A proposed rule by the U.S. Department of Labor's Office of Federal Contract Compliance Programs to increase disabled- and veteran-worker hiring quotas for federal contractors has raised concerns among New Jersey firms already faced with mounting regulations.
"You don't have a lot of small businesses in New Jersey that can meet the standard. There's been a terrible catch-22 … since the beginning of affirmative action set-asides," said Marjorie Perry, president of Newark-based MZM Construction & Management Co. "You're always gonna go in the direction of where you have the path of least resistance. You really want to stay away from cumbersome contracts."
The proposed regulation would require that veteran and disabled workers account for 7 percent of a federal contractor's work force. According to an analysis by the Associated General Contractors of America, compliance with the mandate would cost firms at least $14,056 per office location each year to recruit and hire disabled workers — 30 times higher than Labor's $473 estimate — and $11,333 to do the same for veterans, or 25 times higher than the department's $560 estimate.
"The administration has grossly underestimated the financial and administrative burdens that these new rules would impose, particularly on small businesses," said Brian Turmail, the association's spokesman, in a statement. "If the proposed rules take effect, many small construction firms may no longer be able to afford to work on federal projects."
Perry said under current mandates "just to do the monitoring for compliance is insane," noting that "nowadays, you have to have at least one full-time person on board to stay on top of your percentage of veteran and minority workers."
"Where you're gonna find (veteran and disabled workers) is the issue, and being penalized for not finding them is another issue," Perry said. "If I'm just not finding a welder who's a veteran or disabled, how are you gonna punish me for that?"
According to the Office of Federal Contract Compliance Programs, the proposal at 7 percent is meant to make federal contractors hire veteran and disabled employees at the same rate they currently apply for open positions, citing the unemployment rate for such workers is 1.5 times higher than the rate for nonveteran and nondisabled job seekers.
But AGC CEO Stephen E. Sandherr said in a statement that "federal officials have failed to provide any data indicating that veterans or people with disabilities are being treated unfairly with regard to hiring."
"The problem isn't that construction firms aren't hiring veterans or people with disabilities," Sandherr said in a statement. "It is that they are too busy struggling to survive to do any hiring at all."
Thomas DiGangi Jr., executive director of the Associated General Contractors of New Jersey, said AGC and the Building Contractors Association of New Jersey "generally opposes any preferences that are government mandated," but he's confident that Labor "will do a good job with the contracting community's concerns over the rule."
"We work very closely with our trade partners to encourage veterans and all folks to enter our trades, because that's where our work force comes from," DiGangi said. "Right now, we're in learning mode and discussion mode with the rule. It's premature to assume the rule would be adopted as it is currently proposed. Without understanding the final version, it's hard to suggest what actions we would be able to do."
DiGangi did not know a timeframe of when the proposed regulation would be addressed.