Hard Working: Hiring Chicagoans and Chicago Subcontractors

July 7, 2009

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Photo by Robert Bernhard

The unemployment rate in the Chicago metropolitan area is nearly 11 percent. Governments are pumping money into building and construction projects to put people back to work—but, an analysis of contracts to build public schools in Chicago shows a lot of construction dollars head to businesses outside the city. WBEZ's Adriene Hill has been tracking who's getting jobs these days, as part of our series Hard Working.

Nelson Carlo is in the steel fabrication business—his company makes the metal skeletons that buildings are constructed around.

CARLO: We take the steel we cut it, we punch it, we drill it, we weld, we assemble it and then from here it goes from the field to the project site.

But not recently. He says they haven't touched a piece of steel in more than a month. We meet in his office on Chicago's South Side. Carlo says he's had to lay off about 32 employees. But he tells me, it's not entirely for lack of money in the market. There are public buildings being put up.

He pulls out a big spreadsheet and flattens it on his desk.
 
CARLO: This is schools and police stations that were bid. This is the school name, address. This is the general contractor who got it. And these are the subs they gave the work to.
HILL: Now can you read that list because we're on the radio?
CARLO: You got Munster Steel in Munster Indiana, Midwestern Steel, Hammond, Indiana, Scott Steel in Crown Point Indiana, and again Munster, Indiana. You even have the suburbs here—you have Melrose Park.

Hiring non-Chicago companies to help build Chicago schools isn't isolated to Carlo's steel fabrication industry.

WBEZ analyzed bid information for the 11 Chicago Public Schools with contracts that are currently being paid. Of the more than $320 million in subcontracts, less than of that quarter goes to companies with Chicago addresses.

There are lots of reasons that this could be going on. Carlo says it has to do with costs of doing business in the city.

Some contractors complain the industry is all about who you know and who knows you.

Other people I spoke with said slow payment can keep contractors who know better away from the work.

And UIC professor Rachel Weber has another theory:
 
WEBER: It could be that that is just where those businesses are located.

She says a huge number of manufacturing and service based businesses left the city for the suburbs starting in the in the early '70s. But, she says the most important thing for the city itself is whether contractors put Chicagoans to work.

WEBER: When you hire local residents you're investing in a local economy. Those local residents are going to buying a home or renting a home in the city, they're going to be paying property taxes either directly or indirectly. They're going to be buying goods and services in the city of Chicago.

With only 23 percent of the subcontracting work on schools going to Chicago subs—is there any way to know if that actually happens? If Chicago laborers are being left out of locally funded projects?

The Public Building Commission of Chicago is the group responsible for the schools contracts we analyzed. No one with the commission was willing to for this story. But in a written response a spokesman addressed both the question of local hiring and of Chicago subcontractors.

The building commission says it requires 50 percent of the work on contracts it awards go to Chicago residents.

And just this May, the group addressed the dearth of local subcontractors on city projects. The new resolution requires Chicago based General Contractors to get a quarter of their subs from the city. General Contractors out of the city have to cross a higher hurdle—they need to give 35 percent of their subcontracting work to Chicago companies.

It may not sound like a huge change—but it could mean more work and more dollars for Chicago contractors and their employees.

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