Housing Complex

Is the District Unconstitutionally Forcing Contractors to Hire Local?

For years now, contractors have complained about District rules that require them to hire local residents on construction projects built with city money (which, most of the time, they haven't obeyed). Last year, the D.C. Council tightened the First Source law even further, mandating that D.C. residents account for a majority of the hours worked on a job, not just 50 percent of the new people hired.

That was too much for the Associated Builders and Contractors of Metro Washington, which filed suit in federal court on May 25 charging that the law is unconstitutional—putting one of the District's signature employment initiatives at risk. Today, Mayor Vince Gray and Councilmember Michael Brown promised to defend the law.

The voluminous complaint begins with a diatribe against the District's approach to workforce development.

The District of Columbia's 'employment problem' is not that there are too many residents chasing two few jobs. By some measures, there are over 800,000 jobs in this city of 600,000 people. The 'problem' is that the District lags behind its neighbors in educating and training the workforce the construction industry needs.

The First Source Employment Act has never created a single job—and never will. Instead, it infringes on the fundamental American right to pursue employment free from discrimination. It violates the Civil Rights Act and numerous constitutional protections, including the Privileges and Immunities Clause, the Commerce Clause, an the First Amendment. Indeed, it is flatly inconsistent with the stated policy in the District's Human Rights Act that there should be 'an end in the District of Columbia to discrimination for any reason other than that of individual merit, including, but not limited to, discrimination by reason of...place of residence or business.'

For too many years, developers, contractors, and other employers have been forced to endure and work around the Act, afraid of the public outcry that would follow if a purported 'jobs bill' were challenged, and afraid of the retribution of District officials with a vested interest in pretending that the First Source Employment Act is a solution to the District's chronic underemployment in certain areas of the city. But with the recent amendments to the First Source Act, contractors cannot possibly comply with the Act's hiring and quota requirements, and they are threatened with job losses, business failures, and debarment from government contracting...the amended First Source Employment Act puts the plaintiffs' very livelihoods at risk, and they need judicial redress.

The suit then runs through a litany of accusations, including:

  • District residents are less skilled than workers from other jurisdictions and fail drug tests or walk off the job early in disproportionate numbers, which leads to lower morale in the crew overall, since they are preferentially treated.
  • Because of the requirements, Miller & Long—a Bethesda-based concrete company that signed onto the complaint individually—says it can only do two projects subject to the law at any one time, which decreases competition and raises prices.
  • The law violates the First Amendment: "The District is substantially impairing, infringing, and chilling the protected speech of ABC Metro Washington's members by requiring them, as an unconstitutional condition of receiving a public benefit, to advance and espouse a view directly contrary to their own."
  • The law unfairly favors companies who "do not share their philosophy of individual merit and a level playing field."
  • The law violates the contracts clause of the Constitution, since its requirements are onerous and unreasonable.

What are we to think of this?

On the one hand, the District has done a terrible job of preparing its residents to work on these projects. At the same time, it has seized on the construction industry to solve the unemployment problem because that's what the city can control, despite the fact that it represents a tiny slice of the jobs available. The Department of Employment Services' job training programs are a mess, and the Workforce Investment Council—which the District is required to have as part of receiving federal funds—was only recently reconstituted after years of dormancy. Even Brown agreed that the District hadn't done enough to help contractors obey the rules, which is why the amended law includes the creation of a "workforce intermediary" that's supposed to create a pipeline of D.C. residents to employers. The industry didn't want to wait for that to work, nor for the WIC to implement a recently-issued slate of recommendations.

Also, I have no doubt that the reporting requirements are a pain in the butt, making it more difficult for companies to bid on District projects, which may mean that the District doesn't get as good a deal for its money (in fact, they've started offering incentives for hiring D.C. residents, rather than penalties for not doing so).

Finally, from a macro perspective, is there really a public good in requiring that some humans get hired over others? One more D.C. resident hired means one less Maryland resident gets a job, even though he or she is probably as deserving—the District has no special moral claim here.

On the other hand, I think this suit fails on a couple of counts.

One: It's completely within a city's rights to ensure that its own tax dollars are spent on its own residents. That's why there are residency requirements for schools, social welfare programs, and any number of grants (though not rank-and-file District employees). That's not the case for federal projects, which is why the District resident numbers are so much lower on projects like St. Elizabeths.

And two: It's not like the District is forcing these companies to take District projects. There's plenty of private construction going on as well. It just means that they have to go some serious extra miles in order to compete for them.

Wouldn't you like to be on this jury?

Photo by Darrow Montgomery

  • jcm

    Why doesn't the Associated Builders and Contractors of Metro Washington develop more apprenticeship programs to train DC residents? Fund it through membership fees. Why are they waiting for the government to solve this problem for them?

