Draft of 10/94; do not quote or cite without the authors' permission

Creating HUD's Step-Up Program:

Forging Davis-Bacon Compromises among Organized Labor, Local Housing, and Federal Agencies

The Prevailing Need meets the Prevailing Wage

Albert J. Schorsch, III, Ph.D., AICP*

Reynold Hillenbrand Institute

and

Loyola University, Chicago

Richard S. Allan

Deputy Assistant to the Secretary for Labor Relations

Department of Housing and Urban Development**

Washington, D.C.

A paper for the

Association for Public Policy Analysis and Management

Sixteenth Annual Research Conference

Chicago, IL, October 28-30, 1994

The Davis-Bacon Act (1931) prescribes that prevailing wages be paid to workers on federally funded construction projects. For sixty-three years this Act has both been defended as the linchpin of all federal wage laws and attacked as an instrument barring minority hiring on federally-funded local housing and community development projects--thus producing much rhetoric and some case law but little other agreement. With Labor Day, 1992, HUD initiated the Step-Up Program, a creative compromise on Davis-Bacon cumulating years of effort, which has allowed hundreds of public housing residents to gain employment rehabilitating public housing units in Chicago, and which is now being implemented in eight additional cities as a transition to mainstream employment.

How this compromise was shaped and how it continues to be implemented is an interesting case of how prepared and determined staffers and officials can make a difference, and how Labor, Government, and other organization representatives joined creatively to "make things work" despite partisan and ideological differences. Participating in the presentation will be Richard Allan, Deputy Assistant to the Secretary for Labor Relations, U.S. Department of Housing and Urban Development (451 7th Street, S.W., Room 7118, Washington, D.C., 20410, (202) 708-0370, internet: Richard_S._Allan@hud.gov), and Albert J. Schorsch, III, [formerly of] Loyola University, [schorsch@uic.edu at U of I, Chicago, as of 11/14/94]

* This document contains previously copyrighted material, (c) Copyright 1992,1993 Albert J. Schorsch, III. Permission is hereby given to the Association for Public Policy Analysis and Management (APPAM) and its members to distribute this document without charge on the Internet and for academic purposes. The authors retain the right to publish this material under their own copyright. This document is a draft and should not be cited without the permission of the authors. Mr. Schorsch's statements herein are his own and do not represent those of the Reynold Hillenbrand Institute or of Loyola University.

** Mr. Allan's statements herein are his own and do not represent official positions of the Department of Housing and Urban Development or the United States Government.

OVERVIEW

With Labor Day, 1992 the United States Department of Housing and Urban Development announced the Step-Up program, which would utilize "flexibility in Federal prevailing wage and apprenticeship regulations to provide employment and training opportunities and fundamental support services to Housing Agency (Public and Native American Indian) residents and other low-income persons," and which "can provide contractors a vehicle for demonstrating a good faith effort toward meeting Federal affirmative employment and training obligations" (Federal Register, V. 57, N. 196, Thursday, October 8, 1992).

Step-Up established special opportunities for public housing residents and other low income people to obtain apprenticeship wages and training for federally-assisted construction and related work. To date nine cities participate in the project, with just under 500 public housing residents on the road to mainstream employment. The Step-Up approach of:

(1) Labor apprenticeship, not dead-end "helper" status, in established trades,

(2) Local decision and policy-making,

(3) Local partnerships, and

(4) Long-term employment and worker entry into mainstream trade wage and support networks characterized by participant choice and options

provides economic strength and local flexibility to the program.

The following discussion addresses:

Why a Step-Up compromise was necessary;

How it was arranged, structured, and implemented using both local and national resources including labor unions, public housing authorities, businesses, and non-profit organizations;

How it grew to become an interagency agreement involving cabinet Departments of Housing and Urban Development, of Justice, of Labor, of Health and Human Services, and of the Environmental Protection Agency, and yet within a modest, and at first non-existent, budget;

What may be its prospects for either: (a) expansion into a truly national employment strategy, (b) recycling into another program, or (c) attrition.

The pursuit and practice of the possible good--of "getting things done" when and where they can be done--working with existing actors in one of government's more charged policy arenas, that of public housing and employment--is our key idea. Employment of public housing tenants on publicly funded construction projects must establish itself within a zone of constantly maintained compromise, a "neutral zone" whose boundaries must be vigilantly strengthened. We discuss the resources and skills necessary to maintain such compromise, and argue that putting existing legislation and resources into practice is a necessary step before substantive progress can be made through further legislation in similar intractable policy arenas.

WHY A STEP-UP COMPROMISE WAS NECESSARY

What happens when a mandate to employ to the greatest extent possible a designated group of impoverished citizens is limited in practice by another mandate requiring a high rate of pay and attendant skill requisites--thus limiting the number of those who could be hired, further muting the mandate to employ? This has been the dilemma for those seeking to promote the hiring of public housing residents for federally-assisted construction and related work on public housing for almost three decades. Legislative solutions to this dilemma have consistently failed because of the great and contradicting public interest in any such legislation. Our story is of an administrative and public-private compromise which addressed this enduring dilemma.

