One of the federal government’s greatest small business success stories over the past 30 years has been the growth of minority- and women-owned businesses. Yet, it’s also been one of its biggest failures.
How is this possible? It’s a classic case of a glass that’s either half full or half empty. It all depends on how you shade the statistics. In the bizarro world inhabited by government bureaucrats, it’s an easy thing to do. There is no right; there is no wrong; it just a matter of your point of view.
Nowhere was that more evident than at recent Capitol Hill hearing. The portrait of the government’s 30-plus year effort to promote the growth of minority- and women-owned businesses was both uplifting and depressing.
The Small Business Administration, which is largely charged with overseeing the effort, boasts of an impressive record in assisting these firms. The number of SBA loans to minorities has almost tripled in the past five years and risen in dollar value from $3.5 billion to more than $6.7 billion, according to testimony. The track record for women-owned firms is roughly the same. The number of loans has almost tripled and dollar value has risen to $3.4 billion from $2 billion.
Yet the sad fact remains that minorities are still woefully under-represented in business. Although they make up 32 percent of the population, they only make up 18 percent of business owners, according to the SBA’s Office of Advocacy. While the number of minority owned firms has grown by 35 percent in the past five years, their average gross receipts actually fell by 16 percent. Minority firms on average had gross receipts of $162,000 compared with $448,000 for non-minority firms.
What’s more, advocates like Anthony W. Robinson, president of the Minority Business Legal Defense and Education Fund, believe that racism is still firmly ingrained in the business world. As bad as the situation is, it would be much worse without government programs. But over the past several years even they have become endangered by the Bush Administration.
Ironically, back in the 1970s, President Nixon, a Republican, pioneered government efforts to encourage minority business growth. Conservative groups have urged the government to abolish the programs ever since, They managed to survive through a spirit of bipartisanship in Washington. But the current Bush administration is anything but bipartisan. It has come closest to carrying out conservative wishes through crippling cuts in SBA funding every year since it took office. While the president has been unable to kill the SBA outright, the cuts have yielded stifling bureaucratic indolence.
The federal government provides its biggest boost to small businesses through SBA administered contract set-asides. Under current law, SMBs are supposed to receive at least 23 percent of the $417 billion Uncle Sam spends each year on goods and services. As it turns out, however, government contracting has been nothing more than a high-stakes shell game during the Bush years.
Fernando V. Galaviz, chairman of the Small Business Association for Technology, a group that represents small government contractors, told lawmakers that the SBA’s contracting programs, at best, were “ineffective.” Over the past five years, he noted, total government contracting had increased by 60 percent, yet the number of small business contracts had decreased by 55 percent.