Businessweek Archives

`A Thunderous Impact' On Equal Opportunity


News: Analysis & Commentary: AFFIRMATIVE ACTION

`A THUNDEROUS IMPACT' ON EQUAL OPPORTUNITY

Six years ago, affirmative action began a giant slide down a treacherous slope. That was when the U.S. Supreme Court, setting a tough legal standard for state and local minority set-aside plans, tossed out a Richmond (Va.) program that reserved 30% of the city's construction work for minorities.

The decision had a rapid impact: Within a year, nearly all of the nation's 236 state and local programs had been dismantled or suspended, according to the Minority Business Enterprise Legal Defense & Education Fund. In Richmond, the minority share of construction dollars shriveled from 41.6% to 2.2%. "It was devastating," says Deborah L. Barnes, Richmond's minority business enterprise administrator. "Diversity in the construction industry went back to its old ways."

Now, affirmative action may be nearing the cliff. On June 12, the Supreme Court raised the same hurdle for a federal program that helps companies classified as "disadvantaged." The ruling could affect a panoply of racial preferences, from reserving radio spectrum for minorities to the 1965 executive order requiring nearly 200,000 federal contractors to adopt affirmative-action hiring plans. The decision "will have thunderous impact," warns Ronald M. Green, a lawyer who represents companies in affirmative-action disputes.

PRESSURE. Some lawmakers aren't waiting for the ripple effect. Senate Majority Leader Bob Dole (R-Kan.) and Representative Charles T. Canady (R-Fla.), chairman of a key judiciary subcommittee, plan to introduce bills to nullify the executive order and other federal programs that help minorities. Even President Clinton is likely to recommend curtailing some preferences.

Some experts say the shift in Washington could prompt companies to return to their old habits. "If we pulled the affirmative-action programs tomorrow, we would revert back to blatant discrimination in a second," says Donna Gillotte, a consultant who has studied companies' attitudes toward diversity.

Employers such as Sears Roebuck, AT&T, and Texas Instruments dismiss such fears. If a company depends on employees for a competitive advantage, "you've got to create an environment to attract people from all segments of the population," proclaims Jim Porter, Honeywell Inc.'s vice-president for human resources.

Lawyers advising corporations raise another concern. Government contractors face a conflict between the ruling and the 1965 executive order. If they scrap their affirmative-action plans, they may lose federal contracts. Under the new ruling, though, too aggressive a plan may spawn reverse-discrimination suits. "It really puts business in a bind," says Theodore Wang, an attorney with the Lawyers' Committee for Civil Rights, a San Francisco nonprofit group that consults with large employers.

A slew of litigation is expected to resolve the uncertainty created by the Supreme Court ruling. The case was brought by Randy M. Pech, the white owner of Adarand Constructors Inc., a Colorado Springs company. After submitting the low bid for subcontracting work, he lost to a company designated as disadvantaged because of its Hispanic ownership. The high court didn't strike down the preference program but said that, like state and local set-asides, it was subject to "strict scrutiny." The plan could be upheld if the government proves it had a compelling interest, such as correcting past discrimination, and that the remedy was narrowly tailored.

DIRTY WORK. Some cities and states have met that difficult standard by introducing race-neutral programs targeting the disadvantaged or flexible goals for minority contracting. But studies that prove past discrimination are expensive. For Uncle Sam to justify all of its programs would require an unprecedented number of studies and discrimination findings. "I can't imagine how they're going to do it," says Gilbert J. Ginsburg, a Washington contracts lawyer.

Advocates of affirmative action are eager to try. But Ralph C. Thomas III, head of small-business contracts at the National Aeronautics & Space Administration, worries that the effort could strain relations with government contractors. To justify programs, "we have to dig up all the dirt" on companies' hiring practices, he says. If the ruling also emboldens more workers to file reverse-discrimination suits, the last phase of the affirmative-action war could be a nasty one. And Corporate America could get caught smack in the middle.

LEGAL LIMBO FOR EMPLOYERS

How the Supreme Court's ruling on federal preference programs may affect corporate affirmative action:

PROBABLY SAFE

-- Voluntary hiring and promotion goals for minorities and women

-- Recruiting on predominantly minority college campuses

-- Advertising job openings in publications targeting minorities

AT RISK

-- Special deals with recruiters to bring in only minorities

-- Reserving job slots for minorities and women

-- Plans based on federal mandates for aggressive minority hiring

-- Reserving wireless phone spectrum for women and minoritiesBy Stan Crock in Washington, with Michele Galen in New York and bureau reports


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus