Keep Me Informed

Local Hiring Strategies

How to Use It

Basic Steps

  1. Identify where major public investments will be made in the community.
  2. Assess community capacity and document local needs.
  3. Weigh the costs and benefits of the two delivery mechanisms.
  4. Define thresholds, set-asides, and other criteria and components of the desired local hiring initiative.
  5. Organize to pass the initiative.
  6. Monitor the initiative to be sure it is fulfilling its goals.

Step 1: Identify Major Public Investments

Because local hiring agreements are tied to economic development, the first step to creating a local hiring initiative is accurately assessing the state of economic development in the target area. Is there one very large project in the works? Are companies being attracted to the area by location incentives, city contracts, or other public money?
Also consider the current or expected effects of this development. For example, is it actually creating a net job gain? Or is it causing significant job losses or job displacement that will offset any job increase?
Information on development projects and incentives should be available from the jurisdiction's economic development or planning offices.  Don't forget to investigate non-financial incentives such as zoning variances (zoning board) and infrastructure improvements (department of public works).

Step 2: Assess Local Needs and Capacity

Why Assess?

An assessment of job skills, employment history, and educational attainment among local residents will give policymakers a realistic understanding of the number of un- and under-employed residents in need of employment assistance. It is also helpful to those designing the initiative.

Before embarking on any local hiring initiative, it is critical to assess the job skills, employment history, and educational attainment of local residents. This gives policymakers a realistic understanding of the number of un- and under-employed residents in need of employment assistance. 
An assessment is also important for the community that wants the initiative.  Without it, there may be an expectation that all unemployed residents will get jobs immediately.  If unrealistic goals like this are set and not met, the result can frustrate both business participants and community members, potentially endangering the future of public-private partnerships for local employment efforts. An initial assessment can aid advocates in setting realistic goals and timelines and in designing appropriate training and apprenticeship programs to achieve them.
Assessments also provide communities with the ability to craft local hiring strategies that target residential areas with the most demonstrated need, and the evidence to back up that decision.  Many very large cities have implemented local hiring ordinances. But simply stipulating that city residents be hired may be insufficient to ensure that the jobs go those who most need employment.  Therefore, some policies get more specific.  For example, an agreement may target residents living within a mile radius of the new development, or an ordinance may target residents living in a defined federal Enterprise Community.
Finally, a comprehensive assessment can be a powerful defense if your jurisdiction faces a legal challenge (see Challenges ). 

Step 3: Select a Strategy

Local hiring initiatives come in two basic forms:

  • City/County Ordinances are pieces of legislation that affect all publicly funded projects in the target area that are above certain thresholds.
  • Community Benefit Agreements are typically the outcome of negotiations between community groups and a developer.  They apply to one specific development, and are designed and implemented independently from government regulatory bodies.

There are many things to take into consideration when choosing which form to pursue. The decision will depend on a community's needs, and also its organizing capacity.

  • If a community is about to experience one very large development that will affect the neighborhood and residents are already organizing around it, a community benefits agreement may make sense.
    Consistency. With an ordinance, all companies know and understand the requirements ahead of time. Thresholds and requirements are applied consistently, without a need to mount a new campaign for each development.
  • Flexibility. Community benefits agreements are more flexible than ordinances, because they are negotiated on a case-by-case basis, independent of the government. This can allow requirements for a particular project to be set higher than would be politically feasible for a city or county to agree to on a wider basis. While generally time-intensive, they can also be initiated in direct response to a major development plan, while an ordinance is a wider undertaking.
  • Enforcement. Cities with local hiring ordinances can develop a centralized monitoring and enforcement body to ensure efficient and consistent application of the ordinance, as well as coordination of hiring and training programs. Community benefits agreements can be harder to enforce, as there is less infrastructure to back them up.
  • Long-term Impact.  Once an ordinance is passed, it will be in effect indefinitely. Community benefits agreements apply for the life of the project for which they were negotiated. In addition, the assessment and consensus process associated with developing community benefits agreements is time-intensive and makes repeated agreements quite sporadic.
  • Political Will. Developers and the business community can, and frequently do, wage fierce opposition against additional regulations.  Given the sophistication and extent of opposition, realizing jurisdiction-wide ordinances requires enormous political support from council-members. On the other hand, private firms that participate in agreements that yield positive results for the community can gain political favor and respect among community members - an incentive for their continued participation.
  • Community Involvement. The effect of an ordinance may initially be abstract to community groups, while project-specific benefits agreements offer obvious and tangible community benefits, often including precise numbers of new jobs for specific communities.  Tapping into neighborhood opposition to specific developments that will affect the community, perhaps displacing jobs or homes, may be easier than organizing support for an general ordinance. Community members can also play an integral role in negotiating community benefits agreements, which gives residents a sense of connection and respect for the process.

