Study finds ACC gov making race, gender disparities worse

We all know that women and people of color often face barriers in the business world, ranging from microaggression to outright racism and misogyny, making it more difficult to achieve financial success in a world owned by white men.

So when the ACC Commission paid MGT Consulting $400,000 in 2021 to find out whether the local government was contributing to racial and gender disparities in the Athens region, they knew what they were likely to find. The answer, finally revealed at a work session this week, is of course yes.

Women and minority-owned businesses are underrepresented and underutilized

MGT found that the ACC government spends 73% of its budget in 31 counties, including Athens-Clarke, Oconee, Madison, Fulton, Cobb and Gwinnett, among others. In this set of counties, Black and women-owned businesses make up a small fraction of the total number of firms and take home an even smaller percentage of sales.

In the construction business for example, only 1.8% of firms in the study area are owned by Black people of any gender. Even worse, these firms take home only 0.15% of the dollar value of all construction sales. That means Black-owned firms are not only underrepresented in the market, they’re also underutilized even when they are able and willing to do the work.

Similarly, white women-owned construction firms make up only 2.1% of the total and bring home only 1.1% of sales dollars. That’s a bit better, but nowhere close to parity.

Not surprisingly, wages and self-employment earnings for women and minorities in the private sector across the 31-county study area were found to be lower than for their white male counterparts. The wage disparity ranged anywhere from 11% lower for Hispanic construction workers all the way to 51% lower for white women in the “general goods and services” category.

Wage elasticities table from the 2023 ACC disparity study.
Wage disparities across race and gender in different professional fields in the Athens region (A&E stands for Architecture and Engineering). Check out the full study here.

In its summary of the regional business environment, the study found that racial and gender-based disparities do exist in the communities in which the local government does business. While this is not necessarily the local government’s fault, by spending public funds in these counties the ACC government is at least passively participating in a system of inequality.

Local government spending contributes to existing disparities

MGT’s disparity study looked closely at local government spending from July 2017 to June 2021. The results were similar to those from the private sector.

In total, 19% of available firms selling things the ACC government needs within the study area were owned by women or minorities, but only $4.1 million in public money went to those firms over the five years they examined. That’s compared to $405 million going to firms owned by white men.

The study found “statistically significant, substantial disparities” for Black people of all genders and for white women. It even calculated a “disparity index” with numbers ranging from 0-100, anything below 80 indicating a “substantial” disparity. Black-owned firms were the worst off, with an incredibly low disparity index of 0.77 out of 100. 

Firms owned by white women were also not well-utilized by the local government – they had a disparity index of 6.09 of 100. 

The local government did not utilize Asian-American-owned firms or Native-American-owned firms at all, but that’s probably due to the low number of these firms and the results were not statistically significant. Firms owned by Hispanic-Americans were also few and far-between, but had much better utilization by the local government (Hispanic-owned firms had a disparity index of 28.09, still considered substantial).

There’s nothing in the study to indicate why the local government’s utilization of Black and women-owned firms is so poor. MGT reviewed local government policies around procurement and didn’t find any “inherent or built-in barriers that intentionally restrain or constrain suppliers” from getting their fair share of government contracts. In fact, they found “policies in place to facilitate opportunities” for minority-owned businesses.

The disparity study’s real purpose

The local government spent $400,000 to do this study and found basically what they expected. Yes, racial and gender disparities exist in the Athens area, but the government is probably not directly responsible even if they do make it worse. 

Did we really need to spend so much to find out what we already knew?

Commissioner Ovita Thornton
Commissioner Ovita Thornton

“This was a very expensive piece of paper,” Commissioner Ovita Thornton said somewhat dismissively at a review of the disparity study this Tuesday. 

While she supported the study and voted for it, Thornton has consistently been critical of the local government’s tendency to research problems, seemingly endlessly, without taking action. “I’m always on edge because we do studies, and then we do what we want to do,” she said before voting to approve the study in 2021. “A study means nothing if we don’t learn by the study and utilize it.”

Thornton voted in favor presumably because the reason behind the study wasn’t to discover something we already know. The real purpose is action. The study can act as a legal shield to protect the government and allow it to implement race and gender-conscious policies that will hopefully help to reduce inequities. Without it, taking action would be illegal.

When Richmond, Virginia established a minority set-aside program back in 1983 giving preference to minority-owned businesses for contract awards, they were sued by the white male owner of J.A. Croson Company who argued that the program was unconstitutional under the equal protection clause. This case, Richmond v. J.A. Croson, made it all the way to the US Supreme Court. 

Croson won the case because Richmond hadn’t done their homework, more or less. They hadn’t rigorously documented the disparities that they knew existed. As a result of this decision, cities are now legally required to find and document evidence of disparities in the marketplace before they can take action to address it. Without strong evidence, every effort cities make to address disparities across race and gender would be struck down as soon as a white male business owner felt discriminated against.

The ACC government is now armed with ample data to protect them from an equal opportunity lawsuit. They can start to take action, if they feel inclined to do so. The study even has a few ideas of what they could do going forward. Some of the study recommendations are conscious of race and gender, but they also offer other suggestions that might help but aren’t so specific.

Study recommendations

Help all businesses thrive

In general, the local government can support minority and women-owned businesses by providing more information and assistance to all businesses, especially small businesses. Some examples include establishing a small business program, making information about contracts more accessible and helping all firms apply for and receive government contracts. These programs will tend to give more help to the businesses that need it most, since firms that are very competitive for contracts already know what they need to do.

Provide race and gender-conscious help where it’s needed

The local government could establish a race and gender-conscious set aside program for government contracts to ensure minority owned businesses get their fair share. They can adopt contract-specific goals for minority and women-owned subcontractors, even if the main contract goes to a white male-owned business. They can also break down contracts into smaller and more attainable chunks, providing bidding opportunities that might be easier for smaller firms to earn. 

If you’d like to see the entire list of recommendations, check out the full disparity study here.

Next Steps

Sandra Day O'Connor
Sandra Day O’Connor was the first woman Supreme Court Justice in US history.

Mayor Kelly Girtz indicated that he’ll be assigning the commission’s Government Operations Committee the task of figuring out how to move forward on these issues. It won’t be easy to make progress quickly, given how stacked the private market is against women and minority-owned businesses. Over the long-term, the local government can at least hope to reduce or eliminate their role in perpetuating race and gender disparities in the Athens region.

As US Supreme Court Justice Sandra Day O’Connor said in the Croson decision, “It is beyond dispute that any public entity, state or federal, has a compelling interest in assuring that public dollars, drawn from the tax contributions of all citizens, do not serve to finance the evil of private prejudice.”

APN will be following this issue as it moves through the Government Operations Committee and we’ll keep you informed.

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