Another Way Obama’s Stimulus Fails African-Americans

In the Great Recession, African-Americans experience disproportionately high rates of unemployment, and most stimulus funds have yet to make their way to hard-hit African-American communities. A new study shows another facet of the problem: Minority-owned businesses received a disproportionately small share of stimulus-related government contracts.

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.

Most of the $862 billion in stimulus funds was awarded in block grants to states, but there is no reliable system for tracking how states award contracts to minority-owned businesses.

The Obama administration argues that the numbers are slightly better then they appear.

The White House also pointed out that about $21 billion of the $46 billion is guaranteed, and the rest are options. Latino-owned businesses have received 3.7 percent of the guaranteed total, and black-owned businesses 2.4 percent.

That’s still a disproportionately small share, and indicates that when the government is paying strict attention, minority-owned business do better.

Minority business owners report continuing problems in obtaining government contracts, from “old-boy” networks that control to whom contracts get awarded and tend to favor existing contractors, to being hired as subcontractors by white contractors to meet standards and then dumped when the government wasn’t looking.

Although the administration is committed to helping racial issues by addressing class issues, since African-Americans and some other minorities fall disproportionately into lower income brackets, studies increasingly show that institutional discrimination and sometimes overt discrimination contribute to economic disparities between racial groups — and that simply working to assist the poorest Americans may not help African-Americans achieve proportional economic parity.