Good Jobs First is currently examining economic development subsidy programs in over 240 small and medium-sized cities. This blog is a part of a series examining these programs for provisions related to equity and transparency.
Construction jobs have long been occupied mostly by men who often come from outside of a community. But some places are pushing against this trend, ensuring construction jobs at subsidized projects are available to a diverse pool of local workers. Worcester, Massachusetts, sets a good model for such efforts.
Tax increment financing (TIF) is an economic development program used in Worcester to subsidize hotels, offices, manufacturing, and research facilities.
While Massachusetts’ TIF law sets the program’s general rules, each locality can add additional requirements to the program.
In Worcester, developers that receive TIF subsidies must make all jobs available first to city residents. The goal is to ensure the project has a local workforce that is 10% minority, 5% women, and 15% low- or moderate-income earners. Importantly, similar goals are set for contractors and subcontractors on those projects.
Besides targeted hiring, the city requires TIF recipients to:
- pay a minimum of $15 an hour or 125% of the state average wage, whichever is higher
- use best efforts to hire contractors and subcontractors regionally (within a 30-mile radius)
- use best efforts to purchase supplies and materials from local vendors
- affirm they will not misclassify their workers as independent contractors, a common occurrence in the construction industry (and again, this extends to contractors and subcontractors).
These are among the strongest equity requirements we came across during our two-year project looking at equity and transparency standards attached to local business and development subsidies across 229 cities (our transparency findings are outlined in “Seeing is Engaging: Economic Development Transparency in Small- and Medium-Sized U.S. Cities,” which we released earlier this month).
But the city doesn’t stop there. Each subsidy recipient must submit detailed job creation reports to the city’s economic development office, including data on hiring of local workers from specific groups during the construction phase. The office publishes that data in an easily understood format, including simply color-coding company achievements red when it fails and green when it succeeds.
This transparency allows for scrutiny and accountability by reporters and the public. It also makes it easier for public officials to hold developers accountable for keeping their promises. In 2023, for example, after a developer of a major downtown project did not meet job creation obligations, the city council decertified the project from being eligible for the TIF subsidy.
Our research into equity and transparency in economic development shows that cities across the country have a long way to go to ensure that subsidies provide job opportunities to a diverse set of local workers. But Worcester provides a good example of policy solutions that ensure economic development subsidies create local jobs and help all workers thrive.