Set-Asides Are Unconstitutional

Covid-19 has devastated small businesses nationwide, and New York’s entrepreneurs and landlords have been particularly hard hit. In response, Governor Andrew Cuomo has awarded millions of dollars to affected small businesses through the New York Forward Loan Fund. But to get these taxpayer-funded loans, it helps to be a minority-owned business, as designated by the state, because Cuomo’s office has announced that it will be “focusing on” Covid relief for minority- and women-owned firms. Relief was welcome news for those receiving grants, but small-business owners unable to obtain aid may feel like they have been shunned because of their race. It’s only the latest example of how New York politicians, in their fight against racial discrimination, have established a new system of racial prioritization.

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{snip} Racial discrimination is now a primary consideration for bureaucrats engaging businesses to build state roads, highways, and bridges. Cuomo has signed into law a statewide mandate designating infrastructure-related set-asides for preferred minority groups. Though the law doesn’t expressly state the percentage of public dollars reserved for these groups, the governor has previously said that he would reserve 30 percent of public-contracting dollars for businesses owned by women and black, Hispanic, Asian, or Native American residents.

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In 2017, the governor’s office boasted in a press release that the $2.2 billion set aside for minority and women-owned enterprises represented both the largest percentage and the largest dollar figure allocation for such businesses in the nation. Cuomo also created an advisory council to “ensure that the State is able to meet and eventually exceed” the 30 percent set-aside requirement.

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Racial set-asides are also unconstitutional. The Supreme Court’s landmark decision in City of Richmond v. J.A. Croson Company established that government mandates for contractors to subcontract 30 percent of each job to minority business enterprises violates the Constitution’s promise of equality before the law. {snip}

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