Real Estate Wealth Taxes as a Anti-Gentrification Tool

New Orleans   Recently I listened to an interview with a prominent local developer on WAMF in New Orleans as he was asked about gentrification.  He tried to walk the line between his self-interest and progressive values.  He was against displacement on one hand, but he opposed inclusionary zoning that would require developers to create affordable units in their properties.  He claimed it would sacrifice three units for every one that it created without mentioning that most of the three units built would be for high-end customers.  He opposed a tax on developments that would fund affordable housing or homeless programs.  He claimed the city and state had no money, so the real solution to gentrification had to be federal.

In some ways his argument was breathtaking in its chutzpah.  He was claiming to believe that gentrification was in some ways a pejorative term for a natural process, while opposing displacement, protecting his self-interest, and at the same time presenting himself as an advocate of a national remedy.  Unsaid was the fact that given our Developer-in-Chief president and the current situation in Congress and HUD, the chance of a federal remedy is much less than that odds Vegas would give a snowball in hell.

Chuck Collins, director of the Program on Inequality at the Institute for Policy Studies, in a commentary in YesMagazine made a much stronger, more realistic case for local action, saying:

Municipalities should move with due haste to enact high-end real estate transfer taxes, requirements for the disclosure of beneficial ownership, and regulations aimed at the disruptive impact absentee-owner-investors are having on our cities.

Collins doesn’t claim this will stop gentrification but makes the case that it will discourage “rapacious global capital” from exacerbating displacement and artificially increasing ownership and rental prices by discouraging the kind of offshore wealth capital “parking” that has been so destructive in Vancouver and London.  As an example, he cites the situation in San Francisco, another favor of “ultra-high net worth individuals” with over $30 million in assets, where voters passed a high-end real estate transfer tax on residential and commercial properties with $5 million price tags and higher.  According to Collins, the tax…

“…the tax expected to generate $44 million a year, which has been allocated to fund free tuition for residents at San Francisco Community College and help pay for the city’s tree maintenance program.”

That’s not the same as building affordable housing, but it’s moving in the right direction.  Furthermore, there’s no reason it could not leverage other funds to construct affordable housing or provide city-based rent subsidies.

We can’t wait for Washington.  We have to act now, and whether a real estate tax on $5 million or $1 million or whatever, if such a tax builds local equity by creating affordable housing or other programs that fight displacement, it’s worth a fight.

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Is the Gig Up or Down?

New Orleans      With statistical unemployment below 4% for the first time in years, economists, policy makers, politicians, and self-interested hucksters have found something new to throw statistics at each other backwards and forwards:  is the gig economy growing or slowing?  At many levels one might say it depends on who you ask.  At another level one has to worry about why it matters to the drum beaters.

So, just to review the field of battle for a minute.  The respected Economic Policy Institute in Washington weighed in recently that the gig economy was so marginal it was basically only worth a side room in an academic convention amounting to less than 1% of the jobs in the economy.  The federal Bureau of Labor Statistics trying to update its figures put the number higher than that but way less than double figures and cast doubt on whether the level of such employment was rising or falling.  Others argued that the BLS statistics were an undercount citing the almost 70% of Uber drivers who are not counted by BLS because they have payroll jobs, and Uber is their side gig, so to speak.  Gig promoters claim that more than one-third of the USA labor force is involved in some form of contract or freelance work.  No one disputes the fact that contingent, subcontract and temporary labor is huge, but sorting it out is guaranteed a migraine.

Let’s look at why it matters, big or small.

There’s a continuing push by the giggers to get changes in labor law protections, and that’s not good news for anyone but the giggers themselves who are trying to compete with more established employers in the same industries by sweating the labor of their workers.  Not having to pay social security, unemployment, health benefits and the rest of the package and instead pushing the costs over to the workers themselves saves a ton of money, if you are allowed to get away with it.  The whole point of Uber-kind businesses is in fact to get away with it, which is why they continue to fight here and abroad against any finding that they are responsible for their workforce and not simply an internet application.

It also matters when the bean counters determine how big the number is of fulltime gig workers, because these are workers who represent a long-term time bomb on society if they lack sufficient Social Security benefits to support themselves when they outlive their gigs.  A significant change in the composition of the workforce creates a burden that companies want to shed by passing their responsibility over to the rest of us.

Some good news came from an unexpected front in a southern California ruling against the Cheesecake Factory restaurant chain when they were hit along with their janitorial subcontractor for over $4 million on wage theft claims because workers were denied breaks and forced to work unpaid overtime hours before being released from the shift by Cheesecake managers.  Having employing companies held responsible for subcontractor violations could set precedents that protect contingent and temporary workers as well as gig workers.

We need a lot more victories along the Cheesecake lines because whether the number is huge or small we need to force these kinds of business in another direction where protection of workers’ rights and benefits is still part of the business model.

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Please enjoy Fionn’s Magazine Face.

Thanks to KABF.

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