in Business Incentives, Economic Development, Employment, Governor Cuomo, Jobs, Upstate New York

New York State Gave $2.6 Million to Build a Food Greenhouse that Pays One Dollar Above the Minimum Wage

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In April of this year, Green Empire Farms in the central New York city of Oneida became notorious as the location of more than 170 Covid-19 cases.  The facility is a massive 2.8 million square foot greenhouse where vegetables and fruit, including strawberries and cucumbers, are produced.  County health officials believe that the outbreak occurred at three area hotels where much of the facility’s largely migrant workforce was housed – in many cases four to a room.  Workers, however, said that Green Empire did not enforce social distancing or provide masks, according to an article published in The Nation.

The Syracuse Post-Standard reports that while some of the facility’s 300 employees are local residents employed by Green Empire Farms, most are migrant workers recruited and employed by MAC Contracting.   The Utica Observer-Dispatch reported that the company had hired 230 workers to work at the  Green Empire greenhouse facility.  According to the Indiana Department of Health, MAC is a supplier of workers for agricultural labor camps.

What is not widely known is the fact that Green Empire Farms received a $2.6 million grant from Empire State Development Corporation to help the company pay the $72 million cost of constructing the facility.  The grant was approved by the Empire State Development Board in February 2020 – only a few months before the Covid outbreak.

According to the Utica Observer-Dispatch, Green Empire is a subsidiary of Mastronardi Produce, a Canada based company that is the largest producer and distributor of greenhouse-grown produce in North America.   In addition to the assistance from New York State through ESD, the Syracuse Post Standard reported that the company received “a 20-year tax break worth millions.”

As a condition of receiving the ESD grant, Green Empire Farms is required to maintain a workforce of at least 118 at the facility.  While it is believed that the company has met the employment requirements, ESD’s agreement with the company does not note that workers at the facility receive slightly less than $13 per hour for their work – about one dollar more than the state’s $11.80 minimum wage.  Migrant workers hired by MAC received the same wage as local workers employed by Green Empire, but had hotel costs deducted from their wages.

ESD’s agreement with Green Empire also does not acknowledge that the company is contracting with a third party to provide migrant workers to meet more than half of its staffing needs.  Because ESD did not address Green Empire’s use of a subcontractor to provide most of its workforce, it failed to use the leverage provided by its financial contribution to the project to protect those workers’ interests.

In this case, using a subcontractor to provide migrant labor allowed the company to pay low wages while meeting its worker needs.  At the same time, because Green Empire did not employ the workers, the subcontractor – MAC Contracting – was responsible for providing housing while assuming liability for a number of work-related issues.

Although large scale industrial food greenhouses create jobs, the quality of the jobs provided is poor – wages are low and employment is seasonal.  As a result, relatively few local workers are willing to work in the facilities, and large numbers of temporary migrant workers are employed.  The Post Standard reported that John Becker, the Chairman of the Madison County Board of Legislators, said that the use of migrant labor is typical of how factory farms like this one work.  “We can’t fill the jobs with American labor, so these folks come up. They send money home. These conditions are throughout the country,” said Becker, who ran his family’s dairy farm for decades.

Why would New York State provide $2.6 million to help a company build a food production facility paying only one dollar more than the minimum wage, largely staffed by migrant workers?  One answer lies in the process by which the project was brought to the state for approval.

In 2015, Governor Cuomo created a competition, the Urban Revitalization Initiative (URI), that would provide $500 million to each of three upstate regions to which according to the Governor, “will help to transform local economies by providing $500 million over the next five years to support projects and strategies that create jobs, strengthen and diversify economies, and generate economic opportunity within the region.”  Central New York was one of the regions receiving the $500 million commitment from the State.

The Central New York Regional Economic Development Council created a slickly packaged application for the funds that described a series of initiatives that it said would “significantly improve the economic trajectory of the region…[Projects would] offer transformative impact in the form of new jobs, private sector investment, improved economic competitiveness and enhanced economic inclusion.”

One of the elements of the strategy was to “build multiple CEA [Controlled Environment Agriculture facilities] to “supply high demand consumer products such as ready-to-eat salads for retail and restaurant consumers.”  Controlled Environment Agricultural Facilities are huge industrial greenhouses for the large scale production of vegetables and fruit.

It is likely that the Regional Economic Development Council’s application included the construction of CEA’s as a proposed project because Madison County had been seeking to help Green Empire build the Oneida facility.  WSYR in Syracuse reported that the Madison County Administrator first heard of the project in 2015 and that the county had sought the project for a significant period of time.

Conclusions

New York’s decision to provide Green Empire with a $2.6 million grant to create 118 jobs paying less than $13 per hour and to permit the company to meet most of its labor requirements by engaging a subcontractor to provide hundreds more migrant workers raises some significant questions.

The first has to do with the opportunity cost associated with providing a large subsidy to a company that provides jobs that are barely above the minimum wage.  Of note is the fact that while ESD requires Green Empire to maintain employment for 7 years at the contracted level, it has no requirements of the company for benefits like health insurance, sick leave, and personal leave.

Similarly, the contract with ESD makes no reference to Green Empire’s contract with its supplier of migrant labor to ensure that those workers are properly treated.  Of note is the fact that the subcontractor, MAC Contracting, chose to house the workers four to a room during the Covid-19 epidemic and did not enforce social distancing or mask-wearing prior to the epidemic.  At the worksite, Green Empire did not enforce social distancing or mask-wearing prior to the outbreak.  Empire State Development did not use the leverage that its financial contribution provided to protect workers employed by Green Empire and those that worked for the subcontractor – MAC Contracting.

Also of concern is ESD’s management of the Upstate Revitalization Initiative.  For good reason, New York State and Empire State Development have not generally subsidized the development of fast-food locations and other businesses that pay very low wages and offer few benefits.  These jobs provide do not provide state residents benefits that are commensurate to any assistance that might be offered.  The URI, like the State’s Regional Partnerships is characterized by weak state oversight (see this and this report by the New York City Citizens Budget Commission).

Subsidizing the development of industrial food production facilities that pay $1 per hour more than the minimum wage to a mix of local and migrant workers with no contractual requirements to provide reasonable worker benefits and protections is irresponsible.  Both the Regional Economic Development Council and ESD should focus efforts on developing initiatives that provide good jobs to workers, not jobs that provide low wages and no real protections.

 

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