A disturbing proposition.

The remifications of Proposition 209 pose a chilling problem for minority employment, education and businesses across the country. With clone bills waiting in the wings, how will its agenda affect YOU?

WHEN FIRST-YEAR GRADUATE STUDENT ERIC Brooks joined the Rev. Jesse Jackson on a podium in the shadow of San Francisco's Golden Gate Bridge last year, he had earned that privilege by having the dubious distinction of being the only African American to enter the 1997 class of the Boalt School of Law at the University of California-Berkeley. It was an "honor" that befell Brooks by default when 18 other African Americans chose not to attend the school, which stood at the center of the maelstrom over Proposition 209. The measure, passed by California voters over a year ago, bans government-sponsored affirmative action programs, including university admissions.

Indeed, 1997 was a dizzying, and perhaps foreboding, year for supporters of affirmative action efforts. Whether it was Jackson, in a scene reminiscent of the '60s, marching across the Golden Gate Bridge, or the continued aggressive backlash against diversity efforts nationwide, it appeared the new year might begin with affirmative action coming in D.O.A.

That possibility still lingers. Currently Prop 209 clone bills are being prepared for ballots in Washington, Florida, Colorado, Arizona, Ohio and Iowa. And this past November, the Supreme Court rejected challenges to Prop 209 and upheld California's sweeping ban on affirmative action policies in state education, employment and contracting. Supporters of Prop 209 believe the floodgates are now open for more clone bills to go through virtually unchallenged. Affirmative action supporters, however, view Proposition 209 as nothing short of the first step toward annihilating the black middle class.

So threatening is the prospect of Prop 209 and its offspring, it was the focus of the semi-annual meeting of the BLACK ENTERPRISE Board of Economists in Washington, D.C. The board met to examine the implications of the elimination of affirmative action in education, employment and contracting.

Present at this discussion were David H. Swinton, president of Benedict College; Margaret C. Simms, vice president for research at the Joint Center for Political and Economic Studies; Lucy Reuben, dean of the School of Business at South Carolina State University; Thomas D. Boston, an economics professor at the Georgia Institute of Technology; Andrew F. grimmer, president of Washington, D.C.-based grimmer & Co.; and Cecilia A. Conrad, an economics professor at Pomona College. Also invited as a special guest was former board member Bernard Anderson, currently the assistant secretary of labor for the U.S.

The board recognized 1998 could well be the make-or-break year for affirmative action efforts. Waiting in the wings is the McConnell/Canady bill. Formerly the Dole/Canady bill (or the Civil Rights Act of 1997), the legislation has as its goal to repeal all existing federal affirmative action programs and policies in contracting and employment. "It's time for Congress to do the same [as California] for the entire nation," bill co-author Charles Canady was quoted as saying.

Because of the rising tide against affirmative action, Boston says the time is now for African Americans to unite behind it. "We cannot back off from supporting affirmative action. I don't care if the whole country has moved away from it," asserts Boston. "When you say `they' don't like affirmative action, it implies that they feel as if they have to give us something. They are not giving us anything. What they are doing is remedying historical barriers of discrimination. That is what affirmative action is."

WHAT'S ALL THE BROUHAHA?

Over the past decade, right-wing politicians have attacked programs designed to achieve parity and economic empowerment. One of the reasons for affirmative action, Simms points out, was to put pressure on those who were unwilling to look at contractors outside of their network. "This puts it back into the realm where you will either pursue diversity because of the political character of those holding office or because of the enlightenment of an individual," she says. "Those who are not [enlightened] will have no nudge or carrot that would make them do anything different from their natural inclinations."

Conrad, who has directly monitored the impact of Prop 209 on California's statewide university system, believes the battle will be won--or lost--in the courtroom in the coming year. "I'm sure people are looking for cases right now where they can show this Proposition has teeth by challenging situations where something has been granted to a minority and can argue that they were qualified too," she says. Conrad points out that many contractors and agencies may be inclined not to do the right thing by minority vendors if they feel challenged. "Before you hand out a contract, you're going to ask yourself: `Am I going to be the subject of one of those reverse discrimination suits?"' says Conrad.

In November, voters in Houston took the first step in heeding Boston's call to action by voting 54% to 46% to let affirmative action practices remain by voting down Proposition A. Says Congresswoman Sheila Jackson Lee (D-Texas): "It gave us a chance to explain what affirmative action actually meant."

Jackson Lee says the key in Houston was the wording of the actual ballot measure. Rather than being asked whether they wanted to ban "preferential treatment," as was the case in California, Houston voters were asked specifically if they wished to ban affirmative action in city contracting and hiring. "We worked very hard on the wording to minimize confusion," she says. "It was clear that this measure would end affirmative action, and we were not going to stand for that in Houston."

