DOWNTOWN POVERTY DEVELOPMENT: I'm going to propose a new term now. The term is poverty development. I define "poverty development" as the deliberate application of public resources and policies to create jobs at poverty wages.

Please note that poverty development is not what happens when people are thrown out of work, or out of their homes, as the result of public policy. These activities may create poverty -- lots of it -- but that's not usually their goal, it's a side effect of some other goal. In poverty development, on the other hand, the poverty-wage jobs are a stated goal, the poverty-level wages are built into participants' long-range business plans, and ensuring a labor supply at those wage levels is part of the public development activity.

An example of poverty development would be the investment of hundreds of millions of dollars in public funds into a public convention center, in order to create business for hotels and restaurants that pay most of their employees less than living wages.

In this connection, I've posted a page of excerpts from CSU Urban Studies Dean Mark Rosentraub's pro-convention center "study" on my Cleveland Wages Pages website. The most relevant passages are highlighted in red, but the rest of the excerpt is there for context. What it says, in short, is:

A big part of Cleveland's workforce is uneducated and therefore unemployable in the better jobs we hope to create in the technology and financial sectors, so we need to keep growing the "hospitality sector" to provide jobs for them.

I had a long talk a couple of years ago with a young woman who worked as a housekeeper at the Ritz-Carlton, cleaning up after guests who paid up to $300 a night. She described a very demanding job where pay started at about $7 an hour and rose to $9 only at the top of a competitive "incentive" scale. The workers were virtually all Black, Hispanic or recent immigrants; many did not speak English. She had family members and friends at the Marriott who were working in the same circumstances.

These two hotels were flagship projects of the '80s, built with heavy tax abatements to "revitalize the hospitality industry" and "create good jobs for residents". What they created was dead-end jobs at $14-15,000 a year -- less than the City's definition of a Living Wage that's acceptable for subsidized projects --with no prospect of improvement. (Of the 2,500 hotel rooms built downtown since 1980, a grand total of 140 are cleaned by workers with union representation.)

When we talk about preserving and creating "hospitality sector" jobs for uneducated Cleveland residents, these hotels -- and the restaurants around them -- are what we're talking about. That's downtown poverty development. We've had lots of it in the past twenty years, during which the City has become -- predictably -- poorer.

If we're going to spend a lot of public money to benefit uneducated Cleveland workers, as Dean Rosentraub argues, there is another possible strategy: We could spend it to help them get educated and qualified for all those better jobs in technology, finance and health care.

But for some reason, nobody is calling for "leadership" in that direction.

WEIRD SCIENCE (ECONOMICS DIVISION): As I read yesterday's PD article about organized labor pushing a new convention center initiative, the following sentence caught my eye:

In the 1990s, employment gains in Northeast Ohio's hospitality sector - which includes, retail, museums and hotels - almost equaled lost manufacturing jobs, according to CSU analysis.

Read that sentence again. See anything strange? Here's a hint: Do you think of shopping malls as part of the "hospitality sector"? Probably not... but it seems that's the way CSU's study was counting in order to make its highly political point.

The study, by Levin College of Urban Affairs Dean Mark Rosentraub, is available here in PDF format. Published last May, it was waved around a lot during the Summer by Convention Center Tax advocates, but I never looked at it until this morning. The sentence from the PD quoted above is based on a passage that starts on page 14 and continues on page 15, referring to "changes in job levels throughout Northeast Ohio during the 1990s":

There was a loss of more than 22,000 manufacturing jobs... The number of new jobs in the retail, amusement services, museum, and lodging sectors -- which when grouped constitute the hospitality sector -- was almost equal to the loss of manufacturing jobs.

A chart follows which shows the following sectoral job gains (among others) for 1989-2000: 17,314 jobs in retail trade, 191 jobs in hotels and lodging, 4,115 jobs in amusement and recreation, and 478 jobs in museums. The total of these lines -- 22,098 jobs -- is apparently the "hospitality sector" gain that is supposed to almost offset the manufacturing loss. "Retail trade" is three-quarters of that total.

