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San Francisco set to implement tough local-hire law

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SAN FRANCISCO >> As San Francisco prepares to implement what is billed as the nation’s toughest local hiring ordinance, the mood at a recent gathering of about 50 local contractors and construction industry representatives was a mix of resigned acceptance and cautious optimism.

“I think it’s going to work, at least at first,” said William Holland, an ornamental iron contractor who attended a public meeting Friday at City Hall to discuss the new law, which establishes strict requirements for how many work hours on city-funded projects must be completed by city residents, starting with 20 percent this year and rising 5 percentage points a year all the way to 50 percent.

Bob Alvarado, executive officer of the Northern California Carpenters Regional Council, sounded less convinced.

“You need to go back and revisit sections of the policy — and you’ve got about a week to do it — so we can understand exactly what we’re getting into,” he told a panel of city officials tasked with overseeing the law’s March 25 rollout.

The law was modeled in part after a similar mandate enacted in Cleveland, Ohio, but it goes a step further by also requiring that a set percentage of work hours on be performed by economically disadvantaged workers. The requirements apply to municipal construction projects worth more than $400,000 within 70 miles of the city.

Supporters say the law will create much-needed jobs as San Francisco grapples with a 9.5 percent unemployment rate and prepares to award an estimated $27 billion in public works and improvement contracts over the next decade, including 128 planned projects in the coming year.

“Local hire will not only boost our local economy and get San Francisco families back to work, but it will translate into a reinvestment in our city that will help pay for parks, public safety and social services,” said Mayor Edwin Lee, who singled out the law as a top policy priority of his one-year interim term.

Supervisor John Avalos, who spearheaded the legislation, described it as part of a larger, ongoing fight for equitable labor practices.

“My efforts to strengthen local hiring is not just about addressing San Francisco’s high unemployment rate, but also about addressing the historical exclusions of certain communities, and opening up job opportunities for everyone,” Avalos said in an e-mail.

But critics say the law’s touted benefits come at the expense of jobs in surrounding counties, where many construction workers have flocked seeking lower housing prices. Those outlying areas are home to more than 60 percent of the estimated 14,700 construction workers employed in San Francisco, according to the state Employment Development Department.

“In this down economy, we shouldn’t be precluding men and women opportunities to work,” said Carole Groom, a supervisor in San Mateo County, where about 18 percent of San Francisco construction workers reside. “We have men and women who are unemployed, just like San Francisco.”

One area lawmaker is so unhappy with the ordinance, he’s pushing statewide legislation designed to limit its reach.

Assemblyman Jerry Hill, D-San Mateo, has introduced a bill that would prohibit the use of state funds on local-hire projects and also would prevent San Francisco’s ordinance from being implemented in outside counties.

The ordinance already includes exemptions for two major city-funded projects in San Mateo County: improvements to San Francisco International Airport and San Francisco’s water system.

“The Bay area is an economically interdependent region,” Hill said at a news conference announcing his bill last month. “We need to focus on creating jobs regionally, not just in each city or county.”

The construction industry has been particularly hard-hit by the recession. Between January 2010 and January 2011, construction employment fell 6.6 percent in the metropolitan area encompassing San Francisco, San Mateo and Marin counties, according to the Employment Development Department.

Contractors and union officials have largely applauded the goal of creating opportunities for disadvantaged workers, but some say the demands of the local-hire law are unrealistic.

Holland, a lifelong San Franciscan and owner of Holland Iron Works, said he supports a mandatory local-hiring percentage but thinks it should top out at 30 percent.

“I’ve been pushing for local hire for a long time,” he said. “But most union employees don’t live in the city, so I don’t think we’ll ever get to 50 percent.”

As workforce demand picks up over the next few years, it will be increasingly difficult for contractors to find enough skilled local workers to meet the new rules, said Michael Theriault, secretary-treasurer of the San Francisco Building and Construction Trades Council, a coalition of 28 construction unions. He said the city should focus instead on increasing the number of disadvantaged residents in construction apprentice programs, where they can hone their skills and rise through the ranks of their trade.

The law is not the city’s first attempt to encourage local hiring. San Francisco already requires contractors to make a “good faith” effort to hire 50 percent of its workers from the local population for publicly funded projects.

But two recent studies found that guideline is rarely met. Locals have contributed just 20 percent of the work hours to public projects since July 2009, according to the city Office of Economic and Workforce Development. A report by Brightline Defense Project and Chinese for Affirmative Action, two San Francisco-based nonprofits, put the figure at 24 percent between 2002 and 2010.

Avalos and other local-hire supporters had initially wanted to set the baseline requirement of the new law at 30 percent, with steeper annual increases. But ultimately they decided that starting things closer to what contractors already are doing voluntarily would help them adjust to the new reality.

“This is powerful legislation. It did challenge some status quo interests, but the implementation is very reasonable,” said Vincent Pan, executive director of Chinese for Affirmative Action, which helped craft the ordinance. “Once the law becomes operational, it will just be how things are done.”

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