EDITOR’S NOTE: This submission comes from Peggy Daly-Masternak of Toledo, Ohio, who expressed concern about the future of the old Elder Beerman site on Secor Rd.
Regarding tax abatements for the proposed development to replace Elder Beerman on Secor Road, this proposal ain’t even close to the “quality jobs” for the abatements and/or incentives (read give-aways) awarded for Jeep or ProMedica. Now, we are giving abatements to Bob’s Discount Furniture??? To TJ Maxx??? Perhaps 30 years of tax breaks!?!
Seriously?
At a minimum, it will be 15 years of abatements for cheap retail in the age of Amazon, where you can get king-sized mattresses and entire rooms full of furniture, let alone hoodies, jeans and purses, delivered to your door off the internet.
This is insane.
If Toledo is so desperate for any development (and this is one of the worst I’ve seen), it should absolutely be written into municipal code that when developers demanding a handout come to town, their promised jobs’ numbers—jobs which should all be required to be paid at living wages as everyone knows that minimum wage is NOT a living wage—that these job claims must be proven and documented on paper before a single moment of consideration is given to the plan. And then re-proven quarterly while receiving the handout. As soon as these numbers fall short, either in job numbers or living wages paid, any abatements must be withdrawn. If a rezoning was required for these projects, the corporation should be fined for failing to live up to their promises after they destroy Toledo’s master plans.
(Note: I am conclusively against corporate abatements and other give-aways in the first place, given that corporations shouldn’t have it both ways: Unbridled capitalism UNTIL the capitalists want a handout from the public trough. Known as corporate welfare. But that’s another story beyond the scope of this Elder Beerman redevelopment proposal under an “enterprise zone” strategy.)
Please do not ignore this fleshed-out analysis of the sub-standard retail wages and products this development will produce.
Not only should tax abatements for this development be soundly rejected, but these companies also should never be allowed to do business in Toledo again.
Peggy Daly-Masternak
ANALYSIS
POVERTY WAGES
See below for a further analysis of the two corporations under current consideration and what the real story is on what they pay and the quality of their products. However, citing The Blade report of January 25, 2020, titled “Tax breaks could help site,” for two fourth-rate companies, the projected wage calculations are as follows:
- The proposal projects $1.8 million payrolls for 63 jobs total.
- Average wages for all employees will then be $28,571 per year, or on a standard 52 week/40 hours per, $13.74 per hour.
- The 63 jobs certainly must include managers (both head managers and assistant managers), cashiers, sales associates, stockers, and delivery drivers (furniture).
- Let’s reasonably assume perhaps 8 managerial-level positions between the two stores.
- Let’s assume those managerial positions pay an annual average of $50,000 each or $400,000 combined. (I’m being extremely conservative here. Anything more than this for managerial positions will further reduce hourly employee wages.)
- That original $1.8 million payrolls now becomes $1.4 million for the remaining 55 jobs.
- Average wages for the vast majority of claimed jobs are now recalculated at an average of $12.24 per hour or $25,455 per year.
- 2020 Federal poverty level wage guidelines for a family of 4 is $26,200.
- Reduced hours for “part-time” employees almost universally means no company benefits, requiring those employees to fund their own health care and retirement at 100% cost.
- Comparable retail stores in Toledo show that the actual wages for sub-management employees can be far, far less than even these paltry numbers reflect. See the evidence below.
- Investment in Toledo declines given retail’s poverty wages. Even modest housing becomes unaffordable. Retail workers often live one significant medical bill, one unexpected car repair, one school tuition bill away from financial disaster.
SOME TOLEDO RETAIL DEVELOPMENT HISTORY
Every gargantuan developer I’ve ever heard comes into Toledo on one false number: That is, the purported jobs and related claims of enormous recoupment of income taxes in trade for a “give us everything we want” mentality. All of them claim this fiction.
Who in the city administration follows up to see if those jobs ever materialize and are sustained? Who calculates the job LOSS numbers, especially in retail, when existing businesses are out-gunned by category killers or internet shopping? Surely, the City’s Income Tax Department has number crunchers who can count heads on a monthly basis, jobs both coming and going.
Example: Kroger’s ridiculous employment promises
Notwithstanding that Kroger bailed on their 2017 proposal at Notre Dame after demolishing historic buildings, specifically their claimed income tax math was inconceivable for the jobs promised, even if all they had been planning were full-time jobs with benefits. As it turned out, that was never the case. In fact, it was at the Plan Commission hearing that February where Kroger’s attorney, Jerry Parker, revealed that there would be 75% full-time jobs and 25% part-time jobs per the proposal.
