August 31, 2000

A look at I-200's impact

The passage of Initiative 200 in November 1998 ended state affirmative action programs, and has left its mark on the construction industry.

Public sector work for women and minority business enterprises has fallen, and according to some, the drop-off in contracts has forced companies out of business.

To get a sense of what has changed, the Journal of Commerce asked contractors, nonprofit organizations, government officials and those who study the construction industry to discuss what they've seen since I-200's passage, and whether the initiative's effects have been positive or negative. What follows are excepts of those conversations.

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(I-200) had the effect that I don’t have city of Seattle projects anymore — it can all now go back to the good ol’ boys… And now the general contractors absolutely do not need us… Now, the jobs are a lot cheaper and I don’t have the workload to take cheap jobs.

To me, the hardest hit was the city of Seattle work. They went out of their way to promote women and minority businesses in the city of Seattle. Now, if you went and looked at any city of Seattle project, they’re all white and they’re all male. More than half my work is from the private sector, and it was never that way before."

--Bonnie Graham
owner, G & G Corp.

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What impact does the passing of Initiative 200 have on women and minorities is a good question, but I don't have any answer based in certainty. It is a very emotional issue. I am not aware of any studies that have measured the actual results of passing such legislation that removes minority set-asides.

During the campaigning for this legislative change, both sides lobbied extremely hard about the positive and negative affect that the law would have on women and minority construction firms, but I have not read any actual research that has measured the impact since the law went in to effect in California or Washington. This poses a good thesis question for researchers and needs to be studied.

The evaluation of the removal of set asides needs to be made based on a impartial factual examination of the issue utilizing good benchmarking measures, not on emotional hypothetical statements from both sides of the debate.

--Darlene Septelka
assistant professor, WSU School of Architecture and Construction Management

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My business has not seen any effect because my work is based on my reputation and my ability to do the job. Right now people are so tapped, that if you can do the job, then your background doesn’t matter. I don’t think there are any color barriers. If you have a heartbeat, you can get a job.

I saw in an article a couple months ago that the average age of people in the construction industry is 49-and-a-half. When they start to retire, it will be a tremendous opportunity for younger people.

--Shelton Burr
owner, Adept Mechanical Services

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We have seen a decrease in public works and consulting contracts (with women and minorities). Construction utilization had been in the upper 20s (percent) and is now down to 14 percent, a 15 percent drop in utilization. Consulting has dropped considerably, too…

From the city’s perspective, we’re concerned about the decline in numbers. Seeing a large drop like that is disturbing. We’d like to see better performance.

-- Rod Brandon
director of contracting, City of Seattle

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I’ve been among the fortunate few to have redirected my business to the private sector. Others haven’t been able to do that. (Set-asides) kept a lot of companies in business, and all of a sudden that business is gone. Minority- and women-owned businesses are struggling.

-- Don Mar
owner, Marpac Construction

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The state’s problem is that for minorities, contracts are based on need, not as a straight business deal. Minorities still need to be competitive, though. In the private sector, it’s a straight business deal. If (this perception) came across the same for the public sector, the public would have looked at it differently. With the (women and minority) requirements, you’re no less competitive -- you still have to be competitive to get contracts. People said, though, you don’t have to be competitive, you just have to be a minority.

I have promoted in seminars for years that minorities should do business in the private sector. In the private sector, people judge you on your straight performance. If you perform well, you’ll usually do business. Based on performance, Lugo’s does pretty well.

We see more prejudice in the public sector than in the private sector. Maybe before I-200, when I was doing work as a minority, we saw resentment. Now, I see no resentment from the government (when we’re working on public contracts.

I have mixed feelings about I-200. I don’t see that entry to gain work in contracting experience….I see some semblance of resistance to minority contractors, including negative marketing against minority firms — the inference is that we have minority status, and therefore we’re not a real contractor.

Minority startups are scrutinized more (than others). A minority that survives is very good in this business because you have to be better.

But most of our contractors only care about performance: “I don’t care what color you are, do you do a good job or not?”

Without some shelter at the beginning, minority firms have a harder time.

--Adrian Lugo
owner, Lugo Construction

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In the public sector, (I-200) has been devastating. Last year alone, contracting work for women and minorities dropped 39 percent as a result of I-200. Personally, I know of two contractors that have gone out of business as a result of I-200. I’ve told people that they shouldn’t do more than 30 percent public contracts because you don’t know whether the voters will continue to fund them.

Now, there’s nothing that says that the state can’t work with women and minorities, but the question is how much is the private sector going to pick up for public sector?

--Louis Cooper, Jr.
director, NW Minority Supplier Development Council

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It has had a chilling effect….Though we have legal definitions for “race,” we do not have any legal definitions for “preferences.” The reason why I say it’s a chilling effect is because of how the law is being interpreted. Many jurisdictions are defining the law broadly to remain safe. And to be safe, they’re interpreting the law more conservatively than necessary. If one local jurisdiction discontinues its program, it has an effect on the state program. Someone under one jurisdiction may assume that there are no programs available under other jurisdictions.

So for the construction industry and the public, the value of the program is less than optimum. We’re still dealing with a variety of interpretations of the law.

-- Cathy Canorro
compliance manager, Office of Minority and Women’s Business Enterprises

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We haven’t felt the brunt of the particular action of I-200 in the primary market we’re involved in… As we expand our lines of services into state and local projects, we would be affected… We haven’t gotten our business because it was a set-aside or anything like that. In that regard, nothing’s changed (since the passage of I-200).

In most cases, you have to be able to have an ability to compete on the strength of your qualifications, but at the same time, as women- or minority-owned businesses, you have to have the programs in place such as those eradicated by I-200 to level out the playing field.

-- Ed Rose
owner, EMRI, Inc.

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Woods

Before I-200, we had some jobs with set-asides, and they don’t have that anymore. Government agencies had disclaimers to encourage use of WMBEs, but they aren’t required to. It’s a rather ambiguous, voluntary thing.

We’ve still been keeping pretty busy. We’ve been able to form 2-3 job ventures, but training has been curtailed since funds have been cut off. I’ve been working for nothing since March.

-- Jeff Woods
director, Contractors Resource Center

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I’ve seen the impact of I-200, and I don’t necessarily consider it a negative impact… No business person likes (government) mandates as it is. On the flip side, minority groups thought I-200 would take away jobs from minority workers. (But with the construction boom), nobody is out of work now.

-- Mike Sotelo
vice president of field operations, W.G. Clark Construction Co.

 

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Jon Silver can be reached by email or by phone at (206) 622-8272.

Other Stories:

• More women choose construction
  
• Even after I-200, diversity is here to stay
  
• Discrimination in the construction industry: where are we now?
  
• With a little help from his friends
  
• Attracting more women to construction