Posted on November 24, 2009

Will Minorities Get Enough out of the Economic Stimulus?

Tim Padgett, Time, November 23, 2009

Miami’s poorer residents have long complained that the city’s meager public-transit system makes it harder for them to get to work. So when the Obama Administration announced the $787 billion stimulus plan earlier this year, many hoped some of that money would help fund plans like an expansion of Miami’s undersized Metrorail system–especially a 10-mile northern extension that would reach into predominantly African-American and other minority communities largely cut off from downtown and other employment centers. But the project, in part because it’s not considered as shovel-ready as jobs like existing highway maintenance, isn’t getting any of the $15 billion in stimulus aid for Florida, and has been shelved for the time being.

To Gihan Perera, that’s just one example of how federal and state governments are missing a great opportunity to use the stimulus to aid the poor and minority communities hardest hit by the Great Recession. Perera, director of the nonprofit Miami Workers Center (MWC), is among a number of antipoverty activists closely examining which communities and contractors are getting stimulus dollars, and so far he says the picture doesn’t look bright for already marginalized “low-opportunity” zones and minority-owned firms. {snip} And as of September, less than 10% of the $330 million in stimulus projects awarded directly from federal agencies to Florida-based contractors had gone to minority-owned firms, according to a study by the MWC, the Kirwan Institute at Ohio State University and the Research Institute on Social and Economic Policy (RISEP) at Miami’s Florida International University. In all, black-owned firms received less than 2%. “The fear,” says Perera, “is that the stimulus money could instead serve to exacerbate the inequalities that existed before.”

{snip} In Illinois, President Obama’s home state, a Chicago Public Radio investigation this fall found that less than 10% of the Department of Transportation’s stimulus contracts had gone to “disadvantaged business enterprises,” or DBEs, even though the state says it benchmarked almost a quarter of the dollars for those minority- and women-owned firms. Less than 2% of it had gone to black-owned businesses. {snip}

Washington and the states have been trying to get stimulus money and projects out the door as quickly as possible, often bundling smaller projects into larger ones set to begin work immediately (so-called shovel-ready projects) for more efficiency. Consequently, they have also tended to rely on larger and therefore predominantly white-owned construction contractors (who in turn also tend to use their preferred subcontractors) over smaller minority-owned firms that often don’t have ample equipment or personnel. Those smaller companies also have trouble finding the resources to post construction bonds (money contractors must offer up front as a guarantee that a job will be finished) on larger jobs. Serge Jean-Louis, a Haitian-American contractor and president of Nicon Engineering in Coconut Creek, Fla., near Fort Lauderdale, is struggling to land stimulus-related projects in South Florida. He says federal and state officials managing the stimulus should relax bond requirements for smaller firms and DBEs, “or we’re going to be out of the stimulus picture.”

The Obama Administration insists that 15% of the stimulus contracts awarded so far across the country have gone to DBEs. That’s 21⁄2 times the share of federally funded projects that went to minority- and women-owned firms in fiscal 2008, say officials. “It’s a top priority of the President’s, and we’ve worked very hard to create those opportunities,” says David Hinson, director of the Commerce Department’s Minority Business Development Agency (MBDA). {snip}


{snip} Powell argues, “We need to put how this is playing out under a larger magnifying glass, make it more transparent.” If not, he warns, “we’ll have the irony of the first black President presiding over the greatest economic restructuring in decades, but it could actually end up worsening the racial disparity.” {snip}