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#UnBlockRI

Ken Block told me he's going to ignore me, but I wonder if
he'll ignore calls to #UnBlockRI?
My state rep., Aaron Regunberg cosponsored a bill, RI H7515, which would require businesses of ten employers or greater to give their employees a schedule two weeks in advance. The purpose of the bill is meant to give low-wage workers some assurance that they can plan for the rest of their lives without having their schedule unilaterally changed at the last minute. The bill provides that if a new shift is requested with short notice, or canceled with short notice, the worker would be entitled to one hour of predictability pay. No employer is allowed to retaliate against an employee for using the provisions of the law.




Enter, Ken Block.

Reasonable people could disagree with this proposal. I'm not calling Ken Block reasonable though. We started talking about RI H7515 because of a tweet he posted--to be honest, I hadn't heard of the law before, so I had to look it up to see what he was talking about. Thanks, Ken, for bringing it to my attention! 

A long discussion followed, in which Block was dismissive and rude. Par for the course, really. I don't know if I've ever had an online interaction with Ken that hasn't resulted in him blowing his stack like a lunatic.
One of the points I tried to impress upon Block was that there are many burdens that small business faces in Rhode Island that are larger than this bill, and that a good leader would find ways to bargain over those various burdens so as to reach a settlement that works for everyone. Perhaps many restaurant owners are not thrilled at the idea of this bill. And, in fact, perhaps even some workers would prefer it to be differently worded. It's very much something to be discussed. But what are the burdens to small business that could be removed instead of not passing 7515? Here are some I think would be huge:

Pass a land tax of some kind, and use the revenue to lower property taxes
Walmart, Home Depot, and a few other
big box stores appear to be some of the
largest taxpayers in Providence, but if 
you do a "per acre" measurement of 
their tax returns, it's quite small. The
public infrastructure required for these
big box stores is much greater, too:
sewer management, roads, etc.
A land tax is important for small business because many small businesses inherently take up small spaces. Block pointed out in the Twitter debate that many restaurants go belly-up. It's true. Restaurants are a highly volatile business to get into. But many restaurants also take up tiny, tiny pieces of property, relying on a lot less in terms of public infrastructure than big boxes. A land tax rights this wrong, and could help more small businesses to succeed.

Joe Minicozzi has done a lot to show how this paradigm operates, and so has Chuck Marohn. Not only do urban/town center grids of tightly clustered, small buildings bring more tax revenue when they are at their peak, they also outperform big box/drive-thru businesses even when they are "old and battered". I did an analysis using this math on Olneyville, which was published in Eco RI and at Urbanophile (although I think Aaron Renn has since cleaned house at Urbanophile, so it's probably not there anymore). 

I eyeballed this on GoogleMaps, but
this is a roughly equal rectangle of
land. Which do you think brings in
more taxes? And which do you 
suppose brings in more per acre?

This observation also applies to parts
of Providence that are quite low
income, like the South Side.
I've proposed enabling legislation at the state level to allow a parking lot tax to be instituted at the community-by-community level, which municipalities could then trade for lower property taxes. The parking lot tax would operate much like a land tax, except that it would tend to exclude a higher charge for green space. I think this nullifies a major public objection to land taxation--people like green space--while still encouraging lower taxes for most residents and small businesses, and reforming land use away from surface parking. Many places have a parking tax. Pittsburgh has the country's highest parking tax, and is in Pennsylvania, which also allows land taxes.

Zoning Reform
Zoning is a major barrier to small business. Most communities in Rhode Island have zoning that gets in the way of development, and much of that zoning is also counterproductive to environmental and social justice goals at the same time.

A big example is parking minimums. Parking minimums are requirements to have off-street parking for a particular business. Many communities in Rhode Island have started to roll these gradually back--Providence and Pawtucket have eliminated them in their respective downtowns, while Central Falls no longer has them on Dexter or Broad Street, just to name some that I know of off-hand--but I am not aware of any communities that have gotten rid of them completely. A parking space averages in cost around $15,000 in the U.S., but can be higher or lower based on land prices and location. Many zoning provisions call for a certain number of parking spots per resident, customer, or square foot of retail. Donald Shoup estimates that that the U.S. spends about the same in public subsidies to parking through parking requirements or public garages as it does on Medicare and Medicaid. So this is a big, big, big zoning barrier to small business and affordable housing.



