Taxation without Employment: The Case for the District’s Strong Local Hiring Rules

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DCJobsPlate

Washington, DC —Though D.C. taxpayers are supporting billions of dollars in development, out-of-state residents are reaping the benefits by capturing the lion’s share of construction employment, Good Jobs First concluded in Taxation without Employment: The Case for the District’s Strong Local Hiring Rules, released December 4.

City leaders could reduce unemployment in the District by strengthening enforcement of First Source hiring rules, the study authors concluded. First Source is a jobs stimulus law that mandates certain percentages for participation by District residents on construction projects receiving city funds. The study is available online at: www.goodjobsfirst.org/taxationwoutemployment

“The failure of area contractors to employ District residents is troubling,” said Thomas Cafcas, researcher at Good Jobs First and author of the report. “Too much money has been spent on public works, taxpayer-subsidized real estate development, and job training in the District of Columbia without adequate checks to make sure those public investments maximize job creation for the city.”

Just 2.9 percent of all District workers are employed in the construction industry, a much lower percentage than residents of Baltimore, Boston, New York City, and Philadelphia. As a result, District residents access family-sustaining construction jobs at a lower rate than their peers throughout the Northeast, diminishing one important pathway through which low-income workers enter the middle class.

If District residents got their fair share of area construction jobs, study authors calculated 11,500 more District residents would be on construction sites, and DC’s coffers would benefit from tax revenue from an estimated $386 million in additional wages.

“This study clearly indicates that the District needs local hiring requirements,” said DC Councilmember Kenyan McDuffie (D-Ward 5), Chair of the Council’s Committee on Jobs and Workforce Development and advocate for creating employment opportunities for DC residents. “We have more than 30,000 unemployed men and women in the District, including 4,500 Ward 5 residents seeking work. Based on my conversations with constituents, I believe that many are ready to pick up a shovel and get to work – they just need a chance to prove themselves.”

Nearly one year ago today, Mayor Vincent Gray and the DC City Council strengthened the District’s First Source hiring rules.

Data show contractors on a variety of projects have made significant gains in hiring residents, but only when local hiring is made a priority. For example, Good Jobs First found that residents accounted for 64 percent of new hires and 42 percent of hours worked on one project where local hiring requirements were strongly enforced. On another project where local hiring rules had not been applied, residents accounted for as few as 10 percent of new hires.

Other key findings:

  • Data suggest that there are thousands of DC residents that could potentially benefit from greater access to construction jobs, including the working poor and unemployed residents.
  • In 2010, the District spent $112 million on job training for over 62,000 residents – nearly twice the unemployed population – but saw no change in unemployment rolls the following year. Failure to leverage training money with First Source job opportunities needlessly wastes taxpayer money.
  • A job on a single construction project can have lasting positive professional consequences for DC workers: construction work is often found through informal word-of-mouth referral networks.

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