Higher education isn’t the only realm that’s kept minorities from succeeding
By Eugene Chay
Usually, when we hear about affirmative action it’s in the context of higher education. But that’s not the only realm that’s historically kept minorities from advancing due to systematic discrimination.
Last week, Advancing Justice | AAJC coauthored an amicus brief in just such a case. Rothe Development, Inc. v. Department of Defense is a case that challenges the constitutionality of affirmative action provisions contained within the Small Business Administration’s Small Business Act.
The unfortunate truth in our country is that minority-owned businesses seeking to compete for government contracts still encounter racial and ethnic discrimination. The U.S. Small Business Administration’s 8(a) program exists expressly to remedy that: to help minority-owned small businesses obtain loans, bid on contracts, and generally facilitate business education and guidance programs.
The program was found constitutional by the District Court for the District of Columbia in 2015, but was immediately appealed to the D.C. Circuit Court of Appeals. We joined civil rights leaders NAACP Legal Defense & Educational Fund and The Leadership Conference on Civil and Human Rights to argue that the policy is justified because of the discriminatory policies and practices that have long impeded minority-owned businesses in government contracting, and the discrimination that continues to undermine minority entrepreneurs’ endeavors today.
In order for the Court to evaluate whether the program is constitutional, the district court must examine whether there are compelling reasons for it — namely, whether remedying race-based discrimination and its effects is still a compelling government interest, and whether there is evidence that those barriers still exist.
As we present in the brief, minority-owned business have been awarded contracts far less often than their non-minority owned counterparts. Access to credit and venture capital is a clear issue, as is discrimination in employment opportunities and union membership. Studies show a statistically significant difference between the number of minority-owned contracting businesses and those that received contract awards. Minority-owned businesses have faced and continue to face disadvantages in government contracting that cannot be explained by non-discriminatory factors.
And it’s important to note that far from serving as a passive onlooker of those practices, the federal government has played a significant role in perpetuating the structural inequalities that have systematically impeded minority business development.
GI home loan programs excluded African Americans. The Federal Housing Administration (FHA)and other governmental agencies adopted discriminatory mortgage lending practices. Neighborhoods have been denied credit on the basis of race or ethnicity. And until at least the 1980s, federal regulators allowed private banks to pattern their lending practices on the discriminatory practices of the FHA and other government actors. As a result of policies and practices like these, minorities have lagged behind in home ownership rates, and, in turn, minority entrepreneurs have not been able to rely on this important source of equity.
The federal government has also enacted legislation that kept racial minorities from obtaining the skills, experience, and social networks that are necessary to create and grow businesses. In the past, the federal government has effectively sanctioned the racially exclusionary practices of labor unions and legislatively acted to restrict competition for non-white workers.
And discrimination against minority entrepreneurs hasn’t ended.
Data shows that minority-owned businesses are vastly underutilized in public contracting and secure less public contracting financing than non-minority-owned firms. Minority entrepreneurs report often being shut out and unable to access the networks necessary to receive federal contracts. Another study showed a business owner’s race, ethnicity, gender, and disability status has a statistically significant adverse impact on the success of a new business, as well as on the likelihood of securing public contracting and sub-contracting opportunities.
“Old boy networks” severely limit opportunities for minority business owners. Because the federal government spends billions of dollars through its procurement practices, it has the power to perpetuate the effect of discriminatory practices in private markets — and does. It also tacitly endorses discriminatory practices by its silent regulation and tolerance of such practices. Discrimination remains an ongoing concern when competing for government contracts.
As long as we see these trends continue unabated, the Small Business Administration’s 8(a) Program is still needed. And we’ll keep fighting for it.