Let's Get Together

Unions: Good or Bad?

Local blogosphere abuzz lately with talk about the Congressional vote on the Employee Free Choice bill. Randy Kuhl's vote, specifically, has received plenty of attention. He voted no despite originally co-sponsoring the bill. If we are scoring correctly Rochester Turning says that's bad and the Fighting 29th (a Colbert voice always says this blog title in my head) says it's not such a big deal.

The Fighting 29th examines the benefits of unionization in a post today. The WBP decided to take a look as well.

According to a January 25th, 2007 US Department of Labor report:

In 2006, full-time wage and salary workers who were union members had median usual weekly earnings of $833, compared with a median of $642 for wage and salary workers who were not represented by unions.

In plain numbers, being a member of a union will earn you more money. Numbers can be misleading, though, and perhaps the trend is more closely linked to what industries see widest union membership, rather than membership itself:

Workers in the public sector had a union membership rate nearly five times that of private sector employees . . . The union membership rate for government workers (36.2 percent) was substantially higher than for private industry workers (7.4 percent). Within the public sector, local government workers had the highest union membership rate, 41.9 percent. This group includes several heavily unionized occupations, such as teachers, police officers, and fire fighters. Among major private industries, transportation and utilities had the highest union membership rate, at 23.2 percent, followed by construction (13.0 percent) . . . Among occupational groups, education, training, and library occupations (37.3 percent) and protective service occupations (34.7 percent) had the highest unionization rates

At the least this data tells us how the legislation was pushed through as these sectors are represented by very powerful lobbies, but does it tell us why? The majority of "average American workers" who belong to unions are not benefiting from union membership because "average Americans" are not public sector employees.

What if the focus is pared down to state level? Not many would say that the Upstate New York economy is booming. Does union membership play a role?

Four states had union membership rates over 20.0 percent in 2006--Hawaii (24.7 percent), New York (24.4 percent), Alaska (22.2 percent), and New Jersey (20.1 percent). Hawaii and New York have recorded the highest union membership rates among all states for 10 of the past 11 years.

Alaska and Hawaii can essentially be thrown out since their economies are anomalies given geography; left are New York and New Jersey, economies on the grow or on the decline?

The southern United States, particularly the southeast, have experienced considerable economic growth over the past decade. How do unions factor?

Among the five states reporting union membership rates below 5.0 percent in 2006, North Carolina and South Carolina continued to post the lowest rates (3.3 percent each). The next lowest rates were recorded in Virginia (4.0 percent), Georgia (4.4 percent), and Texas (4.9 percent).

Union membership across the country is declining, but unions are big money and this legislation is a response to those declining numbers. The law may benefit the membership rolls but I have trouble believing it will benefit our economy.

NY Consumer Confidence Up

State Bucks February National Trend

According to a poll from the Siena Research Institute, consumer confidence rose 0.4 of a point last month. However, this was due to increased consumer confidence in New York City; Upstate confidence actually dropped 4.9 points.

Buying plans were up for automobiles but the poll continued to show a slump in the housing market.

“We have a strange set of numbers for February: New York State inched up due to the New York City area, while upstate and the rest of the nation took a hit,” said Dr. Douglas Lonnstrom, professor of statistics and finance at Siena College and SRI Director. "These figures do not reflect the stock market drop last week. New York City now has its highest confidence since before 9/11. On the other hand, buying plans for homes, home improvements and furniture are all down, mirroring the decline in the housing market.”

At 89.9, New York State’s overall consumer confidence is only 1.4 points below the nation’s 91.3 confidence level.

Monroe County: Fun With Numbers

And the Flu Too!

The office of Monroe County Executive Maggie Brooks has released economic development numbers for 2006. The statistics are as slanted and misleading as those used in her State of the County address:

In 2006, County-sponsored programs approved incentives for 132 local economic development projects. These projects will create 1,857 new jobs (within five years of project completion), retain 9,688 jobs, and invest $373,868,000 in Monroe County.

