Report: Public development subsidy deals should guarantee better jobs, working conditions

A proposed development that would bring a new soccer stadium to downtown Milwaukee should include guarantees of good wages and a path to union representation for workers in the stadium district in return for public subsidies, a new report recommends.

The report, “Worker Power Levels the Playing Field,” was released Tuesday by COWS, a think tank at the University of Wisconsin-Madison. It says taxpayer-funded support for the proposed Milwaukee soccer stadium project, dubbed the Iron District, should come with strings that ensure local hiring and strong job standards even after the project is built out.

“In Milwaukee, a city plagued by racialized socioeconomic inequality, any development should have demonstrably positive impact on these inequities,” states the report. With reference to an earlier COWS report in February 2022 on poor compensation and unstable working conditions in Milwaukee service jobs, the new report says that “raising the quality of service jobs in the city is one way to help build a stronger and more equitable community.”

Milwaukee already has a model for such an agreement, according to the report: the city’s Deer District surrounding Fiserv Forum where the Milwaukee Bucks play. The developers — led by the team’s owners — set a higher wage floor and ensured union rights at the NBA arena. The Deer District is “a nationwide model,” the report says, one that Iron District developers would do well to emulate.

“It’s important for Milwaukee to see itself as a national leader in this way and to reapply the lessons from the Deer District as new development is considered,” says Laura Dresser, associate director of COWS. Dresser is coauthor of the report along with Pablo Aquiles-Sanchez, a COWS research analyst. 

COWS is a nonprofit research and policy center that seeks to address social problems through solutions that emphasize shared growth and opportunity, environmental sustainability and strong democratic institutions. 

The Iron District project is to be developed by Kenosha-based Bear Development and Kacmarcik Enterprises on 11 acres just east of Marquette University with an 8,000-seat soccer stadium and a 3,500-seat concert hall and a hotel, Urban Milwaukee reported in May.

Bear Real Estate CEO S.R. Mills told Urban Milwaukee in June that the project was expected to cost $160 million, including $40 million for the soccer stadium, and that it would require some public funding.

Just how much aid and in what form haven’t been defined. “No one really knows what sort of timeline the so-called proposed Iron District might be moving forward on,” says Peter Rickman, president of the Milwaukee Area Service and Hospitality (MASH) Workers union. 

COWS’ August 2022 report on the Iron District proposal views subsidies for soccer arenas in particular with skepticism. “Though not much data exists specific to soccer stadiums, ample empirical evidence from other sports venues shows that subsidizing them does not deliver for cities,” that report states.

The new COWS report says that if taxpayer subsidies are provided for development, strong community benefits agreements can help communities reap greater rewards.

Union manufacturing jobs that blossomed in the decades after World War II have given way more recently to low-paying, nonunion service jobs in Milwaukee, the report observes

“Poverty and racial and economic inequality in Milwaukee can be traced back to this development,” the report states. “By transforming service work, Milwaukee can reverse this four-decade slide and begin addressing the problems of economic and racial disparity.”

If a community coalition can step into the discussion of government subsidies for a private developer, the “community shapes the project through its demands, and in exchange for the coalition’s support of the project in the approval process, the developer commits to uphold those demands,” the authors write. 

The report offers the example of the Bucks stadium and Deer District development, which followed an agreement between the NBA team’s owners and Alliance for Good Jobs, a coalition of labor, community and neighborhood groups. The project included $250 million in public money. 

The agreement guaranteed that service and hospitality workers in the stadium and in the Deer District could organize and join a union without employer opposition and guaranteed that a first contract would be successfully negotiated. 

It included a commitment to hire at least half of the employees from designated Milwaukee ZIP codes with the highest rates of unemployment and underemployment. And it set a minimum wage for arena and Deer District jobs at $12 per hour starting in 2017 and rising to $15 per hour within six years. That goal was reached ahead of schedule in 2020 in the contract with the MASH Workers union. The union grew out of the Alliance for Good Jobs.

“What’s good for the Deer District is good for the Iron District,” says Rickman, the MASH president. “Until there’s a good deal for good jobs, just like the Deer District, any policymaker advancement of the so-called Iron District remains premature.”

According to Dresser, for a development’s project benefits agreement to make a difference, it needs to go beyond guarantees tied to the construction phase. 

“The kind of community benefits agreement that Milwaukee needs attends to job quality at every phase of the project,” she says, including the jobs that the development creates when construction is finished. It also “understands that job quality is achieved through worker organizing.”

The MASH Workers union participated in producing the report with COWS. “You don’t tell the story of what’s happened around the Deer District unless you’re engaging the people that made that story true,” Dresser says. “The voices that helped make that story real are important in telling that story.”

Private sector agreements such as those outlined in the COWS report mirror another trend, says Terri Gerstein of the Harvard Labor and Worklife Program: local governments stepping in to advance worker rights and require better working conditions beyond what state or federal laws require — raising local minimum wages or passing laws requiring sick leave policies, for example. 

“Cities and other localities are seeing improving people’s working conditions and setting standards as a core part of their mission,” says Gerstein, who wrote about the trend with LiJia Gong of Local Progress in a report published by the Economic Policy Institute.

But in some states, including Wisconsin, state legislatures have forbidden such local labor standards. Private sector agreements could offer an alternative when that happens. 

“What is so promising about this approach is that the state pre-empting the city from setting higher standards doesn’t in any way prevent private parties from agreeing to higher standards,” Gerstein says.