Washington – Amid mounting criticism that minorities, women and low-income workers are missing out on business opportunities and jobs under the stimulus bill, the Obama administration is urging the nation’s governors to work harder to ensure that these groups participate fully in state transportation projects that receive federal funding.
The issue of equity has cast a cloud over the American Reinvestment and Recovery Act in recent weeks as various reports appear to confirm what minority advocates and some economists have been saying: that the fruits of the stimulus bill may not be reaching groups who are suffering the most in the worst recession in decades.
While the unemployment rate is 9.3 percent for whites, the jobless rate for blacks is 15.6 percent and 12.7 percent for Hispanics. Nationally, it’s 10 percent.
The Congressional Black Caucus has criticized President Barack Obama for not providing more direct assistance to African Americans during the recession.
“Behind virtually every economic indicator you will find gross racial disparities. We believe that tackling systemic inequality requires specific, concrete and targeted action,” said Rep. Barbara Lee, D-Calif., the chairwoman of the black caucus.
A survey of registered voters by the Hart Research Group reported that less than 30 percent of Hispanics saw any benefit from federal recovery efforts in their neighborhoods, including the creation or retention of any jobs.
Last month, the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University found that of $25 billion in federal stimulus funds distributed directly to private firms, only $1.6 billion went to black-, Hispanic- or women-owned businesses as of Oct. 11.
The Kirwan study didn’t include stimulus funds disseminated through the state agencies, but recent news accounts suggest similar disparities involving state transportation projects.
For example, Chicago Public Radio found that less than 10 percent of stimulus funds awarded by the Illinois Department of Transportation went to businesses owned by minorities and women. The state had set a goal of 22.7 percent.
In advance of a proposed new jobs bill that could include more than $69 billion for state transportation projects, U.S. Secretary of Transportation Ray LaHood sent a letter this week to governors, urging them to do a better job of spreading the wealth in their transportation contracting efforts.
LaHood called for state officials to break up large individual contracts into several pieces so that smaller women- and minority-owned companies can better compete for them.
He wants states to set goals for awarding more transportation contracts to these so-called “disadvantaged business enterprises” and is offering lending and bonding assistance to help make it happen.
LaHood also asked large contractors to consider joint ventures with minority and women-owned companies and to provide technical expertise to help these companies prosper.
“I believe it is vital that we work together to provide small disadvantaged businesses and female and minority workers a fair chance to participate in transportation projects,” LaHood wrote. “Existing programs may not be sufficient to ensure the broadest possible participation in Recovery Act projects, but I encourage you, along with your state and local leaders, to consider innovative approaches to these challenges.”
These include using a portion of federal highway project funds for job training. The Missouri Department of Transportation is a pioneer in the concept.
The department recently agreed that low-income construction apprentices would make up 30 percent of the work force on a $500 million highway project that was just completed. Working with trade unions and community groups, the department also agreed to use $2.5 million of the project’s federal funding to train low-income residents in construction work.
A similar agreement in Wisconsin resulted in 22 percent minority labor participation on an $810 million highway project in Milwaukee, said John Horsley, the executive director of the American Association of State Highway and Transportation Officials.
Laura Barrett, the president of the Transportation Equity Network and whose affiliate organizations helped broker the Missouri work agreements, said LaHood’s letter was a major breakthrough.
“We are thrilled that the Obama administration is starting to take work force diversity issues seriously and starting to put them front-and-center on one of the most important economic engines in this country, which is transportation infrastructure projects,” she said.
Barrett is pushing for transportation funds under the upcoming jobs bill to require that contractors provide racial, ethnic and residency information about workers on their projects to better assure that minorities and disadvantaged workers are represented. The current stimulus bill requires no such reporting.
Jason Reece, a senior researcher at the Kirwan Institute, said efforts to measure the level of minority hiring among Florida contractors with stimulus-funded projects have largely failed. Only four of more than 40 firms that were contacted provided information, he said.
That’s why Reece wasn’t as encouraged by LaHood’s letter. He said many states already have target goals for minority contracting as, LaHood recommended. Because those goals aren’t mandatory, however, they’re seldom reached.
“It’s a nice gesture,” Reece said of the letter. “But unless there is some kind of mandate or carrot-and-stick approach to ensure that these goals are met, good intentions aren’t necessarily going to get it,” Reece said.
Harry Alford, president of the National Black Chamber of Commerce agreed. He said LaHood’s letter was encouraging.
“And I applaud that. But until we start getting some contracts, it’s just talk. We need action,” Alford said.
In October, the National Black Chamber of Commerce filed separate complaints with the Justice Department, claiming California’s transportation department awarded only one-tenth of 1 percent of total contract dollars — $3.1 million of $2.3 billion — to black firms in fiscal year 2008. A similar complaint against the Illinois Department of Transportation claims black-owned firms got only $11.6 million of nearly $800 million in department contracts.