But for purposes of this calculation, let’s make-believe that all the jobs were to be full-time, with benefits, which would have helped everyone employed at the store. (Further, it would have helped keep some employees off the rolls for those in need of public benefits for health care and financial support.)
In February of that year, Parker stated at the Plan Commission hearing and again in a February 10 Blade article entitled, “Plan commission again rejects Kroger’s plans,” that “the store would allow Kroger to add 100 workers to the current staff of 150.” He went on to make the unbelievable claim that “the jobs would generate nearly $1 million a year in income tax for the city.” Multiple times, Parker stated these same numbers of job creation and income tax revenues during the Plan Commission hearing.
Just one month later, at the Toledo Zoning and Planning Committee hearing of March 15, 2017, Kroger representatives inflated the job projection by 34%, claiming they would hire 125 new associates and transfer 210 existing associates from across the street, for a total of 335 jobs.
These outrageous claims went unchallenged by anyone on City Council. A simple back of the envelope calculation by anyone would have shown the lunacy of either of these claims.
- As it is today, in 2017, the Toledo income tax rate was 2.25%.
- To generate $1 million in income tax revenue, the Kroger yearly payroll would have needed to be roughly $44.5 million.
- $44.5 million divided by Parker’s 250 jobs for the proposed Secor Road store would have meant that the average Kroger employee would have earned yearly wages of $178,000. (Sign me up.)
- The Kroger rep’s claim made at the Z&P hearing of 335 jobs would have paid an average yearly wage to Kroger employees of $132,836.
But these spurious, unchallenged claims were more than enough to turn most every head on Council, regardless of the community losses Kroger planned to cause (losses that continue to mount even today). The council’s affirmative vote violated the city’s master plan for development, breaching long-standing zoning of green space and historic buildings. Just as in the Home Depot case outlined next, once buildings are demolished, peoples’ perceptions change dramatically, moving further into the desperation phase of Toledo planning.
Example: Home Depot
I have a vivid memory of this disaster. In trade for rezoning needed residential land and demolishing 88 affordable apartments, Home Depot promised 200 jobs back in 1997 and 1998 at the Secor Road site and claimed they would pay an average wage of $10.75 per hour (Source: “Westgate Site Rezoning for Home Depot OK’d,” The Blade, November 4, 1998.)
Only Home Depot itself (doubtful they’ll self-report) or perhaps the City number crunchers (you have access there) can tell you how many employees the Secor Road store actually employs. Specifically regarding wages, in today’s dollars, that claimed $10.75 adjusted for inflation should equal $17.48. Alas, the real HD story is grim.
The internet proves useful. (See attached.) Current information from the LinkedIn social media franchise shows today’s average base salary for cashiers at Toledo Home Depot is $20,900 which equates to $10.05 per hour (if employed 40 hours x 52 weeks).
Twenty-three years later, today’s Toledo HD wages are less than 1997!!
Further, if HD employees are not full time, then we likely subsidize their health insurance costs and any other public benefit they need just to survive. Just as we do for Walmart and hundreds of other cheap labor retail outfits.
Continuing to examine Toledo’s Home Depot, Indeed.com (also attached) shows other wages for their employees—our neighbors, family and friends. In today’s wages, Toledo HD Customer Service Representatives average $21,039 or $10.11 per hour, Merchandisers average $25,242 or $12.13 per hour, and Sales Associates average $17,756 or $8.54 per hour, (all calculated based on full-time hours.)
ALL OF THESE WAGES ARE BELOW THE 2020 FEDERAL POVERTY GUIDELINES FOR A FAMILY OF 4 ($26,200). Yet, Home Depot’s Chairman and CEO were awarded $11,366,662 in 2018 compensation. This is unconscionable.
HERE WE ARE AGAIN: New Examples at Elder Beerman Site with Tax Abatements to boot!
RE: Bob’s Discount Furniture Wages
Indeed.com gives some insight into Bob’s Discount Furniture wages. First, all Bob’s job postings from around the country for sales positions state: “A competitive Hourly Advance / Draw vs Commission pay structure with bonus potential!” (See *asterisk below for definition of this type of pay scheme, a very creative means of possibly very cheap labor if not free labor.)
Based on that below the definition of this wage scheme, and stated multiple times by employees providing reviews at Indeed, this is how Bob’s Discount Furniture works: Sales employees sign contracts that require them to REPAY THE COMPANY for the draw (called “recoverable draws”) if they don’t meet sales goals. Within employee reviews of the company, several employees state that Bob’s “floods the sales floor with salespeople,” setting up a “cut-throat” dynamic amongst employees. This then likely guarantees that employees are repaying the company some if not all of their commission on the “draw”.
- According to employees posting on Indeed, the commission rates range from (lowest) 5% to (highest) 15%. Most are citing the 5% commission.
