A Tax Break Took New Jersey’s Poorest City From Zero Grocery Stores To... Zero Grocery Stores

Camden, located in the southern part of New Jersey, just across the Delaware River from Philadelphia, is one of the poorest cities in the state, if not the whole U.S. The median income there is just $26,000, compared to $76,000 in the rest of New Jersey, and the poverty rate is above 37 percent. In the 2013-2017 period, per capita income in Camden was just $14,405.

But income isn’t the only issue: Camden is also infamous for being a “food desert.” According to the U.S. Department of Agriculture, huge swathes of the city are populated by people who live in low-income neighborhoods, don’t have a car, and don’t have a grocery store within half a mile of their homes.

New Jersey lawmakers have been trying to “help” Camden for what feels like forever, and one of their ideas was to use tax incentives to entice new grocery stores into the city. But instead of bringing in new shopping options and addressing entrenched inequality, the effort showed how giving tax breaks to private corporations doesn’t help local economies or reduce poverty.

First, some background. At the behest of Gov. Phil Murphy (D), a task force is looking into New Jersey’s corporate tax incentive programs, which, in theory, use tax breaks to entice and retain businesses, thus creating jobs and boosting incomes. What the task force has found so far is that those programs are a total mess: Instead of creating good jobs for residents of the state, they’ve allowed connected lawyers and lobbyists to direct tax breaks to their clients, who often broke their job creation promises, all at an exorbitant cost to taxpayers.

Case in point: The effort to bring a grocery store to Camden. In its first official report, the task force noted that a provision of a 2013 rewrite of New Jersey’s corporate tax incentive programs specifically addressed grocery stores in Camden, under a program called Grow NJ. But a politically connected law firm called Parker McCay — whose CEO happens to be the brother of a prominent New Jersey Democrat — “drafted large swaths of the [tax incentive] bill in various respects that appear to have been intended to benefit the firm’s clients,” according to the task force. That included shaping the grocery store provision to explicitly help its client, ShopRite, and prevent other grocery stores from benefiting from the tax break.

Here’s what the law firm allegedly did: It represented a joint project to have a ShopRite anchor a larger retail area in Camden, which was announced before the state legislature rewrote New Jersey’s tax incentive programs. That project, per the task force “was planned to be over 150,000 square feet, with at least 50 percent occupied by the grocery store.” Another developer was, at the same time, pushing a smaller project that also included a grocery store.

When New Jersey’s new tax incentive programs were later announced, the criteria for grocery stores were very specific. Grocers only qualified if they were “at least 50 percent” of a larger retail development “of at least 150,000 square feet” — the exact specifications that ShopRite had planned. (At the time, the average grocery store in the U.S. was 46,000 square feet.) As a result, the incentive explicitly helped ShopRite and rendered its competitor ineligible for the tax break, even though either project would also have fulfilled the goal of opening a supermarket in an underserved area.

Ultimately, ShopRite didn’t follow through on its Camden project, and neither did the second store that was made ineligible for subsidies. So the end result was no new grocery store in Camden at all. Instead, a sealant company took the site ShopRite would have used, thanks to $40 million in tax breaks; per the Philadelphia Inquirer, “No explanation has been provided for why the ShopRite project collapsed.” (In 2014, a PriceRite opened in Camden that was also too small to qualify for the tax breaks ShopRite would have enjoyed.)

Camden’s grocery stores were one of many examples in New Jersey’s incentive programs in which private concerns trumped the public interest. As the task force put it in its report: “Certain aspects of the Grow NJ program’s design are difficult to justify from a rational policy perspective and can be understood only as the result of a process in which certain favored private parties were permitted to shape the legislation to their benefit — and further, in some cases, to disfavor potential competitors.”

New Jersey lawmakers took a dubious idea and made it worse.

Sadly, such inside wheeling and dealing is a standard part of corporate tax deals. In fact, according to a study by the Kansas City Federal Reserve, an increase in a state using corporate tax incentives is correlated with an increase in its officials being convicted of federal corruption crimes. That connection makes a certain sort of sense, since corporate tax incentives are targeted to specific industries, if not specific companies, making a coziness between elected officials and corporate interests nearly inevitable.

But inside dealing aside, was using tax breaks to entice grocery stores into Camden even a promising strategy? A growing body of research says probably not.

