Public Procurement

When government apparatuses run calls for proposals for state-issued contracts, the rules are typically straightforward: go with the lowest bid and offer the maximum in tax incentives. Given the size of these contracts, as well as the fact that the state is, in theory, acting in the public interest, changing these rules is a unique opportunity to improve working and community conditions on a large scale. Federal contractors alone employ about 22 percent of the American workforce, giving the government great power to enforce labor laws and raise labor standards through procurement policy.

According to Kasia Tarcynska of Good Jobs First, government spending has wide social implications:

Large development projects do not happen in a vacuum. They create opportunity costs and force us to ask questions such as: “What else could state and local governments have done with those dollars?” New developments also bring new residents — and taxpayer costs — to an area. They require more classrooms, teachers, firefighters, public safety officers, garbage haulers, and highway construction.

In recognition of the implications of wage and workplace violations committed by companies that receive federal contracts, tying procurement to labor standards and social equity has a long history in the United States. In 1840, President Martin Van Buren established a ten-hour working day for those working under government contracts. The Davis-Bacon Act of 1931 requires contractors to pay local prevailing wage rates on construction projects, and the Wagner-O’Day Act of 1938 created a “Committee on Purchases of Blind-Made Products” (expanded in 1971 to include products made by “other severely handicapped” people).

The primary source of federal regulation of employment discrimination in the postwar period was government contracts, and the Public Works Employment Act of 1977 stipulated that 10 percent of local works projects be for minority-owned businesses. In 2014, President Barack Obama issued the “Fair Pay and Safe Workplaces” executive order, which required federal contractors and subcontractors to demonstrate compliance with federal labor law. This order was revoked by President Donald Trump in 2017, but the implementation of similar policies in Europe has demonstrated the utility of such laws.

In recent years, government procurement has been of particular interest to climate activists, who likewise see state contracts as opportunities to address the growing threat of climate change. In 2010, Christian Parenti urged a new government procurement strategy that he called “the Big Green Buy”:

Consider this: altogether federal, state and local government constitute more than 38 percent of our GDP. Allow that to sink in for a moment. The federal government will spend $3.6 trillion this year. In more concrete terms, Uncle Sam owns or leases more than 430,000 buildings (mostly large office buildings) and 650,000 vehicles. The federal government is the world’s largest consumer of energy and vehicles, and the nation’s largest greenhouse gas emitter. Add state and local government activity, and all those numbers grow by about a third again. . . . A redirection of government purchasing would create massive markets for clean power, electric vehicles and efficient buildings, as well as for more sustainably produced furniture, paper, cleaning supplies, uniforms, food and services.

Increasingly, climate activists are tying their cause to that of labor. J. Mijin Cha and Lara Skinner of Cornell University’s The Worker Institute believe that it’s possible to combat “the worst effects of climate change, and do our part in reducing global emissions, while also fighting against growing economic inequality.” To do so, “strong job and training quality standards are needed” in all state procurement contracts: “Depending on the funding mechanism for the job creation programs, these standards include prevailing wage, state-approved apprenticeship job training requirements, project labor agreements, and best value contracting.”

Enter Jobs to Move America

JMA was founded in 2013 by Madeline Janis, previously the director of the Los Angeles Alliance for a New Economy (LAANE). In the late ’90s, LAANE came to public attention after winning worker-retention and living-wage ordinances for jobs funded by the city of Los Angeles. It was in these campaigns that Janis and others saw the value in pushing better labor standards on public procurement processes and developed a model of “community benefits agreements” (legally enforceable agreements that can include provisions around local hiring and workforce diversity) that would come to be central in the work of JMA.

Working with an official at the US Department of Transportation, Janis developed a “high road” plan for public procurement of rail cars and buses. The plan graded bids not simply on their cost but also on the number of jobs bidders proposed creating, and the level of pay and benefits promised for workers. She called this the “US Employment Plan.” Coupled with the aforementioned community benefits agreements and agreements for card check unionization (where the company agrees to the formation of a union if a majority of workers at a particular facility sign cards indicating that they wish to be part of the union), this plan aims at nothing less than a complete overhaul of traditional state procurement.

JMA has won many major victories involving some combination of the US Employment Plan, community benefits agreements, and card check agreements, directly affecting more than four thousand jobs in manufacturing. These wins have included a $305 million contract with New Flyer Industries to build 550 clean-fuel buses, a $890 million contract with Kinkisharyo for 175 new light-rail cars, and a $1.4 billion contract with Kawasaki for 535 subway cars. In addition to winning more such victories in public transportation contracts, JMA is also looking to expand its work to apply to the manufacturing of offshore wind power component parts in New York. Theoretically, the model can be applied to just about anything involving state investment.

Sometimes companies make high-road bids in line with the US Employment Plan and agree to community benefits agreements and card check union recognition beforehand. Other times, JMA has to turn up the heat, as they did in partnering with the International Brotherhood of Electrical Workers (IBEW) to file an environmental challenge to Kinkisharyo’s Palmdale plant, which outlined violations of state environmental law. Kinkisharyo was forced back into negotiations with JMA and the city of Los Angeles, and they agreed to card check and a community benefits agreement ensuring a diverse workforce.

