The Changing Racial Regime

Matthew Holden

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351305105
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

The National Political Science Review is the official publication of the National Conference of Black Political Scientists. The Review's purpose, as described by Matthew Holden in his introduction, is to "lead to new information, insights, and findings" into the social and political status of African Americans. The volume is not exclusionist or narrow. It integrates essays that could stand alone, as they initially were written, according to the method and theory of the author in question. As presented here, however, they also lend themselves to a broader treatment of race and the political order. The present volume combines essays expressly focused on African Americans, Africa, and the African diaspora. At the same tune, it contains essays about broad generic subjects such as budgeting and interest groups, written with no explicit racial relevance. Holden integrates these essays under the theme of the changing racial regime.

The integrating concept is the old word "regime," which political scientists have used in many situations before to define such more or less persistent, though not necessarily permanent, orders of precedence. If no significant benefits and no significant burdens could be forecast by knowledge of the social identity called race, then the regime could be seen as non-racial. In American experience, the regime was, at one time, purposeful and sustained white advantage. The "white race" and its preferential standing, was central to virtually all institutional practice public and private. The significant contemporary question is the degree of change hi the racial regime. Some proceed with the assumption that a large degree of change has occurred in the American political system. The view of other contributors is that the system still sustains racial stratification. In its very internal dialogue, this volume presents a panorama of current work by political scientists, African American and other, on the character of the American political system.

Contributors include: Cedric Robinson, Charles Henry, Edward J. Muller, Marjorie Lewis, Katherine A. Hinckley and Bette S. Hill, Nancy Haggard-Gilson, and Vernon Johnson. The Changing Racial Regime is an essential resource for political scientists, black studies specialists, and scholars and policy analysts of race relations in the United States.

Minority Business Enterprise Set-Aside Programs, Disparity Fact-Finding Studies, and Racial Discrimination in State and Local Public Contracting in the Post- Croson Era

Mitchell F. Rice

Louisiana State University

Introduction

Government set-asides, or “sheltered markets” for minority business enterprises (MBEs) are affirmative action programs that provide minority contractors and subcontractors a certain percentage of a governmental jurisdiction’s contract dollars. Government set-aside programs were developed under two theoretical assumptions: (1) a redistribution of government’s contract dollars to minority-owned firms would provide business these firms could not obtain by themselves, thereby increasing their long-run competitive viability and (2) as subcontractors these firms would develop contacts with larger firms, role models, training, increased business acumen, and greater business potential.¹ The realization of these assumptions would preserve, strengthen, and increase the competitiveness of MBEs to excell in the economic mainstream and participate effectively in both the public and private sectors.² The justifications for minority set-asides include: (1) as a way of closing the business “Ownership gap” between minorities and whites; (2) as an economic development tool in the minority community, particularly for creating jobs in high unemployment areas; and (3) as a tool for creating an expanding minority middle class to serve as a role model for minority youth.³

Minority Business and Set-Aside Programs: An Overview Minority businesses are generally small businesses (with less than 100 employees) privately owned and controlled by minority group members. Minority businesses are clustered in the major urban areas of the country and are primarily engaged in “Selected Services and Retail Trades” (cleaning and janitorial, auto repair, hair care, and etc.).⁴ Over the years, minority businesses have found it difficult to raise capital and financing, have limited access to markets, have limited access to credit, have a negative perception from society, and face other problems detrimental to their survival.⁵ The U.S. Commission on Minority Business Development, created by the Business Opportunity Act of 1988 (Public Law 100-656), views these problems as critical issues to be dealt with.⁶ Historically, because of these issues, minority participation in entrepreneurial activities in the United States has been negligible or nonexistent.⁷

Even though minority-owned businesses appear to prosper, James and Clark have been able to identify three constraints which hinder their development:

First, most minority-owned businesses are “service performing industries” reliant on consumer expenditures as their market. Second, minority-owned business[es] in general and black businesses in particular are concentrated in economically distressed cities where overall consumer markets are frequently declining. Third, minority-owned business[es are] reliant on minority purchasing power.⁸