One problem inherent in tax incentives is that they often go toward “incentivizing” actions that the business receiving them would have taken anyway, for other reasons. A study by Timothy Bartik at the W.E. Upjohn Institute for Employment Research found that at least 75 percent of incentives wind up merely being free money for companies that planned to take such action regardless of the incentive. That’s also true with grocery stores: A 2017 study found that up to about 70 percent of grocery stores that entered low-income areas due to the federal New Market Tax Credit likely would have done so even in the absence of the credit.

There’s also plenty of evidence that bringing grocery stores into food deserts isn’t necessarily the panacea for those areas that advocates claim it is. Higher-income and lower-income households actually spend about the same amount of money on average in supermarkets: 91 cents of every dollar spent on groceries versus 87 cents, respectively. They also travel roughly the same distance to those stores, on average.

So simply bringing a store into the neighborhood cuts down on travel costs, but doesn’t have all the ancillary benefits — better diets and better health — that policymakers claim will occur. Diet is much more closely connected to the amount of money a household has and in what region of the country it’s located.

“The primary factors are economic and time constraints that are affecting people, not geographic barriers, in wealthy countries,” said University of Iowa College of Law Adjunct Professor Nathan Rosenberg. “The more studies that have been done, the stronger those studies are, and the better the data we have, the more clear that’s become.”

In 2018, Rosenberg argued in a paper he co-wrote with Nevin Cohen entitled “Let Them Eat Kale” that incentives for grocery stores get the food access solution precisely backward. Instead, Rosenberg and Cohen noted that boosting wages, strengthening worker protections, and increasing funds for programs such as those providing school lunches will all do more to address the root causes of food-related inequality.

So New Jersey lawmakers took a dubious idea, made it worse by allowing politically connected players to influence the process, and wound up achieving nothing for the people of Camden. Sadly, that’s often how programs like Grow NJ shake out: Good for the rich and connected, and leaving everyone else hungry for better solutions.

Getting a promotion is usually a cause for celebration. But after Chip Ahlgren was made a general manager at a Jiffy Lube in Washington state, he moved from an hourly position to a salaried one, and was no longer owed overtime pay when he put in more than 40 hours a week. Instead, Ahlgren could be asked to work as many hours as his boss demands for the same $52,000 a year.

These days, he’s putting in around 60 hours a week, even though his contract says he’s supposed to work 50 hours and the payroll system only counts 40 hours a week for the purpose of accruing sick leave. His managers keep giving him more to do. “They just add and add and add,” he said. “There’s no way for us to get everything done.”

While overall his pay is higher than it was when he was hourly thanks to bonuses, those bonuses aren’t guaranteed. In terms of guaranteed pay per hour, he’s making less: He estimates that right now, it averages out to about $8 an hour, whereas the people below him make $16 an hour. And so much intense work has taken a huge toll on him. “It wears you out to work this many hours,” he said. “I’ve blown out my knee, blown out my back. I’m almost on the brink of not being able to survive physically.”

Ahlgren isn’t eligible for overtime pay because the federal threshold of $23,660 to qualify has gone without an update for decades. And without extra overtime pay for his extra hours, he’s just keeping his head above water financially. “I don’t have really enough to survive or go to the doctor or plan for the future or anything like that,” he said.

Ahlgren may be able to look forward to some relief, however. At the beginning of June, the Washington State Department of Labor & Industries released a plan to update its own overtime threshold. It would ensure that any worker in the state who makes less than 2.5 times the minimum wage — by 2026, nearly $80,000 a year — will be owed overtime pay. About 400,000 people like Ahlgren are expected to be affected.

The state of Washington had to take matters into its own hands because efforts to increase the overtime threshold at the federal level have stalled. In 2016, the Obama administration updated federal overtime rules so those making $47,476 or less would be automatically covered, both hourly and salaried. It would have been updated every three years to keep up with wage growth thereafter, likely covering those making $51,000 by early 2020.

But the update was challenged in court and ultimately struck down. Rather than defend the Obama update, the Trump administration first did nothing, and then put forward its own proposed increase to $35,308 without any automatic updates. According to the Economic Policy Institute, it will cover 8.2 million fewer people than the Obama rule would eventually have.

