'A good notion gone bad': Are participation programs hurting Milwaukee's minority contractors long-term?
Talis Shelbourne
With construction projects expected to increase in the post-pandemic world, some minority contractors say two of the area’s largest participation programs may be doing more harm than good to companies and workers from underrepresented groups.
However, union officials and other construction industry insiders say mandates are the best way to ensure the inclusion of people from these groups.
The programs in question are the City of Milwaukee’s Residential Preference Program (RPP) and Milwaukee County’s Target Business Enterprise (TBE) policy, which set geographic or participation goals for members of underrepresented groups who are working on publicly supported projects.
Milwaukee's program requires that certain percentages of workers on city-backed projects be residents who are unemployed or underemployed. The idea is that because of the city's diversity, most of those who benefit will be from underrepresented groups.
The county's program, meanwhile, requires a rough average of 21% participation from a minority- or women-owned business on any construction project that is not transportation-related.
The effectiveness of both programs may come under scrutiny as the city completes a study of its bid-awarding process for all city contracts — including construction — to determine if it is producing inequitable outcomes.
Beyond ensuring participation on specific taxpayer-backed projects, the aim of such programs is to help companies — and their workers — build capacity and experience to better compete for work on lucrative privately funded projects.
Critics say that is not happening and, instead, such firms and workers are being pigeonholed, and treated only as laborers to help meet participation goals.
Mark Phillips, owner of Atlas-Phillips Plumbing LLC, calls such participation programs “a good notion gone bad.”
Phillips, a master plumber, spent 18 years in the trades, four of which were as a contract compliance administrator with Milwaukee County. He said the workers and companies often find themselves stereotyped and out of work for long periods — and when they are on jobs to help fulfill mandates, it strains relationships with developers.
“The way it’s forced down contractors’ throats, it creates a bad taste in their mouth,” Phillips said. “If someone says, ‘They work on RPP jobs,’ that’s like a knock on you. If your experience is in RPP jobs, those are welfare jobs that you had to work on. RPP job means that’s cookie-cutter stuff — I can do that in my sleep.”
‘We only get work when it’s welfare work’
The county's program, and many like it, is based on whether a company or firm — one that can employ numerous people — is owned by a member of a group considered historically disadvantaged in the industry.
In contrast, the city's program is worker-based, an approach that can be a fit for the building trades because many workers function essentially as free agents, being picked up when there is a need for work on a large-scale project.
Workers must first be certified through the city program. They are eligible only if they have not worked within the last 15 days, worked less than 1,200 hours in the past year or meet federal poverty guidelines.
“In theory, it’s supposed to help people from the community gain skills and become more employable as a result of publicly funded projects that are happening in the community,” Phillips said. “That’s the in-theory part.”
In practice, he said, many of those certified through the city's program find themselves on the sidelines until a large project with public funding attached comes around.
"There are a lot of people where all they know how to do is push a button because they’ve been sitting on the side waiting for a big project to come up," he said, underlining the idea the workers are not building skills.
When work is available, the environment on the job can be less than ideal.
"People on the job will say, ‘Oh, he’s here because it’s an RPP job,’ meaning you wouldn’t be here if it wasn’t for the RPP," he said. "We only get work when it’s welfare work, and that’s essentially what RPP is, because that’s the only sort of job you can get.”
Dan Bukiewicz, president of the Milwaukee Building and Construction Trades Council, said the union actively encourages its eligible members to take on RPP jobs.
Mark Kessenich, CEO of the Association of General Contractors of Greater Milwaukee, said that during high-volume periods of construction, his members — which are firms and businesses — have found success through such programs.
However, he said, there are simply not enough of those publicly backed contracts and the pandemic has significantly slowed building.
This was reflected by the results of a survey conducted by the National Association of General Contractors, which cited frequent delays and increased material costs as reasons for the slowdown.
In the contracting world, developers typically work with a general contractor who then subcontracts work around the various trades, such as plumbing and electrical. The county program requires a certain percentage of each trade-work be done by eligible companies or workers.
That can make those workers a "fourth-party.”
In his experience, Phillips said workers and firms that are filling a participation requirement usually find themselves too removed from developers, property owners and even general contractors to make a good impression.
“Me being a subcontractor, I rarely, if ever, get to speak to the owner, if I know who the owner is,” he said. “So how can I develop a relationship with anyone when they don’t know that I exist?
"That’s where the issue is.”
Industry insiders say alternatives to encourage diversity are scarce
When the Milwaukee Journal Sentinel asked some of the state's largest construction companies what can be done — aside from mandates through government programs — to boost participation by underrepresented groups, only one responded.
None agreed to interviews.
In an emailed statement, Tom Irgens, executive vice president of Irgens Partners, said his firm made inclusion a priority on its own a decade ago through a program to reach construction specialists and subcontractors of all types.
“Having more contractors who will compete for our business is good business practice,” he said in the statement.
Bukiewicz, president of the local trades council, noted participation programs often force general contractors to change how they operate, which can hinder participation.
“The reason contractors don’t like to use RPP is because it’s one more thing they have to track and take care of, it’s more paperwork for them,” he said. “Quite frankly, the easiest thing to do is the same thing they’ve always been doing and that’s not going to help with diversification of the trades.”
Kessenich, of the Milwaukee area contractors group, called relationship development "a critical aspect" of how any new firm comes into the world of private contracting and said his organization is focusing on providing more mentorship and networking events for new businesses.
Meanwhile, organizations such as the National Association of Minority Contractors are working to set up regular meet-and-greets to help build natural relationships between property owners, developers and minority-owned companies and workers.
For its part, Irgens works with Prism Technical Management & Marketing Services, a private-sector diversity and inclusion consulting firm.
Randy Crump, CEO of Prism, said his firm works regularly with developers who have projects with participation requirements and helps them partner with minority companies and workers.
He noted the world of contracting outside of public funds is complex. Some minority-owned companies and individual specialists, he said, hurt themselves by overcharging when they are tapped to help meet participation requirements on big projects.
“Large contractors will have a long memory and will remember how you took advantage of a situation and may not give out an opportunity during bidding in the private sector,” Crump said.
He also said racism has long been an issue: “In the construction industry, a lot of white-owned companies think that minority firms only exist because of affirmative action.
“That’s what my life has been about: trying to get people to recognize there’s a lot of great people in this community and frankly, they just need a shot,” he said.
According to the U.S. Census Bureau, Wisconsin had 13,791 nonminority-owned construction firms compared with 592 minority-owned firms in 2018.
It is difficult to determine the racial breakdown of workers in the trades, given that no one is currently tracking how many remain in the field after completing apprenticeship programs.
Bukiewicz said participation programs will always be necessary until the construction industry makes diversity a priority in public and private contracts.
“There’s always pushback that way as far as them going, ‘It feels kind of forced.’ If you wouldn’t put it in writing into a contract, the chances of them doing it voluntarily isn’t going to happen. Like with anything that needs improvement, you have to write down criteria and milestones to hit; otherwise, who’s going to step up and do it?”
Contact Talis Shelbourne at (414) 403-6651 or tshelbourn@jrn.com. Follow her on Twitter at @talisseer and message her on Facebook at @talisseer.
How are we doing? Fill out this survey and let us know.