Since Brooks took office in 2004, Monroe County has helped 385 companies improve and expand their local operations. These companies are creating 6,900 new jobs, retaining over 28,000 jobs, and investing more than $1 Billion in our local economy.

We refuted many of these claims in our response to the State of the County. The short story is that, according to the US Department of Labor, jobs are actually down since Maggie took office.

Also, the "385 companies" assisted by the County is inaccurate. There were 385 instances of incentives given, but many of these were repeat recipients.

As far as taking credit for creating jobs five years down the road that may never actually materialize - we are not impressed.

The County is also up to old scare tactics to make it appear as though our government is actually needed. Officials have asked for 500 volunteers to participate in a pandemic flu point-of-dispensing exercise. Go to podex.info to sign up.

Unfortunately, Brooks cannot take credit for creating jobs with this exercise as participants will not be paid. Although, using her math . . .

Clinton Outlines Greenprint

Program First of its Kind in Nation

Senator Clinton was in town today carpetbagging her way across the country. While in East Rochester, she highlighted the Greenprint program which is the first in the country to be announced.

This is not an anti-environmentalist wacko post (we like the environment and we like wackos), or even an anti-Hillary post. Rather, there was one section of the D&C's article about Clinton's visit that we found alarming:

"The steps include adopting USGBC Leadership in Energy and Environmental Design standards for public buildings, achieving LEED certification for Renaissance Square . . ."

Did I miss something? Is Renaissance Square a forgone conclusion despite the lack of widespread public support by taxpayers who will foot the bill for the project? Does a new-era environmental program really tie-in with a proposed bus terminal centered around the use of antiquated fossil fuels?

If someone can catch us up please feel free to leave your comments.

Economic Snapshot

There has been plenty of talk from Rochester political and economic groups stating that the way to revitalize the area economy is to capitalize on our vast educational and high-technology resources. Let's take a look at some recent economic news:

- Xerox sold their headquarters in Connecticut and promptly announced that it had no plans to establish headquarters in Rochester.

- Kodak made an announcement that it will begin manufacturing and selling a new printer aimed at the home and small business market. The machines will not be made in Rochester, they will be made in Asia. But the announcement was made in Rochester, right? Nope, New York City. Then job cuts in the thousands were announced.

- Bausch & Lomb has finally filed its earnings reports . . . for 2005 - and at over $10 million less than previously reported. Overseas legal troubles have supposedly hindered the accounting process and there is no word on when 2006 figures will be released. Think the IRS would be so understanding if you filed your taxes two years late?

- After shelling out $250,000 to keep open its option to purchase the Midtown property, and a jaunt by Mayor Duffy to Italy, the City announced that . . . nothing is happening.

- We still own the Farce Ferry and it is has cost us more to move and store the boat north of the border than if we had left it where it was. I guess with the good Mayor out of sight is truly out if mind.

- Maggie and the GRE announced they would build on achivements from 2006. Acheivements like . . . the agreement to build a new Barilla Pasta plant in Livingston County? Wait a minute . . .

As Bausch & Lomb, Xerox and Kodak flounder who is stepping up to supply these supposed high-paying, hi-tech jobs? Sutherland, Unisys and 5Linx - somehow I doubt the average income levels and required employee skillsets from these three compare to those seen in the heydays of the Big 3.

Economic Success in Rochester

With No Help from Government

As reported in the D&C today, "Retail, apartments, offices planned for former Genesee Hospital site - Developer to spend as much as $100M on 'Alexander Park'"

Wow, no COMIDA abatements or public subsidization? A big WBP congrats to Larry Glazer for proving that laissez faire economics still work, maybe certain Republicans who supposedly subscribe to these economic principles should take notice. Let business worry about business, it will straighten itself out, anyone who passed the 10th grade and received a basic education on supply and demand principles can understand marketplaces. "That government is best . . ."

Are We Supposed to Feel Better?

