Affirmative action ban exacted price on economy, say critics

Five years after Michigan voted to ban affirmative action by public entities, anecdotes, experts and a handful of hard numbers suggest Michigan’s economy has absorbed hits due to the measure.

Proposal 2 -- a 2006 initiative which banned race- and gender-based preferential treatment in public contracting, public hiring and university admissions -- is back in the news. On Sept. 9, the U.S. Sixth Circuit Court of Appeals agreed to reconsider a decision used this summer by a three-judge panel finding Proposal 2 unconstitutional. Ordering such a review sets aside the earlier decision and the case is re-submitted to the entire court. Briefs from all parties are due by December, with a hearing expected in early 2012.

“I’m glad we have a second chance for overturning it, because Proposal 2 has weakened our economic base,” said Daniel Krichbaum, director of the Michigan Department of Civil Rights.

Government contracting practices have been most affected by the ban, he said. Proposal 2 has resulted in fewer bidders for government work, which has reduced competition. Most of the attrition has been among minority-owned businesses, he explained.

Krichbaum told Bridge Magazine that he feels so strongly about the decline that he is launching a new, still unnamed initiative to persuade companies to emphasize diversity in their hiring practices.

With the passage of Proposal 2, he can no longer reject a bid because of the company’s racial composition, but he intends to call a meeting with company executives to review their work force and make the case that diversity and inclusion serve a company’s own self-interest. Prior to Proposal 2, many argued that diversity is a moral obligation, but now it’s also a good business decision.

“We are going to help them understand they are going to be a better and smarter company if they diversify their work force,” he said.

Colleague Daniel Levy, director of law and policy for MDCR, agrees. “A diverse auto company never would have marketed a car called Nova in Spanish-speaking countries where Nova means ‘no go,’ he said. “It only takes one employee to know that.”

Precise figures on the effect of the ban are not widely available, but the city of Grand Rapids has monitored it more closely than most governments and the results show it has taken some hits, said Patti Caudill, diversity and inclusion manager for the city.

Data compiled by the city shows dollars spent on subcontracting work by businesses owned by women and/or minorities fell 52 percent after the passage of Proposal 2.

“There have been a number of our long-time minority and women-owned contractors that were in business and doing well before Proposal 2 and have now closed their doors, so we’ve seen that impact,” she said. “Statistically, can we show it’s from Proposal 2? No, but anecdotally? Yes, you can see it.”

Ward Connerly, president of the California-based American Civil Rights Institute who led the initiative to pass Proposal 2, has some anecdotes himself. “There are a lot of white guys who have shut their businesses doors over the years, too,” he said. “It’s a value question. What basis do you award a contract? It may not constitute good public policy if it’s for any reason other than ensuring taxpayers that they are getting the lowest responsible bid.”

Like Krichbaum, Connerly is looking forward to the full court’s review of the three-judge panel decision on Proposal 2. He’s shocked that a trio of judges could tell voters that the vote they cast is wrong.

“If you want to disillusion Michigan, you let that three-judge panel decision stand and that tells people that it doesn’t matter how you vote because they will overturn it. That to me is just unthinkable,” Connerly said.

Caudill admits Grand Rapids’ post-Proposal 2 existence is more inclusive because it rewards businesses who are local, rather than if they are women- or minority-owned.  “We are focusing on sustainability and how we support our local businesses in the area,” she said.

Caudill’s office also has chronicled the city’s evolving work force. The statistics indicate 87 percent are caucasian and 13 percent are people of color. This is different from its city’s population of 59 percent caucasian and 41 percent are people of color.

Grand Rapids' work force isn’t the only population that has been impacted.

At the University of Michigan, under-represented minorities fell from 12 percent to 11 percent of admitted students between 2006 and 2008, according to the “Impact of Proposal 2” report used by the University of Michigan’s Center for the Education of Women.

The report indicates the dip likely would have been worse without outreach efforts that extended all the way up to the president’s office. President Mary Sue Coleman and other senior leaders made appearances and phone calls across the state encouraging students, particularly in communities of color, to apply to and attend U-M.

That 1 percent drop can have a long-term impact, said Charles L. Ballard, a professor of economics at Michigan State University.

“Almost certainly, some minority students have ended up going to a less-prestigious college than they would have gone to if Proposal 2 had not passed,” he said. “In some cases, instead of leading a minority student to a lesser college, it may have led the student not to go to college at all. These changes may have long-term effects on the earnings of the affected students.”

The state’s reputation took a hit when it passed Proposal 2, believes Lou Glazer, president and co-founder of Michigan Future, Inc.:

“The most common characteristic of the most prosperous places around the country are that they are welcoming and having a culture that is open to people that are different than you,” he said. “Things like Prop 2 and gay marriage bans are not very welcoming. They send the wrong message and that message affects where people choose to live, work and go to college. If you can’t attract and retain talent, you have a hard time growing a knowledge economy, which is important for our state’s economic future.”

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Sam Hagar
Thu, 10/13/2011 - 9:26am
The headline of this article is completely misleading. No jobs/work has been lost due to Prop 2 - instead, it has shifted from some firms to others. This is not bad. “There have been a number of our long-time minority and women-owned contractors that were in business and doing well before Proposal 2 and have now closed their doors, so we’ve seen that impact." This means that these companies were non-competitive and were given the award due to special consideration - that is bad business/policy. Period. Race, gender, sexual orientation, etc., have absolutely no place in the business decision making process. To ignore one class of people is just as foolish as being required to engage them.
Scott Roelofs
Thu, 10/13/2011 - 10:27pm
This article is based on a bogus thesis, and is therefore poor journalism. Since when does giving gender or race preference to certain contractors over low bidders help state and local governments? LOW BIDDERS who provide value for their work are the ones who create benefit. When anything other than performance drives decision making, then society suffers. It is outrageous to award contracts based upon the gender or race of the owner of the bidding firm, and this was a practice long overdue for elimination. Representative government failed to do it, so the voters took charge. It will be a sad day if a federal court overrules the will of the populace.