Stimulus Provides a Boost but Falls Short on Equity

By Michelle Chen Oct 31, 2009

It’s easy to see that communities of color and women are facing unique and disproportionate impacts from the recession. It’s much harder to figure out what the government is doing about it. The site has presented masses of data on federal contracts and jobs created by the stimulus, but the data is slippery when it comes to analyzing how the recovery act funds are being spent to address longstanding inequities in economic opportunity–particularly since many of the disparities predated the recession, and will no doubt continue will into the country’s "recovery." But the Kirwan Institute for the Study of Race and Ethnicity at The Ohio State University has tried to break down the distribution of stimulus funds from a social equity standpoint. According to their analysis of contracts for women and minority-owned firms, the stimulus has extended a limited leg-up for businesses in underrepresented communities:

Through October 12, the federal government had disseminated more than $25 billion in funds, with only approximately $1.6 billion reaching black-, Hispanic- or women-owned businesses…. While approximately 14 percent of businesses are minority owned, the study shows that minority owned businesses received only 9.6 percent of federal contracts. The study shows that only 1.3 percent of ARRA funds went to black-owned businesses, 2 percent to Hispanic-owned businesses and 3.1 percent to women-owned businesses. Comparably, there are 5.2 percent black-owned, 7.0 percent Hispanic-owned and 28.3 percent women-owned U.S. businesses overall.

So statistically speaking, you might say the distribution of stimulus funds is somewhat regressive, raising questions about how far the Recovery Act will go to not just rejigger the economy, but to rebalance prosperity in the long term. The Kirwan Institute sees structural issues behind the stimulus gap: women and minority-owned firms might have trouble competing for federal contracts due to small size and limited production capacity, for instance. There’s also the more invidious threat of direct discrimination. Chicago Public Radio did a similar investigation in September on the Illinois Department of Transportation, which planned to use stimulus dollars to create jobs for "shovel ready" public projects. The results were decidedly skewed against the businesses that arguably have the most to gain from the Recovery Act:

Using our first data set we found that the Illinois Department of Transportation has awarded less than 10 percent of stimulus dollars to minority- and women-owned businesses. That’s less than half of the goal the state set for itself with the federal government. In addition, we found that the percent of work done by minority- and women-owned businesses has been falling since 2005. Disadvantaged business enterprises are getting a smaller percentage of stimulus funds than they did of regular highway funds last year…. Black contractors received less than 2 percent ($4,346,507) of the total dollars ($260,472,254) represented by the contracts. Hispanic contractors were awarded about 2.5 percent. White women-owned businesses were awarded about 3.5 percent of the total contracts. Of the small pot of money going to disadvantaged business enterprises in our second data set, just over 50 percent went to women-owned firms, but almost all of that went to white women-owned firms.

With the stimulus package, the government made an unprecedented economic intervention to alleviate the crisis. But in communities that have lagged even during flush times, Washington hasn’t been as bold about protecting their businesses from slipping further behind.