minority business •
Reprinted with permission from June 2013 Springfield Business Journal P. 36
The Tax Payer’s Burden
O
n April 18, 2013, the Illinois House of Representatives passed House Bill 924 on a 60 to 50 vote. The bill amends the Illinois Prevailing Wage Act (820 ILCS 130/2) to require that all contractors and subcontractors bidding on work subject to the Act; satisfy the Illinois Procurement Code’s definition of “responsible bidder.” To qualify as a “responsible bidder,” all contractors and subcontractors would have to meet a series of requirements, three of which may increase costs and reduce the pool of bidders. They are also required to participate in a U.S. Department of Labor apprenticeship program; provide proof of extensive insurance coverage, many of which may not be germane to the work being bided; and maintain an Illinois office as the primary place of employment for persons who will work on the work being bid on. HB 924 presents a serious problem for minorities, specifically African-Americans, who have systematically been excluded from construction industry jobs. According to the Annie E. Casey Foundation’s report titled, “The High Road to Greater Inclusion in the Construction Industry: Problems and Prospects,”on Jan. 20, 2009, when Barack Obama became the first African-American President of the United States most were unaware of a little known fact is that his new home, the White House, was built with slave labor. The builders initially planned to import skilled workers from Europe, but when their call met with a dismal response, they turned to slaves. Having acquired skills building essential structures on plantations, slaves were leased from their masters at $5 a day to work on the White House and Capitol beginning in 1792. Serving as skilled brick makers, stonemasons and carpenters, slaves worked seven days a week even during the stifling Washington summers. Despite the progress represented by Obama’s election, two centuries after our nation’s founding, African Americans still occupy an inferior position in skilled construction trades and in construction firm ownership. For over a century civil rights activists have pushed the construction industry to hire more women and minorities both locally and federally. From Chicago, to New York to Los Angeles to St. Louis and Memphis activists have sought economic parity in the construction industry as women and minorities have been locked out of construction industry jobs as a direct result of lack of access to construction apprenticeship programs. Historically, the drawback of the construction apprentice system has been its ingrown nature and exclusion of women and minorities. The federal government
Minority Business Exchange Pete Reeves intervened in the 1960s to try and correct this injustice by requiring women and minorities on federally funded projects. On the local and state level, as activists are working for inclusion of women and minorities in the construction industry, their opponents have stepped up aggressive campaigns to not only maintain the status quo but make significant advancement to eliminate the smaller firms. HB 924 is one such tool. It also would require all contractors and subcontractors to identify and report on a monthly basis, either as part of their certified payroll submissions or monthly manpower utilization reports, the number of hours worked by minorities and females on projects subject to the Act. This new reporting requirement could be a concern to many smaller local governments that do not have minority- and women-owned business participation requirements. According to Letitia Dewitt –Anderson, CEO of Andersen Legislative Consulting Ltd., the lobbying firm representing opponents of the bill, HB924 requires that contractors bidding on any public works project must meet the requirements under the “responsible bidder” provision set forth in the Illinois Procurement Code. This change in the law will place several expensive and burdensome requirements on small contractors, the most burdensome being the mandatory participations in USDOL approved apprenticeship program. This costly and time consuming provision will thwart the ability of small contractors to bid on local government contracts. “This of course will reduce the number of bidders eligible to bid on local public projects, not only hurting small contractors, but also increasing the cost of the public projects by decreasing competition; thus hurting local tax payers who are left to foot the higher bill,” said Dewitt-Anderson. Dewitt-Anderson’s position is that multiple bidders create a competitive marketplace and keep costs down. HB 924 will undermine this essential marketplace dynamic and would be yet another law hatched in Springfield that makes local government more expensive for taxpayers. The bill is also a first step toward imposing the State’s cumbersome and bureaucratic procurement rules on local governments. Local residents, as well as legislators, need to know that local governments are opposed to HB 924. In addition, Chambers of Commerce throughout the state oppose HB 924 because it reduces the competitive bidding process and would effectively preclude many local businesses from competing on a level playing field. Statewide opponents of the bill include but are not limited to
