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By Michelle Chen

March 4, 2013

Under the reign of New York City’s billionaire Mayor Michael Bloomberg, the New York City Economic Development Corporation (NYCEDC) has issued millions of dollars in business development subsidies to beleaguered urban neighborhoods, meant to create new jobs and promote entrepreneurial spirit. Now the NYCEDC is teaming up with Wall Street to give loans to local food manufacturers, but activists who have examined the city’s development track record smell something fishy.

The NYCEDC’s new loan fund grew out of a partnership with Goldman Sachs, which is running a glossy nationwide campaign to pump seed money into small businesses in several cities. The initiative seems geared toward incubating foodie-friendly startups, conjuring up images of rooftop-grown honey and specialty cupcakes. No loans have been awarded yet, but the program’s eligibility criteria appears to target small- to medium-scale food manufacturers that have four to 100 workers and annual revenues between $150,000 and $7,000,000, and can demonstrate “difficulty obtaining credit from traditional sources.” The agency’s website spotlights honors for charismatic local entrepreneurs, like boutique kimchee and artisan bagel makers.

Community groups say they welcome efforts to foster small food businesses, but are wary that the program will offer more hype than real development for a city that’s hungry for good, steady jobs. Labor advocates who have been organizing in the local food sector know that many local producers, even if they’re smaller than industry behemoths like General Mills, are not necessarily much kinder to their employees.

Brandworkers, a Queens-based advocacy group that has waged several workplace justice campaigns for food workers, has often challenged relatively small-scale facilities that have violated labor laws, from a gourmet seafood supplier to a local tortilla factory, which generally employ low-wage immigrant workers who are especially vulnerable to exploitation. The group recently announced that “talks with the New York City Economic Development Corporation (NYCEDC), Goldman, and their third-party loan administrator broke down over incorporating basic standards of transparency, disclosure, and legal compliance for employers” receiving loans.

In effect, Brandworkers wanted more extensive public oversight of the loan process than the NYCEDC was willing to provide. While the NYCEDC plans to disclose which companies are ultimately selected for loans under the program, Brandworkers has demanded greater transparency throughout the process, including disclosure of businesses applying for loans. This would presumably allow the public to raise concerns about employers that have been accused of labor violations before they are allowed to tap the funds.

In a statement sent to Working In These Times, the NYCEDC said that it has done its best to work with Brandworkers, engaging in an “extended dialogue” with the organization and amending the program in order “to address factors previously not in the program’s scope, including a mandatory code of conduct that all loan applicants must sign when submitting their application.” The code contains provisions for abiding by existing labor laws, including wage and hour standards. But NYCEDC insists that, beyond asking for commitments from awardees, monitoring companies and enforcing those workplace standards are regulatory matters that fall outside its authority as a business-focused development agency.

Brandworkers campaign director Joseph Sanchez tells In These Times, “All we're saying is that companies should have to comply with existing law" to get publicly subsidized loans, and "no company should be afraid of being scrutinized over whether they're compliant with law or not, because every company's supposed to do that. It's not a voluntary thing to do."

The NYCEDC has faced criticism from community groups for throwing around public money at businesses that fail to deliver adequate benefits to the communities that host development projects. Last year an investigation by the city’s comptroller revealed that out of nearly $500 million in business subsidies doled out in fiscal year 2009, the majority “went to 334 companies that failed to meet their job retention and creation obligations.” (The NYCEDC rejected the audit as flawed and unrepresentative of the agency’s overall work.)

In another NYCEDC-led food initiative, the community-labor advocacy coalition Alliance for a Greater New York (ALIGN) campaigned for various community food-access provisions to be incorporated into a program to support local grocery businesses, but the city rejected demands for decent wage standards. That move, activists say, enabled public funds to flow to non-union stores.

This pattern of uneven development is prevalent in many cities, with officials lavishing subsidies on corporations in the name of “growth” but failing to produce the promised sustainable jobs.

Kristi Barnes, communications director at ALIGN, says the loan program has the potential to give a much needed boost to local food manufacturing start-ups but is wary that the public will have little oversight over how the Goldman Sachs loans are allocated. "How's the public supposed to know if these companies that are receiving loans are meeting their targets,” Barnes asks, “or are even required to meet targets for performance in any way?"

Brandworkers says it isn’t against the city encouraging the food sector to grow, but wants that growth to be linked to fair treatment for workers. “Our members want to see the industry improve. And if companies [that are] already violating the law get more money to continue that business model, it's only going to make the industry worse.... It's going to make it harder for employers who try to do the right thing to compete."

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