New York, NY – A new report cites car wash kingpin John Lage, Toys “R” Us, Con Edison and some airline contractors and supermarkets – and their millionaire executives – as among the worst employers of low-wage labor in the city.
The report also predicts a sharp increase in the number of low-wage jobs in the coming years that will continue to make it difficult for workers to support their families and will only exacerbate the already stark economic inequality in New York.
The report, from the community groups UnitedNY and ALIGN, said the economic inequality deprives the economy of additional spending that would occur if low-wage workers were paid fairer wages. The report also exposed several of the city’s worst employers of low-wage labor who exploit their workers while taking immense salaries for themselves.
Specifically, the report focused on car washes, airline contractors, Toys “R” Us, supermarkets, and Con Edison, as well as the handsomely paid executives who manage them.
“This report is designed to call attention to these employers and executives who consistently compromise the livelihood of workers, in the name of profits,” said Camille Rivera, Executive Director of UnitedNY. “Workers all over the city are fed up, and ready to fight back for the wages, benefits, and respect they deserve. That’s why we’re coming together on July 24, to send a clear message to these employers that all of us – community groups, clergy, labor organizations, and workers play a role in New York’s economic landscape, and we are ready to get our fair share.
The report found:
• The purchasing power of New York’s $7.25/hour minimum wage is drastically lower than it was in 1970.
• Four in ten households in New York City are forced to subsist on low-wages.
• Over one-quarter of workers in New York City earn below $25,000 per year.
The report said wages are especially important to these workers because most lack investment and other forms of income that the wealthy typically receive. Big businesses are earning large profits at the expense of their workers and taxpayers who shoulder the costs of poverty and poor working conditions.
The sheer disparity of executives receiving outsized salaries – in addition to other benefits and income – while paying their workers poverty wages without benefits, is revealing of the economic crisis facing our country and so many families, the report concluded.
The conditions of the more than 5,000 workers at nearly 200 carwashes in New York City demonstrate the economic gulf between the owners of many low-wage businesses and their workers.
A 2008 New York State Department of Labor probe found a plethora of minimum wage, overtime law, and other wage theft violations, leading the then-commissioner to call the industry “a disgrace.” Research interviews recently conducted by WASH New York at 29 different carwashes show similar situations still exist.
• A 2008 inspection of 84 carwashes by the New York State Department of Labor found: o $6.5 million in underpayments to 1,380 workers o 80% of carwashes in New York City violated minimum wage and overtime laws
• Based on recent interviews conducted by researchers from WASH New York at 29 different carwashes:
o 53% of those interviewed worked between 61 and 80 hours a week and only 25% received any overtime pay.
o 66% had, at times, been paid below minimum wage.
o And despite constant exposure to hazardous chemicals, only 23% ever received protective equipment from their employers.
John Lage, linked to some 21 carwashes in New York City, has a notorious history of exploitative behavior and labor violations. He was sued by the U.S. Department of Labor in 2005 over allegations that his companies violated the Fair Labor Standards Act. As part of a 2009 consent judgment, Lage was ordered to pay $3.4 million in back wages, damages and interest to over a thousand employees. Meanwhile, his family properties in Westchester County are worth millions, and his waterfront property in Queens is worth more than $1.6 million.
Although supermarkets had above-average growth in the City between 2006 and 2009 according to the state Department of Labor, many workers in this sector earn low-wages and do not receive overtime pay or sick time.
Supermarket workers throughout the city are organizing for fair pay and working conditions. Some have successfully sought to join unions though elections. Several of the workers at Golden Farm supermarket in Kensington, Brooklyn – many of whom are immigrants – have filed a lawsuit alleging they have worked 72-hour work weeks and been paid as little as $4.86 per hour with no overtime.
Meanwhile, owner Sonny Kim sold his $1.1 million New Jersey home in 2010 for a profit despite the slumping housing market.
A 2012 NYU study found that contracted passenger service workers at airports, such as baggage handlers, ticket checkers, airplane cleaners, and security guards make a median wage of $8 per hour, with most of those surveyed earning the minimum wage. Only 17% of workers surveyed had health insurance and only 32% reported receiving paid sick time.
Air Serv is a company that employs many of these workers and had over $400 million in revenues in 2010. It has hundreds of workers as wheelchair attendants, cabin cleaners, security guards, ID checkers, and baggage handlers at JFK International Airport.
Despite paying minimum wages without benefits, its CEO Frank Argenbright was worth approximately $300 million in 2007. Argenbright was fired as CEO of Argenbright Security after the company was revealed to be responsible for passenger screening at two of the three airports where 9/11 hijackers boarded planes. He lives in $6.8 million house in Georgia.
Despite Con Ed over $1 billion in profits in 2011, workers hired by Con Edison’s cleaning and security contractors receive salaries as low as $8 per hour.
To ensure it could continue paying these workers poverty wages, Con Edison spent over $2 million on lobbying in 2010 and 2011, partly to defeat a bill that would remove the exemption for public utility companies to pay contracted workers a prevailing wage.
The disputed provision would have allowed thousands of workers who clean and secure public buildings and facilities to earn good wages and health care for their families, saving taxpayers from shouldering the costs.
Meanwhile, Con Ed President & CEO Kevin Burke was awarded more than $10 million in total compensation in 2011, earning more than $5,200 per hour. Burke owns three homes – a $1 million Westhampton Beach residence, a $1.5 million Upper East Side apartment, and a $2.3 million house in Florida.
TOYS “R” US
New York State has the second largest concentration of Toys “R” Us stores in the country with 62 locations and 19 in New York City. When this second largest supplier of toys in the U.S. was acquired by private equity firms including Bain Capital, 75 stores were closed and an estimated 2,250 workers likely lost their jobs.
Despite having revenues of $14 billion and a net income of $168 million, surveys of Toys “R” Us workers in New York City revealed most made less than $10 per hour, with many starting at just $8.50 per hour.
Toys “R” Us also has a history of facing penalties from the government for violating labor laws. The company agreed to pay more than $100,000 in restitution and penalties resulting from a complaint by the Massachusetts Attorney General in 2009 for failing to pay employees earned vacation time.
In 1999, the company agreed to pay a $200,000 fine as part of a settlement with the U.S. Department of Labor for alleged violations of national child labor laws.
Toys “R” Us CEO Gerald Storch made $7.9 million in compensation in 2011 – a $5.2 million increase over his 2010 compensation. Storch lives in a $3.4 million, 11,000-square-foot home on two acres of land in New Jersey.
Low-wage workers, community organizations and average New Yorkers are working through the UnitedNY coalition to address economic injustices and improve the conditions of working people. The coalition is supporting the efforts of low-wage workers from different sectors in their efforts to win fair wages and working conditions.
On July 24, thousands will unite for the National Day of Action for Economic Justice to call for an increase in the minimum wage and holding irresponsible businesses accountable. ###