Patricia Smith Keynote Address, Full Circle Conference: Labor-Religion Coalition of New York State

Patricia Smith, New York State Commissioner of Labor addresses conference participants, May 19, 2008

Selections from the keynote address

"At the Labor Department we really believe that all workers can be protected, but government in particular needs to protect the rights of the most vulnerable.workers. …I am a big believer in the fact that the government can not do it alone. We need partners. We need partners in the labor unions, we need partners in the community groups, we need partners in the communities of faith, we need partners in immigrant rights groups. And when we partner with these groups we are much more effective in our labor enforcements.

The DOL does have a role in farmworker protection, which I have been trying to strengthen this year. We’ve also been strong advocates for increased farmworker protections legislatively.

H2A workers are legal guest farm workers… But under the H2A program farmers are required by law to take domestic workers first, and my own department is required by federal law, when a job is listed to go out and find domestic workers. An issue has come up recently. Puerto Rico basically complained that we weren’t processing their referrals and Puerto Ricans are U.S. citizens, so they actually threatened to sue us. So we sat down and stared to develop an initiative to bring more legal, domestic Puerto Rican workers to work on the farms. … But we are having a big issue with farmers because they don’t want domestic workers; they basically have told me that domestic workers are lazy. Now if you talk to the farmworker advocate group,… you will get a slightly different story, which is that domestic farmworkers have options that guest workers don’t have. If you are a domestic farm worker and you don’t like that job, you can go down the road and you can work at McDonalds. If you’re an H2A worker, your only option is to go back to whatever country you came from, because that’s the only reason you’re allowed to be here. So I think that when we look at this situation we have to remember that one of the reasons that domestic farm workers don’t want these jobs is there are so few protections, and they are so little paid.

The number of garment workers in the state has decreased exponentially. Most of the garment industry is primarily offshore. What you saw in this country was either design work or overflow work. … Now what we see is that the shops are going underground …they left China Town after 9/11 when that area of town was shut down. You’re finding those shops now in Queens, you’re finding them in Brooklyn, you’ll find them in basements. We have been diligently trying to enforce laws when it comes to those workers.

The other thing is that as we procure more and more of our garments from overseas, we have to be more diligent in monitoring the conditions in overseas garment shops. And one of the things we’ve been working on in the Labor Department is a sweat free coalition. It’s a coalition of hopefully Northeastern states and some municipalities that are going to band together to hire monitors to go overseas because, if we all hire monitors together, it is going to be cheaper for all of us, and therefore much more likely for there to be monitoring of overseas shops.

I have been looking at statistics lately and NY job growth in the last five years was about 2.5%, but NY job growth for poverty-level jobs was 6.2%, and that is a shocking statistic. One of the things we have been doing to protect low-wage workers is to increase our enforcements, and we’ve actually increased our minimum wage enforcement and collections by 37% in the first year of this administration. … We are doing strategic enforcement…to prioritize complaints that involve more workers.

The first thing we need to do at the Labor Department is get the word out that the NYSDOL is the friend of low-wage workers no matter what their immigrant status is, and that we do not ask what their status is or report their immigrant status. The way to get that message out is a large part through groups…that have connections to that immigrant work force already.

We partnered with a group, “Make the Road by Walking” on what we call the Bushwick Avenue Initiative. I brought in an enforcement team and we went knocking on every door of every business on a four-block radius of Bushwick Avenue, and we found labor law violations in all the stores but two. We have communities where we know labor law violations are rampant. We also have industries where we know labor law violations are rampant. … The reason we do it that way is we feel if we do our enforcements strategically, either in an industry or in an area, that will get employers coming into compliance without doing investigations of them.

The state of NY passed this year a human trafficking law that includes labor trafficking. Labor trafficking is to many people a new concept and is basically labor law violations that the employer is allowed to do because he threatens you in some way. I saw only one or two cases before this was passed. One involved a pizzeria in Ithaca, NY, that brought up Mexican workers from the city and basically required then to live in the basement. These were individuals who had no connection to the community, nowhere else to go, so they felt that they had to do whatever the employer told them. They were underpaid and living in basements and that’s a classic case of labor trafficking. The DOL is working on a task force that the governor has now. …We are trying to educate our investigators to recognize labor trafficking, when we talk about people’s wages to ask them where they live or how they got that job.

One of the things that I think we have to be very aware of is that NY leads the nation in the growing gap between the rich and the poor. We are losing our middle class faster than any other state in the nation. Of the things we need to work on and think about creatively is how do we work to ensure that middle class people stay middle class and don’t fall into poverty. One of the things that we are doing on that front is the misclassified worker task force. There has been an exponential increase in the last ten years in NY and the nation in misclassifying workers. This is taking your employee and telling them you can come back to work tomorrow but you’re starting work as an independent contractor and you’re no longer employed. What does that mean to that employee? Well, the first thing that happens is that they have an 8% pay decrease because instead of paying their side of social security they are paying both sides of social security as an independent contractor. The second thing is to the extent that they are earning overtime, there is no more overtime. Time limits don’t apply to you. The third is no more worker’s compensation, no more temporary disability, so if you want those benefits, you have to pay for them yourself. Fourth is if that employer tells you in three weeks that he doesn’t need you anymore, you get no more unemployment compensation… Finally, to the extent that you had a pension plan or health plan, those are not going to apply to independent contractors.

So you can imagine the quality of life, of a middle class life style that is eroded when individuals are told they are now independent contractors, when in fact they are, under the law, employees. Our Misclassified Workers Task Force takes different agencies (tax, labor, workers comp, unemployment and they work jointly on programs. I am going to tell you that Misclassified Worker Task Force is not even a year old now. Since September of 2007 we have found out that 6,000 workers have been misclassified…38 million dollars in unreported payroll, 1.6 million dollars in owed unemployment insurance tax, 3 million dollars in labor law violations, primarily overtime violations, and they haven’t even completed investigations in the tax office yet. That is a big issue we are working on to try to preserve a middle class lifestyle in this state.

Right now there is a proposal before the legislature to reform industrial development agencies. We have 62 industrial development agencies. They finance private companies in many areas of the state. When they do that, they do it through bonds or they do it through payment in lieu of taxes. And when that happens, the tax base in that area is eroded and then everybody’s taxes are a little higher. My moniker has been we do not want NY to use taxpayers’ dollars to create poverty-level jobs. We have enough poverty level jobs (applause). One of the things that means is that we are actually subsidizing these jobs twice. First we subsidize the employer. Then we subsidize the worker with food stamps, Medicaid and whatever else, because he’s making so little money. Ultimately we have a state economic development agency that ours billions of dollars into what I might call corporate welfare, but if we’re going to subsidize corporations …I want to make sure that the jobs that are created are jobs that we want people to have. That’s the last thing I want to talk about when it comes to protecting the middle class.

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