Step 4: Define Components of the Local Hiring Initiative

Both ordinances and community benefits agreements need to be carefully structured to make requirements both clear and achievable. Here are the basic components of most local hiring initiatives:

Percent Set Asides

Percent set asides are the percentage of total hours worked or total employees hired that must be residents of the target area.  Percent hiring goals generally vary from 10 to 50 percent, though there have been policies with 100 percent requirements, like Wyoming 's statewide policy (discussed in Challenges ).  The percent set aside should match the needs determined in the assessment process; goals that reflect documented community need will receive more political support and will better withstand lawsuits.

Target Area

Who, What, Where, When

Any local hiring ordinance or agreement needs to define who must participate, what they need to do, where local hires must live, and when companies must report on their progress.

This is the area whose residents qualify as local hires to fulfill the set-aside.  Usually it will be the city or municipality, but it can also be smaller - a defined subset of the city, or a certain radius around a development. It can even be as broad as a whole state.
Within a target area, certain residents may get additional priority. The community benefits agreement regulating construction of a sports and entertainment complex around the Los Angeles Staples Center, for example, includes a targeted hiring strategy that gives first priority for jobs to those whose homes or jobs have been displaced by the construction.

Thresholds

Thresholds are criteria used to determine which development projects will be required to participate in the local hiring program.   They are only necessary for ordinances, since project agreements generally to a single project.  Thresholds can be set for a combination of the following criteria:

  • Size of the development
    In Berkeley, all new construction, change of use, or rehabilitation projects greater than 7,500 square feet are required to participate in the city's First Source Program.  7,500 square feet is on the very inclusive end of the scale, but Berkeley maintains no percent set-asides; only participation in the FSP is required. Hartford, CT, has a more mainstream threshold for its local hiring requirement: commercial developments over 40,000 square feet that receive a city subsidy.
  • Varied Approaches

    There are many ways to set thresholds for local hiring initiatives;
    • Type of contracts or incentive
    • Size of development
    • Amount of public money
    Amount of the subsidy
    An ordinance usually applies only to developers who benefit from a minimum amount of public money.  The level of public financing that triggers participation in a local hiring initiative varies from $10,000 in Hartford to $50,000 in Oakland to $100,000 in Washington, DC.  This threshold should be set at a level that balances the desire for a wide application with the city's assessment of need and capacity and current growth rates.  A small jurisdiction, or one with relatively slow development and high unemployment, should set a low subsidy threshold in order to capture as many job opportunities as can be feasibly filled.  A rapidly growing area, with a lot of publicly financed development may be able to set thresholds slightly higher and still leverage more than sufficient job opportunities for local residents.
  • Type or size of public contract
    Contract criteria can be based on either the type of contract or its size.  In Tucson, all companies who have contracted with the city to provide janitorial and custodial, security, or facility and building maintenance services are required to hire locally.  In San Francisco, all employers with a city contract of $350,000 or more in construction, or $200,000 or more in services are covered by the local hiring initiative.  And in California's Alameda County, all recipients of public contracts greater than $100,000 are expected to participate.
  • Receipt of specific incentives
    Targeted hiring practices may be required of all companies receiving certain  kinds of financial incentives, like tax abatement or deferments, Enterprise Zone credits or vouchers, city-issued bonds, low-interest loans, or changes in zoning restrictions. Oakland's One-Stop Capital Shop (under the direction of HUD's Section 108 program) is an example of how incentives can be tied to job creation.  It requires businesses to create a permanent, non-construction job for every $35,000 of CDBG loans they receive. Fifty-one percent of these jobs must go to low- or moderate-income residents of Oakland's Enhanced Enterprise Community.
  • Type of Job
    A crucial choice is whether percent set-asides cover construction jobs only, or also the permanent jobs that follow.  Construction jobs are easier to cover, train for, and monitor. But they are also short-term.  Including permanent jobs opens up a much wider variety of career opportunities for local residents.