the Associated Builders and Contractors, DuPage Mayors and Managers Conference, Illinois Landscape Contractors Association, Illinois Municipal League, Midwest Truckers Associations and Township Officials of Illinois. Local opponents included the Springfield Branch NAACP and the Springfield Black Chamber of Commerce. Teresa Haley, NAACP President said, “HB924 would be devastating to black contractors because their payroll can’t handle it. It will simply force many small businesses to shut down. They cannot afford the cost associated with training.” Larry Beckom, a diversity activist and CEO of Beckom and Associates, agreed stating, “the bill will make it virtually impossible for African American contractors to compete.” While bordering states are backing away from public sector union domination, Illinois would move in the opposite direction by requiring private contractors to provide apprenticeship training programs for journeymen employees entering the trades field, such as pipefitting or plumbing. Most small, non-union construction businesses do not have the funds to establish apprenticeship programs. If HB 924 becomes law, small businesses will either be forced to offer training, bid only on non-government jobs or leave the state. What is at stake is billions of dollars in state contracts from various programs. Illinois Governor Pat Quinn has unveiled a $12.62 billion infrastructure plan which he hopes will move the state’s economy forward by improving roads and bridges and revamping public transportation. It is part of his $31 billion “Illinois Jobs Now! Program,” which was passed by legislature in 2009. The program will support 439,000 jobs over the next six years and contains progressive hiring incentives aimed at bringing more women and minorities into the construction trades. “The plan will improve 2,142 miles of highway and replace 517 bridges across the state,” Quinn said. State officials with the Illinois Jobs Now! capital construction program are hoping women and minorities take advantage of various construction jobs available. On May 20, state officials held an informational meeting at the Peoria Next Innovation Center with another meeting scheduled in the near future possibly in Springfield. Another program is The Illinois Tollway’s $12 billion capital program, “Move Illinois: The Illinois Tollway Driving the Future.” Move Illinois will improve mobility, relieve congestion, reduce pollution, create as many as 120,000 jobs and link economies across the Midwest region. Move Illinois will address the remaining needs of the existing tollway system; rebuild and widen the Jane Addams Memorial Tollway (I-90) as a state-of-the-art
21st century corridor; construct a new interchange to connect the Tri-State Tollway (I-294) to I-57; build a new, allelectronic Elgin O’Hare Western Access and fund planning studies for the Illinois Route 53/120 Extension and the Illiana Expressway. Locally, the High Speed Rail which is expected to be a multimillion dollar multiyear project promises to offer thousands of jobs regionally. Local organizations such as the NAACP, the Springfield Black Chamber of Commerce and the Faith Coalition for the Common Good are working diligently with local, state and federal officials to ensure that minorities are not excluded from the jobs and contracts that will be available from the High Speed Rail Project. The city of Springfield is at an extreme disadvantage when it comes to the number of women and minority owned construction firms. More specifically, there are currently no minority owned general contracting firms or specialty trades firms that are bidding on either city or state construction projects. There are, however, many AfricanAmerican tradesmen who believe that it is senseless to waste time and money on bidding on projects that they have no chance of being awarded. The city recently got its first African-American engineering firm when Infrastructure Engineering of Chicago, Ill. opened its offices here in Springfield in the Springfield Chamber of Commerce Building. The minority community needs more minority owned architectural, engineering, general contracting and specialty contracting firms to participate in the upcoming construction boom both locally and on the statewide level. HB 924 will aggressively decrease any hope for future advances for inclusion that have been made in the construction industry while aggressively increasing the tax burden on local residents. The bill was sponsored by Rep. Jay Hoffman, Rep. Linda Chapa LaVia, Rep. Mike Smiddy, Rep. Keith Farnham, Rep. John D’Amico, Rep. Patrick J. Verschoore, Rep. Daniel V. Beiser, Rep. Brandon W. Phelps and Rep. Jerry F. Costello, II. The bill remained in the Senate Labor and Commerce Committee meeting on May 20, and has received an extended deadline of May 31. The Senate Labor and Commerce Committee is not scheduled for a hearing as of this writing. “HB924 is harmful to small business and bad for taxpayers. It should remain in the Senate Labor Committee and die,” declares Dewitt-Anderson.
Pete Reeves is Principal at VERVE Media Group. He can be reached at minbiz@gmail.com