  • Lynn

    Not all construction jobs require expensive training. In many instances, DC residents are passed over for low paying entry construction jobs that are given to individuals that speak very little English. What ever happen to hand up not hand out. Many DC residents with GED's or a high school diploma would welcome a working class salary.

  • Non e Mus

    An apprenticeship program is a good suggestion. But it requires a pool of people who are in a position to be apprenticed. A 2007 study found that 1/3 of adults in DC are functionally illiterate. There are kids who graduate high school not able to read, write, or do math at a high school graduate level. It's a bit much to ask a trade association to take on all of that. And it's not really their problem if they can get people from another state who are ready, willing, and able to do the jobs.

  • Whatactuallyhappens

    I've worked on half a dozen large development projects in DC the past decade, all of which were encumbered by the local hire and local small disadvantaged business requirements, which combined drive up commercial construction prices 4-7% over what they are right across the river in Rosslyn.

    One particualr project downtown had a 50% setaside for DC residents by the GC (Clark). Literally more than 100 construction jobs just waiting to be taken by a DC resident. The jobs were advertised via DOES and outreach programs were held in 3 Wards 6,7,and 8.

    At the end of the job 18 months later, a total of 46 DC residents had applied for the jobs and 42 were given offers, 4 were so illiterate they couldn't fill out the applications. 39 of the 42 actually showed up for the first day of work and of the 39 hired, only 3 made it to the end of the job. People would show up for 2 or 3 days and then go ghost, never to be seen or heard from again.

    So in the end, it cost the project money to set aside these jobs, advertise them, hold workshops and even more money in lost costs hiring and then rehiring someone 4 days later because they quit.

    Every single job I've done in DC was the exact same way. Why do rednecks from West Virginia, or Hispanic men from Richmond VA get DC construction jobs? Because they show up, every day.

    You have the city government literally GIVING it's citizens jobs, making jobs specifcially for them, handing them to them on a silver platter and they can't be bothered to show up, preferring I guess to stay on the cities even more generous, generational welfare programs.

    DC's problem isn't lack of jobs, its problem is it has an enormous population of illiterate, uneducated felons who can barely qualifiy for any job, and then don't bother to actually show up when they get one and no amount of legislation is going to fix that.

  • styrax

    I'm afraid that whatactuallyhappens says is what actually happens. Besides, as a sort of corollary, in most government RFP processes across the country, the contract goes to the lowest qualified bid, regardless of the bidder's locality. "lowest" and "qualified" have equal weight.

    Besides, like LdeP suggests, it's idiotic for DC to pretend it's not part of a region.

  • http://urbanplacesandspaces.blogspot.com Richard Layman

    wrt what whatactuallyhappens wrote, this has been researched by sociologists, and the issue is that employers hire based on their employee networks. Basically, the idea is that your qualified productive employee is likely to make recommendations of other equally qualified potential employees, because a recommendation that doesn't work out rebounds negatively.

    That's why over time the job demographics of construction employees in DC has shifted to Hispanics. (Although didn't Lydia have a cover story on this issue some time ago. If it wasn't her, I'm thinking about a years ago CP article.)

    That being said, the ABC lawsuit likely lacks merit.

  • Lydia DePillis
  • Lydia DePillis
  • Q-Street

    Whatactuallyhappens put my thoughts on this better than I could. I had a small project in Shaw and experienced exactly what he's talking about.

    There certainly are people in DC who are hard workers, with marketable skills or are generally competent who are down on their luck. Those people deserve a hand up, however they are not the foundation of DC's chronically unemployed.

  • Upset DC Tax Payer

    Time and time again the DC Government talks of job creation and working to improve the lives of citizens but does nothing to actually do so and this law was just another example of it.

    The fact of the matter is that there are greater than 800,000 jobs in a city of only 600,000 residents of which an estimated 200,000 at least are unable to work because of age and health conditions (such as physical, mental or just old age issues). Which means that realistically there is at least 2 jobs in this city for every DC resident. To make matters worse Dr. Stephen Fuller has stated that construction makes up around 1.5% of the jobs in this region which comes out to be 10 - 11,000. This means that if you fired every construction worker in the region and filled the jobs with DC Residents it wouldn't solve the unemployment issue in Ward 5 which has the third highest unemployment in the city. At the same time less than 35% of DC Government Employees are DC residents.

    As to the issue of the fight over this legislation it is illogical to say the lease because it focuses on one industry and places an unrealistic burden on them to meet standards and hiring goals which are impossible. Further it mandates forced discrimination which would put companies in a situation to be sued by non DC residents.

    Further this the passing of this legislation has lead PG County, MD and VA to introduce their own similar bills. This would mean that DC Residents wouldn't be able to work outside of the city or jobs with regional companies which in the long run would only serve to hurt DC residents.