What appears to be stunning reinvention in government can sometimes be instead a persistent decades-long process of incremental implementation that finally manages to draw notice. Reform laws, be they for prison reform, mental health, child welfare, housing, etc. are enacted and reenacted over a period of generations, each seeking basic objectives, such as employment or housing betterment. But social and political forces, contradictions within the laws themselves, and unintended consequences often prevent the effective implementation of these laws. That similar laws are repeated with each passing generation signifies that powerful forces withstand their effective implementation, but also that powerful aspirations keep calling these proposals into the legislative process.

Implementing ineffectively executed laws is thus not so much a case of policy reinvention but of determined realization of existing legislation and regulation, even when these seem to contradict themselves. Invention does come into play in gathering a group of actors willing to overcome such obstacles, and in maintaining a clear pathway for implementation through compromise. But this compromise requires something else: that enough of the actors have mastered the detail of their own turf and know how to observe the letter of pertinent law and regulation while establishing workable alternatives. Essential for such a feat is a lifetime of policy experience and of established ties with the field's principal actors.

How does one mine the vein of the possible within a seemingly intractable bedrock of regulation, interest, and partisanship, and how does one keep, as it were, the workspace breathable and the workway properly trussed while the labor continues? These questions argue that the lifetime bureaucrat, committed to the execution of the public will as expressed in law--and with a clear "vision"--can with preparation seize a policy opportunity to bring long-frustrated public will into action. In this instance, a workable compromise along Davis-Bacon lines which can bring greater numbers of the impoverished to permanent jobs at decent wages appears as the domestic equivalent of a Berlin Wall crumbling down. It is an opportunity that must not be wasted or misunderstood. We hope that by the following attempt to understand, that waste of opportunity can be avoided.

In his study of federal housing policy, Schorsch (1992) wrote of a "deadly embrace" among partisan policymakers which prevented unequivocal and effective housing policy. Whether relating to public housing, where early local housing authorities were not allowed to set aside financial reserves for repairs, thus accelerating the deterioration of public housing (Meehan, 1979), or to recent publicly subsidized home construction, wherein subsidized homeowners are denied the full benefit of ownership in terms of control over their equity interest, thus defeating the antipoverty purpose of the legislation, Schorsch argued that an intermittent partisan standoff over the past forty-five years has militated against effective housing policy. This same argument was shared at a 1993 housing policy seminar at the University of Chicago with Christopher Jencks (1994), who later wrote of the effects of a decades-long congressional stand-off leaving a policy vacuum pertaining to the homeless and mentally ill.

"Reinventing" or "making government work" within such a context of policy contradiction is a daunting challenge. The policy here in question is the federally legislated preference to hire public housing residents for construction or related work on public housing. The 1966 Model Cities legislation contained the requirement for "maximum opportunities for employing residents of the area in all phases of the program and enlarged opportunities for work and training," and Section 3 of the Housing and Urban Development Act of 1968 required employment and training opportunities for low income people to the greatest extent feasible in designated HUD programs. This latter provision was amended in 1992 by the Housing and Community Development Act of 1992 to especially target public housing residents.

The implementation of the perennially-stated policy of employing local unemployed residents on publicly-financed housing projects made necessary a new apprenticeship arrangement to conform with Davis-Bacon prevailing wage requirements. In order to establish a working agreement on these arrangements, a number of irresistible forces had to meet their immovable objects. As a result, seemingly tiny changes have made significant differences. The challenge is to keep the zone of change viable.

In housing and development policy certain immovable objects tempt the inexperienced to try direct but impossible actions, usually through legislation. On the taxing side, homeowner tax preferences appear on first glance plump for the picking by those interested in increasing federal revenue, while on the regulatory side prevailing wage laws for federally funded projects draw interest when large-scale employment projects are contemplated. But both of these bodies of policy have large, powerful, and vocal constituencies who promise to remain permanently so. Both of these constituencies are also strengthened by unintended consequences of laws which not only predate the New Deal but also provide important foundations for New Deal legislation and social organization. While seemingly isolated bodies of law, homeowner and employment preferences sit pinned down by the crushing gravity of three subsequent generations of housing and employment policy and those who gain or lose from them.

Attempts to change policy in the area of homeowner tax preference or in prevailing wage law fall into the category of what Schorsch likes to call "Tweety-Bird" policies, after the fat little bird in the Warner Brothers cartoons that looks so easy to swipe out of his cage. But when Sylvester the Cat makes his move on Tweety, he is run over by steam rollers, crushed with anvils, bitten by fierce bulldogs, and smitten by Granny's broom. Tremendous structural, economic, and political forces maintain their hold on the housing and related markets, and surface like that beefy Warner Brothers bulldog when changes are proposed in any of the above areas. And even when Sylvester lulls the bulldog to sleep, something unforeseen always wakes him up. In order to succeed in any of the above "Tweety" policy areas, heaven and earth must both be moved--sometimes inch by inch.

There are times, however, especially in cases of great and urgent human suffering, when moving heaven and earth becomes a reasonable proposition. One such case is that of public housing residents, who face both utterly bleak employment prospects and inadequate housing. That public housing residents could be hired to maintain and rehabilitate public housing is an idea as old as public housing in the United States. But older than federally-funded non-military housing in the United States is the Davis-Bacon Act of 1931 (amended 1935, 1964, 1982), which prescribed that prevailing wages be paid to workers on federally-funded and assisted construction projects.

