State May Be in the Minority in Affirmative Action Stance

As state affirmative action efforts were dealt another blow by a federal appeals court ruling Tuesday upholding Proposition 209, corporations are stepping into the breach, aggressively courting women- and minority-owned businesses.

“It seems like the corporations and the public sector are going in opposite directions,” said Patricia Perez, a Pasadena businesswoman who is working on a national online program that certifies women-owned businesses seeking government and corporate contracts.

“Corporations are acting as if nothing has changed,” Perez said.

Corporate human resources departments remain committed to outreach efforts and to programs that identify women- and minority-owned companies for vendor arrangements, she said.

Meanwhile, financial institutions such as Wells Fargo, Bank of America and Home Savings of America all have either started or intend to start billion-dollar lending programs geared to women- and minority-owned businesses.

“It’s in their business interest to mirror their consumer base; otherwise, they’re not going to be competitive,” said Fred Jordan, chairman of the San Francisco-based California Business Council for Equal Opportunity.

Although state affirmative action efforts have been virtually eliminated, Jordan said federal agencies, at least in the Bay Area, have increased the number of networking events and are focusing more on small businesses. Many of these small firms are minority- and women-owned.

“The number of [networking] events probably has doubled this year,” Jordan said. At a recent event sponsored by the U.S. Department of Housing and Urban Development, Jordan estimated that 60% of the 400 business owners attending were women and minorities.

But the continued efforts by both corporations and the federal government may have given women- and minority-owned small businesses a false sense that all is still well, Jordan said.

“They don’t feel it yet,” he said. “But when the agencies begin to roll up and the affirmative action officer is reassigned, then it will set in quickly.”

The state’s effort to restrict affirmative action began in June, when Gov. Pete Wilson signed an executive order designed to limit outreach to women and minorities in state hiring, education programs and contracting.

The order caused prime contractors to slow down their efforts to seek women- and minority-owned subcontractors, said Paul Guerrero, head of United Minority Entrepreneurs, a statewide business association headquartered in San Jose.

When Proposition 209, which bans preferential treatment based on race, ethnicity or gender, was passed by voters in November, prime contractors dramatically reduced their outreach efforts.

Guerrero said his association’s December newsletter, which typically carried more than 100 outreach ads by contracting companies, had only 30. He estimated that at least 200 of his members have gone out of business, abandoning public contracting entirely.

“And that’s just in this area,” he said.

Jordan estimated that 50% of minority- and women-owned businesses that previously held state contracts are no longer working. An estimated 6,000 contractors had been previously registered with the state. But both Guerrero and Jordan said state statistics are not available to determine the impact because Wilson eliminated funding for state personnel who kept track of such efforts.

To cope with the changed business environment, small businesses are using their wits and networking skills, said Rod Garcia, owner of Century Diversified, a civil engineering firm in Monterey Park.

“I tend to team more with other small firms,” Garcia said.