Minneapolis screws businesses owned by women and minorities

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Minneapolis: we just don't love minorities and women
Despite programs designed to make sure that businesses owned by minorities and women get their fair share of Minneapolis city contracts, a new study shows that these businesses still get left out in the cold.

For example, though 19.5 percent of construction businesses in the area are owned by women or minorities, only about 7 percent of City contracts go to these firms.

As sad as the numbers look, there's actually a bit of semi-good news mixed in with the bad. The City's affirmative action program seems to be working in the construction industry, where efforts have been focused. It's just that the program isn't working well enough to make city business color- and gender-blind.

And in other industries where the City hasn't put forth as much focus, the numbers are even more discouraging. In the service industry, minority and women-owned businesses make up 27.5 percent of the total, but get only 2.7 percent of the City's projects.

For several years now, the City has been facing legal pressure to eliminate its preference for women- and minority-owned businesses. But the $500,000 study, done by Jon Wainwright and colleagues, of NERA Economic Consulting, provides the data the City needs to keep the program in place. "Having a disparity study is very important," Wainwright says.

The NERA study also includes disturbing confirmation that in general, minorities and women make less money than white men in Minneapolis. This is true both for individual wages, and for the money that firms owned by women and minorities take in. "For example, although 1.81 percent of all firms in Minnesota are owned by African Americans, they earn only 0.36 percent of all sales and receipts," the study says. "African American employer firms are 0.50
percent of the total but earn only 0.31 percent of sales and receipts."

The study includes a number of suggestions that could help make the program actually work. You can check them out here, in this report.

"The other thing to keep in mind is that no one in the private sector is doing anything in this regard," Wainwright says. "So to say what is the City doing wrong--if it weren't for the City, DOT, and City of St. Paul, these businesses would be getting no work."

The City of Minneapolis is not unique in this regard, says Wainwright. Most regions have the same problem, he said. "This is very typical of what we see around the country," he says. "It's somewhat of a bleak landscape out there."


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