The D&C Henrietta blogger has posted his Final Followup on 5Linx and now everything is right with the world. Only -

- Spurred by articles at the Water Buffalo Press, 5Linx has applied for membership in the Direct Selling Association as a response to highlights here on the WBP that non-membership indicated questionable business practices by the respective entity. According to a representative from the DSA, 5Linx will not be accepted for membership as their application did not illustrate practices consistent with the strict guidelines of the DSA.

- As highlighted in our earlier article, Find the Red Queen, the supposed $6 million investment in the community is nonexistent as it can only be assumed, since exact figures are unavailable to the public, that $6 million has been returned to the company in the form of government investments and abatements.

- The championing of 5Linx as a leader in telecom is overstated, as 5Linx reps do not carry inventories; rather, 5Linx serves as a third party marketer providing website marketing materials (at a price) to direct sales representatives whose websites redirect customers to carriers.

- The pyramid nature of the business model is illustrated in the new jobs that will be housed in the expansion: According to Denise Nowak with 5Linx this inhouse sales team "provides quotes to small and medium size businesses that our independent representatives come across that would like to use our GLOBALINX service", (although the acquisition of leads from a supposedly independent representative raises questions about how independent this realtionship is) essentially these business leads are the most profitable and the 5Linx founders (the top of the pyramid, which includes ACN defectors) want to ensure that the profits continue to be weighted at the top of the structure. What is left for the independent reps to market to are private residential clients, undoubtedly less profitable than business sales.

All in all, the type of business that our region should brag about and subsidize?

Globetrotting Mayors & Cured Meats

I Smell Old Antics . . . and Cheese

I like prosciutto as much as the next person but are we going to pay for this too?

From the D&C:

Mayor Robert Duffy expects to travel to Parma, Italy, with a contingent of city leaders as soon as February to get a better understanding of the "Made in Italy" project and to help cement details with proponents in that region of northern Italy.

"It's important for us to go over for everyone to see there is serious negotiation going on," the mayor said. "Part of the foundation for this (business relationship) is a sense of trust, and it has to be a two-way street."

Maybe the Mayor really likes pecorino romano, but Duffy's globetrotting seems strangely similar to our last frequent flyer: Bill Johnson. Johnson's travels were many, for instance, a jaunt to Baltimore to visit with the company who would eventually become the failed developer of the High Falls district; but this international mini-vacation for Duffy seems rather extraneous, especially if the deal falls through and the cost of the trip for taxpayers gets added to the already $250,000 tab - a total racked up when the City gave the developers that much just to keep open their option to buy the property. (It seems the developers just happened to put the building on the market at just the right time.)

I hope this project succeeds and we partner with the Italian government and Midtown is revitalized; unfortunately, this appears as another backroom political deal where the public's opinion does not matter. The current owners of stores within the mall portion of Midtown have not even been consulted about proposed plans for the property. If Duffy wants to do this deal in private then go ahead (in fact an agreement has already been signed by Duffy), but we here at the Water Buffalo Press will demand the following: if this is an idea that private entities believe can succeed then use private funding and monies to finance the project, NO COMIDA abatements, NO EMPIRE ZONE incentives, use an external revenue source to expand the area's tax base, reduce the second highest property tax burden in the nation and actually benefit Rochester instead of being another ferry or performing arts center/bus station.

Find the Red Queen: COMIDA, 5Linx & Trillium

Following a story broken here by the Water Buffalo Press the Rochester blogs have been abuzz lately with talk of COMIDA's questionable investment in the Henrietta based company 5Linx. The history can be reviewed in the Water Buffalo Press archives, what follows is a summation of information gathered so far by the Press and its sources -

County Executive Maggie Brooks held a press conference last week to announce COMIDA benefits tied to a project involving expansion plans for 5Linx. The press conference, as well as some reporting on the event, was misleading as 5Linx seemed to be the sole beneficiary of the benefits. In actuality the incentives were passed along to LeFrois, the development company building the office park expansion, the second such incentive they have received on the property according to an official with Monroe County.