Almost since its enactment, Davis-Bacon has occasioned an ideological pitched battle which has continued among those with vested interests. Every conceivable topic under the heading Davis-Bacon Act has a long and voluminous history of splenetic debate and litigation, from the definition of prevailing wage, to the definition of covered projects, to the definition of covered workers, to the scope and duration of the coverage. In addition, the Copeland Act of 1934 requires that contractors operating on Davis-Bacon covered projects submit their weekly payrolls to the Federal agency administering the project, a paperwork cost estimated at $100 million per annum by the Bush Administration Department of Labor and $50 million per annum by the Congressional Budget Office, a disparity reflecting the underlying partisan nature of the controversy.

From the standpoint of organized labor, Davis-Bacon, enacted during the Hoover Administration and thus predating the New Deal social legislation, remains the solid footing for these latter labor policies just as Hoover's Federal Home Loan Bank system provided the foundation for New Deal home finance policy. From organized labor's point of view, the maintenance of a national prevailing wage system in politically charged federally subsidized construction is the fundamental government support for labor. From the standpoint of critics of Davis-Bacon, the latter social and labor legislation made Davis-Bacon a cumbersome anachronism. Nevertheless, over sixty years of editorial thunderbolts have not shaken organized labor's unflinching commitment to Davis-Bacon, and few substantial compromises on Davis-Bacon have been achieved.

In recent years, a racial overtone, an issue in the 1980's, intensified the debate over the Act when the Wall Street Journal ("Davis-Bacon Meets Jim Crow," May 13, 1992), during the aftermath of the Los Angeles riots, followed a number of scholarly critics of the Act's history, and claimed that Davis-Bacon was enacted in response to the fear by white workers of being replaced by African American workers migrating from the South. The Journal produced evidence from the legislative history of Davis-Bacon by which it purported to indicate the Act's clear racial intent. This controversy spilled over into House Subcommittee on Labor Standards of the Committee on Education and Labor, which held hearings on H.R. 1987 (Hearing 102-112) on June 16, 1992, for a Davis-Bacon amendment which never made it to the House floor. The 103rd Congress had another Davis-Bacon Reform Bill pending, H.R. 1231, introduced March 4, 1993 by U.S. Representatives Austin Murphy of Pennsylvania and William Ford of Michigan, which (1) sought to take up again the legislative amendment of the "training wage" to make this wage a catch-all, longer term arrangement, to (2) regularize adjudication of disputes under the Act, and to (3) amend the Copeland Act to prescribe monthly, not weekly, reporting (experimentally by electronic means)--but this bill did not make it either. In the early weeks of his administration, President Clinton canceled an executive order from the Bush Administration which had exempted portions of Florida, Louisiana, and Hawaii rebuilding after the 1992 storms from Davis-Bacon provisions (an executive privilege under the original legislation), and the controversy took fire again among a few of the major and minor pundits. Against this background music the Step-Up program took shape.

In the absence of federal legislation on Davis-Bacon over the past several decades, local solutions have been attempted to reduce barriers that Davis-Bacon might pose to the hiring of increased numbers of public housing residents at wages lower than those determined to be "prevailing."

With perfect hindsight the answer to this problem would seem to be: go to the building trades unions and negotiate conditions under which public housing residents could be employed at agreed wages, and gain approval from the necessary state and federal agencies. But for this option to work, the right people must communicate at the right moment about the right things. Because these right people and things did not coincide until recently, a three-decade string of attempts by local public and non-profit housing agencies to have residents do construction work on the sly under CETA, JTPA, and other programs at less than prevailing wages played out, usually ending in court or in recrimination. But despite this history of failure, and to great extent because of it, the HUD staff working on Step-Up were able to bring to the table--actually, many tables--international and local construction labor leaders and groups like the National Association of Housing and Rehabilitation Officials (NAHRO), which officially still stand opposite each other on the issue of Davis-Bacon, to establish a compromise.

In his internal HUD discussion paper, "Economic Uplift - Building Lasting Ladders to Opportunity, the Evolution of a Policy" (Appendix I to this paper), Richard S. Allan (1994) detailed almost three decades of attempts to build working compromises and strategies to employ impoverished citizens in public housing and development initiatives following the Model Cities Act (1966) and Section 3 of the 1968 Housing Act. From this experience of attempt after attempt, Allan drew several lessons:

1. "The construction industry, like politics, is essentially local. Special jobs and training initiatives in construction, to have hope for success, need to be able to reflect local dynamics, city by city. The rigid 'master plan' dictated from Washington 'from the top down' was never a viable option."

2. "Over the years that followed, a variety of efforts . . . . all fell far short of these statutory expectations. Most of the failure can be attributed to the absence of any viable strategy or program vehicle for achieving the lofty objectives set out by Congress. . . . Arguably, the measure of failure also has been as much a function of what might have been unrealistic expectations for employment outcomes for low income people in the first place given the erratic nature of employment and the high skills requirements in the construction industry."

