City Will "Encourage" Companies With Tax Breaks to Be Better Employers, But Won't Require It

Last month, workers' rights advocates gathered outside City Hall to demand that the City of Houston stop giving companies millions of dollars in tax incentives when those employers are not even required to pay their workers a livable wage. In a recent report, the Texas Organizing Project and Workers Defense Project could only verify that the city had created about 12 percent of the jobs it promised in past tax incentives, and only a small fraction of those contracts included a minimum standard of what those jobs would provide for workers, such as what wages or health benefits.

This week, though, the city passed a new tax abatement ordinance that addressed the advocates' demands — sort of.

The new ordinance now encourages companies applying for a tax break to provide workers with those livable wages, to offer affordable or workforce housing assistance, to offer paid internships to low-income students and jobs to ex-cons re-entering the workforce, and to create mid-skilled jobs that don't require a college degree, among other things. But the catch is that none of those things are required, only “encouraged.”

Mayor Sylvester Turner repeatedly called the ordinance a “measured response” to dealing with income equality on Wednesday. He said that, while the guidelines aren't mandatory, they will give companies a better idea of what he and the city are looking for when deciding to grant companies the tax abatement. As for why it's not mandatory: “We certainly don't want to disincentivize people from coming to the city and providing job opportunities and providing economic development within our city,” he said. “So it's a step-by-step project." 

While it's not exactly what TOP would prefer, communications director Mary Moreno said at least the city has now openly supported everything that the organization has been pushing for the past year — because, she said, the previous administration paid the issue little to no attention. “Before, providing community benefits like these was not even apart of City Council's lexicon,” she said.

Hoping Turner would start listening, TOP endorsed him outside of a 40-story luxury apartment building for which the city provided a tax incentive — despite the fact that the developer had no requirement to pay its workers more than minimum wage. In the past, TOP has criticized Walmart and Landry's for the same problem. As one TOP member said last month, “This is subsidizing poverty jobs, and we don't need that.”

As the city's tax abatement requirements stand now, even with these new additional guidelines, companies are only required to retain or create 25 new jobs. “When you're getting millions of dollars from the city,” Moreno said, “that's a pretty low bar.” And not even that requirement is 100 percent required, either. In the most recent $6.5 million tax abatement that the city awarded to Fairway Energy, it waived the job-creation requirement.

Martha Ojeda, an advocate with the Faith and Justice Workers' Center in Houston, said that lax requirements and optional guidelines like these are simply reflective of Texas's overall attitude toward workers' rights. She pointed to the state's optional workers' compensation system, the fact that Texas is a right-to-work state and the fact that paying living wages isn't required as yet more evidence of Texas's prioritizing big business over blue-collar workers.

“The city is trying to do the right thing,” she said. “But just encouraging employers is not enough.”

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