Unconfirmed reports suggest that 5Linx heads may have felt "pressured' by the owner/developer but these sources wish to remain anonymous and statements were unclear as to the type of pressure applied.

Rochesterturning.com refers to high-ranking 5Linx officials with former government ties, this is likely a reference to William Faucette Jr., former Chief of Staff under Rochester Mayor Bill Johnson and founder of the 5Linx Millionares Club. Faucette is likely the individual who has posted to this blog under the user name positive1. There is no information that suggests Faucette used his ties to improperly influence the funding process, but his ability to set up tours of 5Linx facilities for local bloggers covering the issue raise questions about his relationship with the 5Linx founders and how strictly the company adheres to the restrictions placed on businesses employing the MLM structure.

5Linx received COMIDA incentives in October on the purchase of VoIP equipment, the very same equipment that is billed as their breakthrough in the telecom industry and the same equipment that was likely distributed down through the 5Linx network of independent sales representatives for a profit.

5Linx was also the beneficiary of equity from a branch of the Trillium Group in Pittsford that oversees the investment of funds drawn from the New York State Common Retirement Fund. Funds directed by the office of the Comptroller are reinvested in businesses, these investments range from two to five million dollars. The direction of state funds by a private firm is questionable as there is no way for the taxpayer/voter to hold the decisionmakers responsible, however the practice is common across the state and is the sixth such investment by this branch of Trillium.

The legitimacy of the 5Linx business model is questionable, as is any that employs the MLM structure, but concerns are only multiplied by 5Linx founder Craig Jerabeck's questionable dispute with Verizon that resulted in the downfall of his former company @Wireless and the fact that neither 5Linx nor GlobaLinx is recognized in the membership of the Direct Selling Association whose membership includes companies like Avon and Cutco. Additionally, quotes from Jerabeck regarding the cost of operating a business in New York state and references to North and South Carolina suggest 5Linx was considering relocation; in which case 5Linx likely misrepresented their intentions to secure funding from Trillium, as I would hope Trillium is not in the practice of investing New York state tax dollars in companies who plan to relocate.

While none of these activities or funding initiatives are outside the realm of law the return on the investment for the New York state taxpayer remains to be seen. In all 5Linx has promised to create over 150 jobs in return for the incentives they have received, time will tell if they live up to their end of the deal. The numbers, however, do not illustrate a benefit to our area. Quotes from Maggie Brooks cite the investment of $6 million in the community from the 5Linx expansion, but the combined COMIDA incentives added to the possible $5 million investment by the Trillium Group, drawn from the New York State Retirement Fund, totals over $6 million in funding and tax breaks returned to the company. All this equals a net loss for our community. In the coming days the Water Buffalo Press will attempt to discern what guidlines, if any, exist for the receipt of funding from COMIDA and Trillium. We will also highlight COMIDA funding recipients as many, like LeFrois Inc., have received mulitple grants over the past two years.

The Water Buffalo Press will continue to monitor the project's progress and report as neccesary -

5Linx Update

Company Not Recognized by Direct Selling Industry

Website membership searches of the World Federation of Direct Selling Associations and the U.S. Direct Selling Association do not yield search results for GlobaLinx or its parent the Henrietta, NY based company 5Linx. Each website, whose membership includes companies like Avon and Cutco, indicates that non-membership is a warning sign that the company in question may not be legitimate.

COMIDA's Numbers Don't Add Up

The County of Monroe Industrial Development Agency approved incentives for four other projects at its meeting.
They include:
HOLT ROAD INVESTORS It is proposing to construct a 9,300-square-foot child care center on the west side of North Ponds Park in Webster, creating 33 full-time jobs. The incentive package totals $126,000.
ROCHESTER LODGING ASSOCIATES The company is proposing to renovate the 98-room Best Western Rochester. It would create five full-time jobs. The incentives total $99,000. NORTH FOREST PROPERTIES It is proposing to construct a 13,764-square-foot building at 105 Canal Landing Blvd. in Greece that would create 30 full-time jobs. The incentives total $188,000.
THE BENNETT GROUP The consulting and training firm, which specializes in education, is purchasing $112,621 in mailing equipment to be used at its training facility. The incentives total $8,900. - As reported by the Democrat & Chronicle

