Cleveland saw it as a simple ask for developers who received financial help from the city. Once their projects were completed, the employees who work there should be paid a living wage.
Cleveland’s living wage, officially known as the fair employment wage, is currently $16.85 per hour. Ohio’s minimum wage is $11. Both are adjusted annually based on inflation.
Developers have resisted paying the higher wage, Tyson Mitchell, director of the city’s Office of Equal Opportunity, told Signal Cleveland. His office negotiates and monitors agreements with developers who receive grants, tax abatements, low-interest loans and other support in exchange for pledging to do something that will financially uplift residents in one of the nation’s poorest big cities.
If you receive city finances, then you should be willing to pay your workers at least a living wage. It’s important because those who make below the living wage are usually people from the Cleveland community, including Black women and brown folks. These are people who have been historically left out.
Tyson Mitchell, director of Cleveland’s Office of Equal Opportunity
Mitchell said that many developers were concerned that paying the fair employment wage would make their projects less competitive.
“They say that if they have to tell tenants you must pay the living wage, it reduces the amount of tenants that apply for that property,” he said.
Despite the resistance, the city has kept asking. The persistence paid off. The $108 million Project Scarlet, which will redevelop two downtown buildings into a luxury hotel and residences, has become the first project to sign an agreement to pay Cleveland’s fair employment wage for some positions, Mitchell recently announced. The agreement doesn’t include the specific number of jobs that will benefit.
Cleveland has worker-protection ordinances that require the city to pay at least the fair employment wage. Employers with city contracts must also at least pay their workers this wage. The living wage is optional for other employers unless they sign legally binding agreements.
Project Scarlet’s developer saw no need to push back against offering a living wage.
“We believe in it,” wrote Gregg P. Cramer, senior vice president of government affairs and business development for Green Harvest Capital|Sparck GHC, in an email to Signal Cleveland. “For this project to be successful, we will need to attract – and retain – individuals who have the appropriate hard and soft skills that will set themselves – and Project Scarlet – up for success.
“We believe work should be rewarded and are committed to expanding the circle of opportunity for the residents of the City of Cleveland,” he wrote.
The project is receiving at least $13.3 million in city financial assistance, including a loan and tax increment financing, which allows some new taxes to be diverted to pay for development and redevelopment, according to documents the city provided. Project Scarlet will also receive tax abatement that the city will later determine, the documents show.
Project Scarlet is the first Cleveland project with agreement to pay a living wage
The Project Scarlet agreement was signed as part of the city’s Community Benefits Agreement policy. The agreements are legally binding pacts between the city and a developer, company or nonprofit receiving subsidies for a project. In 2023, Cleveland strengthened its community benefits ordinance to better ensure that residents benefit from such agreements. So far, the city has executed 52 agreements, Mitchell said.
Developers can meet their CBA requirements in several ways. Most agree to hiring Cleveland residents, including residents considered low-income, for a portion of the construction jobs. Most agreements also require that developers hire either Cleveland-based small businesses, minority-owned or women-owned companies to handle a share of the work. Other requirements include the developer agreeing to apprenticeships or internships or mentor-protege relationships, in which small, minority-owned businesses can learn from larger, experienced companies.
Project Scarlet’s CBA requires some of the above, but it also includes an agreement that the developer “will use good faith efforts” to hire at least 10 Cleveland residents at Cleveland’s fair employment wage/living wage for the construction project. Once Project Scarlet opens, the developer has committed to paying the living wage for two years to some workers. This includes those holding positions in housekeeping, on the front desk, in maintenance and in food service. The living wage doesn’t apply to servers, bartenders and others who primarily work for tips.
The agreement doesn’t state the number of jobs at the hotel and residences that will be covered. Signal Cleveland has asked the developer for the number and will update this article when we receive it.
The project includes redeveloping the Rose Building at 2060 E. 9th St. and the Sloan Building at 823 Prospect Ave. Interior demolition continues at both buildings, and the project is scheduled to be completed in 2028, Cramer said. When the buildings open, it is likely that they will bear a name other than Project Scarlet, he said. The developer will reveal the official name of the project next year, Cramer said.
Mitchell said agreeing to the fair employment wage part of the contract is significant, even though it only requires employees to be paid for two years.
“If you receive city finances, then you should be willing to pay your workers at least a living wage,” he said. “It’s important because those who make below the living wage are usually people from the Cleveland community, including Black women and brown folks. These are people who have been historically left out.
“Low wages continue that cycle of poverty, and we don’t want that cycle of poverty,” he said.
City and council member worked together key to getting living wage for Project Scarlet
A major reason Project Scarlet became the first community benefits project to pay the living wage is because Mitchell and Council Member Richard Starr were able to work closely together to get buy-in from the developer, Mitchell said.
Starr, whose ward also includes Central, which is home to many low-income residents, didn’t hesitate to lobby for the living wage a requirement. He said residents should receive “more than promises” from city-financed projects.
“They should receive real opportunities, meaningful employment, fair employment wages and pathways to financial stability,” he wrote in an email to Signal Cleveland.
“Project Scarlet represents an important step forward because we are moving beyond simply counting the number of jobs created and beginning to focus on the quality of those jobs,” he wrote. “A job that does not pay enough for someone to support themselves or their family cannot be our definition of economic success.”
John Ryan, a consultant to Cleveland’s Fair Employment Wage Board, which oversees the fair employment wage, agreed.
“We don’t need more poverty jobs, especially those that are supported by the city or the county or the state,” he said.
The MIT Living Wage calculator puts the living wage in the Cleveland metro area at $21.14 for one adult with no children. It rises, for example, to $52.93 for one adult with two children. Cleveland’s living wage at $16.85 is higher than the average wage for some of the jobs the agreement covers, according to some online job boards. For example, the average hourly wage for janitors in Cleveland is $15.53, according to Indeed.com. The average salary for someone working a hotel front desk job is $16.16, according to ZipRecruiter.com.
Yanela Sims, Ohio state director of SEIU Local 1, which represents janitors and security guards, believes the living wage agreement is important. Though the union’s members don’t work in hotels, SEIU Local 1 believes that all workers in the often low-paying service jobs covered by the Project Scarlet agreement should make a living wage. The union turned its 2024 contract negotiation into a citywide campaign to raise the pay of all low- and moderate-wage workers, many of whom are Cleveland residents.
“I think this is definitely a step in the right direction to set some standards on the front end of newly created jobs,” she said.
Project Scarlet will also help residents of Winton Manor
The Project Scarlet agreement also requires the company to do outreach to the residents of Winton Manor on Prospect Avenue, an affordable apartment building for seniors and people living with disabilities. The effort will include helping the apartment’s residents find jobs, training or other pathways into the workforce, Starr wrote. This includes hosting job fairs for residents, Cramer wrote.
Such efforts will directly connect Winton Manor residents to development in their community, Starr wrote.
“They should not have to watch millions of dollars being invested in their neighborhood without having a meaningful opportunity to participate in the jobs and economic activity being created,” he wrote.
