ST. PETERSBURG — City leaders last summer hailed the adoption of a new hiring incentive scheme as a significant step toward reducing local unemployment.
The program was the result of a push by church groups and activists to reduce unemployment in the city’s poorest neighborhoods. Companies working on big city projects get paid faster if at least 30 percent of workers they use come from Pinellas. It also encourages companies to hire so-called “disadvantaged workers,” a term that includes the long-term unemployed or those with a criminal record.
But the program is off to a slow start, with only four workers hired through the program since it went into effect in October.
City officials say it is too early to judge whether the program will work. Since it was introduced, only eight projects that exceed the minimum $500,000 threshold have been awarded. Of those, only one has reached the point at which companies can submit a list of new hires to show they are eligible to be paid earlier.
“There’s too much attention being given to a program that is still in its infancy,” Public Works Administrator Mike Connors said.
Still, several of the companies awarded recent projects say they have no plans to hire any workers, disadvantaged or otherwise, despite the incentive.
That includes Lavandera Electric, a Tampa company awarded an $838,000 contract to install power outlets on boat slips at the city’s port.
“We’re not hiring anyone,” said Donna Stringfield, office manager. “We’re fully staffed; we don’t have a reason to look for outside forces.”
Tarpon Springs company Augustine Construction is in a similar position. It was awarded a $562,000 contract to make road improvements on 38th Avenue between First and Fourth streets north.
“We hire only people from Pinellas County anyway, but on that job, we will not be hiring anyone because it’s such a small project,” project manager Jim Phillips said.
One exception is BL Smith Electric, which plans to hire locally for its $2.2 million contract to replace underground electric cables. The company, based in Dundee, said hiring locally makes sense because it would be too expensive to send its own workers across the state.
“It’s a nice advantage,” Vice President Curtis Barnhill said. “We’re trying it out.”
The incentive approach the city eventually adopted was a compromise solution. Faith and Action for Strength Together, an interfaith coalition that works on social justice issues, initially fought for the city to require that at least one-quarter of workers on city projects be disadvantaged workers.
Construction companies warned city leaders that a quota system would be a bad idea. The extra paperwork to prove companies have complied and the search for qualified workers would mean higher bids and taxpayers paying more.
Instead, the incentive offered by the city is intended to relieve cash flow problems for smaller contractors who need to pay workers and buy materials.
Without that, the city typically holds back 5 percent to 10 percent of payments to companies to guarantee they complete all final touches on a project, such as touching up chipped paint, for instance. On a $2 million project, that can add up to $200,000.
Hubbard Construction became the first company to qualify for early payment by hiring four local workers on a $4.3 million project to resurface city roads.
Hiring is done in the field, and company personnel officials advised project managers about the incentive.
“It is an opportunity that we will take advantage of to increase our cash flow,” said Steve Plastek, vice president of human resources. “We relayed it to the field that it was an opportunity to get our money back more expeditiously.”
Karl Nurse was one of the council members who pushed for the ordinance and supported the compromise solution. He said the acid test for the program will be when the city awards construction contracts for major upcoming projects, including a $70 million police station and the $46 million pier renovation or replacement.
“The city is really just beginning to implement the hiring ordinance, and it’s too soon to tell if it is going to be effective in generating local hiring, particularly on smaller projects,” Nurse said. “I am confident that it will be effective when we bid out our bigger projects like the police headquarters, a new pier and the major portion of the sewage plant retrofit.”