In February, the latest amendment to the District’s “First Source” law went into effect, imposing a new batch of unattainable labor mandates and the threat of stiffer financial penalties on building contractors. We are moving in the wrong direction. It’s past time that we recognized that the First Source concept — requiring that workers who live in the city be given priority for jobs on construction projects receiving government assistance — is deeply flawed.
Since it was enacted in 1984, First Source has fallen far short of its goal of promoting employment, has been inconsistently enforced and has applied to some types of jobs but not to others, a discriminatory practice. The law punishes businesses that create new jobs and sets up unintended consequences that hurt the local workers it seeks to help.
The law’s proponents on the D.C. Council don’t see it this way, of course. They praise First Source and tout its influence on legislation enacted or being discussed in neighboring jurisdictions in Maryland and Virginia. But this trend only compounds the danger that a “hire my constituents first” approach presents for this region.
Elected officials who promote such laws ignore the fact that our building industry is a regional marketplace. If each jurisdiction enacts its own First Source law, a contractor who hires local residents to perform 70 percent of the unskilled labor on a D.C. construction project — one of the new thresholds for compliance — will be forced to lay off these employees and hire other workers for projects in Maryland or Virginia. And what happens when a new hire moves from one place to another, perhaps in search of more affordable housing?
Such unintended complications increase costs. Contractors’ bids must reflect the greater labor costs of First Source compliance, and residents have to pay higher rents and prices for goods and services once projects are complete.
It does make sense for construction firms to employ local workers, and contractors in the District make significant hiring and retention efforts. Local contractors participate in partnerships aimed at engaging middle and high school youth in study that can lead them into good-paying jobs and viable careers in the building trades, and some employers have taken steps to provide jobs and second chances to ex-offenders. Despite these efforts, however, the attrition rate for hiring in the District is extremely high. For reasons ranging from a lack of transportation and housing to mandatory participation in court-ordered programs scheduled during the workday, many workers do not stay on the job. First Source penalizes contractors who fall short of work-hour targets, but employers are not in a position to provide the support services needed to keep many D.C. workers employed.
Hitting District contractors with unrealistic mandates and financial disincentives does nothing to help unemployed local residents or provide a real long-term solution to their needs. The unintended result of First Source and copycat laws is the loss of permanent jobs and fewer opportunities for workers to develop skills that make them employable across the region. The D.C. Council should replace the punitive First Source rules with a response that directly matches job training and work readiness to the needs of the marketplace.
The writer is chairman of the Associated Builders and Contractors of Metro Washington board.