3. "The sobering reality that these past HUD efforts at intervention have had little demonstrable measured impact to this point has been generally conceded at HUD and of course by Congress in the 1992 revisions to Section 3 where it was acknowledged that 'prior Federal efforts. . . have not been fully effective and should be intensified.' The fact that despite long-standing supportive legislation such as Model Cities 'manpower' objectives and more than twenty-five years of Section 3, and a not inconsiderable staff commitment, HUD still has nothing other than anecdotes and shaky supposition on whether or not a 'reasonable' distribution and number of job opportunities in HUD-assisted programs to 'community' residents has occurred should at the least undergird a commitment to correct the absence of any performance evaluation capacity in future HUD efforts. Setting policy goals in the absence of a capacity to measure outcomes didn't make sense in the past and is no longer acceptable for the future. Second, but most importantly, this experience should be the footing for a more successful effort in the future."

Allan then outlined the following impediments to HUD "growing" jobs:

A. HUD's past unwillingness to "partner" with the Department of Labor, which has regulatory authority over apprenticeship programs, kept it from gaining the power to adjust rules toward workable solutions, from providing expertise on training issues, and also from the resources (money) to develop apprenticeship programs. This impediment has been overcome in the case of Step-Up through the cooperation of the HUD and DOL Secretaries.

B. The "bottom-line" imperative on HUD-assisted construction projects has limited the use of untrained or unskilled workers. . . . Contractors do not receive offsetting incentives to employ such workers. . . . Davis-Bacon prevailing wage rate requirements act as a further incentive for contractors to employ only the most skilled and productive workers.

C. Training and work experience programs, many of them "off the books" [skirting violation of law and regulation] have usually been unconnected and short-term efforts with limited quality standards and little follow-through to program participants.

D. Most HUD-assisted construction, especially in the past ten to fifteen years, has been performed by non-union or open shop contractors, including the big cities. . . . Participation in formal worker training vital in the construction industry has been very limited to nonexistent in the non-union sector.

E. Incorporating "additional" workers (trainees, "preapprentices," youth, etc.) on construction jobs displaces workers who otherwise would do similar work (laborers and apprentices - often minorities and women). [Paraphrase:] Unions view training other than apprenticeship as simply a device to dilute the skilled trades with partially trained workers. Historic attempts to create "hybrid" construction classifications--attempts at "sub" laborers--has the effect of undermining long-term job training and acquisition strategies which create more permanent or lasting jobs.

F. Where the construction work has been covered by Federal prevailing wage requirements (Davis-Bacon and Related Acts), only registered trainees or apprentices can be employed at wages less than journeymen wages. Such entry qualification provides for competent and structured training and for basic entry qualification standards for new entrants to specific trades in the construction industry. . . . [Paraphrase:] Step-Up was specifically created to address this entry access issue, called by some "racist" and "deliberately exclusionary." Allan marshalled evidence from a number of studies to indicate that construction unions had significantly addressed the question of affirmative action in recent years, and that the use of untrained "helpers" shortchanged those who could be learning a more permanent trade.

G. The cyclical nature of construction and the existence of significant unemployment in the industry at any given time (normally twice the rate of general industry) has created institutional "wariness" concerning new training programs.

Against these impediments, HUD Office of Labor Relations staff built Step-Up on the following four essential characteristics:

Step-Up has a generic and empirical base - a set of common defining elements

(1) a jobs/training funding stream (federally- assisted construction),

(2) a sponsor/employer/labor partnership built around apprenticeship,

(3) provision of support services for participants which welcomes and encourages multi- agency collaboration, and

(4) a long- term commitment (to the extent possible) to employment and other successful outcomes for participants.

Step-Up is modeled on a flexible locally- customized framework - local institutions and agencies, local employers and unions, and local people generally all must come to an agreement on the design and scope (size and occupations, etc.) of a Step- Up program.

Step-Up is designed to fit the federal Davis- Bacon labor standards environment - therefore it can operate across program/agency lines - the "mainstream" labor market).

Step-Up uses existing resources to function - it's fundamentally budget neutral.

As the program has evolved, local Step- Up sites have reflected varied approaches to overcoming these obstacles using the above characteristics. For example, journeyworker to Step- Up apprentice ratios have differed from site to site as have starting wages and wage progressions over the term of apprenticeship. Duration and frequency of rotations of Step-Up apprentices from trade to trade has also varied from site to site. The glue which binds all of this together is the local unions' commitment and agreement to work with the local sponsor and acceptance of the notion of a "career exploration" Step- Up model as the optimum means of minimizing drop- outs and maximizing success by assuring "right" choices of craft or career selection by Step- Up apprentices following a year's exposure on the job. All of these variations are agreed upon locally and approved by DOL or its State apprenticeship counterpart with the cooperation and assistance of HUD's Office of Labor Relations.

With this background exposition complete, we spare our readers a long history by presenting (a) a chronology of Step-Up's progress, (b) a short list of key transition points necessary for the establishment of Step-Up, and then (c) a selected commentary on process and prospects.

HOW STEP-UP WAS ARRANGED, STRUCTURED, AND IMPLEMENTED

Significant Dates in Step-Up Development

1. Model Cities legislation enacted in 1966 containing provision to require "maximum opportunities for employing residents of the area in all phases of the program and enlarged opportunities for work and training..."

2. Section 3 of the Housing and Urban Development Act of 1968 enacted requiring employment and training opportunities for low income people to the greatest extent feasible in designated HUD programs. This provision was amended in 1992 by the Housing and Community Development Act of 1992 to especially target public housing residents.