Yet, due in part to set-aside programs, minority businesses—particularly black businesses in the construction and business services—have increased dramatically in the U.S. since the early 1980s.⁹ According to the most recent data from the U.S. Census Bureau, which has been tracking minority business trends since 1969, there were 424,000 black-owned firms in the United States in 1987 (3 percent of all firms)—an increase of 115,905, or nearly 38 percent from 1982. These firms employed about 220,00 employees (about 5 percent of the minority workforce in 1987) as compared to 121,000 employees in 1982. The number of paid employees in these firms nearly doubled from 38,000 in 1982 to 71,000 in 1987. Black-owned firms generated sales of nearly $20 billion. The average sales and receipts of these firms rose from about $36,600 in 1982 to $46,600 in 1987, a 27 percent increase.¹⁰ Black-owned construction and business services increased by 63.7 percent and 53.3 percent, respectively, from 1982 to 1987.¹¹

Furthermore, from an economic perspective, state and local government set-aside programs for minority businesses have led not only to millions of dollars in contracting opportunities, but also to increased minority employment.¹² For example, in Atlanta in 1988, minority businesses received nearly 35 percent of $55 million expended by the city. In Chicago, during the period 1985-1989, minority contractors received more than $307 million from the aviation industry. In 1989 minority firms in Philadelphia received about 15 percent of nearly $62 million in city contracts. Washington, D.C. expended $232 million with minority businesses in 1988.¹³ The Metropolitan Washington Airport Authority awarded $60 million (out of a total of $299 million) to minority-owned firms in 1993.¹⁴ In New York state set-aside programs have significantly assisted minority businesses. The Port Authority of New York and New Jersey awarded minority firms $105 million in 1989. The Dormitory Authority of the State of New York provided $62.4 million to minority businesses in 1989.¹⁵ On the employment side, minority firms in Atlanta, as an example, employed some 7,200 individuals. The City of Chicago’s set-aside program over the period 1985 through 1988 created an estimated 7,200 to 10,800 new jobs.¹⁶ Thus, for the continuation of state and local governmental jurisdictions, set-aside programs would seem to be critically important to the further development, proliferation, and diversification of minority-owned businesses and to overall minority employment.¹⁷

Since the Supreme Court’s decision in City of Richmond v. J. A. Croson¹⁸ in early 1989, disparity fact-finding studies have become a focal point in state and local government jurisdictions’ MBE set-aside policies. Disparity factfinding studies, at a cost of some $13 million, have been conducted or are underway in more than sixty jurisdictions around the United States.¹⁹ This chapter discusses the status of MBE set-aside programs after Croson and examines the use of disparity fact-finding studies as mechanisms for justifying the adoption or continuation of set-aside programs in state and local governmental jurisdiction. This chapter also provides a discussion of specific analyses that have been major components of disparity fact-finding studies and a summary and discussion of disparity of fact-finding studies conducted in five jurisdictions.

State and Local Set-Aside Programs in the Aftermath of Croson

Borchers categorizes public contract preference legislation and resultant legal cases into three classes:²⁰ (1) Class I cases—purely state and local enhancement, with no federal involvement (the Croson case); (2) Class II cases— federal funding contributes to a state or locally administered contract with availability of federal funding depending upon the state/local entity complying with a federal directive to give racial preference (the Fullilove case);²¹ and (3) Class III cases—the federal government acts directly without using a state/local intermediary (the Metro Broadcasting case).²²

In Croson, a majority of the Supreme Court for the first time held that ameliorative race-based preferences developed by state and local governmental entities must meet the “strict scrutiny” standard, as opposed to the “rational relationship” test, in order to withstand challenge under the Equal Protection Clause of the U.S. Constitution. The Court found the City of Richmond’s (Virginia) MBE set-aside ordinance to be unconstitutional.²³ In striking down the Richmond ordinance, the Court called into question the constitutionality of hundreds of other similar state/local governmental jurisdictions MBE programs. Nay and Jones speculate that between 564 and 1,394 set-aside programs were affected by the court’s decision.²⁴ In view of the Croson decision, seven defects may by identified in state and local jurisdictions MBE programs: inadequate statistics; lack of specific evidence; overly inclusive definition; excessive numerical goal; unlimited duration; failure to try race-neutral remedies; and inadequate waiver procedures.²⁵

