Government set-aside programs for minorities have had a positive impact on the rate of business formation by African-Americans, conclude the authors of a new study, “Impact of City Contracting Set-Asides on Black Self-Employment and Employment,” published by the National Bureau of Economic Research.
Write the authors: “Black business ownership rates increased significantly after program initiation, with the black-white self-employment gap falling by three percentage points (25-40 percent). ”
The white-black employment gap closed as well. Black gains were concentrated in industries affected by the set-asides and accrued primarily to better educated blacks. “It appears that city programs led to a reallocation of self-employment from white to black men.”
Bacon’s bottom line: As a matter of philosophical principle, I dislike programs that divvy up the spoils of government spending by race. Such programs make a mockery of creating a color-blind society. As a practical matter, however, I acknowledge the history of discrimination against African-Americans and I see the logic (even if I disagree with it) of enacting policies to compensate for past injustice. The value of this study is that it demonstrates that set-side policies actually do accomplish what they set out to do (something you can’t take for granted), which is increase business and employment opportunities for African-Americans.
A couple more observations. First, it appears from this study that the primary beneficiaries are educated African-Americans, who, we can assume, tend to be better off than their less-educated brethren. Therefore, while set-aside programs arguably may comprise a rough form of racial justice, they seem less likely to constitute an effective anti-poverty program.
Second, the article does not address the effect of set-asides for other minorities who have suffered no history of discrimination at all, at least not in Virginia. In the Old Dominion, for instance, many winners of minority contracts are Hispanic or Asian — and many of them are immigrants! It is exceedingly difficult to argue that immigrant Hispanics and Asians living in Virginia today have suffered from discrimination in access to government contracts. Indeed, it would be interesting to know the extent to which these new-comer minorities have displaced African-Americans in the competition for racial spoils.