Holyoke’s proposed REO would require contractors to set aside jobs for residents
from The Valley Advocate, August 26, 2010
By Maureen Turner
The city of Holyoke is poised for somewhat of a building renaissance these days, points out at-large City Councilor Rebecca Lisi. There’s the upcoming expansion and renovation of the city library, the new senior center, the long-awaited, yet-to-be-sited high-tech computing center.
“There are a lot of big projects coming our way,” Lisi said. “There’s a lot of positive attention on Holyoke these days, and we’re doing a lot of work to prepare for the future.”
And that, she added, makes it an opportune time for a new city policy that would ensure that Holyoke residents reap all the benefits they can from those projects. That’s why she is co-sponsoring a proposed ordinance designed to guarantee city residents a certain percentage of jobs on publicly funded constriction projects. The “Responsible Employer Ordinance,” or REO, would also require contractors to hire a set percentage of minority and women workers, to provide workers with decent wages and benefits, and to offer apprentice programs for city residents.
The proposed ordinance, which is still in draft form, was drawn up with local labor unions representing the building trades. Backers describe it as a way to keep local money in the local economy, and ensure that contractors give back, through employment and training, to the community paying for the projects. But critics in the industry say REOs actually have a hidden agenda: to steer public construction projects to union shops, at the expense of non-union shops, who often cannot meet the requirements of the ordinances as easily as union bidders.
According to a tally kept by Associated Builders and Contractors—a national organization of “merit shop,” or non-union, construction firms, and a chief critic of responsible employer ordinances—REOs exist in almost 20 Massachusetts communities. They include Springfield, which passed an REO last summer.
Boston, Lawrence, Worcester and Somerville are among the cities that have REOs on their books. In Fall River, the City Council recently repealed that city’s REO, which it had revised back in the spring. According to the Fall River Herald News, councilors made the move in response to a lawsuit filed by a group of employers who alleged that they would be discriminated against under the ordinance, which required 50 percent local hires.
In Holyoke, the proposed REO is sponsored by Lisi, Ward 2 Councilor Diosdado Lopez, Ward 4 Councilor Tim Purington, and at-large Councilor Aaron Vega. In its current draft form, its requirements would apply to construction contracts worth $100,000 or more that are at least partially funded with city money, or subcontracts of $25,000 or more.
The REO would require that at least 35 percent of jobs on a qualifying project go to Holyoke residents. Twenty percent would go to minorities, and 5 percent to women. Waivers from these requirements would be granted to contractors who demonstrate to a city monitoring committee that they could not find enough qualified workers in those categories, after making serious recruitment efforts.
The REO also calls for contractors to comply with existing state laws by paying prevailing wages and providing health benefits and workers’ compensation coverage, and to maintain a pension plan for employees.
In addition, under the REO, contractors would have to set aside 5 percent of the jobs for apprentices learning the trade, and offer a state-approved apprentice training program for each trade in their workforce, graduating at least two apprentices a year per trade.
Contractors would be required to participate in a close tracking system to ensure their compliance with the REO. The program would be overseen by a monitoring committee, with members appointed by the City Council and mayor. Contractors who violate the REO would face a fine of $300 per day for each violation.
Too often, taxpayer-funded construction projects go to out-of-town, or even out-of-state, construction firms, which bring in workers from outside the area, says Dan D’Alma, president of the Pioneer Valley Building Trades Council. The council represents union shops in Hampden, Hampshire and Franklin counties.
The workers commute in at the beginning of the workday, and head home at the end.
The economic spin-off for the host community? “Maybe a coffee on their way in in the morning; maybe a six-pack and a coffee on the way home,” said D’Alma.
“They want to come in and do the project, and yet they’re not giving anything back to the community,” he said of the contractors. “They bid the job, bring in their people. The city taxpayers, not one of them has an opportunity to work on the project.”
The Building Trades Council has more than 300 residents who live in Holyoke, D’Alma added. With big jobs like the computing center on the horizon, “they should be afforded the opportunity to work on the project. …
“They’re taxpayers,” he added. “It’s their city, and they’re locked out of working.”
REOs, D’Alma said, ensure that the communities paying for the projects reap at least part of the benefits. In particular, they help get work for people who’ve historically been under-represented in the industry, like women and racial minorities. And their apprenticeship requirements help get residents on the path to good-paying jobs with solid benefits—an especially crucial benefit in cities like Holyoke and Springfield, where un- and underemployment is high.
“To me, it’s about making sure the benefits of the projects are distributed as evenly as possible,” said Lisi, the city councilor.
“This is not something that’s supposed to be confrontational,” she added.
But it is controversial, at least in one large sector of the building industry.