Opponents in the Set-Aside Battle

The National Associated General Contractors (AGC) of America and state/local chapters have been the primary challengers of set-aside provisions nationwide.²⁶ The organization has been tracking set-aside policies at the federal, state, and local government levels since the mid-1980s. AGC is a 32,500 member, 8,000 contractor organization. About 95 percent of AGC members are small business.²⁷ AGC and its minority counterpart organization, the National Association of Minority Contractors (NAMC) are two major opponents in the set-aside issue.²⁸ AGC views set-asides as “discrimination as a means of correcting perceived discrimination,” driving non-MBEs out of business, taking away business, unfair, a monopoly for MBEs and increasing prices.²⁹ NAMC argues that set-asides are necessary because they “increase productive capacity and competitiveness among contractors. They give a sense of equal opportunity in the marketplace”³⁰ and “because racial discrimination continues to deprive minority contractors of opportunities open to whites.”³¹ Other anti-set-aside organizations, such as the Builder’s Association of Missouri and the Mechanical Contractors Association of Kansas City, are strongly opposed to the use of a disparity fact-finding study, arguing that:

We are concerned that the pursuit of such a study and its findings, whatever they may be, will only polarize opinion on special preference programs and possibly lead to costly and unfortunate litigation involving study results and race- and gender-based preferences generally.³²

Aftermath of Croson

The immediate aftermath of Croson led to the judicial dismantling of some set-aside programs in state and local jurisdictions and the voluntary termination/suspension of numerous other programs.³³ About a year and a half after the Croson decision, over fifty cases had been filed involving challenges to federal and nonfederal minority set-aside programs and some forty-six jurisdictions had abandoned their programs.³⁴ Lower court decisions struck down set-aside programs in a number of state and local entities, including the Florida Department of Transportation, state of Michigan, Minnesota Department of Transportation, City of Atlanta, Wisconsin Department of Transportation, City of Philadelphia Public Schools, and Multnomah County, Oregon. Other jurisdictions responded to Croson by either changing, suspending, or terminating their programs.

State and local jurisdictions that voluntarily made changes in their set-aside programs to comply with Croson include San Francisco; Minneapolis; Phoenix; Denver, State of Oregon, Denver, Colorado; Forth Worth, Texas; the New York/New Jersey Port Authority; and Wilmington, Delaware. Denver, Colorado developed MBE goals on a project-by-project basis. San Francisco changed to a 10 percent bidding preference for MBEs. Minneapolis removed the gender and race qualifications from its set-aside provision to benefit only economically disadvantaged businesses. Phoenix changed its MBE/WBE set-aside to a disadvantaged business enterprise program. Some jurisdictions that suspended/terminated their programs include San Jose, California; State of Colorado; New Castle County, Delaware; Ft. Lauderdale, Florida; South Bend, Indiana; Genesee County, Michigan; Minneapolis, Minnesota; Durham, North Carolina; Guilford County, North Carolina; Lane County, Oregon; and Sal...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• Editor’s Introduction
• Slavery and the Platonic Origins of Anti-Democracy
• Abram Harris, E. Franklin Frazier, and Ralph Bunche: The Howard School of Thought on the Problem of Race
• Organizational Character and Interest Group Strategies
• Regimes, Party, and Federal Budgeting: Presidential Estimates, Appropriations, and Expenditures
• Ethics and Budgeting: Comment on an Integrity Model
• The Rehnquist Court’s 1990 and 1991 Terms: The Constitutional Politics of Federalism and its Consequences for Black Americans
• Agenda and Roll-Call Responsiveness to Black Interests: A Longitudinal Analysis of the Alabama Senate
• Race, Abortion, and Judicial Retention: The Case of Florida Supreme Court Justice Leander Shaw
• Mayoral Politics Chicago Style: The Rise and Fall of a Multiethnic Coalition, 1983-1989
• Party Sorting at the Local Level in South Carolina
• Boston’s Mandela Referendum: Urban Nationalism and Economic Dependence
• Minority Business Enterprise Set-Aside Programs, Disparity Fact-Finding Studies, and Racial Discrimination in State and Local Public Contracting in the Post-Croson Era
• Racial Formation in Zimbabwe
• Affirmative Action: The Quality of the Debate
• Mozambique’s Descent into Hell
• Democracy in America and the Representation of African Americans
• Book Reviews
• Editor’s Postscript: Regime Issues and a Study Agenda
• Invitation to the Scholarly Community