The Stimulus and Disadvantaged Communities: Trickling Down or Slipping Away?

By Michelle Chen Feb 25, 2010

One year on, how far does the stimulus money stretch? New data on the impact of American Recovery and Reinvestment Act spending in communities of color show that by and large, the money has trickled into well-worn grooves of privilege and often further alienated the hardest-hit communities. Federal funding for transportation–a sector with a ready supply of "shovel-ready" projects–is stuck in neutral, according to a study on federally funded initiatives in Minnesota. Charles Hallman writes in the Minnesota Spokesman-Recorder:

PolicyLink, joined ISAIAH, and Organizing Apprenticeship Project (OAP) a Minneapolis advocacy group in producing a recent analysis of ARRA transportation investments in Minnesota and their impact on low-income communities and communities of color. The study concluded that the highest levels of transit investments are not in areas with the highest poverty or unemployment rates, nor are they in areas with the highest percentage of people of color across the state of Minnesota or within the Twin Cities. ARRA funds only reinforced existing inequities, the study added. Jermaine Toney, lead policy analyst of the OAP says the stimulus money “is deep, deep public investment dollars, but it was not a shift in the transportation policy itself. The suburbs got more transportation projects up and running, but did it benefit the most disadvantaged: blacks and people of color? No.”

Many factors could affect the flow of transportation dollars, not just advocacy groups but savvy business lobbyists as well; a community’s capacity for investment and workforce development; and local political support. But the racial disparities follow a familiar pattern across the country, suggesting that even in the fiscal chaos of the stimulus roll-out, certain rules of the road hold firm. The Kirwan Institute’s progress report on ARRA provides a wide-angle view of where the stimulus dollars are trickling, and which groups face a stimulus drought:

Although consistent state level data on ARRA contracting to minority firms is not widely available, figures from federal procurement indicate very troubling and disparate contracting patterns when reviewing data on procurement to minority and women owned businesses. While Black, Latino, and Women owned businesses represent 5.2%, 6.8%, and 28.2% respectively,54 as of February 1, 2010, they had only received 1.1%, 1.6%, and 2.4% of all federally contracted ARRA funds. Of the $45 billion in direct federal contracts allocated by February 1st 2010, less than $2.4 billion (5% of the total) were allocated to Black, Latino and Women owned businesses.

On the state level, a separate study on Florida’s ARRA-supported contracts shows a similar trend of state officials (despite a mandate to promote "minority procurement") sidelining firms own by people of color. Though the data is not comprehensive, the disproportionality seems even more skewed in light of the fact that Blacks, Latinos and women are underrepresented to begin with in the small business sector. To advocates on the ground, the infusion of federal cash can’t be expected to correct that, but for the stimulus to perpetuate systemic inequalities so seamlessly is unacceptable, The Opportunity Agenda has tried to help local groups advocate for a piece of the shrinking stimulus pie, guiding them on requesting government data and matching that against obligations under civil rights statutes. But while advocates need to mobilize to hold the government accountable, well-connected companies are wasting no time eating up what’s left of the stimulus, while poor communities of color, crushed by foreclosure and joblessness, fall even farther behind. If Congress provides another stimulus or jobs bill, activists will have to act fast to get ahead of a rigged game, by both monitoring future outlays and mobilizing local groups to snag those funds, and use them responsibly, before they dry up. Looking ahead, the Kirwan Institute recommends:

• Improve Tracking of ARRA Resources and Outcomes. Rather than scaling back job tracking efforts, there should be additional measures which consider the quality and duration of employment, as well as the race, gender, and zip code of job recipients.

• Increase Small and Minority Business Participation. Unbundle large contracts for small businesses. Breaking up large projects will allow for more small business participation in the recovery. Set and mandate specific, MBE and DBE Goals for every department.

• Ensure That Hard Hit Communities Experience Job Impact. Use targeted reinvestment in hard-hit areas, first source hiring, apprenticeship and job training. Increase employment opportunities for ex?offenders.

But the final measure of the Recovery Act’s impact will be the lasting results of those contracts: the businesses receiving federal money must also be held accountable for delivering to their communities, especially if they represent economically disenfranchised areas. Are they paying living wages, giving people viable skills, reaching out to the most disadvantaged within poor communities (including people with limited education or criminal convictions), working toward environmental sustainability, and channeling new career opportunities into their constituency? The stimulus is a microcosm of how the government and communities could (or should) confront the institutional challenges exposed by the recession. When it comes to moving federal money equitably, from Congress to your neighbor’s pocket, nobody gets a free pass. Image: Cleveland Plain Dealer