“While promoting responsible contracting is certainly a worthy goal, a closer look at union-sponsored Responsible Employer Ordinances (REOs) shows they are really about controlling the marketplace and limiting competition from non-union or open shop firms,” Greg Beeman, president of the Massachusetts chapter of Associated Builders and Contractors, wrote in a recent opinion piece.
“At first glance, REOs seem reasonable. But a closer look shows that they are a wolf in sheep’s clothing—much more about controlling the marketplace than promoting responsibility,” Beeman wrote.
ABCMA has been tracking REOs around the commonwealth for years, Beeman told the Advocate; in recent years, he said, the trend has been toward stricter and stricter requirements. “The Holyoke one is the most extreme I’ve seen,” he said.
ABCMA’s 425 member construction firms support the general concepts of REOs, Beeman said. “They want to do the right thing. They want to have an industry that has high standards,” Beeman said.
But REOs like Holyoke’s, he contends, have a more specific agenda: slanting the playing field to give union contractors an unfair advantage over non-union shops—which, according to Beeman, account for about 80 percent of the industry in Massachusetts.
REOs, Beeman noted, don’t just guarantee health care and retirement plans, for instance; they guarantee benefits equal to or better than that offered under union collective-bargaining agreements, which automatically puts union shops bidding for the jobs in a stronger position.
In addition, Beeman said, REOs’ apprenticeship requirements are written so tightly as to ensure that union shops will be able to meet them easily, while non-union shops will not. Union contractors participate in group apprenticeship programs, which serve all members of the union. A non-union shop, however, would not only have to establish its own apprenticeship program—something, Beeman said, most already have—but also meet the specific graduation rates (in the case of the draft Holyoke REO, two graduates per year in each of the trades represented). For small shops that don’t have a lot of employees, that number is just too high, Beeman said.
“If this was just about being a responsible employer, we’d have no problem with it,” Beeman said. “I don’t see this as responsible. I see this as setting very difficult terms that are difficult for non-union shops to meet. … We would like them to be fairer to the majority of employers and contractors, who are not union.”
REOs, Beeman also contends, add yet another layer of regulations—and paperwork—to an already heavily regulated industry. “It seems like a textbook example of how to kill a company with paperwork,” Beeman said. “A lot of small businesses, they’re just struggling to keep up.”
And it’s not just non-union firms that suffer under REOs, Beeman argued—so do taxpayers. When governments are hiring contractors for publicly funded jobs, it’s important to attract as many qualified bidders as possible, to get the best deal possible. The sort of strict requirements REOs place on potential bidders limit the number of firms vying for the job, he said.
D’Alma, the union leader, rejected the criticisms made by ABC as “sour grapes.”
REOs don’t reduce competition for public building jobs, D’Alma responded; when the city of Springfield recently sought bids for a new Putnam High, he said, more than 80 subcontractors bid on the job.
D’Alma also dismissed arguments that REOs are unfair to smaller businesses, or drown firms in paperwork. The ordinances simply require that contractors put a certain percentage of local people to work, he said. “They want to bring in who they want, make their money, and go home.”
“That cracks me up, when I hear ‘it’s a union thing,'” D’Alma added. “It’s not a union thing. It’s a residency thing.”
The building trades council, D’Alma said, is in the early stages of a campaign to get an REO passed in Chicopee, and has its eyes on other communities, such as Greenfield, as well. “I think every city should have one,” he said.
Holyoke’s proposed REO, Lisi stressed, is still a work in progress. In Springfield, city officials spent about six months hashing out the details before passing that city’s REO last August. Holyoke councilors will also take their time, listening to all the affected parties and tailoring the ordinance to best meet their city’s needs, Lisi said.
That could mean reducing the percentage of local hires from 35 percent (the figure in Springfield’s REO, and in Holyoke’s draft) to 20 or 25 percent—although, Lisi added, “I would like to still see it aggressive, because that’s where we get the big benefits from.” It could also mean raising the contract threshold that triggers the REO requirements—currently, in the draft ordinance, $100,000—to a higher figure, or expanding the residency requirement to include neighboring communities as well as Holyoke.
The ordinance is “still being molded,” said Lisi, who recently met with Beeman and other ABCMA officials about their concerns.
While ABCMA has made its objections to the REO clear, another major business group has yet to officially weigh in: the Greater Holyoke Chamber of Commerce. Chamber President Doris Ransford told the Advocate her group is still studying the draft ordinance and soliciting feedback from its members.
Some have expressed concerns that limiting the pool of potential bidders in a community as small as Holyoke would limit competition, and could end up costing the city more money, she said. Others have expressed concern about the amount of paperwork the REO would require, or questioned whether the $100,000 threshold in the draft ordinance is too low.
“There’s a lot of questions and issues,” Ransford said. “It’s not something we would blanket say ‘no’ to, but it doesn’t look very good to us at this point.”