In the wake of Trump’s weak federal action, a number of states have stepped into the breach, because, as with the minimum wage, federal overtime law is just a floor; states and localities can go higher if they choose.

“This is a standard that is really important to the vibrancy of the middle class, and it has dramatically eroded over time,” said Heidi Shierholz, senior economist at the Economic Policy Institute. The minimum wage raises pay and living standards for those at the very bottom, but overtime is “about the lower end of the middle class,” she said. The typical person impacted by it is the front-line supervisor in a fast food restaurant or retail store — a low-level manager who may be asked to put in 60 to 70 hours a week at no additional pay. Updating overtime therefore acts as a “companion standard” to increasing the minimum wage, she said.

Pennsylvania was the first to act when last year Gov. Tom Wolf (D) proposed raising the state’s threshold to $47,892 by 2022 and updating it automatically every three years after that. California and New York have also taken action: California‘s overtime threshold will cover everyone making less than $62,400 by 2023, while New York will raise it to $58,500 in New York City and phase it in at different rates for different parts of the state.

But Washington state has so far gone the furthest. “The Washington announcement is definitely the boldest,” said Paul Sonn, state policy program director at the National Employment Law Project. “It’s a model for how states can take strong action to protect workers from the Trump overtime rollback. We hope it’ll spur more states.”Previously, about two-thirds of the salaried workforce had to be paid overtime when they worked more than 40 hours a week. Washington’s update would cover about 44 percent, Sonn said: “It’s really quite moderate historically because it wouldn’t fully restore overtime pay to the share that had it in the 1970s.”

Federal overtime law is just a floor.

One of the beneficiaries in Washington would be Sidney Kenney. When he started working at a residential service provider for developmentally disabled people in a salaried position, he was told the job would be 9 to 5, Monday through Friday. “Soon you find out that’s not true,” he said. He was required to always be on call, even on weekends, holidays, and vacations. It meant keeping his phone at the ready even when at the movies or in bed. “It changes how you live,” he said.

He once took a vacation to go to a friend’s wedding but found himself having to do work on the way there, during the wedding, and on the way home. Every time he put in those extra hours, he was paid the same. “It builds resentment,” he said. “You’re angry, you feel like you’ve been lied to, feel like you’ve been taken advantage of.”

So, he decided to move to an hourly position instead. “I loved the job I was doing,” he said. “However, I realized it was not a lifestyle I could continue or wanted to continue.” Now he has a set number of hours, and if he has to come in early or stay late, he’s paid for that extra time. “My days off are my days off,” he said. “I still get phone calls from work and I still get some text messages, but I don’t have to answer them.”

“Your time is invaluable,” he noted. “I can plan things, I can enjoy my time. It’s a crazy world and nothing’s promised, so what time I do have I want to enjoy.”

But he thinks if his state’s proposed overtime update goes into effect, almost all of the positions at his job will simply be made hourly to accommodate it. “I would have stayed in the same position if it were hourly,” he noted. “If they were to extend the same position I had … but in an hourly capacity, I would go back to it.”

Ahlgren doesn’t expect that being covered by overtime regulations would reduce his hours. But it will mean extra money for his extra work. “At least I would be able to go to the doctor and take of myself,” he said. “I would be able to plan for a future where I wouldn’t just have to do this forever.”

Other states may soon join in the action. Last week Massachusetts held a hearing on a bill that would increase its threshold to $64,000 by 2026. Colorado’s labor department kicked off a comment process for whether and by how much it should raise its overtime standards, which will continue through Aug. 15. And a bill has been introduced in Maine’s legislature to increase its threshold. There may be others just waiting in the wings: Sonn noted that 16 states filed objections to Trump’s overtime update. “That shows there’s a long list of states that think it’s not enough,” he said. “We may well see them acting in the future.”

Workers in Washington also hope their state can inspire others to act. “So many businesses have built their models around having these free workers,” Kenney noted. “It’s not right, it’s not ethical, and it’s not fair.”

“I’m just hoping more states follow suit,” he said.