3. Model Cities "Policy Statement and Guidelines for Special Local Agreements on Rehabilitation and Related Housing Construction work in the Model Cities Programs" - by the Building and Construction Trades Department, AFL- CIO, July 16, 1968.

4. Step- Up concept "created" and "named" during summer of 1991 in HUD Office of Assistant to the Secretary for Labor Relations as its contribution to special Section 3 Task Force.

5. Draft "briefing" materials on proposed program prepared and utilized for support- seeking discussions with Deputy Secretary of Labor, the Assistant Secretary for Employment and Training (DOL), and the Bureau of Apprenticeship and Training (BAT) staff during fall, 1991.

6. Meetings with the President and Secretary- Treasurer of the Building and Construction Trades Department, AFL- CIO to discuss concept and seek support--summer and fall, 1991.

7. Briefings of Secretary Kemp during fall, winter of 1991, into spring of 1992 regarding progress of Step- Up "selling" effort within HUD bureaucracy as well as within DOL, both employment and training - apprenticeship, and wage and hour (Davis- Bacon)

8. Developed Step- Up "logo" and descriptive materials late 1991 through Spring, 1992

9. Provided preliminary Step- Up training of Labor Relations field staff in May, 1992.

10. Provided formal Step- Up briefing to heads of local building trades councils from New York City, St. Louis, Chicago, L.A., and Pittsburgh at National Legislative Conference of Building Trades Department in Spring, 1992.

11. Secretary Kemp suggests CHA director Vince Lane consider doing Step- Up in Chicago - May- June, 1992, following Los Angeles riots.

12. Allan goes to Chicago in July, 1992 to meet with Thom Finnerty, special assistant to Lane and other CHA staff on design of a Step- Up program with the building trades.

13. Formal announcement of first Step- Up in Chicago in August, 1992.

14. First Step-Up class starts work September 8, 1992, Chicago.

15. Labor Relations puts Step-Up Notice in HUD clearance in August, 1992.

16. Kemp signs request from Labor Relations to announce Step- Up in the Federal Register as a new program concept September 30, 1992.

17. Step- Up Notice published in Federal Register October 8, 1992.

18. Secretary Cisneros announces Interagency Step- Up Agreement on June 19, 1993. Labor, Justice, HUD, NAHRO.

19. Phoenix awarded Step- Up designation August 20, 1993.

20. Huntington, WV awarded Step- Up designation September 20, 1993.

21. Baltimore awarded Step- Up designation November 29, 1993.

22. HHS signs Step-Up interagency agreement, December, 1993.

23. Secretary Cisneros addresses Building Trades Department's National Legislative Conference April 19, 1994 and calls for 50 Step- Up cities by end of year as joint challenge to the unions and promises to deliver resources to carry it off.

24. Ft. Lauderdale awarded Step- Up designation May 3, 1994.

25. Chandler, AZ awarded Step- Up designation May 20, 1994.

26. Dallas awarded Step- Up designation June 8, 1994.

27. Milwaukee awarded Step- Up status August 30, 1994.

28. EPA letter joining Step-Up federal partnership, opening the door for Step-Up workers to apprentice at Superfund sites, September, 21, 1994.

29. San Antonio, Washington, D.C., St. Paul, Minneapolis, Kansas City, Detroit, Toledo, and New York, among others, are expected to become Step-Up sites over the next several months.

HOW IT GREW TO BECOME AN INTERAGENCY AGREEMENT

Over the course of the development of Step-Up, the following operating principles took shape, and were summarized by Richard Allan (1994):

I. Operating parameters, i.e., Section 3 and prevailing wage and apprenticeship requirements should be viewed as complementary. These operating parameters, supported by relevant technical assistance and related resources from a HUD-DOL collaboration as well as other public-private partnerships, will provide the basic elements of success for locally-developed job programs.

II. HUD's primary technical assistance role in "growing jobs" should be as "translator" and "facilitator."

III. Existing programs and initiatives like Step-Up which manifest the kinds of programs features and overarching themes needed to succeed locally should be actively nurtured and expanded.

IV. The proposed Fair Housing Equal Opportunity (FHEO) Section 3 demonstration initiative should focus primarily on the compliance side, the education side, the procurement side--translating Section 3 for HUD program environments where it has application--pointing employers toward the means, the vehicles for compliance.

V. DOL specialists should carry the bulk of the technical assistance side through the HUD-DOL collaboration. The proposed "one-stop shopping centers" and reemployment efforts should be cornerstones of HUD economic uplift efforts.

VI. HUD Policy Development and Research should provide for an evaluation and outcome measurement scheme.

VII. Youth Corps and Youthbuild programs, to the extent possible, should be linked with Step-Up to maximize the transition from school to work, from "life preparation" to actual work settings and apprenticeship.

VIII. In implementing an overarching economic lift strategy, every effort should be made to avoid overly prescriptive Washington solutions driven by rigid bureaucratic approaches. Strategies and initiatives should have the room to adjust and be creative, whether in terms of how technical assistance is delivered or in how HUD programs cooperate and collaborate within the HUD family and with outside resources.

