Making Development Work for Local Residents: Local Hire Programs and Implementation Strategies That Serve Low-Income Communities

July 2008
Kathleen Mulligan-Hansel, Ph.D.

Making Development Work for Local Residents: Local Hire Programs and Implementation Strategies That Serve Low-Income Communities documents our movement's success in winning hundreds of new job opportunities for local residents.

Model programs profiled in the report include an East Palo Alto ordinance, the Los Angeles airport modernization CBA, and the project labor agreement for the Port of Oakland modernization, among others. Making Development Work provides evidence for what we all know: that local hire programs can provide substantial numbers of new job opportunities for low-income local residents.

These programs have been tremendously successful in opening access to permanent jobs; despite significant progress in creating new access to construction careers, barriers remain.

Executive Summary: 

Over the past decade, the community benefits movement has emerged as a powerful mechanism for challenging the political and economic realities that undermine urban communities. Community benefits campaigns strive to build new political relationships among unlikely allies, uniting labor, community, environmental and faith-based groups behind broad-based agendas focused on economic development that prioritizes high-quality jobs, creates new career paths for low-income workers, marshals resources for environmental cleanup and sustainability, and avails residents of access to more affordable housing options.

In many cities where community benefits coalitions work, research has shown that, too often, new development fails to generate high quality jobs and career paths for residents of the poorest parts of the city. Local hire requirements are a critical component of the community benefits agenda because they create concrete mechanisms for ensuring that investment of public funds in economic development will direct resources into low-income neighborhoods. The point is not only to hire local residents, but to use local hire requirements to target opportunities to low-income residents and people of color who might otherwise not benefit from new development. Local hiring programs are on the strongest legal footing, and are likely to produce the most meaningful outcomes, when they are rooted in efforts to reduce poverty rather than merely to hire city residents.

Community benefits coalitions tend to stress the importance of bundling local hire requirements with job quality standards, affording low-income residents easier access to higher quality jobs that offer better wages and benefits packages than might historically have been available to them.

Community benefits coalitions have developed significant expertise in the organizing, research and policy analysis needed to negotiate strong agreements, but thus far they have advocated for local hire programs with little concrete data on whether or how they operate effectively. This report reviews nine efforts to develop and implement local hire programs, and provides an overview of what makes these programs work. The nature of the cases varies considerably, and they include programs with years of implementation experience as well as brand new programs; programs that cover hundreds of jobs and programs that cover dozens of jobs; and programs created through community benefits agreements (CBAs), ordinances, and project labor agreements (PLAs), as well as other innovative policy vehicles.

The research concludes that these local hire programs have developed effective mechanisms for helping low-income local residents find jobs at new development sites and have created job opportunities with existing employers that had previously been unavailable to many low-income workers. The best local hire programs create first source referral systems to coordinate worker recruitment and screening, liaise with developers and employers, refer workers and support them as they navigate the hiring process, and link workers with support services that can help them stay on the job. Strong policy language sets the stage for success by clearly articulating the responsibilities of all stakeholders: developers, employers, contractors and the first source referral system. Implementing a good program requires staffing both to create and maintain the first source referral system -- which is effectively a service-provision role -- and to monitor outcomes and maintain the political will required to address challenges that can arise.

Effective first source programs must be tailored to the realities of the industry sectors in which they aim to develop employment opportunities. Policy architects and implementation teams have tended to address the hiring challenges for construction jobs separately from the hiring challenges that pertain to the jobs offered by businesses that rent space in new developments: the service and retail sector jobs that are commonly referred to as end-user or permanent jobs. Differences in how these industries interact with the development process, and how they approach hiring and retention, abound. For example, whereas construction workers in any given trade might be on site for only a few weeks or months, retail establishments and service vendors, once opened, may maintain employees indefinitely. Further, whereas construction workers have to navigate a complicated hiring process that often includes establishing union membership before getting hired on by a contractor, the hiring process for permanent jobs is much more direct. Among the key findings in this report is the importance of addressing the policy language and implementation needs of permanent and construction jobs separately.

Regardless of the types of jobs they cover, local hire programs can bring concrete benefits to the table, making development projects better. Though many stakeholders, developers and employers included, initially resist local hire requirements, local hire programs ultimately help address the fragmentation inherent in the development process, establishing better communication among developers, employers, community organizations, local job training resources, and the workforce development system that can provide job readiness and job retention support services. Not only does this improved communication facilitate ease of hiring when new developments open, but the implementation teams that must be developed to make local hire programs function can also help address other development obstacles that arise. The costs and risks to developers of participating in local hire programs are minimal, while the payoffs can be tremendous.