Indeed, Houston has gone against the tide of anti-affirmative action rhetoric in recent years. Mayor Bob Lanier signed an executive order in 1995 that increased the city's affirmative action goals dramatically (see "Bucking the Trend," February 1996).

Yet, one of the concerns was the apparent lack of a national effort or movement to stem the tide against affirmative action measures. "My impression is that the organizational activity is not happening in the black community," says Conrad.

Beyond California, if affirmative action is eliminated, it would likely have multiple effects on public employment, suggests Conrad. "We know from studies on a national level that for black women in particular, public employment has been a forum for upward mobility. If you look at the share of management and professional workers among black women who are employed in the public arena, it's very high."

"We don't really know how many black businesses are dependent upon local government contracts and how many have obtained them as a direct result of affirmative action," says Swinton. "But if [federal legislation passes] and it is a significant share, then we're going to see a significant impact."

One of the early and unexpected consequences of Prop 209 has been its impact on institutions of higher learning in California. While the effects on employment and contracting remain to be seen, it doesn't bode well for the future.

A DREAM DEFERRED

For nearly as long as he could remember, it had been Eric Burton's dream to attend law school at UC-Berkeley. And until recently, he had been on pace to do just that. With an LSAT score of 160 out of a possible 180, Burton was accepted to Berkeley's Boalt Law School last March. It seemed as if years of hard work and preparation were about to pay off. That's when the controversy surrounding Proposition 209 fell squarely in Burton's path.

"That was the school I wanted to get into for such a long time," says the native of Oxnard, California. "It was my top choice and my dream school. I went to undergraduate school at Stanford and with the expense of that, I not only wanted to go to a state school because I thought it would be less expensive, but also because I thought Berkeley was a great school."

But Burton's timing was seriously off. In a foretelling of Prop 209, the California Board of Regents had recently passed Resolution SP-1, which ended affirmative action in admissions in the UC system. Prop 209 reinforces the affirmative action ban on the entire UC system as well as other educational outlets such as community colleges. "What SP-1 does is say that you can no longer use race as criteria," says Conrad. "You still have this twofold admissions process, one part based on numerical criteria and the other based on broader criteria, but race can no longer be a part of that equation. The question is, `What will the implications be?'"

The answer was not long in coming. Burton turned out to be one of just 18 African American students accepted to Berkeley's law school in 1997. This was down from 77 blacks accepted in 1996. Burton says his decision was further complicated after visiting the campus during "admit day," when all the potential registrants are invited to tour the campus. "I was the only black there and it was a really strange vibe. There were signs and placards saying, `Welcome to Jim Crow Law School' and pinatas looking like Pete Wilson." Burton said most of the students and faculty he spoke with were supportive and concerned about the impact Prop 209 would have on diversity at Boalt. "The dean said he was also concerned about the numbers but was quick to add that in this era of conservatism, they had to comply with the regents decision and Prop 209."

Burton, who had also been accepted to UCLA, Stanford, Georgetown, the University of Pennsylvania and New York University, says he "agonized over the decision for a couple of months.

"There's a lot of pressure and stress anyway. The first semester of law school is difficult enough and then to have all this media attention....I just don't think it would have been good for me and I wasn't up to the fight." Ultimately, Burton registered at UCLA, where he's studying public interest law and policy.

Just how many African American students will ultimately be affected by Prop 209 in California is difficult to determine. While it's apparent the number of blacks being accepted to Berkeley has declined dramatically, what is difficult to grasp is how many of them are simply shunning the state school altogether.

"Why would you want to go to a place where diversity isn't taken seriously and where you could be the only black?" asks Burton. "I think a lot of qualified black students just decided not to apply because they didn't want to be part of a system that was stepping back in time."

IS THIS ECONOMIC APARTHEID?

If the U.S. is indeed becoming more global in its approach to business opportunities and economics, then perhaps it's picking up the former apartheid policies of South Africa.

Theoretically, Prop 209 attempts to put everyone on equal footing. However, since most minority businesses are newer and smaller, they're often unable to compete with larger companies. Most often, jobs requested by government are awarded to large contractors because they can afford to have the lowest bid. Without specific designations for using smaller firms, such as those addressed by minority business enterprise (MBE) programs that were the target of 209 legislation, those firms will fail to win contracts--let alone compete--with large companies.

"I think 209 is really about contracting," says John Hill, affirmative action compliance officer for Los Angeles County. "A significant impediment to greater CBE [community business enterprise] participation is the county's practice of using agreement vendors," he said in a report to county supervisors on the utilization status of CBEs. "This precludes small businesses that tend to be primarily minority-and women-owned from competing," he adds.