What Had to Happen So That Step-Up Could Happen

The above operating principles were applied through the process of building the compromises, summarized in the following necessary steps:

1. Selling the Step- Up Concept Within the Bureaucracy, specifically HUD and Department of Labor (DOL). Once the concept strategy was outlined, the name "Step- Up" chosen, and the "lasting ladders of opportunity" informal imagery adopted. the "bureaucracy" within HUD and DOL had to be sold on embracing this proposed new initiative--both career and political people had to be targeted. Secretary Kemp's support and intervention had to be resorted to very often during this process to generate and sustain the momentum, to get audiences with senior people at DOL, and to gain the assistance while minimizing the turf concerns of other HUD offices. There was significant resistance below top people (like the Deputy Secretary at DOL, an early supporter)-- for example, the Employment and Training Assistant Secretary and Bureau of Apprenticeship and Training Director and staff were not anxious to go along even when prodded by the DOL Deputy Secretary. They feared unions and the apprenticeship "community"--both within the individual trade unions and DOL field staff from the Bureau of Apprenticeship and Training (BAT) and its State counterparts. Plus they resented an "apprenticeship initiative" originating somewhere else. The DOL Davis- Bacon Wage and Hour Administration staff was much more cooperative and wanted to do something "positive" in the area of jobs and training - like Step- Up. Their position was if ETA people bought it, they could.

2. Convincing the Unions. HUD Labor Relations used personal relationships and trust built up over many years to appeal to top leadership of AFL-CIO Building and Construction Trades Department to listen and provide some operating room, "letting us go out to do missionary work with the union locals and among the internationals." Appeal was pragmatically based on the following:

a. Market share recovery or establishment - much of the HUD- funded construction and rehabilitation work was going non- union even in the big cities - Step- Up offered a strategy to obtain that work for union contractors and members--a win-win situation.

b. Demonstrated that a serious effort to provide jobs and training opportunities to low income people, including public housing residents, could be done in the context of the ever- controversial Davis- Bacon Act by "adapting" the apprenticeship system within the federal regulations.

c. Would dramatically help unions (and their contractors) further diversify their work forces so that they could compete in the quickly changing market place (their own membership base is aging rapidly) and meet increasingly more aggressively enforced hiring goals like Section 3 or Executive Order 11246 [President Johnson, 1964, on affirmative action in sizable government contracts] at the national level especially.

d. Showcased apprenticeship as the way to go, with a twelve- month "career exploration" period for Step- Up participants designed to minimize drop- outs, maximize choice (successful), assure most efficient use of training and mentoring resources, and enable a number of career tracks other than construction for participants. Trades were familiar with career exploration concept and many used "pre- apprenticeship" and other similar "outreach" programs - Step- Up built on this experience. Previously "unqualified" and "unsuited" apprentice candidates among the inner- city poor etc., could now be recruited, supported, and ultimately mainstreamed to all construction through the traditional trade apprenticeship network.

e. Would effectively "deflect" and address charges of racism and sexism - the historic existence of same has made Davis- Bacon repeal more of a political problem for the trade unions in recent years.

One difficulty (which is ongoing) was that while national union leadership and local business agents were responsive, apprenticeship institutional people were less so--probably because the seeming proliferation of apprenticeship schemes like school-to- work, youth apprenticeship, etc., fed a real sense of threat to the long-established "standards" by "sham" programs.

Step- Up initially got branded (incorrectly) among some of these people as a one year program that in fact represented a threat to the standard craft apprenticeship programs. Additionally, some unions wanted to sign participants up immediately at the beginning in order to increase membership rolls and per capita payments to the union and achieve "quid pro quo" work exchanges with willing local procurement providers like housing agencies. This activity is ongoing apart from Step- Up, and is complementary, although it is perceived in some quarters as competing.

3. Selling the "Industry" - Local Public and Housing Agencies. The initial targeting of public housing agencies as Step- Up sponsors because of their sizable "federal funding streams" and priority clients - residents who needed work and skills and Section 3 statutory objectives was problematic because most agencies knew very little about unions, apprenticeship, training, and Davis- Bacon. The National Association of Housing and Redevelopment Officials (NAHRO) in fact and many of its members were part of a "Davis- Bacon Reform-Repeal Coalition." Agency procurement and construction people were typically far removed and generally did not talk to the "resident services" people who were interested in jobs programs and resident benefit programs as a whole--usually of the short term variety. Overcoming this overall "language" and terminology barrier has been very difficult--this includes communication with other federal and state/local agencies as well. It was made more difficult by a general anti- labor sentiment and perhaps a more active anti- Davis- Bacon sentiment both among these agencies, and particularly and historically at HUD. The strategy was to develop a partnership with NAHRO-- an organization which could help carry the Step- Up message nation- wide and potentially provide technical assistance and external (to HUD) support regardless of what went on inside HUD in the short term and between elections. Another problem was that the industry also had a very established procurement (building) network of contractors, consultants, and operating practices. All of this was buttressed by HUD's very static- risk adverse bureaucracy--HQ and field. Workshops and conferences sponsored by NAHRO and others were utilized frequently to get the word out about the Step- Up program strategy approach against this less than supportive backdrop.

