Local and targeted hiring
What is it?
Local and targeted hiring policies require or incentivize businesses that receive public resources, such as government contracts or tax breaks, to hire workers living in a particular geographic area or from specific populations within the community. This is usually done by revising employers’ hiring procedures to build in connections with referral sources that can promptly send qualified local and targeted workers in response to employer requests. Employers are generally given benchmarks (a certain share of jobs or working hours) to try to achieve by using this system. These programs advance inclusive growth by increasing job access for workers who face barriers to employment, improve economic security by increasing employment and household incomes, and benefit businesses by identifying a reliable source of local workers.
Targeted hiring policies are intended to ensure that a fair share of jobs created by public dollars benefit those with the greatest need, and can be based on a range of worker characteristics, such as veteran status, sex, race or ethnicity (where allowed), residency in a low-income neighborhood, prior incarceration, disability, or long-term unemployment. Critics argue that local hiring requirements reduce the number of bids for government contracts and drive up costs for businesses and municipalities. However, in cities such as Los Angeles and Seattle, local and targeted hiring programs have added millions of dollars in wages and tax revenues to their local economies.
Who implements it?
- Elected and appointed city officials can promote local and targeted hiring through executive orders, ordinances, and resolutions, as well as specific provisions in public contracting.
- Business leaders, community-based organizations, and advocates can work together to ensure local and targeted hiring through community benefits agreements and other types of contracts, and to help make sure that training programs are effective and connected to employers.
The most robust programs set mandatory, progressively increasing targets and are paired with workforce training resources (including pre-apprenticeship training), job-quality standards, and first-source referral systems to provide targeted populations with stable pathways into middle-class careers.
Cities seeking to implement or strengthen targeted hiring efforts must consider a range of related legal and practical questions.
- Local and disadvantaged workers: Targeted hiring policies usually focus on local workers who face barriers to employment; local capacities and policy goals are central in choosing targeted populations. Local residency requirements can be used in many circumstances, with careful legal drafting. Such requirements are often combined with a range of “disadvantaged worker” categories, such as veterans, residents of low-income neighborhoods, individuals emancipated from the foster care system, or low-income households. Many jurisdictions target workers who have graduated from quality, publicly funded, community-based training programs. Legal barriers prevent explicit targeting based on race or gender except in narrow circumstances.
- State preemption: Several states now preempt their cities’ ability to mandate local hiring requirements, but some kind of targeted hiring policy can be implemented in most circumstances.
- First source referral: Job training and placement programs, including first-source referral systems, should generally be implemented in conjunction with targeted hiring strategies to ensure that local residents are prepared to fill available jobs, and to make it easier for contractors to identify qualified candidates.
- Monitoring and compliance: Cities should establish strong measures to ensure that businesses comply with hiring requirements. Public reporting of results is key and “liquidated damages” are an important compliance tool.
- Defining hiring benchmarks: Both local and targeted hiring programs should include specific requirements for the share of positions or work hours that must be filled by the targeted worker population. These benchmarks should be defined in consideration of the city’s overall demographics and phased-in over time.
- Collaboration: To maximize the benefits of local and target hiring, cities should engage a broad range of stakeholders and help to build strong partnerships between workforce development programs, government, anchor institutions, and businesses.
- Developing workable hiring processes: A strong local hiring policy will take into account legitimate business needs in the hiring process, and will ensure that policy requirements are workable and practical for employers. Process requirements that hold up the hiring process for a month will probably not be followed.
Where is it working?
Local and targeted hiring programs should be customized with respect to the demographics and market conditions of a given city or metropolitan area. They rely on extensive engagement from policymakers, businesses, and workforce development to be effective, but successful models have shown that these approaches are highly scalable and often surpass their initial targeted hiring goals.
- In San Francisco, advocates successfully campaigned to replace the city’s non-mandatory “good-faith” local hiring goals for public works construction with a mandatory local hiring requirement (now at 30 percent of work hours), which is enforceable through assessment of liquidated damages. Recent reports indicate achievement of more than 40 percent local hiring, indicating the strength of a mandatory approach, as compared with the prior good-faith approach.
- In Portland, Oregon, the community workforce agreement governing the Clean Energy Works pilot project established a local hiring target of 80 percent, reserved 30 percent of the trades and technical work hours for historically underrepresented groups, and aimed to direct 20 percent of total project dollars to businesses owned by members of those groups. The project ultimately exceeded its targeted hiring and contracting goals: more than 55 percent of work hours were performed by women and people of color, and 24 percent of project dollars went to women- and minority-owned businesses.