Although Los Angeles has the largest number of African Americans in the state, blacks rank third in population both in L.A. and in the state--behind whites and Hispanics. In a review of L.A. County's contracting efforts, of the $1.4 billion in contracts paid in fiscal year 1996-97, only 6.3% (or $93 million) went to CBE firms. And, the county's four largest departments--health services, public social services, public works and the Sheriff's Department--spent only 3% of their $100 million in contracts with CBE firms. The county's official goal is to award 25% of construction commodities and service contracts to CBE companies. Prior to Prop 209, the state had an official goal of 15% specifically for minorities.

"One of the difficulties is that there is less detailed information kept, and it varies by town to county what is actually going on with these programs," says Conrad. "What comes out is that there have been goals set which are almost never reached, particularly for minority-owned firms," she adds.

It's this kind of atmosphere that Craig Jackson, president and CEO of Saunders Engineering, a 28-year-old Yorba Linda, California-based company, fears. "We have not gotten a state job since 209 was passed. Although we can bid any job we want, the number of contracts has virtually dried up," says Jackson of his $40 million concern.

And he's not sure for which the tragedy is greater--a 28-year-old firm or a new one. "We could not have continued the growth pattern the company has: had without it [MBE/DBE goals]. DBE [disadvantaged business enterprises] allowed us to be introduced to clients--it was the vehicle that got us in the door in the first place. Now the pendulum has swung the other way," laments Jackson.

That's precisely what affirmative action goal programs were designed to create--opportunity. "So little of business is set-asides," says Harriet Michel, president of the National Minority Supplier Development Council in New York. "Set-asides suggest that there are special dollars put away for blacks, whether they're qualified or not. But that's not true. They still have to meet the qualifications, there's still competition even though it may be targeted to minority suppliers," she explains.

Jackson, a November 1997 graduate of the Small Business Administration's 8(a) program, says only 45% of his business at any time was 8(a), but the balance was DBE. With the Supreme Court also upholding the Adarand decision, President Clinton and the SBA have dispensed with the DBE category, a move to "mend, not end" affirmative action efforts. But that doesn't mean all small businesses will be able to compete, even firms the size of Jackson's.

"Since there is no SDBE [small disadvantaged business enterprises] category, you're either 8(a) or small business. But the kind of companies I'm competing against ar.$500 million and above, so what's $40 million?" Jackson says. "We don't have the same kind of resources. If I were a larger firm, I could afford to absorb the loss and go on to something else--that's the difference," explains Jackson, whose company now encompasses general contracting.

With offices in California, Virginia, Hawaii and Georgia, most of Jackson's business is with the federal government on major municipal contracts. State- or local-sponsored projects make up only a small portion of his contracts. The firm currently has a $300,000 subcontract with the UC system to rehabilitate a building on its San Bernardino campus.

Boston says Jackson's experience is very consistent with that of other large, minority-owned firms doing substantial business with government entities. "It's really the bigger firms that are generating the most jobs and the most revenue, so these are the firms that have this kind of dependency, particularly on the public sector, because the private sector continues to lock them out. It's also going to be more concentrated in particular areas--construction firms are going to be hit particularly hard," notes Boston.

"We don't think California is a friendly environment any more, so we may have to relocate. We may have to downsize. We hope, however, that we can joint venture with some larger firms that still believe in a company and can judge them not by whether they're black or not, but by their experience and ability to do the job," Jackson adds.

TWISTING BACK THE CLOCK

California employs 191,425 state workers. Whites account for 110,066 (or 57.5% of the total), and African Americans represent 22,025 (or 11.5%). For the moment, employment policies and practices have not been impacted by the anti-affirmative action movement. Based on 1990 U.S. Census data, African Americans 25 and over represent 5.7% of the state labor force, and 11% of UC's workforce.

The UC system is one of the largest employers in the state. Its nine campuses and other sites account for 72,637 staff employees and 14,700 academic employees, of which 6,900 are faculty. Carmen Estrada, director of equal opportunity and employee support programs for the UC Office of the President, cites the yearly payroll at $3 billion. The 1997-98 annual budget is $8.7 billion, of which $2.1 billion is state funds.

In employment, African Americans as a whole decreased slightly by 0.5% statewide. Each campus sets affirmative action goals based on qualified persons in the labor force and not on the general population at large.

Among the 319 UC senior managers earning over $100,000, 14% are minority. Blacks represent 5%, Asians 4.4% and Hispanics 4.7%. Estrada says this tally does not include other job categories with similar salary scales, such as faculty, deans, physicians and coaches.

LaRhonda Loeb, manager of recruitment and employee relations for L.A. Care Health Plan, agrees with Estrada. "Diversity is the only approach for good business. It means recognizing and understanding that differences among people exist, and it's all right," she says. "By creating an environment of acceptance, company employees can work toward a common goal." Loeb, whose concern is a nonprofit overseer of managed care health plans to Medi-Cal beneficiaries, says the organization is "dynamically diverse." She estimates that African Americans and other ethnic minorities represent 40% of top managerial positions. "We have a way to go, but our goal is to mirror the population that we serve from top to bottom."