    In actuality this lawsuit is the right thing to do to a city which just doesn't seem to get it. It is why I'm an upset DC Tax Payer

  • DC Drywall Diva

    ABC-Metro Washington does have its own apprenticeship training academy, so that's not really an issue. The issue is money. Lydia DePillis says there are "plenty" of private construction jobs to go around, but that is not actually the case. There are far too many companies still holding on, post-recession, relative to the number of projects. Competition is so tight that prices are still incredibly low -- and, therefore, there's not a lot left over for companies to spend on training workers (when a pool of skilled workers from MD and VA already exists).

    To say the District should be able to have whoever it wants working on its own projects makes some sense, but think of it in smaller terms. Say you are a contractor doing a renovation on someone's house. The owner wants you to employ her son, who has no construction experience. It's a little ridiculous, right? You could refuse to sign the contract and walk away from the job, but say you have few other prospects and need to stay busy. What you'll probably do is bump up your costs to make up for lower productivity. This is what we have to do all the time. Unfortunately, the District (and developers) refuse to understand that -- and by the way, the "incentives" only apply on a handful jobs and usually don't get paid out anyway. The District needs to spend its money on the sources of the unemployment problem -- poor schools, overincarceration, etc. Construction companies -- especially in this still-difficult economy -- are not equipped to act as social services.

  • Hillman

    WhatActuallyHappens nailed it.

    I recall a few years back when the two giant office buildings went up due West of Union Station. The homeless shelter Gales School was open at the time, literally next door.

    I talked several times with one of the main foremen at that job (for lack of a better term).

    They told me the DC government pressured them to hire locals first, and specifically made it clear their permits and inspections would go a lot easier if they hired from the homeless shelter.

    So they tried.

    They recruited there every day.

    They could not get a single person to even show up at the job site.

    For even the most basic unskilled job.

  • Hillman

    The problem is DC is at full employment.

    Has been for quite some time.

    Yes, I know, unemployment in Ward 8 is very high.

    But like it or not that is by choice.

    There are so many jobs here that employers go begging for everything from office cleaners to restuarant staff to construction workers.

    After years of this being the case, and years of the DC government failing to educate, then guaranteeing many never-ending welfare benefits, is anyone surprised that many are unqualified or unwilling to show up for work?

    There has been a Help Wanted sign up for the past two years at a restaurant near my house. The owner tells me she ends up having to fire two out of every three new hires, as they seem angry that they have to show up sober, can't cuss at customers, have to work weekends, etc.

  • oboe

    The "problem" is not that DC "lags behind its neighbors in educating and training the workforce the construction industry needs". The problem is that, generally speaking when an unemployed DC resident lands a stable, long-term employment, then move to the suburbs. Their peers who are chronically unemployable stay in the city. And if you're a suburban resident that "falls through the cracks", historically you've been more likely to move back into the city (with your parents, or to very cheap apartment housing). That dynamic is starting to change, which is why the city's demographics are shifting.

  • oboe

    Many DC residents with GED's or a high school diploma would welcome a working class salary.

    And do. At which point they move to PG County. Which is why the aggregate DC unemployment rate stays the same. Same unemployment rate; different set of unemployed.

  • oboe

    At the end of the job 18 months later, a total of 46 DC residents had applied for the jobs and 42 were given offers, 4 were so illiterate they couldn't fill out the applications. 39 of the 42 actually showed up for the first day of work and of the 39 hired, only 3 made it to the end of the job.

    And all three now live in the suburbs. Success story!

    On a serious note, DC policies should be targeted towards getting those three working-class folks to stay in DC, and getting some portion of the unemployable to move out to the suburbs. Unfortunately, our policies are effectively the exact opposite.

  • Lynn

    Non e Mus: Functionally illiterate (a term you did not understand) means just that! They function within society and they are illiterate; not uemployed. They work in fast food restaurants, on trash trucks, as janitors, .... You don't need a BA in English to work at a job that requires physical labor. Who are you mad at? How about the question: if people that can't read and speak limited English get hired, your point is what about literacy? Really, it's baseless. As for the training crap... whatever excuse you can find. Until people have jobs, we will all pay the cost for alarms, security and thefts.

    Oboe: Everyone that is successfull does not move to the suburbs.

  • oboe

    Oboe: Everyone that is successfull does not move to the suburbs.

    No, not everyone does. Just as not everyone in America owns a car. But people who claw their way out of poverty and enter the (lower) middle-class overwhelmingly leave DC. The reason given is usually that "DC is too expensive", but the reality is that you can get a bigger house with a yard and garage out in the burbs for a lot less. All you give up is proximity.

  • http://www.twitter.com/AdamLDC Adam L

    I'm not particularly in favor of laws like this for many of the reasons stated in the comments. However, the case has no shot. "My money, my rules" is a long-honored tradition.

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