JMA estimates that the $5.4 billion annually spent on bus and rail car purchases over the next decade could create 530,000 American manufacturing jobs, and not simply in urban, liberal areas. They are rather unique in the progressive labor world for focusing on manufacturing. Janis believes that “an economy can’t work well if the economy doesn’t make things. Manufacturing is the pillar of a healthy, successful, sustainable economy — and globalization shouldn’t change that. We needed to find a way to adapt to modern circumstances, to find a new way to revitalize manufacturing.” When asked about the tendency of progressives to focus on the existing post-industrial economy, JMA deputy director Miranda Nelson echoed Janis on the importance of a diversified economy:

I’m just not sure that an economy that’s only based on service and care work will really get us through. I think we need more jobs than that and a bigger variety of jobs. And when you think about all of these formerly industrial areas, losing manufacturing was really devastating. Some of them have managed to replace [manufacturing jobs] with care work, [but] it’s not the same thing. It doesn’t bring back the vital economies of those areas.

Traditionally manufacturing “creates” more jobs than any other industry, not only offering stable, high-wage employment in itself but also lifting up local economies and linked industries. Manufacturing is also far from gone in the United States, which “still excels in the advanced manufacturing of products like precision instruments and airplanes.” And that work is much more precarious than it used to be. Nelson continued:

There’s this perception around manufacturing that the jobs are all good ones, that they’re all unionized, and that we don’t need to worry about them. We should go and organize the service economy because we organized the factory economy a century ago, and now we’re good. And that really is not the case: right now, union density has declined drastically in manufacturing. And in a lot of these factories where we’ve been talking to workers, many are temps or long-term temporary workers. And it’s really dangerous work: we talk to people who regularly get injured, and they’re not making that much more than minimum wage. So we need to do the work to improve these jobs and give workers rights and the protection of a union.

Blue State Leverage for Red State Gains

The contemporary labor movement is strongest in states and municipalities that are solidly Democratic, and there is an increasing recognition that if labor is going to make a breakthrough in reversing the decades-long union-density decline, it must learn to win outside of its political strongholds, as the United Auto Workers recently did at the Volkswagen Chattanooga plant.

Unsurprisingly, JMA’s wins thus far have all happened in major liberal metropolitan areas, but the contracts they have affected have applied to companies with facilities outside of those areas, as is the case in the recent win at New Flyer in Alabama. This creates a somewhat unique opportunity to leverage conditions in states like California and New York to aid organizing drives in low-union-density states that are politically and legally hostile to unionization. Given the struggle unions have had in getting leverage in such right-to-work, low-density states, this is a significant innovation that enables unions to break out of their usual geographies and into core industries of the climate transition.

And thanks to recent changes in policy at the Office of Management and Budget (OMB) lobbied for by JMA, their work could soon scale in a way that it so far has not. Janis had hoped for twenty or more contracts including the US Employment Plan to have been won by now, but their work has gone quite slowly through the present. According to Nelson, individual negotiations are complex and difficult, requiring a lot of time and resources:

Each negotiation takes a lot. It’s both negotiations between the transit agencies and between the companies. It requires a lot of political will within government to want to do this. And there’s just a lot of bureaucratic inertia that has to be overcome if you’re not used to thinking about wages and benefits.

There is also a good deal of hesitation around the US Employment Plan, as state and municipal officials are simply unaccustomed to such a process:

A lot of these things are federally funded, and there’s hesitation on the part of state and local agencies to apply any standards toward federal funds because there’s a history of the federal government blocking those standards. Local hiring, in particular, is one that’s very clearly not allowed in federal rules. In general, there’s language in federal procurement standards that have said that you can’t do things that would restrict competition when you’re bidding. That is often read as: you should only get the lowest price.

For years, JMA has worked to get OMB to change their rules to much more explicitly allow for local and targeted hiring, and also to allow job quality to be taken into account in the bidding processes. Last month, OMB released its updated Uniform Grants Guidance, which enacted many of JMA’s recommendations, including returning decisions about local contracting criteria to state and local governments receiving federal funds, allowing for targeted and local hiring, and allowing recipients of federal funds to reward bidders for job quality metrics such as wages and benefits, among other ways by using the US Employment Plan. If these federal rule changes stick past the 2024 election, JMA’s work could quickly scale.

The Green Transition

If the Inflation Reduction Act (IRA) and other recent pieces of federal legislation are any indication, some combination of supply chain hawkishness and concern for climate change is going to lend procurement processes and state investment increasing importance for improving working standards in the years to come. The IRA, by encouraging domestic battery manufacturing, unleashed a rush of investment from automakers and battery material suppliers, potentially increasing manufacturing capacity in North America sevenfold. JMA’s work offers a useful blueprint for intervening in this manufacturing investment to improve labor standards, and it could also be applied to other sectors involved in the green transition — construction, transportation, agriculture, energy systems, etc.

The increasingly apparent need to address the climate crisis is rapidly changing the landscape of work in the United States, offering massive opportunities to improve working conditions and for the labor movement to add to its ranks. With innovations like the US Employment Plan and community benefits agreements, as well as by advocating for broad changes in rules around procurement at the federal level, JMA is helping to think through how best to take advantage of those opportunities.