Address Disproportionate Representation

Minorities make up more than 20 percent of the U.S. population but own only 9 percent of all construction firms and receive only 5 percent of all construction contracts.  The impact of such a divide is particularly devastating because construction is affected by a capacity catch-22: firms with little capacity are unable to bid on big projects, but without working on bigger projects, companies will never sufficiently expand their capacity to bid on big projects in the future. 

This cycle of lack of opportunity and low capacity is too pervasive to be solved by promises of equal opportunity and too deep to be solved by market forces.  But even moderate intervention can make a dramatic difference.  Assistance on even one contract can dramatically increase a disadvantaged firm's capacity - helping it to break out of the low capacity/lack of opportunity cycle.

Create Community Wealth

Healthy, successful businesses are a basic component of strong, sustainable communities.  But many of the businesses within urban communities of color have been devastated by redlining, job flight, and disinvestment.

Increasing the capacity of these local businesses creates wealth in the community by generating job opportunities for residents.  Research shows that minority businesses hire greater percentages of minority employees than majority-owned firms do.  A report prepared by the Regional Alliance and New York Building Congress in the mid-1990s found that 90 percent of minority-owned firms rely on a labor force that is at least 50 percent minority, and most had a labor force of at least 75 percent minority workers.  As businesses of color are given greater opportunity to grow, they will train and employ more minority residents, who can then reinvest in their communities.

Link Development with Community Benefits

Strategies that increase minority contractors' access to and capacity for contracts are one way of building additional community benefit into any community development or revitalization project.  Minority contracting programs are part of a larger community benefits movement, where communities are organizing around publicly subsidized development projects to leverage community benefits like agreements to pay workers a living wage, hire local residents, provide sufficient affordable housing, or provide for displaced homes and businesses.  The construction activity generated by new housing, new transportation infrastructure, or any physical community improvements can pump economic benefit into depressed areas with little additional spending.

Target an Industry that Has Both Opportunity and Need

Strategies to support minority-owned businesses focus on construction for several reasons:

1. Construction is an industry that relies heavily on public money.  Federal, state, and local governments are responsible for building roads, schools, transportation systems, etc.  Anywhere public money is being used, there is a leverage point for community benefits agreements.
2. Construction is a profitable industry that can support workers with good wages even at basic levels of education.  Once the skills are mastered, they can become keys to life-long employment opportunities. 
3. Even more than other industries, construction has historically been dominated by white men, due to restrictive union memberships, discriminatory hiring practices, and heavy reliance on exclusive networks.  Achieving equity within this industry requires outside intervention.

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