Local Governments’ Underused Resource for Building Local Jobs

Many local governments are hurting financially as they fight back from the devastating effects of the coronavirus. It will take ingenuity, collaboration across departmental lines and cooperation from the private sector for public officials to restore their governments’ finances and operations to pre-pandemic levels and hopefully, with more innovative approaches, achieve new levels of success. In order for this to occur, public officials must do much better at leveraging their best and too often underused resource: government itself.

Nowhere is this more important than in the need to create and nurture sustainable-wage jobs for local residents. Over the course of my public-service career, I was involved with several major efforts to leverage the apparatuses of local government in this way. One such effort took place back when I was a member of the Atlanta City Council in the late 1980s and early 1990s. There I developed the city’s First Source Jobs policy, which is still in effect today. It requires the purchasing director to ensure that businesses receiving city contracts consult a government-created registry of unemployed local workers and make good-faith efforts to hire individuals from this list for entry-level jobs that become available as a result of the city contracts. Many local governments with such policies set a target of filling 50 percent of the new jobs in this way.

The Atlanta program also included funding for a staff to monitor and enforce key provisions of the initiative, including building the registry of unemployed residents, integrating the policy into the purchasing code and processes, and assuring good faith on the part of contractors. Failing to show good faith could trigger penalties that ranged from vendors having their contracts terminated to decertification from eligibility for future contracts.

These kinds of requirements for local hiring work better if they have support from the private sector, and we invited businesses to provide input from the start. Businesses have to be sold on the fact that by selecting an employee from a local registry they will be getting a better-qualified candidate than they might find in the general market or even among those they already employ. This makes job training an important component of the program. (More information on the Atlanta program and similar ones can be found in thisUrban Affairs Reviewarticle.)

Another example of a local government-leveraged jobs program comes out of my experience as deputy chief operating officer over development for DeKalb County, Ga., a suburban county just east of Atlanta. This program, which kicked off in 2011, was referred to as ONE DeKalb Works (ODW). It went a step further than the Atlanta jobs initiative by mandating job training as a prerequisite for being listed in the registry. It also required that local partnerships be formed with entities such as technical colleges, labor unions, the National Urban League and its affiliates, and Goodwill Industries to assist with training, administration and evaluation of the program.

ODW was a targeted initiative that sought to leverage a $1.35 billion capital improvement fund to create jobs for local residents. The county had entered into a consent decree with the Environmental Protection Agency that required improvements to its wastewater treatment facilities. Since the improvements were to be done over the period of a decade, this provided a huge opportunity for the county and its partners to establish a First Source-style hiring program and train local residents in the skills needed to upgrade the wastewater plants and clean up the environment. Over time ODW has evolved and has been integrated with the county’s workforce investment program funded by the U.S. Department of Labor.

These programs conceptually are good examples of how local governments can be leveraged to create jobs for residents. But to be effective they absolutely require leadership at the top and buy-in from county executives, mayors and council members. They also need staff for monitoring and implementation. Without monitoring and penalties for violations, the programs will not work. And the programs need to provide high-quality training not only for technical skills but also for “soft” skills such as communication, teamwork and time management. The latter can best be delivered by nonprofit organizations partnered with government.

But we also need to remove barriers to the kinds of programs that can generate good local jobs. The Biden-Harris administration has proposed to spend $2.3 trillion on infrastructure, and much of this spending will be done at the local level. The opportunity for local governments to leverage this spending for job creation and training could be unprecedented but for one major problem: Office of Management and Budget regulations that in effect prohibit the use of local hiring preferences. This prohibition has never been approved by Congress and is a remnant from the past, dating back to the Reagan years. The White House and Congress should take a hard look at doing away with it.

The idea that the public interest is served only with the lowest bids turns a blind eye to past discrimination against small, local and minority-owned businesses — the vendors most likely to hire underserved residents, including minorities and those from rural areas. It further perpetuates the advantages that have accrued to majority-owned businesses that in the past often obtained public contracts without having to develop serious bid proposals. Competitive pricing is important, but so is leveraging the powers of government to ensure that public spending benefits the greatest number of local residents. First Source hiring is a tried and proven way of accomplishing this goal.

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