size of the pools of unemployed and underem- 

 ployed labor with and without a project, instead, the 

 benefit procedure implicitly projects the percentage 

 of project labor hires estimated to come from the 

 unemployed labor pool. 



2.11.4 Evaluation procedure. 



(a) Step 1. Calculation of employment benefits is 

 limited to onsite project construction or installation 

 activity in eligible regions as defined in 2.11.2(b). 

 The first step therefore is to determine whether a 

 project is wholly or partially located in an eligible 

 area. 



(b) Step 2. Estimate the number of skilled and 

 unskilled unemployed construction workers in the 

 labor area. Construction labor pool data are usually 

 available from local offices of State employment 

 security agencies. 



(c) Step 3. Determine the labor requirements for 

 plan implementation as follows: 



(1) Labor cost The manpower requirements of 

 water resource projects differ widely. Construction 

 cost estimate data will provide the percentage of 

 labor cost to total construction contract cost. 



(2) Manpower requirements. Analyze the plan's 

 construction work force and schedule to determine 

 manpower requirements over the construction 

 period for skilled and unskilled categories of work- 

 ers. Convert these data to total construction wages 

 in skilled and unskilled categories by year of con- 

 struction. In addition, estimate the yearly wage bill 

 of other workers needed on the project. Use the 

 occupational tables in Appendix 1 of this section to 

 categorize different types of workers. 



(d) Step 4. Compare the annual manpower re- 

 quirements of the project to the size of the unem- 

 ployed labor pool in eligible regions. If labor avail- 

 ability is significantly larger than labor requirements, 

 proceed to the next step. If not, reduce the per- 

 centages in the next step based on one or both of 

 the following: expert interviews; or a careful mat- 

 chup of requirements and availability for specific 

 types of jobs (e.g., carpenters). 



(e) Step 5. Calculate NED employment benefits— 

 (1) Standard method. The following percentages 

 are derived from An Evaluation of tfie Public Works 

 Impact Program (PWIP). ' Although the projects 

 studied in the PWIP report are not fully comparable 

 to many typical water projects, the report does pro- 

 vide an empirical basis for relating public works ex- 

 penditures to employment of unemployed workers. 

 Case 1, below, covers situations in which there is 



' Economic Development Admimslration. U S Department ol Commerce An Evalu- 

 ation of the Public Works Impact Program (PWIP) Spnngfield, VA, National Technical 

 Information Service (PB-263 098). January 1975 



no "local hire" rule; it is taken directly from the 

 PWIP report, as PWIP has no local hire rule. Case 

 2 covers situations in which there is a local hire 

 rule; the reference data are modified to account for 

 an 80-percent local hire by scaling up the actual 

 local hires (for skilled and unskilled workers) to 80 

 percent, but retaining the distribution of local hires 

 previously employed to local hires previously unem- 

 ployed. 



(i) Case 1, NED benefits, no local hire rule. Multi- 

 ply the total wages determined by categories of 

 workers (skilled, unskilled, and other) by the follow- 

 ing percentages to obtain NED benefits by year of 

 construction: 



Skilled— 30 

 Unskilled— 47 

 Other— 35 



(ii) Case 2, NED benefits, local hire rule. Apply 

 the following percentages in Case 2 situations: 



Skilled- 43 

 Unskilled— 58 

 Other— 35 



Because the 80-percent local hire rule is a goal, not 

 a requirement, support these percentages by data 

 that indicate the local hire goal is likely to be met. If 

 this is unlikely, reduce Case 2 percentages to num- 

 bers between the standard Case 1 and Case 2 per- 

 centages. 



(iii) Annual NED benefits. Convert the NED bene- 

 fits by year of construction to an annual equivalent 

 basis using the current discount rate. 



(2) Alternative methods. The percentages of un- 

 employment hires may be changed from those 

 used in the standard method if the change can be 

 supported by an empirical study that shows differ- 

 ent percentages of unemployed and underem- 

 ployed workers on a similar project, or on a seg- 

 ment of the same project, for labor market condi- 

 tions similar to those of the proposed project. In 

 using this method, it may be necessary to vary the 

 categorization of construction workers used in the 

 standard method. The opinions of experts such as 

 local State employment security agencies, local 

 construction firms, associations of contractors, and 

 labor unions may not be substituted for empirical 

 data. Studies used to document alternative percent- 

 ages for specific types or locations of projects 

 should be cited if not included in the project report. 



(3) The percentages are used in the standard 

 method to measure wages paid directly to previous- 

 ly unemployed workers. Previously employed work- 

 ers may vacate ,obs that then become available to 

 unemployed workers, but there are no empirical 

 data to support a quantification of such indirect ef- 



94 