Congress hasn’t raised the U.S. federal minimum wage in more than a decade, the longest stretch between increases in history. To remedy that failing, House and Senate Democratic leadership have introduced the Raise the Wage Act, which would gradually increase the federal minimum wage to $15 per hour by 2024. It would also link the minimum wage to median wage growth thereafter, and phase out sub-minimum wages for tipped workers, which has been stuck at $2.13 per hour for 28 years, and workers with disabilities, which allows employers to pay disabled workers as little as pennies per hour.

If passed, the new federal bill would also have far-reaching consequences that aren’t widely touted — including helping address America’s growing retirement crisis.

As of 2013, nearly one in five Americans age 55 to 64 had zero retirement savings or pension. The crisis is much more acute for lower-income Americans: While nearly nine in 10 families in the top fifth of the income distribution have retirement account savings, fewer than one in 10 families in the bottom fifth do.

It’s not surprising, then, that seniors increasingly rely on Social Security’s very modest benefits, which make up 90 percent or more of the income of nearly one in four seniors — a share that rises to more than six in 10 for those in the bottom fifth of the income scale.

The yawning gap between the high pay of the rich and the stagnant or declining pay of the working and middle class is a key driver of the crisis: According to the Urban Institute, rising wage inequality means that today’s 45-year-olds in the bottom fifth of the lifetime earnings distribution will have 3 percent less retirement income than today’s seniors, 25-year-olds will have 6 percent less, and 5-year-olds will have 13 percent less. Meanwhile, for the richest fifth, annual retirement income will rise over time.

The amount a worker can afford to save for retirement is tied to her earnings, and the Urban Institute researchers find that raising the federal minimum wage from $7.25 to just $12 — below the $15 Congressional Democrats have proposed — would offset nearly 60 percent of the retirement income lost by the bottom fifth of today’s 25-year-olds, and nearly 40 percent lost by today’s 5-year-olds.

The minimum-wage bill’s impact would be especially profound on workers of color — particularly black workers, a full 40 percent of whom would get a raise. Black workers are paid much lower wages than their white counterparts, with the typical full-time, year-round black male worker earning just 70 percent of what a white male worker earns, while black women make just 61 percent. They also face a much more severe retirement crisis, exacerbated by systematic inequalities that hamper saving, prevent wealth-building, and inhibit upward mobility. Black Americans who are nearing retirement age have only about 10 percent as much wealth as whites in the same age group. Social Security benefits made up at least 90 percent of income for 46 percent of black seniors, compared to 35 percent of whites.

The low-wage, low-quality jobs disproportionately held by workers of color don’t pay enough to make ends meet — much less save — nor do many offer the tax-preferenced retirement accounts such as 401(k) plans and individual retirement accounts (IRAs) that help build wealth. As a consequence of shorter life expectancy and lack of resources, many black men will die before they are able to retire.

This raise is a decade overdue: In 2019, a worker earning $7.25 per hour will lose nearly $2,600 compared to 2009 — when the federal minimum wage last went up — because inflation has eroded the wage’s purchasing power. A $15 minimum wage would also lift millions of Americans out of poverty, dramatically reduce spending on public assistance programs, and improve infant health. In just the last five years, 22 states and Washington, DC, have increased their minimum wages, at little or no cost to government and without the job losses conservative pundits claim will result.

Americans get it: In every single state, voters say want their state’s minimum wage to be higher than it currently is. By passing the Raise the Wage Act, Congress would rightly give voters what they’re demanding, and help address the retirement crisis at the same time.

Editor’s note: This piece was originally published on Jan. 17, 2019. It has since been updated.

While temperatures were breaking records in California last week — reaching as high as 107 degrees in King City on the Central Coast — as many as 400,000 farmworkers were picking strawberries, stone fruit, and melons, trimming table grapes, and engaging in myriad tasks to keep the nation’s number one agricultural producer in business. They labored under punishingly hot sun for eight to ten hour shifts, paid by individual tasks rather than by the hour.

When it comes to hazardous working conditions on American farms, many people think of pesticide exposure; as early as the 1960s, farmworkers were ringing alarm bells about it. But heat stress has actually surpassed pesticides — which cause cumulative harm over time — as the most immediate lethal danger in the fields, according to Dr. Marc Schenker, distinguished professor of public health sciences and medicine at University of California Davis. “We don’t see acute deaths from pesticide poisoning anymore,” says Schenker (though pesticides are still recognized as a significant danger with severe health risks for people exposed to them).

