Urban "enterprise zones," the centerpiece of the Reagan administration's agenda for revitalizing blighted areas, took a thorough raking at a conference here on the future of the cities. The salvos came from the political left, right and center. Only HUD Secretary Samuel Pierce had anything good to say about it: that it would "create jobs within the most economically depressed areas and spur economic growth in place of hard times" -- and would accomplish this without the expenditure of federal funds, merely by removing "government burdens."
Detroit Mayor Coleman Young, skeptical and, as usual, salty, said he'd prefer the approach of Franklin D. Roosevelt, which, while it might not work as well for the problems of the 1980s, would be "a damn good place to start." William Hudnut, the Republican mayor of Indianapolis, said the cities "don't need enterprise zones; we need enterprise," an assessment echoed by developer James W. Rouse, who warned that "you can't 'buy' business into doing what it doesn't want to do."
But the sharpest attack on the controversial proposal -- designed to tempt businesses back into the devastated inner cities by forgiving taxes, relaxing health and safety standards and suspending the minimum wage -- came from Thomas R. Donahue, secretary-treasurer of the AFL-CIO, who charged that it "would not create any new jobs, and therefore no new customers and no incentive to expand production," which is what the flagging economy needs.
"The tax breaks and the giveaways held out as bait would indeed encourage movement," he said. "But it would be the movement of only footloose, low-investment, labor-intensive industry, such as the apparel industry, in which companies can move with relative ease from one depressed area to another depressed area, and from one underpaid minority group to another."
The real problem facing such industries, Donahue said, is cheap imports. "Wages in the (American apparel) industry average $5 to $5.50 an hour, and with benefits, the total comes to about $6.75 an hour. That is, of course, a controllable cost, and no doubt could be reduced further. But it can't be reduced to the $1 an hour paid in Hong Kong, to the 40 cents an hour in Taiwan, the 20 cents in India, and the even lower amounts in Sri Lanka or the People's Republic of China. Yet the proposal is to subsidize such industries by relieving them of tax obligations and of health, sanitation and labor standards to make them the parasites of another community, all the time ignoring the flood of dirt-cheap imports. . . ."
More and more people across the political spectrum are questioning proposals to attract new small businesses by tax forgiveness, since the sort of businesses the proposal envisions won't earn enough money in the short term to have to worry about taxes. Rouse, developer of Harborplace, Boston's Faneuil Hall and Quincy Market and the new town of Columbia, Md., said that instead of trying to attract the marginal businesses that nobody wants the cities should develop attractive retail centers that would allow them to compete with the suburbs.