In discussing our proposed Citywide project labor agreement (PLA) policy with San Francisco government, we have heard it might hurt small contractors. Even after asking repeatedly, we have not heard just how it could. We have no reason, then, to consider the concern real.
We do know the City values its small contractors. We have reiterated a willingness to address concerns that might prevent them from working under PLAs.
Our obligation is to workers, though, and we believe a Citywide PLA policy ensures that contractors small and large benefit workers while succeeding.
The City might ensure in an additional way that its small contractors benefit workers. As our "Citywide" PLA proposal exempts projects under $1 million in value, and as many small contractors would work on projects below the $1 million threshold, the City could supplement the policy by amending another and so benefit not just workers, but itself.
The City provides a bid discount to small local contractors, so that even if they bid slightly higher than larger or out-of-town contractors, they can be awarded work.
Originally the City granted this discount to minority- or woman-owned contractors. In 1996 California's Proposition 209 forbade "affirmative action." San Francisco fought to protect its contracting program from Proposition 209 up to the California Supreme Court, where in 2010 the justices ruled 6-1 against it.
Anticipating this result and answering a 2004 Superior Court injunction, then-Supervisor Fiona Ma carried legislation to create the current bid preference, in part under the theory that small City-based contractors, insofar as they reflected the City's population, would more likely be minority- or woman-owned. The legislation passed. Mayor Gavin Newsom signed it into law in May 2006.
Accordingly, Chapter 14B of the City's Administrative Code grants bid discounts generally of ten percent to "Small or Micro Local Business Enterprises."
It claims additional reasons for the discount: The "hundreds of millions of dollars," including taxes, that small local businesses contribute annually to the City economy; the costs they incur through their location in a high-cost City, or because their small size precludes some economies of scale; the "economic growth and independence for San Francisco and its taxpayers" that "the expansion of small firms or development of new enterprises" can produce; and the relief of "the burden on the General Fund to provide for general welfare" that this expansion can provide.
In this last regard the bid discount could be made to do more.
Suppose a contractor could obtain only a portion of the discount – say, half – solely on the basis of its small size and City location.
Suppose it could earn the rest of the discount stepwise through measures that benefited workers and the City.
Small contractors precisely because of their size are not required by either the federal Affordable Care Act or the City's Health Care Security Ordinance to provide health insurance. They could. Even small, one-truck union contractors do. Suppose, then, that small contractors could earn a step toward the ten-percent discount by providing health insurance to employees, and another step by providing insurance to employees' families. If those workers and families showed up at City hospitals and clinics, then, it would be with means of payment in hand and not as a burden on the General Fund.
Small non-union contractors rarely provide retirement benefits. They could. Even mom-and-pop union contractors do. Suppose small contractors could earn a step toward the ten percent by providing retirement benefits. Their employees would less likely be impoverished in old age and so spare the City yet another burden on its General Fund.
Small contractors could earn a final step toward the full discount by employing apprentices from a California-approved program with a demonstrable record of success. Even our tiniest signatories do. In combination with the City's Local Hire requirements, this would guarantee more residents opportunities for true careers. It would raise up families and communities, reduce poverty, increase economic activity, and bring tax revenue, and not just unburden the General Fund, but grow it.
True, union-signatory contractors could more readily mount these additional steps than could non-union contractors. This general failure of the "open shop" system should not worry the City, which should act instead in its best interest.
If the current pool of small contractors does not yet contain a large number that can climb the steps, the City should recall a stated mission of its bid discount: The development of new enterprises.
The CityBuild Academy has for twelve years now graduated City residents into apprenticeships. Many a graduate could now qualify for a contractor's license. Indeed, I have often heard politicians tell CityBuild students that they expected some would become contractors.
If the City were to reach out to these graduates to offer assistance in becoming contractors, and to us to help ensure that as contractors they also benefited workers and the General Fund, I am sure it would find willing partners on both parts.
Amend the City's bid discount program to give these new contractors greater assistance if they provide genuine benefits for workers. Then they, workers, and the City, minorities and all, would more surely thrive.