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To repair the Castle on the Hill, Adrienne Smoot-Edwards’ construction company, Phoenix Restoration Group, needed $100,000 more just to put warm bodies in the room.
Phoenix, one of the few D.C.-based construction businesses fluent in historic preservation, was hired to help modernize the towering Cardozo Education Campus, perched north of Florida Avenue NW. The company employs 13 full-time people with collective decades of experience in historic preservation. They know how to handle 100-year-old glass, copy an old profile on a piece of wood, remove and restore historic locksets, and remove old finishes off of doors and windows without damaging the underlying wood.
But a roughly 30-year-old District law called First Source required Smoot-Edwards to hire additional workers—D.C. residents—for that project, work that in her estimation was physically unnecessary, given the breadth and sophistication of her team’s expertise. And hiring additional workers to comply with the law would cost an extra $100,000—money that, Smoot-Edwards says, “was not in the budget to hire people I don’t need.”
So the general contractor on the Cardozo modernization project, Smoot-Edwards says, extended Phoenix’s contract by $100,000, just so the company could say on paper that it used D.C. residents for construction work.
Criticisms of First Source largely center around the Department of Employment Services’ enforcement of the law, which requires beneficiaries of large public subsidies to hire District residents for newly created positions. An audit of DOES’ compliance with and oversight of First Source, published in April by the office of D.C. Auditor Kathy Patterson, found that DOES has failed to implement over 80 percent of the law’s provisions effectively, if at all.
In 2011, lawmakers overhauled First Source to make its requirements even more aggressive. But lawmakers, executives, and budget analysts alike still describe it as a law that is too onerous for contractors and too out of step with the economic landscape of D.C.
As D.C. undergoes a boom of new commercial and residential construction, the question of how to make First Source more effective has become particularly urgent. This year, Councilmembers Brianne Nadeau (Ward 1) and Trayon White (Ward 8) have criticized developers responsible for large projects in their respective wards for their apparent failure to comply with First Source for Adams Morgan’s The Line Hotel and Anacostia’s Maple View Flats, respectively. (White even held a protest this summer against the developer’s hiring practices.)
But executives, particularly in the construction industry, tell City Paper that beyond even the question of enforcement, the First Source law as written is flawed.
“First Source is essentially a feel-good thing we do to say that developers have done something for D.C. residents. But it makes criminals out of employers [who are unable to comply with it], and embarrasses the government,” says Yesim Sayin Taylor, the executive director of the D.C. Policy Center.
Large multi-use development projects, like The Line, are enticing prospects to lawmakers and some residents in part because of the perception that they’ll draw construction jobs to the neighborhood. Lawmakers often justify mammoth public subsidies to developers by arguing that they’ll drive new jobs to locals. But that perception, particularly as it applies to First Source, is misguided.
“Even people in the Wilson Building have [the misconception] that when there’s a new project that gets some kind of District funding or District support … all of the jobs on that project, or that a [large] portion of the jobs on that project will go to District residents. And that’s not the case,” Patterson says. “It’s only applicable to new jobs. So if I’m a major contractor, I bring in my crew that are already on my payroll, and there may not be any new jobs created.”
This point particularly aggrieves Smoot-Edwards. Some of her employees have worked at the company for 15 years. “Those who are making promises to the city don’t understand [the law]. I don’t know why the conception is that with every new construction site, we’re disregarding everyone who’s ever worked for us, and holding job fairs to complete the contract,” she says. (She has employees who used to live in D.C. but have since moved to Maryland due to the rising cost of living in the city. “Am I supposed to fire them because they moved?” she asks.)
Smoot-Edwards, whose company worked on The Line, points out that developers favor time-tested contractors with “expertise and stability,” and whose crews have a history of working together. “The thing you don’t want is a company that, every time a new project comes along, they have to rehire new people and go through the learning curve,” she says.
First Source’s reporting requirements for construction companies also mandate that executives file monthly reports demonstrating that they’re making good faith efforts to employ D.C. residents, even if employers have already filled an open position. Smoot-Edwards estimates that she has created unnecessary positions for D.C. residents on at least four separate construction projects.
While completing restoration work on the still-in-progress renovation of Chinatown’s Martin Luther King Jr. Library, Smoot-Edwards says DOES informed her that a new hire wouldn’t count toward Phoenix’s First Source requirement because the employee was tasked with managerial duties in the field office instead of physically painting the building.
“There is a gap between what is on the market and what we have demand for,” Sayin Taylor says, “and First Source is not helping fill those gaps.” As far back as 2010, the DC Fiscal Policy Institute reported in a paper co-authored by now-At-Large Councilmember Elissa Silverman, who oversees DOES, that “there is a skills mismatch between DC residents seeking work and jobs available.”
Lawrence Perry, the deputy auditor who has reported extensively on First Source compliance issues, says that he believes the claim that there is a shortage of skilled laborers in D.C. “is legitimate,” and that despite using DOES resources to find qualified workers, employers have reported that there “just wasn’t a pool of skilled laborers in the District.” Patterson calls this “a persistent issue.”
Both Patterson and Sayin Taylor point to Mayor Muriel Bowser’s development of a D.C. infrastructure academy at the University of the District of Columbia as the kind of good investment that will help foster economic parity. But Sayin Taylor points out that programs like these are sending workers out into “a regional labor market with very localized interventions.”
Even apprenticeship requirements, particularly for non-unionized workplaces, can prove burdensome, Smoot-Edwards says. The District requires all prime- and sub-contractors who perform construction, renovation, or IT work for the D.C. government with contracts of $500,000 or more to provide apprenticeships to D.C. residents. That forces smaller companies to bake in tens of thousands of additional dollars for trade teachers into project bids, making themselves less competitive than bigger companies with existing infrastructure to support the apprentices.
And while Patterson says that some employers and union shops have robust apprenticeship programs that are helpful in scouting and training new workers, the city as a whole is “not pulling all those pieces together in a way that’s effective” for local applicants seeking new technical skills. She also points to the Workforce Investment Council, a board that advises local agencies on job programs, which has seen three different permanent and interim leaders in the span of about two years.
“I think there have been some efforts made,” Patterson says, “[But] it’s tricky to get a real, concerted, overarching approach to an issue like this with continually changing leadership.”
More than anything, Smoot-Edwards says she wants to invest in the employees she already has. “When you find the right person with the right hands,” she says, “you try your best to hang onto them.”