Are Minorities Being Fleeced by the Stimulus?

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Miami's poorer residents have long complained that the city's meager public-transit system makes it harder for them to get to work. So when the Obama Administration announced the $787 billion stimulus plan earlier this year, many hoped some of that money would help fund plans like an expansion of Miami's undersized Metrorail system — especially a 10-mile northern extension that would reach into predominantly African-American and other minority communities largely cut off from downtown and other employment centers. But the project, in part because it's not considered as shovel-ready as jobs like existing highway maintenance, isn't getting any of the $15 billion in stimulus aid for Florida, and has been shelved for the time being.

To Gihan Perera, that's just one example of how federal and state governments are missing a great opportunity to use the stimulus to aid the poor and minority communities hardest hit by the Great Recession. Perera, director of the nonprofit Miami Workers Center (MWC), is among a number of antipoverty activists closely examining which communities and contractors are getting stimulus dollars, and so far he says the picture doesn't look bright for already marginalized "low-opportunity" zones and minority-owned firms. The lion's share of road and other construction work in Florida has gone to venues like airports and new highways that usually benefit more affluent suburbs, Perera argues. And as of September, less than 10% of the $330 million in stimulus projects awarded directly from federal agencies to Florida-based contractors had gone to minority-owned firms, according to a study by the MWC, the Kirwan Institute at Ohio State University and the Research Institute on Social and Economic Policy (RISEP) at Miami's Florida International University. In all, black-owned firms received less than 2%. "The fear," says Perera, "is that the stimulus money could instead serve to exacerbate the inequalities that existed before."

That's not just a concern for the Sunshine State, which now has one of the nation's highest jobless and home-foreclosure rates. Earlier this year, the Associated Press found that across the U.S., the stimulus plan was "set to spend 50% more per person in areas with the lowest unemployment than it will in communities with the highest." In Illinois, President Obama's home state, a Chicago Public Radio investigation this fall found that less than 10% of the Department of Transportation's stimulus contracts had gone to "disadvantaged business enterprises," or DBEs, even though the state says it benchmarked almost a quarter of the dollars for those minority- and women-owned firms. Less than 2% of it had gone to black-owned businesses. Florida's Department of Transport doesn't have a specific DBE participation target for stimulus-related projects, but it says it exceeded its goal of more than 8% for all federally funded (not just stimulus) work in the fiscal year that ended Sept. 30. Still, given that Florida's workforce is about one-third minority, watchdogs like the MWC suggest the target should be higher.

Washington and the states have been trying to get stimulus money and projects out the door as quickly as possible, often bundling smaller projects into larger ones set to begin work immediately (so-called shovel-ready projects) for more efficiency. Consequently, they have also tended to rely on larger and therefore predominantly white-owned construction contractors (who in turn also tend to use their preferred subcontractors) over smaller minority-owned firms that often don't have ample equipment or personnel. Those smaller companies also have trouble finding the resources to post construction bonds (money contractors must offer up front as a guarantee that a job will be finished) on larger jobs. Serge Jean-Louis, a Haitian-American contractor and president of Nicon Engineering in Coconut Creek, Fla., near Fort Lauderdale, is struggling to land stimulus-related projects in South Florida. He says federal and state officials managing the stimulus should relax bond requirements for smaller firms and DBEs, "or we're going to be out of the stimulus picture."

The Obama Administration insists that 15% of the stimulus contracts awarded so far across the country have gone to DBEs. That's 2½ times the share of federally funded projects that went to minority- and women-owned firms in fiscal 2008, say officials. "It's a top priority of the President's, and we've worked very hard to create those opportunities," says David Hinson, director of the Commerce Department's Minority Business Development Agency (MBDA). Hinson points to the outreach program the MBDA and the Small Business Administration have created to "put boots on the ground" and make contract procurement easier for DBEs. He also suggests it's "a little early to draw conclusions" about the stimulus' level of minority participation.

Most of the federal stimulus money is disbursed via states and counties, and the outlook for minorities does seem better once the dollars reach more local levels. Miami-Dade County's Public Works Department has kept its so far $25 million worth of stimulus projects relatively small, and therefore more accessible to minority contractors, to ensure its own 10% DBE participation goal. On some projects Miami-Dade has even 100% DBE involvement. For now, the county is using what stimulus money it can earmark for transit purposes to purchase a fleet of BRT (bus rapid transit) buses that will at least reach into predominantly minority corridors at a faster clip than conventional metro bus lines. Says Miami-Dade Public Works Director Esther Calas, the stimulus trickle-down "wasn't really crafted to happen as fast as it could have, but once it gets to us we're expediting it quickly." She points out that Miami-Dade Mayor Carlos Alvarez championed an ordinance last year that accelerates contracting processes related to any kind of economic-stimulus project.

Given such different track records, minority-business advocates like John Powell, director of the Kirwan Institute, which studies race and ethnicity issues, feel that additional stimulus billions should be pushed more directly to the local level, where it stands a better chance of boosting poor minority areas. "These communities see tons of money moving around, but they fear it's passing them by," says Powell, noting that many, if not most, U.S. municipalities don't yet know how to access stimulus funds for basic green projects like home weatherization and biofuel stations.

Powell thinks it's only fair that more stimulus money finds its way to minority communities, since much of today's economic disaster can be traced to those areas being lavished with subprime mortgages. Despite, the federal website designed for tracing stimulus outlays, Powell argues, "We need to put how this is playing out under a larger magnifying glass, make it more transparent." If not, he warns, "we'll have the irony of the first black President presiding over the greatest economic restructuring in decades, but it could actually end up worsening the racial disparity." Whether or not that's an exaggerated warning, heeding it could help Obama ensure that his recovery crusade is on a track that does the most long-term — and not just immediate — good.