An estimated 2.5 million farmworkers across the United States endure dangerously hot conditions on the job. As the heat climbs, workers can start to develop symptoms of heat stress including dizziness, nausea, fainting, vomiting, fatigue, poor coordination, and seizures. As their organs, especially their kidneys, start to break down, they can fall into a coma and die if not treated. Between 1992 and 2006, 68 farmworker deaths attributed to heat exposure were reported. Limited access to more current data makes it challenging to uncover the depth of the problem, though advocates claim deaths are likely underreported.

Outdoor temperatures aren’t the only issue. Personal protective equipment, ranging from suffocating Tyvek suits worn for pesticide application to thick trousers and heavy boots for working around thorny plants, can add to farmworkers’ misery.

“In workers, the major producer of body heat is metabolic workload,” explained Schenker. “If you’re working in outdoor conditions, you’re generating the majority of body heat from metabolism. The simple prevention is to reduce workload.” The piecework rate of payment for farmworkers, in which people are paid by the pound rather than by the hour, is a recipe for working as hard and as fast as possible. The system is great for employers, but bad for workers.

Access to drinking water, shade, and rest can help workers manage their body temperatures in high heat conditions. But just two states, California and Washington, have laws that require sufficient shade structures and drinkable water be nearby to meet the needs of the work crew. The Coalition of Immokalee Workers’ Fair Food Program, in which companies like McDonald’s and Trader Joe’s pay a premium for more ethically-sourced tomatoes, also requires access to shade, drinking water, rest breaks, and hygiene facilities as part of its code of conduct. But even those requirements aren’t always enough.

In 2008, a 17-year-old pregnant farm worker died of heat-related illness because the drinking water was too far away, despite the fact that California’s heat protection law dated to 2005. Outcry led to enhanced safety regulations and better enforcement, but despite a dedicated heat violation hotline, improved data collection, and a push for better internal auditing to ensure complaints are investigated in a timely fashion, the problem persists.

Even if they have access to preventative care in the field, workers face another heat-related challenge when they go home: Farmworker housing may consist of crude shacks operated by farmers or contracting companies, or hot trailers with no air conditioning. Leydy Rengel of the United Farm Workers Foundation recalls the extreme heat of the Coachella Valley beating down on the trailer she shared with her parents, both farmworkers, as a child: “My parents would come home after 10-hour shifts, and didn’t have a place to cool down.” This can be dangerous, said Schenker: “Nighttime cooling is an important factor in preventing heat stress illness.”

While the short-term implications of heat-related illnesses are well understood, not as much is known about what they mean for people in the long term. Schenker is researching this subject, with a particular interest in what happens if workers experience repeated incidents of acute kidney injury, a potential complication of heat stress. This is especially vital since climate change is making conditions for farmworkers even worse.

California’s most recent climate assessment warned that if greenhouse gas emissions continue at their current rate, the state’s average daily high temperature could be as much as 8.8 degrees Fahrenheit higher from 2070-2100 than it is today. Over that same period, the annual number of extreme heat days (over 103.9 degrees) could rise from four to twenty-four. The amount of land scorched in wildfires will increase 77 percent.

The picture can be grim for farmworkers in high heat conditions.

In California, the law protecting workers from the effects of high temperatures is clear, but enforcement has been erratic. The UFW Foundation was one of the entities that pushed the state to issue more clarity and direction to keep farms — and the contract companies that supply a large number of farmworkers — accountable. Schenker, who has spent years researching farmworkers, said “California really does lead the nation,” but what that can look like from farm to farm is highly variable.

During the recent high heat event, the UFW Foundation ran an awareness campaign encouraging people to report unsafe conditions and setting up tables at locations farmworkers frequent to educate them about their rights. Rangel said even with the promise of anonymity, workers were reluctant to report. “They’re rather just be quiet,” she said, especially when they’re undocumented. And when state officials may take days to respond, complaints don’t always lead to enforcement.

Outside California and Washington, the picture can be grim for farmworkers in high heat conditions. They have some protections under the Occupational Safety and Health Administration, but for farmworkers, especially undocumented people in isolated areas, knowledge of the law and the ability to ask for enforcement can be limited.