In the long run, Loeb predicts Prop 209 will affect the diversity of the workforce and how people apply for jobs. Other potential problems that could arise are a reduction in workplace productivity, low morale, increased discrimination and poor decision-making by supervisors and managers.

Prior to entering the private sector in 1996, Loeb worked as a civilian employee for the federal government for 12 years. She recalls getting her first job in 1984 as a result of affirmative action. The U.S. Navy recruited top honor students at Lincoln High School in San Diego for a special summer work program. "By eliminating affirmative action," she says, "it only sends a negative message that we're turning back the clock."

UC's disturbing drop in black grad students
Using actual enrollment figures from 1994, University of California's
Office of the President ran a simulation on how many graduate students
would have entered in 1994 using the mandate of Prop 209

                     Actual
                   Enrollment   Simulated
Category           Fall 1994    Enrollment   Change

African American       309          178       -131
American Indian         89           51        -39
Asian                2,289        2,740        451
Chicano/Latino       1,146          999       -148
Filipino               261          272         11
White/Other          3,876        3,991        115
TOTAL                7,970        8,229

                            % of Total   Simulated %
                   Change    Freshman    of Freshman
Category           In %     Enrollment   Enrollment

African American   -42.4        3.9          2.2
American Indian    -43.3        1.1          0.6
Asian               19.7       28.7         33.3
Chicano/Latino     -12.9       14.4         12.1
Filipino             4.0        3.3          3.3
White/Other          3.0       48.6         48.5
TOTAL

Source: University of California, Office of the President

RELATED ARTICLE: Modest Income Gains

The growth rate for the American economy will slow noticeably through the year ahead, predicts Andrew F. grimmer, president of grimmer & Co., an economic analysis firm in Washington, D.C. And the unemployment rate will remain level.

"When we look at 1998, the growth rate of the economy will moderate somewhat," says grimmer, a former member of the Federal Reserve Board. "It will converge more toward its long-run potential growth rate, which I estimate will be between 2% and 2.75%. I don't see any major shocks on the horizon and nothing to disturb the forecast. So the real economy is likely to expand moderately, inflation to remain subdued and employment to increase."

The housing sector was a significant source of strength for the economy in 1996, says grimmer. The quickened pace of activity was supported by lower mortgage interest rates and a gain last year in disposable income. Despite somewhat higher mortgage rates, the level of housing starts will most likely continue to rise in 1998. The slight easing of rates in 1996 gave a boost to housing starts last year. grimmer predicts that mortgage rates on new homes may rise this year (from 7.79% to 8.01%).

He also projected that the 1997 black labor force would expand to 15.6 million, or 11% of the total workforce. Black employment would rise to 14.1 million, or 10.9% of the total 130 million employed. Black unemployment, he predicted, would average 9.3%, or 1.4 million, vs. 4.4% for whites and 5.1% for the total civilian labor force.

The economist does note some disturbing trends that will impact African American status in the years ahead. In the short run, he predicts no major changes in the labor force. The continued expansion of the U.S. economy in 1998 will enable blacks to make further moderate gains in their economic position.

But, he cautions, blacks have shared less in the economic expansion of the country than other races because of the growing segment of incarcerated blacks. "That has a substantial impact on the potential labor supply. Increasingly, blacks whom you would expect to show up in the labor force don't get there," notes grimmer. "That results in a loss of jobs and income, which is going to be a very big area of conflict and cost to society."

As other ethnic populations grow, grimmer predicts that blacks may end up on the short end. "We see that whites are losing share, but the gains are being enjoyed primarily by Asians and to a lesser extent Hispanics," warns grimmer. "Down the road, as competition increases, it will not just be blacks versus whites, it's going to be blacks versus everybody else, and unless conditions change dramatically, we risk dropping out at the bottom."

Money income by race
(in billions of dollars)

                         1995                1996
                              % of                % of
Category           Amount    Total     Amount    Total

All households   $4,477.8   100.00   $4,760.3   100.00
White             6,949.1    88.21    4,167.4    87.54
Black               351.9     7.89      393.1     8.26
Other races         176.0     3.93      199.8     4.20

                         1997        1998
                              % of                % of
Category           Amount    Total     Amount    Total

All households   $5,030.7   100.00   $5,272.2   100.00
White             4,381.7    87.10    4,572.6    86.73
Black               425.1     8.45      454.4     8.62
Other races         223.9     4.45      245.2     4.65

Calculation by Brimmer & Co. Inc. Date for 1995 from the U.S. Census Bureau. Estimates for 1996 through 1998 by Brimmer & Co.