4. Finding Resources, Both Internal (HUD) and External (Other Agencies, Allies). A program which had only "idea" status, no authorization from Congress, no formal legislative or budgetary support from the administration other than an Interagency Agreement which relies on relatively limited technical assistance funds, is a difficult program to push. The paradox has been that had funding been sought for the idea, the idea might have been still-born. Jockeying over control of the program within HUD has already been evidenced--if there was money at the outset there would have been regulations needed. Legislating Step- Up might have been an impossible task given the fact that the idea has thrived with cooperation, resource sharing (although not enough) and informal understanding and networking among interested parties. Lobbying and winning financial support at DOL and particularly the Department of Justice and its Weed and Seed Program was extremely important. Justice's support from the Step- Up concept stage was invaluable in giving Step- Up some status and recognition--Justice was interested in using Step- Up as a "seeding" element. Obtaining a HUD $200,000 grant from Drug Elimination funds in Public Housing finally enabled Secretary Cisneros to announce a Step- Up Interagency Agreement with Justice and Labor which could fund a NAHRO technical assistance effort, including what came to be a very successful "marketing" brochure, and thereby establish the Clinton Administration formal connection with Step-Up for the first time. The Secretary's speech to the Building Trades National Legislative Conference helped to "cement" the bona fides of Step- Up at least in public. Health and Human Services's decision to join the federal partnership and enable HUD to tie in welfare reform issues to Step- Up and to link the minimizing of work disincentives for people on public assistance was also very important. EPA was recently asked to join the Step-Up partnership with its environmental justice/Superfund clean- up jobs development goals, and they have responded with enthusiasm.

5. Establishing Pilot Site. Establishing a good pilot site was seen as key to marketing, building support, finding additional resources, getting other agencies involved, and establishing basic legitimacy. Chicago Housing Authority (CHA) Director Vince Lane came to Sec. Kemp in May, 1992 (after LA riot) looking for a jobs program and Kemp suggested Step- Up might be the answer. The headquarters of Labor Relations worked with his people and unions to develop the initiative that summer. DOL's apprenticeship bureaucracy (BAT) in Chicago initially opposed it, and Secretary Kemp had to call the Secretary of Labor to intervene. Program was then approved, First class day after Labor Day--1992. The Chicago Housing Authority Step-Up initially involved $14 million in rehabilitation of 1,600 CHA housing units, with the program participants including 300 public housing residents and 150 building trade workers, of whom approximately 200 were women. Significantly, about 150 workers were placed in union membership at the conclusion of the first year as part of this program. A complementary New York Times front page story on Step-Up in February, 1994 helped immeasurably with Clinton Administration support for Step-Up. There was much "disinformation" and misinformation which surrounded the Chicago Step- Up experience which had to be overcome. CHA bureaucracy had a difficult time with this job program--perhaps too ambitious in size--in an environment of many initiatives, and many pressures from bad press in other areas.

6. Transitioning from One Administration to Another - overcoming the "we didn't invent it - it can't be any good syndrome" and the "politics of selective rejection" of initiatives originating on another "watch."

A new idea with all elements of reinvention, themes of the new administration, and real world workability in "growing" jobs and opportunities for poor people--including welfare recipients--does not guarantee success, acceptance, etc. Resistance to change is endemic within and between federal agencies inside Washington as well as out in the field. Bad or no communication within these "networks" makes change--acceptability of a new idea all the more difficult and threatening. If the new idea is not part of someone's agenda or is not readily embraced, it bumps against a powerful inertia. This challenge can be met to a certain extent by allowing a wider group to "declare victory," in other words, by engaging in compromise within the bureaucracy so that a widening group of participants can share in the positive achievement of finding work for public housing residents. This process of public management in the face of systemic obstacles, so well described by Lynn (1994), is for Step-Up the art of sharing in growing success without the success itself being expended.

WHAT ELSE HAS BEEN LEARNED SO FAR

Here we draw some "Lessons so far":

1. On intractable structural problems such as those calling forth Step-Up as a response, long-term knowledge of the field and its actors are essential to determine a workable pathway and workable moment for change.

2. Powerful agency and organization allies must be called upon to minimize resistance at the proper moments, with influence being expended economically to overcome resistance at lowest cost. Positive press and other written comments must be actively developed, and bad press must be actively answered and underlying problems addressed.

3. Having no budget while developing an interagency agreement might actually help change appear as less of a threat and provide an easier basis for establishing a greater range of allies within the federal bureaucracy and elsewhere. All participants can claim credit for success, since all can champion Interagency Agreement. Some old hands within respective agencies have an appreciation for the significance of an agreement on a decades-old problem.

4. Be prepared for the intramural conflict that comes with success:

a) others claiming authorship and ownership of program through attempts to assume its direction,

b) others wishing to incorporate program into a "new" initiative that can reinvent more wheels than governments, and set back local public housing employment initiatives to earlier squares in game, nearer to square one,

Address (a) and (b) by continuous engagement with key stakeholders on principles of Step-Up's success.

5. Engage early and often in dialogue with consultants who enter the scene as program draws notice and study,

6. Return to #2 above to attempt to minimize ill effects, emphasizing basis for the program's success so far, so that its substantial accomplishments are not destroyed, whatever happens. Widen range of allies friendly to Step-Up approach, and work toward solutions to problems that arise with further expansion of the program.

