Pursuant to City Charter Sections 371 and 372, the City Council hereby adopts a Local Business Preference Program and makes the following findings. The City has a proprietary interest in leveraging, to the greatest extent possible, the millions of dollars it spends yearly contracting with private firms for goods, equipment, and services to and for the benefit of the City and its residents. The policy of the City is to reduce unemployment, stimulate the expansion and retention of local jobs, and create sustainable local economic development. Significant benefits are associated with a Local Business Preference Program. These benefits include the creation of local jobs, which leads to increased consumer spending and a robust local economy. Preference programs in other jurisdictions have been successful where the business conditions approximate the conditions currently existing in the Los Angeles area. For example, preference programs work best where unemployment is high. As of February 2021, the unemployment rate in the City and County of Los Angeles was calculated at 10.9%, compared to 8.5% in California and 6.2% nationally.
Historically, many of the larger cities within the County of Los Angeles experience labor costs that are among the highest in the nation. Los Angeles area labor costs are higher than the competing neighboring cities and counties. The state and local minimum wage standards are higher when compared to other cities and states. City contractors are required to provide employees working on City contracts a higher living wage rate. Business space in the Los Angeles metropolitan area is more costly than comparable space in other cities and counties. All corporations in California are subject to a corporate tax that is among the highest in the county. On a national level, Los Angeles is one of the ten most expensive places to do business as a result of local labor costs and business costs, fees and taxes. These conditions create an expensive climate in which local businesses must compete against firms with lower labor and business costs from neighboring cities, counties, and states.
This narrowly tailored Local Business Preference Program is intended to encourage small and large businesses to compete for City contracting opportunities, establish and maintain local operations, and discourage existing local businesses from relocating to different, less expensive areas outside the City or to other states. Given that the City has limited financial resources available for social and workforce development services, this Local Business Preference Program provides a financially feasible way for the City to address the significant need to help people move away from chronic unemployment and into employment and economic self-sufficiency.
Many residents of Los Angeles County have been out of the workforce for an extended period of time and face considerable barriers when trying to re-enter the mainstream workforce. For the majority of this hardest-to-employ population, these barriers can be overcome by placement in a transitional job through which they can develop the job skills necessary to compete and succeed in a mainstream work environment. A transitional job provides an opportunity to earn wages while learning skills that lead to self-sufficiency and permanent employment.
Currently, most transitional jobs for the hardest-to-employ population are provided by business entities with transitional employment programs. Because these businesses have to pay for higher overhead costs, including supervision, counseling, and training of a transitional workforce, they are at a competitive disadvantage and obtain few City contracts. Consequently, the demand for transitional jobs for the hardest-to-employ is not met.
Along with providing a contracting preference for local and local small businesses in Los Angeles County, extending the preference to business entities working with the hardest-to-employ populations will allow the City to expand the number of transitional job opportunities available to the long-term unemployed in Los Angeles.
SECTION HISTORY
Added by Ord. No. 153,662, Eff. 6-1-80.
Amended by: Ord. No. 157,595, Eff. 5-15-83, Ord. No. 169,059, Eff. 10-24-93; Ord. No. 173,186, Eff. 5-22-00; Subsec. (c), Ord. No. 174,048, Eff. 8-5-01; Title and Section, Ord. No. 187,121, Eff. 8-7-21.