Fresh on the heels of reports that COMIDA had to revoke incentives to certain companies for noncompliance comes the announcement of another $421,000 in tax break incentives for child care, a hotel and mailing equipment. I have a question - why does Rochester Lodging Associates receive incentives totaling $99,000 for the creation of five jobs while Holt Road Investors who is creating seven times the number of jobs only receives $27,000 more in breaks? Also, what mailing equipment costs $112,000 and why is the County helping The Bennett Group purchase this equipment? This does not strike me as an instance of giving incentives to prevent a business from relocating, rather, it appears like the public subsidization of a private entity.

5Linx - Legit or MLM Scam?

5Linx Gets Second Grant From COMIDA

The Democrat & Chronicle reported yesterday that COMIDA (which stands for the County of Monroe Industrial Development Agency and will be the subject of a story to come later here on the Water Buffalo Press) awarded a $600,000 grant to 5Link, a "telecom" provider based in Henrietta. The Henrietta Blog of the D&C praised the company for brining hi-tech jobs to the area, over 130 of them as reported. As I posted on the Henrietta Blog yesterday:

5Linx uses a business strategy called "MLM" or "Multi Level Marketing" to sell their "products;" what this essentially translates to is a Pyramid structure that recruits people to invest in a startup much like Tupperware or Cutco knives. They do not even sell their own products, they resell things like cell phone service and satellite tv. Much like the Fast Ferry founders and Maplestar, they receive millions in government funding and tax breaks under the guise that they will add "hundreds of jobs" only to see the C-level employees pocket the profits and split town. 5Linx currently employs 30 people and we are to believe they will add 130 in the next year through a work at home pyramid structure that forces their "employees" to recruit others? Neither COMIDA, nor Monroe County, nor the D&C, nor this so-called blogger have done their research and that is why our region continues to get swindled by moneymen who make big promises. Ever seen the Simpsons episode where the town decides to buy the monorail? - that's Monroe County and Rochester. Mark it down, 5Linx will never create that many jobs and despite what Maggie Brooks says in her photo "pat myself on the back for doing nothing" op this is not a company our area should brag about.
1/17/2007 4:55 PM

Another blogger, known as alocalbusinessman, posted that he has attempted to contact the HR department of 5Linx only to continually be routed into voicemails. Wouldn't a company poised to take on a massive undertaking such as the hiring of over 130 people at least need an HR department in place to oversee and train the employees?
But let's just say that 5Linx is legit and is as succesful as their C-levels would like us to believe, why then would they be in need of such a sizable grant from the government (the second such grant they have received)? One might answer to pay for the cost of the massive facility they are building in Henrietta, however, the building of the site was announced before the grant was received. By any measure, should our tax dollars be going to businesses so succesful that they expect better than 100% growth in the near future? Certainly a business so succesful would understand if we used 600,000 taxpayer dollars on something like education or our economically depressed City instead of a big fancy call center in a suburb that has no trouble attracting companies.

One of 5Linx claim to fame is the issue of Inc. 500 that names it as one of the fastest growing companies in America (based on projected hires that haven't happened yet), but even the magazine is skeptical about the methods employed by the company:

"What it does - Sells VoIP services and video phones to consumers and businesses through multilevel marketing. Why it's growing - The multilevel marketing model is designed to produce fast revenue growth. It also, of course, produces controversy in many cases. In 5Linx's case, CEO Craig Jerabeck says strong consumer interest in VoIP helps 5Linx sign up the direct sales representatives it needs to recruit."

There merits have come under the pretense of video-phone sales but an exploration of their website reveals that the basis of their business is the resale of cell phones, Dish TV and medical benefits cards. Last time I checked medical benefits didn't fit under the category of 'telecom.'

More to come -