Definition of Compliance

There are two ways to define whether a business is complying with a set-aside requirement:

  1. Set asides are a firm requirement . Firms that do not meet the hiring percentage will lose their contract or subsidy from the city; or
  2. Set asides are a goal, and compliance includes making a "good faith effort." Firms that do not hire the suggested percent of local residents may be subjected to specific scrutiny, but will not necessarily lose their contract.  A firm that ultimately does not meet the prescribed goals can still be determined to have complied with the policy if it maintained good faith efforts and followed all other policy requirements.

Two Approaches to Set Asides and Compliance

Oakland CA's Local Construction Employments Referral Program requires that 50 percent of work hours on a given project be performed by Oakland residents and that 50 percent of new hires be Oakland residents. This is a mandatory requirement.

A community benefits agreement for the Alameda Corridor in Southern CA set out a goal of corridor residents performing at least 30 percent of all project work hours, and graduates of the program's apprenticeship course performing at least 30 percent of that resident set-aside. Firms working on this project will not loose their contracts if they do meet this goal, but they will loose their contract or suffer severe penalties if they are determined to not be maintaining a "good faith" effort.

Monitoring and Enforcement Protocols

Once compliance is clearly defined, real punishments must be levied when businesses are found to be out of compliance. These firms are already receiving many carrots, in the form of economic subsidies; without clear sticks, they cannot be expected to comply. 

These firms are already receiving many carrots, in the form of economic subsidies; without clear sticks, they cannot be expected to comply.

Effective enforcement requires, first and foremost, that a plan for monitoring business activities be included in the ordinance or agreement itself.  All parties must agree to specific reporting and monitoring obligations for each party, which may include weekly, monthly, or quarterly reports of a firm's job hires, periodic site visits by the enforcement agency, or access to all job announcements released by the firm.  These obligations should include, at a minimum, that contractors are required to submit payroll records and tallies of employee work hours, broken down by residency of the employee.  Oakland has the further requirement that prime and sub contractors meet within five days of awarding a contract to outline anticipated workforce composition and a strategy for meeting required numbers of new local hires.

Once a set of concrete methods for measuring compliance have been determined, programs must develop enforcement mechanisms that exact significant cost to ensure firms' compliance with program requirements.  Enforcement should be progressive because, as the National Employment Law Project says, "the imposition of a fine can facilitate compliance, while the termination of a contract makes compliance impossible."  Oakland sanctions contractors who are not in compliance $1,000/day or 1 percent of the contract, whichever is less.  This results in an 80-90 percent compliance rate.  Oakland also offers "alternative penalty resolution," where a contractor may reduce its penalty by hiring Oakland residents for non-city projects within the Bay Area.

 

Enforcement Mechanism

Enforcement mechanisms are used to punish firms that have either failed to make a good faith effort or who are out of compliance for other reasons. They can include: 
  • Delaying contract payment to offending contactor until some corrective action is taken;
  • Fining the firm every day it is out of compliance;
  • Fining firm for every worker hired without making a good faith effort;
  • Revoking financial incentives;
  • Halting projects not in compliance; or
  • Requiring corrective action, such as local residents on projects outside of the jurisdiction.