WHAT ARE THE PROSPECTS FOR STEP-UP?

Given its characteristics listed above, it is reasonable to assume that Step- Up prospects should be rosy and new programs should continue to be developed as the word spreads and more resources and support are attracted. This should be especially the case as Step- Up collaborations with Youthbuild, Youth Corps, "Youth Apprenticeship," Youth Fair Chance, and related programs demonstrate the logic and effectiveness of cooperation and resource sharing across a continuum of separately conceived but closely related programs. Secretary Cisneros did--this past Spring--call for expansion of the program to at least 50 cities this year.

On the other hand, the need in bureaucracies and administrations to recast, rename, repackage, or reintroduce initiatives for reasons unrelated to the current viability of a particular initiative, including simple or not so simple political calculations and suppositions, may lead to `Step- Up" becoming known as something else. It is possible in this regard that legislation would be developed to authorize Step- Up or Step- Up analogues.

A best guess is both of the above will happen. Step- Up is out there in nine cities with more sites in the works. It's difficult to envision the shutting down of a model employment program like this that appears to work. On the other hand, the quest for `newness" and policy/political validation will quite possibly lead to the shaping of another closely related initiative. Time, of course, will tell.

The question then arises, how can this program be expanded in the mean time? Some options are (with likelihoods in parentheses):

1. The expansion of Step-Up to other cities.

Already occurring in the public housing sector.

2. The expansion of Step-Up beyond public housing to the non-profit and for-profit housing sector and into other construction areas (EPA Superfund, GSA, DOT, etc.).

Under discussion. Local start-up costs are not funded, an important question from the HUD point of view, in order to get Step-Up "out into the field" and out of the central agency's shirt pocket. The publicly-assisted housing jobs pool is cyclical, as is other construction employment, so Step-Up's link to non-construction jobs is essential for the success of any public housing or community jobs program.

The next step in Davis-Bacon compromise is not first to legislate it, but to implement it ala Step-Up as legislation makes its way through Congress. As Step-Up is more widely implemented nationally, the more likely will be the political environment for more extensive accommodations on Davis-Bacon to local conditions. We suggest spreading the pattern of local cooperation on Davis-Bacon nationally, even in the absence of legislation, keeping in mind that Step-Up, while a major achievement in negotiations, involved organized labor giving up neither the letter nor the spirit of Davis-Bacon.

Conclusion

Two principles which have been very dear to organized labor during its history are solidarity, which has been described as enduring commitment to the common good, and subsidiarity, which means that central power should not make decisions which can otherwise be made locally. These principles were intuitively incorporated into Step-Up. Davis-Bacon compromise must not force unions to violate their notions of solidarity (they won't), and must positively follow the pattern of local arrangements along the lines of subsidiarity. The model approach of Step-Up is: establish local agreements under general HUD/DOL guidelines, and then have HUD/DOL sign off on these local agreements. It is from these varying fabrics of local agreements that Davis-Bacon compromise can be quilted with shared, common threads.

That other historic approaches to Davis-Bacon compromise regarding the employment of community residents in publicly funded construction projects to date have failed, while Step-Up has succeeded, should argue caution in moving away from the model established in Step-Up. There is wisdom and effectiveness in building upon success wherever it may surprise us.

Step-Up is today facing an important transition from a pilot project with a few hundred workers to a nationally-implemented strategy with thousands of workers. The next chapter in the story is how HUD makes the organizational adjustments so that a larger and effective program can continue. These efforts are in progress, and we look forward to another positive chapter in Step-Up's story.

STEP-UP OVERVIEW

City                Established    Initial Step-Up     
                                   Apprentices         
Chicago             Sept., 1992    298                 
Phoenix             Aug., 1993     10                  
Huntington, WV      Sept., 1993    20                  
Baltimore           Nov., 1993     72                  
Fort Lauderdale     May, 1994      20                  
Chandler, AZ        May, 1994      4                   
Dallas              June, 1994     20                  
Milwaukee           Aug., 1994     20                  
St. Paul, MN                       10                  
San Antonio                                            
Detroit                                                
Total                              474                 

NOTES

Allan, Richard S., "Economic Uplift - Building Lasting Ladders to Opportunity, the Evolution of a Policy," HUD Office of Labor Relations internal memo, February, 1994.

Jencks, Christopher The Homeless, Harvard University Press, 1994.

Lynn, Laurence E., Jr. "Do Not Bash or Sue--Just Manage," Chicago Tribune, August 18, 1994, Section 1, pg. 31.

Meehan, Eugene J. "The Evolution of Public Housing Policy," in Federal Housing Policy and Programs, Past and Present, ed. J. Paul Mitchell, pp. 287-318. Rutgers, Center for Urban Policy Research, [1979], 1985.

NAHRO Step-Up, Building Lasting Ladders to Opportunity, Draft implementation guide, July 26, 1994.

Schorsch, Albert J. III, Housing Policy and Common Sense--An Inquiry and a Method, Dissertation, University of Illinois at Chicago, 1992, UMI dissertation #9226269.

Wall Street Journal "Davis-Bacon Meets Jim Crow," May 13, 1992.

Draft of 10/94; Do not quote or cite without authors' permission