Now I don't know how these things work in the economics biz. Maybe there's some good reason for Dean Rosentraub and his colleagues to have a construct called "the hospitality sector" that includes Wal-Mart, K-Mart, Topps, Builders Square, the corner gas station, the video store, the Dollar Store and some apple stand in Hinckley. But it's hard to see how the performance of such a "sector" tells us anything useful about the economic impact of Cleveland's downtown convention and tourist business.

But who cares?. It's a statistic. It comes from the Dean of a college at CSU. And it appears to document the vital economic potential of conventions and hotels for a desperate Cleveland economy... at least until you give it a second glance. So put it in the paper and let the yokels try to figure out if it actually means anything.

Well, fellow yokels, it doesn't. It's junk science... a pre-judged conclusion in search of some data to support it.

Of course there's always a lot of this stuff floating around Cleveland -- remember the 25,000 good jobs Gateway was going to produce? But it sure would be nice if PD reporters had better smell detectors... or if CSU, which reportedly wants to be regarded as a real research institution, would start asking its faculty (and even its Deans) to act more like scientists and less like shills.

PLAIN DEALER REPEATS BOGUS CITY JOBS CLAIM: In an editorial today, the PD joins Crain's and Roldo in calling for layoffs of City workers -- as early as January -- to head off a projected $52 million deficit in 2004. And like Crain's and Roldo, the PD undergirds its hasty attack on City workers' livelihoods with a claim that thousands of jobs were added to City payrolls in the 1990s:

No one should be cheered by the prospect of public employees losing their jobs, and the administration must be careful to preserve essential services. But since the city added nearly 2,000 employees during the 1990s, careful reductions need not prove crippling.

As I pointed out here on October 7, this claim is wildly wrong. Here, again, are the facts:

I went to the library and got the actual employment figures for General Fund departments (not just General fund employees) for the last ten years, and here's what I found:
... The City added a total of about 600 full-time-equivalent positions from 1992 to 2002.
... About 150 of these FTE positions were in Muny Court.
... About 600 FTE positions were added in the Public Safety Department... including 200 police patrol officers, 60 firefighters, and 95 "institutional guards".
... All the other General Fund departments combined lost about 170 FTE positions from 1992 to 2002.

I'll be sending the full spreadsheet with these numbers to the PD tomorrow... after which I'll confidently await their correction. Anybody else want to see it?

CLEVELAND CONNECTION: Since I sort of gave Wal-Mart a free plug the other day, and since we all like "Cleveland connections" so much, I want to take note of the fact that North Olmsted was one of the 61 Wal-Marts where Federal authorities arrested contract cleaning workers as illegal immigrants on Thursday.

The PD had a good front-page article Friday, which unfortunately doesn't seem to be on line. (If you missed it, here's USA Today for the overall story.) It seems the feds believe that the workers were being paid as little as $2 a day, and that top Wal-Mart execs were well aware of the situation.

Naturally, it's the victimized workers who are in custody. At least so far.

MAYBE YOU ALL ALREADY KNEW THIS... but I just discovered that Walmart.com is selling new PCs for $200. Two new PCs, actually: the Microtel SYSMAR417 with a Lycoris (Linux) OS on it, and the Microtel SYSMAR550 with no OS loaded. They're both Duron 1.2s with modest hard drives (20 gig), no modem and no floppy... but shit, it's $200!

(Don't go to your WalMart store looking for these systems -- they're available on-line only.)

Microtel is a California company and seems to do actual assembly there, though I'm sure they buy their boards from Asia. Lycoris is a Linux distribution from a fairly new company in Redmond, WA of all places (maybe that's why its front page looks so much like Windows XP.) Both companies seem to be looking for other resellers.

Now I'm sure that there's a market to be made in NE Ohio -- heck, in my neighborhood! -- for a sub-$250 new PC with a user-friendly Linux system. Is some Cleveland entrepreneur already checking this out? Is anyone out there trying to figure out how Microtel does it? How about the guys from the Open Source Society?

Or is this one more piece of northeast Ohio's consumer market that WalMart wll get to keep all to itself?

WIRELESS WAFFLES: Belgian waffles and wi-fi... all for $5 !

This Sunday from 9 to 2 at Tremont Scoops -- it's a benefit pancake breakfast for Tremont Wi-Fi. Your money will help buy access points and wireless cards for more community hotspots like the one at at Scoops.

