CINCINNATI - When it comes to the city of Cincinnati’s record of doing business with companies owned by women and minorities, this much is clear: The city’s results are far weaker than advocates of economic inclusion want to see.
In the first quarter of this year, for example, the city spent roughly $1.7 million with companies that identified themselves as black-owned businesses, according to figures the city compiles.
That amounts to roughly 2.4 percent of the nearly $73 million spent in a city with a population that is 44.8 percent black, according to 2010 Census results.
The city spent nearly $2.7 million with businesses owned by white women, amounting to roughly 3.7 percent of the total. And companies owned by Hispanics and those owned by Native Americans got no contracts with the city in the first quarter of this year.
“The only number that really matters is what percentage of the total spend is going to minority businesses. Period,” said Sean Rugless, CEO of the Greater Cincinnati and Northern Kentucky African American Chamber of Commerce. “Minority business contracting has not reached an acceptable threshold in which we would say we no longer have an issue.”
Nationwide, cities with successful economic inclusion programs award between 15 percent and 20 percent of their contracts to minority-owned companies, Rugless said, but Cincinnati’s results are still less than 5 percent with all minority groups lumped together.
City officials argue the government’s percentages are artificially low since women- and minority-owned businesses aren’t required to identify themselves that way when doing business with the city, and some minority- and women-owned firms who do have contracts aren’t counted as a result.
But advocates for economic inclusion say even if the figures are a bit understated, they’re far too low. And, they insist, the results should matter to everyone.
Here’s why: Businesses owned by minorities typically hire more minority workers, said Crystal German, vice president of the Minority Business Accelerator and economic inclusion at the Cincinnati USA Regional Chamber. And locally, the unemployment rate among minorities is roughly twice that of white residents, Rugless noted.
So as minority-owned businesses grow, employment among minorities should increase, too, which expands the tax base and helps the region become stronger as a whole, German and Rugless said.
“We will rise and fall with the success of minority business,” Rugless said.
There’s also the issue of parity, German said. The small number of minority- and women-owned companies that do business with the city doesn’t reflect the business community as a whole, she said.
The Greater Cincinnati region has roughly 162,000 privately held businesses, according to the 2007 Economic Census, the most recent data available. Roughly 9 percent of those companies are owned by minorities, and women own about 30 percent, according to an analysis by market research firm LaVERDAD for WCPO.
Those overseeing the city’s efforts say the government’s spending totals reflect the fact that Cincinnati’s contracting program isn’t designed to steer work to women and minority business owners.
Rather, the city has a Small Business Enterprise, or SBE, program that is “race and gender neutral.” The program has been that way for more than a decade because legal challenges forced the city to remove race and gender as selection criteria. There are 434 businesses that are certified SBEs with the city.
“It’s almost as if the city was collecting apples in a park and that was our target. And sometimes we get to a part of the park where there’s an orange tree, and we pick up a few oranges because they were there,” said Rochelle Thompson, the city’s contract compliance officer.
“And then we get criticized because we didn’t get enough oranges when that wasn’t the target of our program.”
The SBE program is designed to ensure that a portion of city contracts is awarded to small businesses located in Hamilton County to keep those dollars local – not to steer work to women- and minority-owned firms.
Candidates For Mayor Raise Concerns
Earlier this month the city’s minority contracting track record became an issue in Cincinnati’s mayoral race.
Former Councilman John Cranley, a leading candidate, on July 12 unveiled a plan for economic and minority inclusion. In it, he argued that a stronger program is key to building and expanding the city’s African American and Latino middle classes.
Vice Mayor Roxanne Qualls, the other leading candidate in the race, quickly countered that she, too, has been working to try to change the city’s program, which she also has argued is critically important for the same reasons.
Both have advocated for the city to pay for a new disparity study, known as a Croson study, which would determine whether discrimination still exists in the way the city awards contracts. If the study finds that to be the case, Cincinnati could legally award contracts to companies