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Split Council approves Farathane economic development deal

Friday, December 16, 2011 by Josh Rosenblatt

Following a debate that divided both Austin’s City Council and several of its most prominent labor advocacy groups, Council voted 5-2 Thursday to approve an economic development agreement with Detroit-based auto parts manufacturer U.S. Farathane Corporation.

Under the terms of the agreement, Farathane will receive $213,000 in incentives in exchange for creating approximately 228 full-time positions over the next three years. The issue at the heart of the debate was the nature of those jobs, and how much they’ll pay.

According to Farathane, 70 percent of the new jobs will be entry-level positions with an average wage of $10.81 an hour. As several members of Austin Interfaith were quick to point out, that’s 19 cents below both the lowest wage Austin pays city employees and the federal food-stamp threshold for a family of four. Interfaith spokesperson Barbara Grove called that salary “poverty wages” and said it “will force these workers to rely on federal assistance.”

She also argued that the agreement doesn’t hold Farathane accountable for their hiring promises.

“There is nothing in the contract that stipulates how many will be hired, nor for how long,” said Grove.

Austin Interfaith was advocating for a $16-18 per hour minimum wage. That number represented a compromise for the group, which has declared $26 per hour to be the living wage for a family of four in Austin.

However, those in support of the agreement, including Skillpoint Alliance Executive Director Margo Dover and NAACP President Nelson Linder, argued that the deal would provide jobs to those who need them most – blue collar   workers, workers without high school diplomas, and people with criminal records.

Dover called the Farathane wage a “pathway to prosperity” for people without opportunities. “(These jobs) will change people’s lives,” she said. “They give them a start; they give them an entry place; they show children of parents who have not been working that if you work and you are willing to start somewhere, you end up somewhere better.”

Echoing those sentiments, Linder made the argument that for many members of the African-American and Latin American communities (where chronic unemployment is a significant problem), Farathane will be providing much-needed blue-collar jobs, regardless of wage.

“I live in a community where there’s double-digit unemployment,” said Linder. “I see people every day who don’t have jobs, who didn’t finish high school. They don’t ask about a wage; they want an opportunity … This community has folks who have criminal backgrounds in many cases. So what you’re doing is you’re giving folks a chance for redemption, for respect, for dignity. … This is about giving folks a new lease on life.”

Linder went on to say that the Farathane agreement would both shine a light on and help solve the largely ignored problem of African-American unemployment and poverty in Austin, which is rapidly losing its African-American population.

“If you’re unemployed in this town and you’re black and you’ve been to jail, it’s almost impossible to find a job,” said Linder. “There are many folks here who don’t have any jobs, who can’t get jobs, who aren’t even on the radar. … There’s a whole different world.”

Council Member Sheryl Cole pressed that point while questioning Equal Justice Center attorney Anna Bocchini on her organization’s opposition to the agreement.  

After asking Bocchini if she knew what percentage of the Austin population has a criminal record and what percentage has dropped out of high school, Cole said, “It’s so easy to assume we live in one kind of Austin, when we actually live in two kinds of Austin. … (Saying) we don’t want anybody to come here who are going to employ people who are high school dropouts and people who have a criminal record, when we have so many, is not the answer.”

According to the 2010 census, the unemployment rate in the Austin metro area for those with only a high school diploma or GED is 10.7 percent. For those with a bachelor’s degree or higher, that number drops to 4.4 percent.

Mayor Lee Leffingwell called those “very telling statistics” and the reason why he was supporting the agreement.

“We have not in any of our economic agreements heretofore addressed this particular segment of our population, and I believe it’s our obligation to do so,” said Leffingwell.

Cole threw her support behind the measure as well, even going so far as to define the agreement not as an economic development proposal but as a social service proposal because, she said “we are placing the hard-to-place.”

“I do think we’re turning into two Austins. And unless we can crack this one, which involves education, social service, and workforce, we will not have moved very far at all,” Cole said.

Council voted 5-2 in favor of the deal, with Council Members Laura Morrison and Kathie Tovo voting nay. Both said they could not support granting incentives to a company that won’t be providing all its employees a living wage.

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