See you there.

THIRD FRONTIER... NEW STATE ROLE IN BUSINESS? I know there was a PD article about this, but if it didn't lead you to take a look at the new Policy Matters analysis of State Issue 1 and what it means, go do so now. Don't just look at the Executive Summary, download the whole thing -- it's worth the effort.

The press spokesman for the report (thus, I assume, a major contributor) is Zach Schiller, the former PD and Business Week reporter, now Policy Matters Research Director. (If I recall correctly, Zach's byline was on the PD's very first "Quiet Crisis" article).

The report is neutral on passing Issue 1 this November, but points out that this constitutional amendment involves a lot more than some bond money for high-tech research and development -- for example, it would allow the state (and maybe local governments as well) to own shares in private corporations for the first time in a century and a half.

EMERGENT BUDGET DEMOCRACY? BFD has a recent post on "emergent democracy" that might be worth considering in connection with the Cleveland Budget Perplex. The author BFD links to is talking about a new variety of self-organizing Web participation in the civic process, exemplified by the Howard Dean campaign. Since the majority of Cleveland residents are probably still without home computers, let alone good Internet skills, the relevance here may seem farfetched. But the fact is that an awful lot of Cleveland voters have crossed that divide in the past couple of years. Suppose the Campbell Administration actually put the numbers on the Net, where everyone can see them, and urged its constituents to start a serious conversation about them. Where might that lead?

Emergent democracy is about leadership through giving up control, activating the people to engage through deliberation and action, and allowing emergent order to grow from the grass roots.

Maybe we could use a helping of that in Cleveland.

CLEVELAND BUDGET PERPLEX 2: More thoughts:

1) There's a big hand-lettered sign on a fence on Scranton Road that says "Cut the fat, not the firefighters. Call Jane Campbell." One more sign of a long, hard budget season, that will only get longer and harder if the Mayor tries to finesse her problems with quiet deals and last-minute rabbits pulled out of Finance Director Baker's hat.

The Mayor says she has told all the department directors to show her how their budgets can be cut by 10%. Just remember -- this is a General Fund shortfall we're discussing. Three-fifths of the General Fund is spent by the Department of Public Safety. Therefore, three-fifths of a 10% across-the-board budget cut will be borne by that department. More than 90% of General Fund dollars in the Public Safety budget go directly to the Police and Fire divisions. So if there's going to be "fat" to cut, that's where the Mayor has to look.

Cut $20 to $25 million from Police and Fire, without cutting patrol officers and firefighters? Lotsa luck. But without some way to get revenue up, that's the quandary the City faces... which is why friends of the firefighters' union are already putting up signs.

2) My rumor mill tells me that at least two Members of Council are already raising money for mayoral runs. Whether this is true or not, it reflects the certainty that political and journalistic behavior on the 2004 budget issue will assume it's all about November 2005.

No potential candidate for Mayor should get a free ride on this. Reporters and citizens need to make all the players come clean on their budget positions, long before this turns into a posture-fest at the Council committee table. If you think people need to be laid off, who goes first? If there's "fat" to be cut, where is it specifically? If you don't have some useful leadership to offer now, don't come to us talking about leadership in 2005. No Schwartzeneggers need apply.

Of course, this can't happen if all the numbers aren't public.

3) I said this in passing a couple of posts back but I want to repeat it emphatically: The 2004 General Fund projections (and the 2003 numbers to date) -- all the projections -- should be posted prominently on the City's website right now, and updated as the Administration's information changes. This issue, far more than lakefront design or even the Convention Center, cries out for an open transparent public process: "We will have a lot less money than we need next year. What should we do about it?"

CLEVELAND BUDGET PERPLEX: In response to my last entry, Mark Schumann comments:

But then you've got the old raising-taxes-in-a-recession problem. That's not good either. You can't push the payroll tax any higher, can you?

I think the answer is "Maybe yes, a little bit, temporarily, as an absolute last resort, if the alternative is laying off cops and firefighters". Which, Mark will note, is a highly political frame for the issue... but one which I think reflects reality.

