Federal policy from ’68 to aid low-income with jobs falters, ‘needs to be rethought’
It seems like an obvious win-win strategy: Take millions of federal dollars awarded to help create housing and other programs for poor people and hire low-income workers themselves to do some of the labor. The money would do double duty, providing physical improvements while enabling low-income people to rise out of poverty.
But the policy, embedded in a 1968 federal law, has not worked in Cambridge and elsewhere, and rarely gets public attention. Instead, agencies such as the Cambridge Housing Authority and the city’s Community Development Department, which get money from the U.S. Department of Housing and Urban Development, file reports dutifully every year documenting their compliance, or lack of it, with the rules.
The law “is well intentioned, but for this to result in consistent opportunities either for training or for jobs it needs to be rethought,” Cambridge Housing Authority Executive Director Gregory Russ said. “The job market today is very different from 1968.” Instead of focusing on numerical hiring goals, he said, the authority offers its residents, particularly youths, education and training programs to guide them toward self-sufficiency.
That provides “more value in the long run potentially than to say, ‘I’ll give you a job for eight weeks,’” Russ said, referring to short-term construction jobs the federal policy might provide.
Try “to the maximum extent feasible”
Section 3 of the Housing and Urban Development Act of 1968 laid out the policy. Specific rules provide that recipients of HUD money – mainly local and state agencies – must try “to the maximum extent feasible” to fill 30 percent of any new jobs paid for with the money with low-income workers. They also must try to award 10 percent of construction contracts and 3 percent of non-construction contracts to companies either owned by low-income residents or whose workforce is more than 25 percent low-income. If agencies don’t meet the goals, they must explain how they tried and why they failed.
In response to a request, the housing authority provided the most recent five years of Section 3 reports. The city’s Community Development Department provided three years of documents. Asked in an email if the city filed Section 3 reports before the 2010-11 fiscal year, the department’s Robert Keller didn’t answer.
The authority met the jobs requirements in three of the five years since the 2008-09 fiscal year, but only because it hired a number of its own residents as “tenant coordinators” to help with issues such as relocation and construction work scheduling. Most of the coordinators don’t have regular hours; those who do may perform office work, Russ said.
The authority did not award contracts to any Section 3 businesses.
The kind of jobs Section 3 targets were scarce. Over the five-year period, there was one professional, three office workers and three blue-collar workers, according to the reports.
As for the city, its federal grants didn’t create any jobs, so the 30 percent requirement didn’t apply. “We typically do not use our [HUD grants covered by Section 3] in ways that generate substantial new employment of this type,” Keller wrote in an email. “Whenever possible. we support and encourage the hiring of low- and moderate-income Cambridge residents, and actively support programs such as Youthbuild [by the housing agency Just-A-Start] on an annual basis.”
The city did award contracts to four companies that met Section 3 requirements. They got $713,000 in the 2011-12 fiscal year, more than 59 percent of construction dollars from HUD. The city report didn’t indicate whether the firms had low-income owners or employed 25 percent low-income workers. No Section 3 contracts were awarded in the other two years.
History of neglect
Nationwide, Section 3 has a history of neglect. The Inspector General’s office for HUD, the government’s official watchdog of the agency, reported last year that HUD didn’t enforce Section 3 reporting requirements for public housing authorities that got almost $4 billion in stimulus funds in 2011 and 2012. “As a result, 1,650 of 3,102 public housing agencies failed to submit their Section 3 annual summary reports and potentially falsely certified compliance with Section 3. In addition, they did not provide HUD and the general public with adequate employment and contracting information,” the IG’s report said.
Some of those that did file the documents reported no compliance, without any explanation as required, the inspector general said. Thirty-six filings listed more Section 3 jobs than total jobs, an obvious impossibility, but HUD did not act, the report said.
In 2003, the IG found that HUD lacked procedures for ensuring compliance and in 1996 a limited HUD investigation concluded that grant recipients “face significant challenges in making Section 3 work,” according to a 2009 report by researchers for the Center on Budget and Policy Priorities, an anti-poverty think tank.
Ahead of recommendations
The report recommended better enforcement and more attention to employment training programs such as the ones that Cambridge already provides.
For example, the housing authority’s Work Force program, which enrolls eighth-grade students and works with them for the next five years to help them graduate, apply to college and try jobs with local employers, had 95 percent of its graduates last year matriculate in college or a training program, a survey showed.
The survey, of Work Force alumni who graduated between 2003 and last year, also found that 90 percent enrolled in training or college after high school, and 90 percent have worked full or part time since graduating. Seventy-one percent of the 2003 to 2007 graduates finished a college or training program successfully within six years, substantially higher than national college graduation rates.
Besides the Work Force program, the authority started a partnership with the retailer The Gap in which residents get eight weeks of job-market preparation and training and some get summer internships at the retail company or other jobs. Last year 39 residents enrolled and this year there are 55, CHA director of resident services John Lindamood said.
The authority also refers young public housing and rental assistance residents to a training program at Just-A-Start, the affordable housing developer. Some students work on a construction crew for the agency. Keller, at the Community Development Department, also cited the Just-A-Start program as an opportunity for low-income residents.
The city also runs an employment program of its own for low-income applicants that provides “a steady set of job placements” for public housing tenants, Russ said. Last year 103 tenants enrolled, with 31 getting jobs; so far this year 92 CHA residents are in the program, again with 31 job placements.
How well do all these programs help get people out of poverty? It’s not clear. Lindamood and Russ cite the figure showing that 71 percent of Work Force program alumni finished college or training within six years; the National Center for Education Statistics says that nationwide, only 59 percent of students who entered college in 2005 graduated by 2011, and 31 percent of students in two-year programs finished by three years.
“We’re excited about [the Work Force performance],” Lindamood said. On the other hand, officials acknowledged that roughly 30 percent of kids who enroll in Work Force don’t stay in the program. Still, they point to other statistics, such as the fact that 62 percent of Work Force graduates are no longer living in public or rental assistance housing.
Even Section 3 has its successes. According to CHA Deputy Director Michael Johnson, 28 percent of the authority’s current workforce – 58 people out of 208 full- and part-time workers – started out as Section 3 hires.