Last Wednesday, John Coté wrote an article for the San Francisco Chronicle explaining the new local hiring ordinance. The legislation was presented as pretty straight forward. But the Chronicle didn’t explain some of the more arcane details of the costs of implementation of the plan, which could run into the thousands of dollars per job.
Coté wrote:
Under the new law, contractors on city-funded construction projects worth $400,000 or more must hire at least 20 percent of their workers from San Francisco this year and 5 percent more every year until the ordinance hits the 50 percent mark in 2017.
But I found the article light on details. The report left me scratching my head about the whole proposal. Specifically, the costs for set-up and compliance with the new law would be steep, as far as I can tell. The article explained:
The Board of Supervisors’ budget analyst found that besides $608,000 in initial costs, ensuring compliance with the law would cost the city $1.65 million a year.
Is this a lot? A little? There was scant context provided. There’s nothing to compare these numbers to, especially since the program in question is “projected to create 335 jobs for San Franciscans” each year, when the program gets underway, according to Mayor Ed Lee’s office.
According to my calculation, at the peak of implementation compliance costs alone would amount to $4,925 per job. At less than the peak, compliance costs would clearly be greater per local-hire job. Why not mention the cost per job in the article, a number people can relate to.
What are the $608,000 in “initial costs” going toward? Are there other costs beyond the $1.65 million going to anything other than enforcement? How were the numbers determined by the budget analyst? Lee’s administration statement that 335 jobs would be created at peak implementation is a very precise number. How was that determined — through a study using actuarial methodology?
A proponent of the law, Supervisor John Avalos, referenced a report by the city’s chief economist that found that “at full implementation, the city will see a 1 percent increase in annual spending on applicable projects — $9.3 million a year.”
Avalos added: “The cost of not doing local hire is probably greater.” According to the Chronicle, Avalos cited “city savings from an expected decrease in poverty and violence.”
Probably?
The law has clear political upsides for Lee and the Board of Supervisors: they are doing something about jobs. From what I read here, the proposal for city-funded construction projects may be good or bad, but there is not enough information for the typical taxpayer to make an informed evaluation of its merits. The city is running a serious deficit. We’re in a recession. I would have liked to see more supporting details for expenditures, benefits is to the city and statements from officials.
