Stimulus Watch: Less Stimulus for Minority Firms

Jesse Washington, Google News, March 7, 2010

Hispanic and black businesses are receiving a disproportionately small number of federal stimulus contracts, creating a rising chorus of demands for the Obama administration to be more inclusive and more closely track who receives government-financed work.

Latinos and blacks have faced obstacles to winning government contracts long before the stimulus. They own 6.8 and 5.2 percent of all businesses, respectively, according to census figures. Yet Latino-owned business have received only 1.7 percent of $46 billion in federal stimulus contracts recorded in U.S. government data, and black-owned businesses have received just 1.1 percent.

That pot of money is just a small fraction of the $862 billion economic stimulus law. Billions more have been given to states, which have used the money to award contracts of their own.

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Minority businesses are often too small to compete for projects; do not have access to the necessary capital, equipment or bonding requirements; or lose bids to companies with well-established relationships. There also has been an emphasis on spending stimulus money quickly, which favors businesses that have won past contracts.

But minority advocates say that blacks and Latinos have been harder hit by the recession, and getting a fair share of stimulus contracts is key to the recovery of these communities. Unemployment among blacks and Hispanics is much higher than among whites. And although unemployment among whites increased at a faster rate during the worst of the recession than among minorities, rates of those considered underemployed–including people who have given up looking for full-time work or people working part-time because there is no full-time work available–increased faster among minorities than whites.

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Six percent of the $16.9 billion in Federal Highway Administration contract money spent by states has gone to disadvantaged business enterprises, which includes companies owned by minorities as well as women, veterans and the disabled, according to department press secretary Olivia Alair.

Out of $1.1 billion in state-spent Federal Aviation Administration contract money, 7.8 percent has gone to disadvantaged businesses, Alair said, and 8.6 percent of direct Transportation Department contract dollars have gone to those companies.

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LaHood’s [Transportation Secretary Ray LaHood] department has pledged $20 million in subsidies to help disadvantaged businesses pay bonding premiums and fees, and has established a short-term loan program that lent $4.9 million in 2009. Last month, LaHood announced $9.9 million in grants to help businesses owned by minorities and women compete for federal contracts.

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{snip} Latino-owned businesses have received 3.7 percent of the guaranteed total, and black-owned businesses 2.4 percent.

The founder and chief executive of one of the nation’s largest black-owned construction companies, Richard Copeland of THOR Construction Inc., said minority-owned companies usually employ 60 percent minorities.

“If we can’t get on these jobs,” he said, “we can’t hire our people from our community, so poverty and drugs and crime and unemployment and welfare become habitual.” His company has done a small amount of weatherization work through Minnesota stimulus contracts.

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