First Source Programs

Although in theory a local hiring initiative can be complete with only requirements and enforcement, components to connect local residents with participating businesses are essential to an initiative's success. First-Source Programs (FSPs) are one of the most successful ways of realizing local hiring goals and requirements.  FSPs create an institutional structure that is intentional about providing employment opportunities to targeted populations.  Participating businesses are required to give first notice of job openings to the FSP.  This usually means they are required to post all job openings to a central clearinghouse (either run by the city or a nonprofit) for a designated period of time before opening up the position to the general public.  The clearinghouse screens and keeps extensive records of local residents, and refers those with appropriate experience. 
FSP requirements vary from mandating businesses to hire from this referred pool to simply requiring that businesses interview a certain percentage of those referred.  All of these requirements are generally accompanied by expectations that the firm make a "good faith" effort to hire referred applicants.  Firms can be required to report whether they hire each referred applicant, and if not, to provide an explanation for why he/she was not hired. ("Good Faith" requirements are discussed in more detail in the Keys to Success Section).

Apprenticeship and Training Programs

A thorough local hiring initiative includes apprenticeship and training programs for local job seekers.  Ideally, these programs are run with the support of local employers and labor unions and turn into full time positions.  These programs anticipate potential barriers facing prospective workers and provide appropriate support services to ensure adequate child-care, transportation, language skills, and access to licenses, tools, or union fees.

Recruitment and Outreach

In order to reach eligible local workers, local hiring initiatives need multiple recruitment and outreach strategies.  Community colleges, nonprofit referral agencies, faith institutions, and community based organization training programs are all potential partners.  Oakland's Local Construction Employment and Referral Program (LCERP) contracts with over 35 community groups for workforce development and outreach.  Once residents have been identified (and frequently trained) by local groups, they are referred to LCERP, where their skills are assessed and they are assigned to a local union hall where they are dispatched out to individual jobs.

Recruitment and outreach will likely be a less formal process for community benefits project agreements than it is for infrastructure-rich jurisdiction-wide ordinances.

Recruitment and outreach will likely be a less formal process for community benefits project agreements than it is for infrastructure-rich jurisdiction-wide ordinances.  The community and resident groups that organize and fight for a community benefits agreement often do not have the same level of resources, knowledge, or capacity to operate a local hiring program as a city government.  This was the scenario that faced the coalition of groups who won the milestone Staples Center community benefits agreement in the Figueroa Corridor in September 2001.  The agreement they won promised residents around 5,000 permanent jobs over the following seven years - but how those positions would be filled was not included in the text of the agreement. 

Rather than try to replicate other jobs training and recruitment program, the coalition decided to get meaningful resident input in designing a plan for recruiting and training local residents to fill the set aside provisions.  In Fall 2002, the coalition will hold a for-credit seminar for community leaders at the local community college.  About thirty grassroots resident leaders will take this class, which will culminate in a jobs recruitment and training plan that the class will propose to the president of the community college, developers, funders, and local politicians.

Step 5: Organize to Pass the Initiative

Having chosen a strategy, and considered the various components that would make sense for their community, advocates then need to garner support and input from all of the Key Players, and organize to reach an agreement or pass an ordinance. Having the support and early involvement of all the stakeholders, especially residents, will be key to success here.  Involve the community, build alliances with labor, and contact local policymakers.  Depending on the climate and the community, a full range of community organizing and advocacy techniques can be employed. [For help, see the Center for Community Change.]

Step 6: Monitor the Results

Even a program with a good enforcement mechanism should be watched by community advocates to ensure it is meeting its goals, and to suggest changes and improvements.  Community groups involved with passing a local ordinance should look for a way to include themselves in the monitoring process, or at least for there to be some public accountability of the results.