EDA Tax Incentives at a Price: Pay Equity for Men and Women

John Reitmeyer | February 16, 2017 | Politics
Businesses that want help from the New Jersey Economic Development Authority must be able to demonstrate their employees earn equal pay for equal work

Women's march, Trenton 2017
More than $3 billion in economic-development tax incentives have been approved by Gov. Chris Christie’s administration in just the past few years, and now state lawmakers want to make sure no tax breaks go to companies that discriminate against women by paying them less than men.

A bill that would require companies that accept financial help from the New Jersey Economic Development Authority to submit documentation to the state verifying they pay men and women the same compensation for “substantially similar work” was passed by the full Assembly yesterday.

Though first introduced over the summer, the measure’s advancement comes just about a month after millions of women marched in Washington, D.C., New Jersey, and other places around the globe to call for respect and equality, including pay equity. It also follows a failed effort in the state Senate last month to override Christie’s veto of legislation seeking to strengthen New Jersey’s overall pay-discrimination policies.

Sponsors of the bill that passed the Assembly yesterday praised its advancement, saying the new law would ensure no state tax dollars are being provided to companies that engage in discrimination.

“New Jersey should never endorse gender-pay discrimination,” said Assemblywoman Elizabeth Muoio (D-Mercer). “This bill makes clear to businesses that if they want financial assistance from taxpayers, they cannot engage in gender discrimination against workers.”

Supporters say tax incentives keep New Jersey competitive

The Trenton-based Economic Development Authority has approved more than $6.5 billion in tax incentives since Christie took office in early 2010, with more than $3 billion of that total coming after the tax-incentive programs were [https://www.njspotlight.com/stories/14/03/13/early-returns-economic-opportunity-act-of-2013-off-to-solid-start/|significantly overhauled] through bipartisan legislation in late 2013.

The tax incentives are not outright grants, but instead provide companies with a break on future tax bills if certain requirements, including job-creation goals, are met over time. Their advocates say they allow New Jersey to remain competitive with neighbors like New York and Pennsylvania, which have aggressively tried to lure companies out of New Jersey with their own lucrative incentives.

But critics have questioned whether New Jersey’s tax incentives have now gone too far, making them ultimately a bad deal for taxpayers even when projects create or retain jobs. A recent legislative audit of the EDA programs also faulted the agency for not adequately reviewing and verifying the cost of a business moving out of New Jersey against the benefit of it staying here; for not properly verifying the existence of at-risk jobs before approving a grant to a business; and for maintaining a weak system of monitoring businesses’ compliance with grant terms.

Under the measure that passed the Assembly yesterday, the EDA would be required to establish new rules and regulations to ensure businesses that receive any of the agency’s tax incentives are not discriminating against women with unequal pay. The ban on gender discrimination would also extend to companies receiving loans, loan guarantees, grants, tax incentives, or other financial assistance from the agency through its programs, according to the legislation.

To prove that businesses are not paying women less than men, the bill would require them to submit written documentation to the EDA verifying their compensation practices are not discriminatory. The measure defines gender discrimination as “an employment practice in which a business discriminates between its employees on the basis of sex by paying a rate of compensation, including benefits, to employees of one sex less than the rate paid to employees of the other sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility.”

Economic incentives ‘an extension of our values as a state’

The bill passed the Assembly yesterday with no debate on a day that also saw politically charged resolutions condemning President Donald Trump’s recent executive actions on immigration and his nominee to lead the federal Environmental Protection Agency approved along party lines.

“Our economic incentive programs are an extension of our values as a state,” said Assemblywoman Annette Quijano (D-Union). “This bill would say, resoundingly, that New Jersey does not support discriminatory pay practices and that any company that wants to use economic assistance from taxpayers must conduct business in a way that is fair to all employees.”

“This is all about fairness and doing the right thing by both taxpayers and workers,” Muoio said. Both Muoio and Quijano are primary sponsors of the pay-equity bill. A vote on the measure in the Senate has not yet been scheduled.

Senate leaders, meanwhile, have also held back from trying again to override Christie’s conditional veto of the legislation seeking to strengthen New Jersey’s overall pay-discrimination law. That measure would give workers in New Jersey the right to recoup back pay for their entire term of employment if discrimination is proven, instead of only two years. It would also triple penalties for damages, and would force companies doing business with the state to provide detailed reports on their employees’ gender, race, job title, and compensation.

In his conditional veto, Christie cited concerns about the stiff penalties and reporting regulations that companies could face in New Jersey if the tougher regulations were to become law. Now, Democratic sponsors of the bill are working on a compromise with Republican leaders in the Senate, though the lawmakers said earlier this week that no deal was imminent.

It was during last month’s debate on the attempted override — which was pulled back by Senate President Stephen Sweeney (D-Gloucester) before an official vote was recorded — that Sen. Michael Doherty took issue with Senate Majority Leader Loretta Weinberg’s citing of statistics demonstrating a wide gap between the pay earned by African-American women and white men.

“You know, at some point, I got to say it sort of hurts, it does, to be constantly told that you’re the source of the problem,” said Doherty (R-Warren).

“Just because I’m a member of a certain group it doesn’t mean I can be denigrated over and over again,” Doherty said. “It’s got to stop at some point.”