse, anyone who now goes looking for the post I publicly mentioned would get the impression that I was making it all up maliciously! Fortunately, I had already made a couple of screen caps of the post. 

So, just to prove I'm not making up this insanity, here's the graffiti he posted on his blog. 

He posted the graffiti again a few days later in another post:

Both the graffiti post and the photo in the later post have disappeared on his blog with no notice or trace. Here's the text now without the graffiti photo:

The photo had been at the paragraph break.

Honestly, I shouldn't have to deal with this.

AALDEF publishes new data on Chinatown land use

From AALDEF (Asian American Legal Defense and Education Fund): 

[scroll down for the pdf of the study]

June 21, 2013 – The Asian American Legal Defense and Education Fund (AALDEF) is releasing land use data on New York City’s Chinatown, as a preview of its forthcoming three-city study of Chinatowns and surrounding areas in Boston, New York, and Philadelphia.

"We have assembled data on the make-up of small businesses and properties in Chinatown that will enable us to document the effects of gentrification on Asian immigrants, who have been fighting for their community for decades,” said Bethany Li, staff attorney at AALDEF.

AALDEF, in collaboration with community partners, academic institutions, and hundreds of volunteers, spent a year recording block by block and lot by lot the existing land uses in Boston, New York, and Philadelphia Chinatowns and surrounding immigrant areas. Today’s initial release of land use data, combined with detailed analysis of Census data from the 1980s, provides a snapshot of the existing uses of New York’s Chinatown and describes its startling transformation in the past three decades.

New York’s Chinatown has served as the gateway for thousands of immigrants from Asia and is home to a thriving network of low-income residents and small businesses. However, property values in Lower Manhattan have increased substantially, and gentrification is threatening the neighborhoods’ historical and cultural significance. According to Census data, the overall population in New York’s Chinatown decreased 7% between 1990 and 2010 (from 125,574 to 116,722 people) due largely to the increase of non-family households and a decrease in family households -- a significant indicator of gentrification. As a result, many Asian immigrants face the prospect of displacement.

For example, AALDEF's study indicates that an overwhelming majority of commercial use in New York’s Chinatown consists of small businesses (94%), approximately 12% of which is classified as “high-end.” However, our survey shows that the most significant cluster of “high-end” businesses is in the area between Houston and Delancey Streets, where students and young professionals have displaced immigrant families in the past decade. "High-end" stores also dot the landscape along Allen and Orchard Streets heading towards more traditional parts of Chinatown.

“Gentrification threatens to transform these previously neglected neighborhoods into tourist centers and destroy the places where Asian immigrants have lived and worked for decades,” said Li. “We hope this data can be used to support organizing and planning efforts that help retain resources for New York’s Chinatown for current and future immigrants.”

This data was collected with the assistance of AALDEF’s community partners including Chinese Progressive Association and Boston Chinatown Neighborhood Center in Boston, Chinese Staff & Workers’ Association in New York, and Asian Americans United in Philadelphia. The University of Pennsylvania’s City and Urban Studies Department provided technical assistance on mapping and data analysis.

Download Chinatown: Then and Now >

Contact:

Ujala Sehgal
212.966.5932 x.217
usehgal@aaldef.org

Bethany Li
212.966.5932 x.213
bli@aaldef.org

Sustainability

Even if restaurants do provide many more jobs than a 7-Eleven, are restaurants as sustainable as 7-Elevens? That's exactly the question that leads right to the heart, goal and purpose of NO711.

Because they can get higher rents from chain stores, banks and bars, landlords raise their commercial rents on small businesses as soon as their leases come due and drive out those small local-serving businesses in order to open up space for higher-renting bars, banks and chains.

As the highest rent-payer, chains take the highest-density foot traffic locations, clustering to increase that foot traffic. Increasingly, chains are invading less dense neighborhoods. As long as there's no regulatory restriction on chain stores, there's no reason to believe this trend will not continue. Landords in less dense neighborhoods speculate on that trend by raising rents even leaving stores vacant until a chain takes it, as the Pratt Center has observed.

Small storefronts increased rents by as much as 600% in 2006 to make way for bars and chain stores in the EV. Commercial rent increases and upscaling are not static levels. They respond to speculations on itself -- a recursive function that spirals upwards to the highest bidder creating a context in which only the highest bidder can survive. CBGB's was lost to Varvatos, a chain store. Veselka, an independent restaurant, opened on the Bowery after Varvatos opened and has already failed. This is no coincidence.

(As it happens, the restaurant I mentioned a couple of posts back has been around for decades. It has a full liquor license as most successful restaurants have. It is also nowhere near any chain stores.)

Ugly scam

Everyone is sending around the NYTimes piece about the Feds raiding a bunch of 7-Eleven franchises for hiring undocumented immigrants using fake documents. 

I deplore what the Feds are doing to those franchisees. I'm assuming that the franchisees paid those employees their full 7-Eleven hourly wage since the payroll is handled by the corporation. If that's so, then what the franchisees were doing was morally alright, albeit illegal, and the corporation was unaware. There are independent groceries, delis and bodegas that exploit undocumented immigrants paying under minimum wage. That's both illegal and wrong. At least these immigrants were getting minimum wage -- in fact, a little above, if the franchisees weren't scamming the immigrants too. 

So only anti-immigrant sentiment would use this to criticize 7-Eleven. Personally, I applaud what  those franchisees were doing (except for using the former employee's soc sec # that resulted in an IRS prosecution -- that's abusive, and probably stupid, since how do you think the Feds caught on?). Other than that one case, they were scamming 7-Eleven and the law to benefit human beings. What's wrong with that? Encouraging illegal immigration? I think our borders should be open and all immigrants should be legal. Yes, immigrants increase the labor pool, but they consume too, increasing demand for production which demands more labor. Immigration makes us strong. 

Well, turns out those franchisees were abusing the immigrants, according to Reuters, "ruthlessly." So, good for the Feds. Screw those franchisee SOBs! What's going to happen to the immigrant victims?
http://mobile.reuters.com/article/idUSL2N0ET0UW20130617?irpc=932
http://www.nbcnewyork.com/news/local/Human-Smuggling-Investigation-7-Eleven-Long-Island-Federal-Agents-Police-211793521.html

Down for the count: 7-Eeven and jobs again

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. 

Maybe 7-Eleven is ahead of the curve. Maybe the future will have no store attendants at all, just machines and engineered fare.