“Last year, there was a 24-year-old farmworker, an H2-A guest worker in Georgia, who had only been in the country for less than 10 days, and he suffered heat illness. Nobody paid attention, his employers were not informed of how to handle this. They thought he was just being lazy,” said Rangel. It wasn’t the first time an ill worker had died in similar circumstances.

As consumers grow more aware of concerns around farmworker health and safety — calling, for example, for restrictions on pesticide use and listening to farmworkers speak out about sexual abuse in the field — heat illness should be a more prominent topic of conversation. Just as hotter days and longer summers will affect the quality of crops, they’ll affect the quality of life for the people who cultivate and harvest them.

This July, the House of Representatives is planning to vote on a bill to raise the minimum wage to $15 by 2024. Most of the media coverage has highlighted the groundswell of progressive support behind the increase — a $15 minimum wage was considered a pipe dream only a few years ago, and now the bill is co-sponsored by a majority of congressional Democrats. But an equally monumental — and largely overlooked — story behind the bill is what it would mean for the 1 in 5 Americans living with a disability.

A loophole in the current minimum wage law allows employers to pay workers with disabilities a subminimum wage that’s even lower than the federal limit of $7.25 — in some cases, paying people as little as pennies per hour. In recent years, an estimated 420,000 individuals with disabilities have been paid an average of just $2.15 per hour.

The new bill would sunset the separate subminimum wage, immediately setting it at $4.25 and then gradually increasing it every year for the next six years until it is even with the minimum wage.

Disability advocates have been pushing for this type of legislation for years. The subminimum wage was initially introduced in 1938 to encourage employers to hire veterans with disabilities — and has barely budged in the nearly 80 years since. Now, the Depression-era policy does far more harm than good. Partly as a result of these extremely low wages, workers with disabilities are nearly twice as likely to be economically insecure as workers without disabilities.

While some advocates argue that the subminimum wage offers workers a foot in the door of the labor market — paving the way to skill development, training, and an upward career trajectory — research shows that it exposes workers with disabilities to exploitation and seclusion. In 2016, phasing out the separate subminimum wage was a key recommendation of the Department of Labor’s advisory committee on employment among individuals with disabilities.

The Depression-era policy does far more harm than good.

In its current form, the subminimum wage pigeon-holes workers into dead-end jobs — most often at sheltered workshops, where workers with disabilities are kept separate from other workers. It’s stigmatizing, sending the message that disabled individuals’ work is not as valuable as other individuals’ work. And it’s discriminatory, robbing workers with disabilities of the basic labor protections afforded to workers without disabilities and leaving them vulnerable to mistreatment and abuse. Senator Casey and others have introduced the Transformation to Competitive Employment Act, which would include a graduated phase out of these programs over six years and financial incentives to support current programs to move to a model of integrated employment at competitive wages. However, the Raise the Wage Act is notable for finally treating these workers as a key part of the workforce from the outset.

Congressional Democrats’ embrace of one fair minimum wage taps into a growing — but so far, largely frustrated — movement. President Obama attempted to partially rectify the law by including workers with disabilities in his 2014 executive order mandating a minimum wage of $10.10 for federal contractors, which President Trump has threatened to reverse. At least six states, New Hampshire, Alaska, Maryland, Washington, Oregon, and Vermont have independently passed legislation to phase out the subminimum wage for workers with disabilities. Other subminimum wages, like the one that exists for tipped workers, have been able to make more progress. Eight states ban the tipped minimum wage, and all national minimum wage bills introduced since 2012 have included provisions to partially or fully phase it out.

For the 40 million workers who struggle to make ends meet on low wages, the Raise the Wage Act is an historic step towards ensuring a livable wage for all. This call is especially significant for the millions of workers with disabilities who — after 80 years of being left without a voice in federal legislation — are finally able to join the chorus, demanding the fair shot at fair pay that all workers deserve.

Editor’s note: This piece was originally published on May 18, 2017. It has since been updated

A Tax Break Took New Jersey’s Poorest City From Zero Grocery Stores To… Zero Grocery Stores

States Are Going Around Trump to Get More Workers Overtime Pay

Heat Is Now the Deadliest Threat to Farmworkers. Only Two States Protect Them From It.

Everyone Is Overlooking a Key Part of the New $15 Minimum Wage Bill

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