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For years now, contractors have complained about District rules that require them to hire local residents on construction projects built with city money (which, most of the time, they haven’t obeyed). Last year, the D.C. Council tightened the First Source law even further, mandating that D.C. residents account for a majority of the hours worked on a job, not just 50 percent of the new people hired.

That was too much for the Associated Builders and Contractors of Metro Washington, which filed suit in federal court on May 25 charging that the law is unconstitutional—-putting one of the District’s signature employment initiatives at risk. Today, Mayor Vince Gray and Councilmember Michael Brown promised to defend the law.

The voluminous complaint begins with a diatribe against the District’s approach to workforce development.

The District of Columbia’s ’employment problem’ is not that there are too many residents chasing two few jobs. By some measures, there are over 800,000 jobs in this city of 600,000 people. The ‘problem’ is that the District lags behind its neighbors in educating and training the workforce the construction industry needs.

The First Source Employment Act has never created a single job—-and never will. Instead, it infringes on the fundamental American right to pursue employment free from discrimination. It violates the Civil Rights Act and numerous constitutional protections, including the Privileges and Immunities Clause, the Commerce Clause, an the First Amendment. Indeed, it is flatly inconsistent with the stated policy in the District’s Human Rights Act that there should be ‘an end in the District of Columbia to discrimination for any reason other than that of individual merit, including, but not limited to, discrimination by reason of…place of residence or business.’

For too many years, developers, contractors, and other employers have been forced to endure and work around the Act, afraid of the public outcry that would follow if a purported ‘jobs bill’ were challenged, and afraid of the retribution of District officials with a vested interest in pretending that the First Source Employment Act is a solution to the District’s chronic underemployment in certain areas of the city. But with the recent amendments to the First Source Act, contractors cannot possibly comply with the Act’s hiring and quota requirements, and they are threatened with job losses, business failures, and debarment from government contracting…the amended First Source Employment Act puts the plaintiffs’ very livelihoods at risk, and they need judicial redress.

The suit then runs through a litany of accusations, including:

  • District residents are less skilled than workers from other jurisdictions and fail drug tests or walk off the job early in disproportionate numbers, which leads to lower morale in the crew overall, since they are preferentially treated.
  • Because of the requirements, Miller & Long—-a Bethesda-based concrete company that signed onto the complaint individually—-says it can only do two projects subject to the law at any one time, which decreases competition and raises prices.
  • The law violates the First Amendment: “The District is substantially impairing, infringing, and chilling the protected speech of ABC Metro Washington’s members by requiring them, as an unconstitutional condition of receiving a public benefit, to advance and espouse a view directly contrary to their own.”
  • The law unfairly favors companies who “do not share their philosophy of individual merit and a level playing field.”
  • The law violates the contracts clause of the Constitution, since its requirements are onerous and unreasonable.

What are we to think of this?

On the one hand, the District has done a terrible job of preparing its residents to work on these projects. At the same time, it has seized on the construction industry to solve the unemployment problem because that’s what the city can control, despite the fact that it represents a tiny slice of the jobs available. The Department of Employment Services’ job training programs are a mess, and the Workforce Investment Council—-which the District is required to have as part of receiving federal funds—-was only recently reconstituted after years of dormancy. Even Brown agreed that the District hadn’t done enough to help contractors obey the rules, which is why the amended law includes the creation of a “workforce intermediary” that’s supposed to create a pipeline of D.C. residents to employers. The industry didn’t want to wait for that to work, nor for the WIC to implement a recently-issued slate of recommendations.

Also, I have no doubt that the reporting requirements are a pain in the butt, making it more difficult for companies to bid on District projects, which may mean that the District doesn’t get as good a deal for its money (in fact, they’ve started offering incentives for hiring D.C. residents, rather than penalties for not doing so).

Finally, from a macro perspective, is there really a public good in requiring that some humans get hired over others? One more D.C. resident hired means one less Maryland resident gets a job, even though he or she is probably as deserving—-the District has no special moral claim here.

On the other hand, I think this suit fails on a couple of counts.

One: It’s completely within a city’s rights to ensure that its own tax dollars are spent on its own residents. That’s why there are residency requirements for schools, social welfare programs, and any number of grants (though not rank-and-file District employees). That’s not the case for federal projects, which is why the District resident numbers are so much lower on projects like St. Elizabeths.

And two: It’s not like the District is forcing these companies to take District projects. There’s plenty of private construction going on as well. It just means that they have to go some serious extra miles in order to compete for them.

Wouldn’t you like to be on this jury?

Photo by Darrow Montgomery