 A note from Dr. Samuel Myers, director of the Wilkins Center
Prior to the recent great recession, minority-owned and in particular women-minority owned firms registered significant rates of growth. At the time, the U.S. Department of Commerce’s Minority Business Development Agency (MBDA) reported that Asian, Hispanic and African American women-owned firms grew by 40, 60 and 75 percent respectively between 1997 and 2002. This compares with an overall growth rate of 31 percent for minority male-owned firms, 20 percent for all women-owned firms and 16 percent for all male-owned firms. Between 2002 and 2007, however, women-owned firms grew at a rate of 20 percent while male-owned firms grew at a substantially lower rate of 5.5 percent. Asian, Hispanic and African American firms grew at rates of 40 percent, 43 percent and 60.5 percent from 2002 to 2007. These widely reported findings have largely been interpreted as evidence of the success of government programs designed to increase the representation of women and minority-owned firms and also as evidence of the success of women and minority entrepreneurs themselves.
Roger Clegg, CEO and General Counsel of the Center for Equal Opportunity, who writes extensively on matters of government programs designed to help women and minorities, has argued that these programs – especially those that provide racial preferences in public procurement and contracting – are not only unfair but they are also economically inefficient. He, along with other critics of affirmative action for women and minority-owned businesses, argue that the only appropriate rule for the award of public contracts should be a lowest-bidder rule. Many observers note that the very evidence of the significant growth of women and minority-owned business enterprises provides the proof that there no longer is a need or justification for race or gender conscious programs and that at worst these programs hurt non-minority male-owned firms.
Recent reports to the City of Minneapolis and by researchers at the Humphrey School suggest that the problem is not as simple as that. For one thing, in the private sector contracting and subcontracting are often done within long-established “old boy’s networks” that favor established white male-owned firms. Public agencies could passively contribute to this private market inequality by privileging these networks when they favor well-established white male-owned firms. For another thing, the data from MBDA refer to a period before the recession. Post-recession data suggest that the situation facing minority and women-owned firms is extremely fragile. Just look outside and observe what firms are repairing the roads, bridges and highways. Look outside and see what company names are listed on the various big-ticket projects, like the new Twins Stadium and the University of Minnesota’s TCF Stadium. And, ask yourself: Does the racial and gender representation look like the racial and gender representation of the metropolitan area? Or, put differently, do we or should we care about diversity and equity in public contracting that uses our tax dollars? |
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