Providence’s Economic Battle Over Building More Hotels
Tuesday, August 04, 2015
The impasse over the Procaccianti Group's extended stay hotel proposal at the Fogarty Building downtown has pitted construction workers who say they need the work, against hotel workers union. Hotel workers have been battling with Procaccianti Group over working conditions and wages at the Renaissance and Hilton hotels for years. The question is will more hotels create more jobs and, thus, help raise wages.
The Procaccianti group is looking for a tax stabilization agreement from the city for twelve years for the project, saying it would created up to 200 temporary jobs -- but arguments over permanent jobs -- and the quality of those jobs -- is dividing both unions and city council members, with the measure on hold until the council comes back in session later in August.
"We need construction jobs since these jobs pay well. If Providence is going to move forward economically, we cannot continue to hold developers hostage to matters they have no control over such as wages paid in the hospitality industry," said URI Professor of Business Edward Mazze.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"We are sending the message that Providence is not open to business unless the business is willing to "play ball" in an environment that is controlled by unions and elected officials with their own agendas," continued Mazze. "Construction of a hotel should be evaluated on its contributions to the economy (creation of jobs in construction and in support of construction and the extended multiplier effect) and quality of life (meets the building codes and needs of the community.)"
The construction of the 150 extended room would purportedly provide hundreds of construction jobs until completion, but City Council member Kevin Jackson is one of the critics questioning the tax breaks in light of the number of potential permanent jobs created.
"We've lost sight that TSAs were created for economic development -- and permanent jobs," said Jackson. "I don't know of many permanent jobs that have been created through TSAs, other than the mall. I've seen them say there'll be 30 full time jobs. 18 are probably are going to be managerial and come from their existing hotels. So there will be 12 new jobs? The only way that you'll help people who live, work, and eat here -- is to have decent paying jobs so they're not working 2-3 jobs."
As to whether the jobs would be unionized at the new hotel, the Procaccianti group said it would adhere to the letter of the law.
"Management remains fully committed to following federal labor law and the clearly defined process by which the hotel employees can decide for themselves to be represented by a union or not," said Procaccianti Marketing Director Ralph Izzi.
Addressing the Impasse
City Council President Luis Aponte said was talking into consideration both the quality of new jobs created-- and also the overall economic development of the city -- in reviewing the proposal.
"Let's start off from the vantage point that people can build what they like," said Aponte. "If you use your own dollars, and not use a TSA, or need a PEDP -- that's one thing. When you look for public investment -- tax abatements, TIFs, some sort of city involvement -- we have to look at differently than straight development with no public sector support."
"I get it -- the building trades have long been suffering, I get that...but we have an obligation to the public as to what a project is supposedly going to yield, and one of the few things we can say are what kind of jobs are being created, how to we ensure those jobs are good jobs," said Aponte. "[Our] role is not to determine union vs. non-union, but we do have a role in determining that our investment will yield community benefits, for the people who ultimately subs these jobs by paying taxes."
Bryant University Associate Professor of Economics Edinaldo Tibaldi spoke to the issue of supply and demand -- and jobs.
"The idea that there is a trade-off between “more jobs” and "better jobs" is foolish. The labor market responds to fundamental economic forces that drive the demand and supply for labor and, consequently, affect the compensation package that workers receive for their work. Economic opportunities created through construction and operation of a hotel, for instance, change the labor market dynamics, lead to increased demand for labor (unskilled and skilled labor), and benefit the whole community via indirect (economic activity created throughout the supply chain) and induced (economic activity created by household spending of income earned either directly from hotels or from the supply-chain )," said Tibaldi.
"Thus, creating jobs – regardless of the pay rate – has positive effects for the community," continued Tibarldi. "Thus, creating jobs – regardless of the pay rate – has positive effects for the community."
Mazze noted that RI's "unfriendly" business reputation should be a factor under consideraton of how to move forward.
"To overcome our reputation of being unfriendly to business along with our higher than average unemployment and underemployment rates in Providence, we must stop elected officials from defining what jobs are acceptable as long as there are no legal prohibitions to the jobs. A person with a job is important to the community," said Mazze. "Stop holding individuals interested in working to standards created by elected officials who are trying to attract certain types of jobs to Providence where the skills may not be there and where their past track record of attracting and retaining jobs has been a disaster."
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