Why Business Hasn’t Joined the Prop. 209 Fight

Proposition 209, which would end governmental affirmative-action programs, may be the most emotionally divisive measure on the ballot, but it is also the most economically irrelevant. Designed for an era of unchallenged white male domination, the current system of racial and gender preferences is increasingly at odds with a multiethnic economy becoming ever more intertwined and interdependent.

This growing mestizoization of the California economy, the increasing multicultural work force, may be one reason why most business interests, otherwise partisan on an array of ballot measures, have seemed indifferent to the fate of Proposition 209. Many chambers and leading business groups, such as the Central City Assn. and the Greater L.A. Chamber of Commerce, have simply ducked the issue. Some have done so for fear of offending either feminist or civil-rights organizations, on the one hand, or conservatives, particularly Gov. Pete Wilson, on the other. For others, involvement would be bad business.

But corporate executives and entrepreneurs have a longer-term reason to stay out of the 209 fight. Many see the conflict over gender and racial preferences as essentially inconsequential to the more pressing issues of economic expansion and job growth in multiethnic California.

Several factors contribute to marginalizing such preferences, including the UC Board of Regents’ decision to dismantle affirmative-action programs at UC. For one, the economic sectors most affected by racial or gender preferences--state government, directly, large corporations, indirectly--have been relatively peripheral to the state’s economic comeback.

Virtually all net job creation over the past three years, totaling about 600,000, has occurred in small and mid-sized companies, few of which have ever used preferential practices. Even in government, it is unclear how maintaining preferences would help women and minorities. Both groups are currently overrepresented in the ranks of state employees, even at executive levels. African Americans, for example, who make up about 8% of California’s population, constitute 11% of all state workers.

Underrepresentation of Latinos in government jobs, furthermore, has sometimes fostered policies that essentially give preferences to Spanish-surnamed people, including relatively recent immigrants, over more qualified blacks. If they seek their “fair share” of government jobs, Latinos, who are one-third as likely to work for government as blacks, can only get jobs, at least in part, at the expense of African Americans.

But, ultimately, any jockeying for racial or gender slots in government may prove little more than a struggle over the best deck chairs on the Titanic. With the exception of prisons and schools, job-growth prospects in government-related employment, at every level, are not bright. In the year ending June 1996, statewide job growth, overall, surged 2.5%, but government jobs dropped slightly.

The strongest reasons for 209’s economic irrelevance, however, stem from changes in the marketplace. In the 1970s and ‘80s, preferences helped diversify state and corporate employment. Today, the economic dreams of women and minorities are best realized in business ownership. Latino-, Asian- and African American-owned firms comprise about one-quarter of all companies in the state. Women own an estimated one-third of the state’s firms. Combined, these “disadvantaged” groups account for more than half of California’s business owners.

Existing preferences did not greatly contribute to this development. A 1993 survey of businesses in Los Angeles County, for example, found barely 1% of them receiving any form of government assistance. In any case, it is perhaps patronizing to view women- and minority-owned firms as “disadvantaged” in any way, though most are still relatively small. Over the past decade, these businesses have expanded at a much faster rate than their white-male-owned counterparts. Their ethnicity and gender helped them successfully target the state’s most rapidly growing markets, particularly Asian and Latino.

There is another trend in the California economy that bears watching--the rise of multiethnic companies. According to a survey conducted by the Orange County Business Journal, such minority-owned firms do not want to be so classified, in part because of the stigma. Take Powerwave Technology, a fast-growing manufacturer of amplifiers used in the wireless industry. Founded as Milcom Corp. in 1985 by Alphonso Cordero, an entrepreneur of Mexican descent, Powerwave does not see itself, or want to be seen, as an Latino-run company. Much of its management team, as well as manufacturing work force, draws on Orange County’s largely Asian and white work force.

“Powerwave does not see itself as an ethnic company,” protests one executive. “It is simply a company like any other corporation.”

One major reason for the lack of ethnic-specific identity is the strong demand for talent, particularly in software, special effects and multimedia, able to adjust rapidly to and capitalize on technological change. In such a labor market, discrimination against qualified applicants on the basis of race or sex is virtually unthinkable, not to mention self-defeating.

At firms like Transnational Computer Technology in El Segundo, company founder Wond Wossen Mesfin’s biggest worry is finding skilled computer programmers for his expanding custom-software business. Unable to recruit enough qualified native-born Americans, he has been turning to immigrants, mostly Asians and Russian Jews.

But mestizoization is not restricted to high tech. Across South-Central and Compton, many newly built supermarkets are the result of a partnership between Jose de Jesus Legaspi, a Mexican-born developer, and Darioush Khaledi, an Iranian immigrant who owns two supermarket chains. The two epitomize the realities of interdependence that will mark the future Southland economy. Khaledi represents the region’s growing dependence on foreign-bred entrepreneurial expertise, increasingly Asian and Middle Eastern, while Legaspi supplies market intelligence about the exploding Latino consumer market.

Boosted by greater achievement in education among minorities and a huge increase in interracial marriages, this mestizoization is likely to become ever more characteristic of both California society and its new economy. As a result, in a decade or so, the battle over Proposition 209, for all the current gnashing of teeth, likely will be remembered for being much ado about very little.