Local and Targeted Hire

Local and targeted hiring policies require or incentivize businesses that receive public resources, such as government contracts or tax breaks, to hire workers living in a particular geographic area or from specific populations within the community. This is usually done by revising employers’ hiring procedures to build connections with referral sources and training programs that can promptly send qualified local and targeted workers in response to employer requests. Employers are generally given benchmarks (a particular share of jobs or working hours) to try to achieve by using this system. 

Local and targeting hiring programs advance equitable development by increasing access to quality jobs and career ladders for workers who face barriers to employment and by facilitating businesses’ connections to local workers. These policies are common components of Community Benefits Agreements between governments and businesses/developers. 

Local hiring policies focus on ensuring that people residing near and impacted by large construction projects can access the job opportunities they create. Targeted hiring policies are intended to ensure that a fair share of jobs created by public dollars benefit those with the greatest need and can be based on a range of worker characteristics, such as veteran status, sex, race, or ethnicity (where allowed), residency in a low-income neighborhood, prior incarceration, disability, or long-term unemployment. 

New federal investments – including the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) passed in 2021 as well as the Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act – create important opportunities for local and targeted hiring policies to deliver new jobs and career opportunities to distressed communities. The new infrastructure bill allows grantees to implement local or targeted hiring on transportation projects, however local and targeted hiring is still prohibited on non-transportation infrastructure projects. This prohibition is driven by concern about competitive bidding, however, a study of the federal government’s local hiring pilot project found that it did not reduce the number of bidders on construction projects or impact bid prices. 

In addition to the PolicyLink resources listed on the right, see the Partnership for Working Families, Jobs to Move America, and the UCLA Labor Center for more resources on local and targeted hiring.

• Elected and appointed state officials can promote local and targeted hiring through executive orders, laws, resolutions, and specific provisions in public contracting at the state and local levels.
   
• Elected and appointed city officials can promote local and targeted hiring through executive orders, ordinances, resolutions, and specific provisions in public contracting.
   
• Business leaders, community-based organizations, and advocates can work together to ensure local and targeted hiring through community benefits agreements and other types of contracts and to help make sure that training programs are effective and connected to employers.

The most robust programs set mandatory, progressively increasing targets and are paired with workforce training (including pre-apprenticeship programs), job-quality standards, and first-source referral systems to provide residents with stable pathways into construction careers that pay family-supporting wages and provide full benefits.

Cities seeking to implement or strengthen targeted hiring efforts must consider a range of related legal and practical questions.

• Local and disadvantaged workers: Targeted hiring policies usually focus on local workers who face barriers to employment; local capacities and policy goals are central in choosing targeted populations. Local residency requirements can be used in many circumstances with careful legal drafting. Such requirements are often combined with a range of “disadvantaged worker” categories, such as veterans, residents of low-income neighborhoods, individuals emancipated from the foster care system, or low-income households. Many jurisdictions target workers who have graduated from quality, publicly funded, community-based training programs. Legal barriers prevent explicit targeting based on race or gender except in narrow circumstances.
   
• State preemption: Several states now preempt their cities’ ability to mandate local hiring requirements, but some form of targeted hiring policy can be implemented in most circumstances. An example of this happened in Nashville which passed a local hire provision only to have the state legislature and governor nullify it in February of 2016. A great resource for addressing preemption has been developed by the National League of Cities is the New Guide: Restoring City Rights in an Era of Preemption.
   
• First-source referral: Job training and placement programs, including first-source referral systems, should generally be implemented in conjunction with targeted hiring strategies to ensure that local residents are prepared to fill available jobs and make it easier for contractors to identify qualified candidates.
   
• Monitoring and compliance: Cities should establish strong measures to ensure that businesses comply with hiring requirements, ideally across each government agency overseeing contracts. Public reporting on project benchmarks and “liquidated damages,” which are pre-determined penalties for non-compliance, are crucial compliance tools.
   
• Defining hiring benchmarks: Both local and targeted hiring programs should include specific requirements for the share of positions or work hours that must be filled by the targeted worker population. These benchmarks should be defined considering the city’s overall demographics and phased in over time.
   
• Collaboration: To maximize the benefits of local and target hiring, cities should engage a broad range of stakeholders and help to build strong partnerships between residents, workforce development programs, government, anchor institutions, and businesses.
   
• Developing workable hiring processes: A strong local hiring policy will consider legitimate business needs in the hiring process and ensure those policy requirements are workable and practical for employers. Process requirements that hold up the hiring process for a month will probably not be followed.

Local and targeted hiring programs should be customized based on the demographics and market conditions of a given city or metropolitan area. They rely on extensive engagement from policymakers, businesses, and workforce development to be effective, but successful models have shown that these approaches are highly scalable and often surpass their initial targeted hiring goals.

• In 2015, Seattle created a Priority Hire program as a pilot for larger-scale public works projects. The program was expanded to public/private projects in 2017 and includes a requirement that 15 percent of total contract labor hours go to apprentices. As of 2021, the policies had applied to 45 projects. Workers on priority hire projects have earned about $78 million since 2013, and average wages for workers of color on priority hire projects exceed $80,000 per year, helping to reduce the region’s racial income gap.
   
• Since 1991, Milwaukee has operated a Resident Preference Program to connect residents living in distressed neighborhoods with jobs on public works projects, originally requiring that 14 percent of work hours went to un- or underemployed residents living in designated neighborhoods. In 2009, the city strengthened and expanded the program in several ways, including increasing the targeted hiring requirement to 40 percent, opening it up to residents across the city who had low incomes or were experiencing un- or underemployment, and applying it to private development projects that received more than $1 million in City support. An analysis of the program found that between 2010 and 2015, 48 percent of work hours on covered projects went to residents, and 59 percent of the workers were people of color, whereas only 16 percent of workers on projects not covered by the policy were workers of color.
   
• In San Francisco, advocates successfully campaigned to replace the city’s non-mandatory “good-faith” local hiring goals for construction projects with a mandatory local hiring requirement (now at 30 percent of work hours) in 2017. The policy also requires that 50 percent of apprenticeship work hours are performed by local residents, has been expanded to cover private development on city-owned land, and is enforceable through pre-determined penalties for non-compliance. The program’s positive outcomes since this shift indicate the strength of a mandatory approach compared with the prior good-faith approach In 2021, the pandemic slowdown reduced the total work hours on public construction projects by 35 percent, yet the share of total work hours and apprenticeship hours performed by local residents still exceeded the goals, at 35 percent and 51 percent, respectively.