Allowing Mixed-Use by Right
One of many spaces open in Warren's downtown. Why? 
Another zoning requirement is preventing mixed-use or re-use of buildings. I saw a great example of this in Warren, Rhode Island when I was sitting at a bus stop. Above the Coffee Depot and Federal Hill Pizza shops, there is quite a lot of available space for rent. I called the landlord and asked whether the space could be used as residences, and he said that it could not because of the zoning. 

Following up on the discussion, I had a Twitter conversation with some people about the space. Isn't it odd that Warren, one of Rhode Island's most beautiful towns, has so much trouble maintaining a full downtown (there are actually quite a few other vacancies)? Warren resident Asher Schofield of Frog & Toad store said that he thought the town should strongly consider allowing residential uses. Other people chimed in with "likes". The WPRO show Coalition Radio said that it felt the market and personal choice should dictate the use of these spaces. 

It's clear that zoning is in the way when a location that is in a beautiful downtown, five minutes walk from groceries, five minutes from the Narragansett Bay, in the midst of colonial and Victorian beauty, next to a major bike path and right across the street from a frequent, long-span bus service (the 60) isn't rented.

I contacted the City of Warren's zoning officials, who were very genial and helpful, and answered multiple queries about the law by email. The officials said the city allows mixed-use, but requires it to go through public approval. The charge is between $200-$300, per space, depending on the number of neighbors, and can be blocked by the community if neighbors don't like the idea. So there is a method of going about this, and in theory it can be done, but there are red-tape burdens that stand in the way.

A Common Market
I did not suggest this idea during my Twitter conversation with Ken Block, but a comment he made led me to it. Block said that one of the major reasons Rhode Island should reject schedule predictability for workers is that no other state has such a provision. I and several other people pressed him on the idea that he would still be against 7515 even if Connecticut and Massachusetts were ready to pass such a law. At first he was kind of snide and dismissive of this, calling me a "mind reader". When he was pressed on it, he said that no state would consider such a law, because it was clearly a bad idea, and so the point was moot. In other words, the "only Rhode Island is doing this" claim is a tactical maneuver, rather than the real underlying cause of opposition.

But what if we had a common market? My wife sells things at farmers' markets, and she's had to go through a lot of paperwork and spend a lot of permitting fees to do so. Some of the permitting makes some degree of sense: she has to use a commercial kitchen to ensure safety of her products, and so has to pay someone rent for that, and then prove that she has done that. Other provisions are totally nuts. She has a permit to sell things, but no permit to sample them, so in some communities she can't put out tea samples for people to try without paying another several hundred dollar fee. So there's a mix between getting rid of some permits entirely to help small business, and keeping others but modifying them. But what's really infuriating about the process is that oftentimes she has to get a new set of licenses or permits from town to town, even though she may have the equivalent already elsewhere.

At minimum, all towns and cities in Rhode Island should respect one another's permits for similar things. A sales permit in one town should be good in every other town for that purpose. But beyond that, we should look to collaborate with other states in New England to make sure that when we want to issue (or get rid of) a regulation, we can assure that there isn't perverse border competition. An example of this is the gas tax. Rhode Island does not actually have a particularly high gas tax on a nationwide level, but because Massachusetts has a gas tax that competes by being lower, there's a constant push to reduce the tax to avoid having people jump across the border. But Massachusetts and Rhode Island alike have trouble paying for road maintenance, and gas taxes don't even come close to covering the roads we already use. So wouldn't it make more sense for state governments to coordinate to get their taxes to the same levels?

New England is a region where many of the same values are held. It might be a challenge to coordinate the goals of Mississippi with those of San Francisco. But if Vermont can do something a certain way, certainly Connecticut can, and if Massachusetts and Maine are on board with something, it would make sense for Rhode Island to be.

Is 7515 the Worst Barrier to Business? Vs. Parking Requirements
The fact is, when we ask businesses to improve their working conditions for their employees, there is an inherent tradeoff of cost to each regulation. That much is reasonable, and non-debatable. It's also clear that Rhode Island is failing to create or maintain jobs at the rate that anyone would like. But when we criticize efforts by low-wage workers and their allies to improve the basic dignity of their work, we also need to look at the larger problems that face business. I have named just a few.

To put the cost of 7515 in context, I decided to pick one of these, parking requirements, and put it side-by-side with predictability pay.

If we assume a basic cost of $15,000 per parking spot, a requirement for two parking spots will come to $30,000. 

The smallest business impacted by this bill would have ten employees. Ken Block focused heavily in his criticism of the bill on the restaurant industry, which he rightly points out is highly volatile. Governor Raimondo recently raised the restaurant minimum wage to an extremely generous $3.89 per hour. Just in case you were worried that this raise showed signs of becoming a slippery slope, it's the first one that has happened in two decades. So, probably not.
I have ten employees. Maybe five of my employees work during the day, and five at night, and between them they each work six shifts a week. Let's say I'm a particularly sloppy boss, and I cancel fifty percent of the shifts I schedule. 