Let me try walking through this step by step:

1) The huge increases in City workforce cited by Crain's and Roldo are mostly fictitious. I went to the library and got the actual employment figures for General Fund departments (not just General fund employees) for the last ten years, and here's what I found:
... The City added a total of about 600 full-time-equivalent positions from 1992 to 2002.
... About 150 of these FTE positions were in Muny Court.
... About 600 FTE positions were added in the Public Safety Department... including 200 police patrol officers, 60 firefighters, and 95 "institutional guards".
... All the other General Fund departments combined lost about 170 FTE positions from 1992 to 2002.

I don't have a clue what the extra Muny Court workers are doing or for how much, but for the sake of argument let's just say they're expendable. At $50,000 per slot, firing them all would save the City $7.5 million. That still leaves more than $42 million in projected deficit to be dealt with (and 150 newly unemployed people on the street).

Now what?

2) The Mayor and her staffers all just took voluntary pay cuts. Let's assume they can get all the non-civil service managers to do this. And that they find unnoticed cash lying around in a few more corners. And that they manage to get the firefighters to back down on overtime. Let's be wildly optimistic and say this all adds up to $6 or $7 million.

Now we're only short $35 million. What's next?

3) What's next is... cutting uniformed safety personnel, and/or a whole lot of part-time recreation and service workers. Which means, in turn -- no swimming pools or rec leagues next summer. No vacant lots mowed. Slower police response. Maybe a fire station or two shut down.

And... hundreds more laid-off City workers on the street.

4) City residents will recognize the scenario outlined above as a sure-fire recipe for starting "the war of all against all"... angry unions, angry residents, furious Councilmen, municipal paralysis from now till November 2005. At which point we get a new Mayor -- probably just in time for recovering revenues to make him or her look like a genius.

As a City resident who prefers my local government to be functional, I'd rather avoid this municipal hellmouth, especially since nobody in Cleveland is really to blame for lower tax revenue. I don't care all that much if Campbell gets a second term, but I don't want the rest of her first term to be a total waste. That might be convenient for prospective opponents, but it would be very inconvenient for the rest of us.

5) So here's what I think Campbell should try:

First, go ahead and shake down every department for maximum non-personnel savings for next year. Be tough about it. Go after the fire overtime. Trim trim trim.

When that's done, and everyone has a good idea what the remaining deficit is gonna be, propose the following deal to the City unions, Council and the voters:

-- No layoffs, but...

-- All City employees, across the board, take a small pay reduction from April through December, enough to cover half the deficit. But this is conditional on...

-- Voter approval of a temporary income tax increase in March, lasting until the end of the year and sufficient to cover the other half. (A quarter-percent increase, for example, would raise $20-25 million over nine months.)

The deal would be a package. If any part of it failed, layoffs would ensue as needed, beginning April 1.

Also part of the deal would be measures to give back some of the tax hike through reductions in other City charges that don't affect the General Fund. First on my list would be an immediate 10% reduction in Cleveland Public Power rates. The City should also look for ways to reduce downtown workers' costs, e.g. cheaper parking options.

6) What would this accomplish? It would be a way to avoid wholesale layoffs, service cuts, and disfunctional government for what might well be the last year of really depressed tax collections. Everyone cooperates, nobody gets hurt too badly, city life doesn't collapse, and we're all still friends. If things are just as bad the following year (which is totally unpredictable) "we'll climb that hill... when we get up to it."

7) Would a tax increase of this kind hurt the local economy? No. It's temporary, it's small, it buys civic peace and cooperation, it's accompanied by some cost savings, it would be great for the city's reputation if Campbell could pull it off. The alternative is more disarray, more political warfare, and more unemployment.

8) Could she pull it off? That's a whole other question. It would be the performance of a lifetime, with a very high risk of failure -- lots of agendas to juggle, very complicated. Layoffs and service cuts would be simpler... but IMHO, a lot more destructive to both the Administration and the city.

9) One final non-pragmatic point: I think most Cleveland residents, being blue-collar, think private employers should make an effort to keep their employees working through temporary slumps, if at all possible. That's one mark of a "good place to work." We respect bosses who temper their desire to maximize profit and minimize loss with a sense of loyalty and fairness to their employees. We know this kind of boss is going to have a more loyal, more productive workforce in the long run.

Well, in this case, we're the boss. What kind of boss are we going to be?