- Bob’s most expensive 9 piece sectional sofa (includes 5 armless/armed-end chairs and 4 ottomans) is $3,596. IF a 15% commission is a true commission and IF a sales person can possibly sell this monster, she/he might make $539.
- The more likely 5% commission is around $180 for that sale.
- Bob’s most expensive normal sofa that seats 3-4 people is priced at $1,450 which means those at 5% commission earn $72.50.
- How many people can sell more than 1-2 sofa’s per day, every day? They would average for an eight hour day around $9.06 per hour (selling one sofa each day) to a whopping $18.12 per hour (requiring two sofas per day, every day).
- At the Indeed site, many employees complain that work hours are far more than an average 8-hour workday in a cut-throat environment.
Bob’s warehouse employees and delivery people appear to get no commission but specific wages are unknown.
RE: Bob’s Discount Furniture (scary!) Junk Products
Bob’s products sound like garbage through and through. At a Better Business Bureau accredited website called “Consumer Affairs” customers can post product reviews, An analysis of customer reviews since January, 2017, where many, many reviewers posted photographs of their broken, torn, bed bug infested (yes, you read that right) merchandise:
779 Reviews total
- 1 Star: 714 people
- 2 Stars: 19 people
- 3 Stars: 10 people
- 4 Stars: 2 people
- 5 stars: 34 people (where several posters originally gave them 1 or 2 stars but improved their rating after some satisfaction by Bob’s Discount Furniture.)
But wait for it…It gets worse. From Bob’s Discount Furniture website, we find their return policy (with a roaring LOL):
Cancellations, Returns and Refunds Policy: It’s the Bob’s Way to be open, honest and clear! So here’s our simple refund and return policy. You may cancel your order for a full refund at any time up until you take possession of your furniture. Once you receive your furniture it cannot be returned with a few exceptions…
This is CLEARLY not a company hellbent on pleasing customers. The question screams to be asked: With this type of track record, how does this company manage to stay in business?? Why would Toledo want it?
Cheap, imported junk furniture sold by people who are scrambling to make a sale against all their colleagues who are also scrambling to make a sale. Customers are probably bombarded as soon as they cross the threshold, then stalked around the store, and then sold this junk. Toledo better be making a much, much bigger landfill ready.
RE: TJ Maxx Wages
The wage situation at TJ Maxx is just as bleak if not more so. According to Indeed.com, based on 1,178 employees, reviewed in all job categories, and on past and current job advertisements, over a three-year period (current to January 21, 2020):
- The national average wage for the 156 TJ Maxx sales associates’ salaries reported at this discount retailer is $8.67 per hour.
- Customer Services Representatives’ (44 salaries reported) wages are $9.11 per hour on average.
- Customer Service Managers (15 salaries reported) are averaging $10.79 per hour.
- Warehouse Workers (20 salaries reported) are making $11.43 per hour on average.
- A Forklift Operator’s (5 salaries reported) wage is the highest in the warehouse at $12.85 per hour average.
- All 5 of those positions, without a doubt, are the vast majority of all TJ Maxx employees. They are earning well below that $13.74 average wages stated in the “Poverty Wages” section above and likely far less after management salaries are removed.
TJ Maxx Sweatshops
Moreover, by supporting this development, the City Toledo will be complicit in supporting sweatshop labor—sweatshops both here in the US and abroad. According to the Los Angeles Times article of August 31, 2017, titled “Behind a $13 shirt, a $6-an-hour worker,” TJ Maxx is cited:
“The U.S. Department of Labor investigated 77 Los Angeles garment factories from April through July of 2016 and found that workers were paid as little as $4 and an average of $7 an hour for 10-hour days spent sewing clothes for Forever 21, Ross Dress for Less and TJ Maxx. One worker in West Covina made as little as $3.42 per hour during three weeks of sewing TJ Maxx clothing, according to the Department of Labor.”
Yet, TJ Maxx’s parent company CEO was paid 1,500 times higher than the median employee of the company, according to an April 30, 2018 article in the Boston Business Journal That ratio “is one of the highest in the country.”
* According to the Society for Human Resources Management: “What are “draws” under a sales compensation plan, and how do they work? A draw is an advance against future anticipated incentive compensation (commission) earnings. This form of payment is a slightly different tactic from one where an employee is given a base pay plus commission. Under a base salary plus commission approach, although sales employees may still be required to meet specific sales goals, not meeting a particular goal will not necessarily affect their pay since they receive their base salary plus a percentage of any products or services they actually sell. With a draw versus commission payment, typically the only way for the sales employee to earn a higher salary is to meet or exceed specific sales goals in order to earn a higher amount than the draw rate.
