Wednesday, October 17, 2012

Palermo Pizza Strike Supporters Seeking State Probe To Determine Job Creation By Company Justified Tax Credits

Palermo workers union and the AFL-CIO testified at the Joint Audit Committee in Madison about employees getting paid less than the WEDC's required minimum wage, including WEDC's lack of transparency and accountability to justify tax-credit-eligible jobs claimed by Palermo Villa Inc.

By H. Nelson Goodson
October 17, 2012

Madison, WI - On Wednesday, Voces de la Frontera (VDLF) reported that Julie Farb Blain, the author of the newly released AFL-CIO's Center for Strategic Research report (CSR), and Cheryl Maranto, Chair of the Department of Management at Marquette University, joined Palermo's Pizza striking workers in Madison to provide testimony at the state legislative Joint Audit Committee hearing. They testified about the lack of transparency and accountability of the Wisconsin Economic Development Corporation (WEDC), including the conflicting and impossible to confirm new job creation numbers provided by Palermo claiming earned tax credits for jobs that were redacted out by the WEDC.
The AFL-CIO's Center for Strategic Research authored the report that was released on Tuesday detailing the $26 million dollars in public subsidies that Palermo Villa Inc. has received from city, state, and federal sources for economic development and job creation.
According to news release by VDLF, a FOIA request has revealed documents by Palermo so heavily redacted that it was impossible to know whether the company met job creation benchmarks, for which new jobs the company claimed or received tax credits, and whether any new jobs Palermo Villa created actually meet the full-time, permanent, and minimum wage specifications of $10.88 per hour the company committed in its contract with the WEDC.
The WEDC claimed yesterday to have released job accountability data and Palermo's claimed to have met all of Its job creation benchmarks, but examination of the document released by the WEDC on Friday, shows total job numbers that conflict with the numbers from the Wisconsin Housing and Economic Development Agency. The WEDC disclosure form is also too vague to determine the quality of the jobs Palermo's Pizza claims to have created and for which it has claimed tax credits, according to both VDLF and the CSR report.
Today, Palermo's Pizza has fewer full time permanent employees than it had before it applied for half a million dollars in tax credits promising to create 56 full time positions, according to the CSR report.
The CSR report says, that many jobs at Palermo pay about $10.55 per hour and "have paid less than the WEDC's minimum wage requirement ($10.88 per hour) for tax-credit-eligible jobs as well as less than the Menomonee Valley Partners living wage ($12.00 per hour)."
In 2010, Palermo reported it had 369 full-time and 27 part-time employees for a self-reported total of 396 employees. In October 11, 2012, Palermo Villa Inc. in a press release stated it employed 374 people, including 189 plant employees, according to the CSR report. The latest job numbers by Palermo strongly indicates it might not have met its commitment with the WEDC to claim tax credits.
Palermo Villa Inc. will most likely have no option, but to confirm that they have met all the requirements to claim earned tax credits to justify their millions of public subsidies. 
A state probe into Palermo's claim of meeting the WEDC's wage requirements, including job creation and the lack of transparency and accountability by the WEDC will be paramount to resolve in order to justify taxpayer subsidies.
The CSR recommended in its report  that WEDC should improve disclosure of company reporting on accountability, tax credit programs should adopt minimum wage requirements that match reputable living wage index for the region it serves, should enforce "clawback" measures for companies failing to meet the minimum wage requirement to pay back any job creation tax credits received and should deny subsidy eligibility and enforce "clawback" provisions when companies violate labor laws.
Palermo Pizza employees have been on strike since June and have launched a national boycott. Striking workers are seeking better wages, safe working conditions, additional sick days, reinstatement of fired workers and a union.

The CSR report at link (pdf):

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