5 x 6 (Daytime shifts per week)
5 x 6 (Nightime shifts per week)
60 (Total shifts per week)

I cancel half of them, so that's thirty per week. That's a $3.89 charge for each of them, so that's  30 x 3.89 = $116.70 per week.

There are 52 weeks in a year, and I'm a hard nose, so my employees work every one of them. $116.70 x 52 = $6068.40.

Even if I doubled the number of canceled shifts--I am a completely disorganized business owner in this scenario, canceling or rescheduling 100% of the sixty shifts my workers had each week--that doesn't get me to the price of one parking spot. And that's assuming my parking spot is an "average" one, which for many downtowns would not be the case (in Providence, for instance, one parking spot is around $30,000, not $15,000--and that's for surface parking). 

Keep in mind, a lot of businesses have fewer than ten employees. I work part-time with a startup that has three employees. My boss would be under no obligation to deal with this law. From my perspective, ten employees is a sign that you're beginning to get someplace in the business world. I would still say that qualifies you as a small business, but RI H7515 is not going to keep new startups from sticking their toes in the water and entering the market.

Vs. Taxes.
Let's look at taxes. We estimated that our our sloppiest ten-employee boss cancels 100% of his shifts. That comes to a more than $12,000 cost.

What do Rhode Island small businesses pay in taxes? 


Let's take Providence as an example. Our lowest rate is $19.25 per $1,000 of value for residential property, while its rate on commercial property is $36.75 per $1,000 of value. It has a higher rate of taxation for rental properties that are not "owner occupied" as well.

Pulling from my Eco RI piece: For a business like the Chipotle on Thayer Street, which takes up 0.1 acre of space and is worth $700,000, that's a yearly tax of more than $25,000.

The Waterman Street Whole Foods--actually a fairly modest-sized grocery store--is worth $2,222,300. Its yearly tax would be almost $82,000. 

I'm not making the comparison to pick on Whole Foods. And, in fact, this store is the more modest of the two that Whole Foods runs, in terms of land footprint. And both are quite small compared to many other big boxes in the city. But if you do the per-acre valuation that Joe Minicozzi outlines, you find that the Chipotle building (which also has a record store) is worth almost five times as much per acre in tax value to the city. It also contributes next to nothing in street maintenance costs, because it has no parking, and thus is not pulling a great deal of cars to it in order to build a customer base, and is across from a very small, very easily maintained Thayer Street. The Whole Foods, by contrast, has some good accommodations for bikers, but is mostly running off of car traffic, and is almost certainly inducing a great deal more road damage, stormwater overflow, etc.

Keep in mind that zoning is part of why many stores have so much land footprint in the first place, so it's not even necessarily a comparison of two market choices.

But when we contrast the $12,000 cost of Mr. Sloppy's Abusive Employment Emporium, we see that tax rates are much more significant to a small business on Thayer Street than this regulation (in fairness, Chipotle offers a per-hour rate that is higher than our assumptions, but it's also not plausible at all to say that the manager would schedule people and then un-schedule people at a 100% rate of error).

Would instituting a land tax and reducing the rate of property taxation help a small business? Yeah. Allentown, Pennsylvania is one place that does this, "Beginning in 1997, the City of Allentown will adopt a property taxation system designed to encourage development of new properties and improvements to existing properties."

This might seem like a local issue, and to an extent it is. But the State of Rhode Island and Providence Plantations, in its infinite wisdom, does not allow the option of differential taxation on land versus property, so local communities cannot choose to rectify their deadened downtowns.

Small Businesses, Workers, Unite! You Have Nothing to Lose But. . . Alright. . .
Not to get too excited about this issue, but I think it's clear that there are many ways that small businesses are blocked in Rhode Island. And to be fair, that is not Ken Block's fault. However, I think he should be more receptive to potential constituents since he's constantly posing as a statewide leader and calling for reforms to protect small business. His party--the "Moderate" Party, supposedly characterizes itself as a third-way in Rhode Island politics, yet whenever I've attempted to talk to him about an area of policy I know a lot about--transportation and land use--he treats me like someone who is not worth giving the time of day.

I think he's a jerk. And he shouldn't ever be governor.

~~~~

And now, your moment of zen. Ken Block on parking requirements' impact on small business:





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