A Croson to bear.

Author:Brimmer, Andrew
Position:City of Richmond vs. Croson; discrimination against black-owned construction firms

The construction industry is a major force in the U.S. economy. It is a mainspring of economic growth and generates significant jobs and revenue. Yet, entry into the industry and opportunities to expand are severely restricted by discriminatory practices failing disproportionately on African-American contractors.

In 1991, new construction was worth $404.9 billion. This figure represented 6.3% of total business revenues and was equal to 7.1% of gross national product (GNP). By contrast, food manufacturing revenues were $398.1 billion. In the same year, an average of 4.7 million people worked in construction. This level was equal to 4% of total employment. About 327,000 blacks worked in the industry. They held 7% of the total jobs and accounted for 2.8% of total black employment.

In 1991, public-sector agencies made $109.2 billion construction expenditures. This amount was equal to 28% of total outlays. It was divided among the federal government (4%) and state and local governments (24%). The private sector accounted for 72% or $295.7 billion.

African-American In Construction

Black contractors and subcontractors play a modest role in the industry, and that role has expanded little during the last decade. In 1977, 976,724 U.S. construction firms had revenues of $73.87 billion. Also, 21,101 black construction firms had $758 million in revenues. Blacks represented 2.16% of the firms and accounted for 1.03% of total receipts.

These relative shares can be used to calculate disparity indexes and show roughly the size of the shortfall in black participation. In the landmark 1989 City of Richmond v. Crozon ruling, the Supreme Court held that such a disparity index is a yardstick of discrimination in a local construction market. The index is found by dividing blacks' percentage share of total industry revenues by their percentage of the total number of firms in the industry. The Court struck down Richmond's attempt to show discrimination by comparing construction revenues with the black percentage of the city's population.

In 1987 (see chart), the last year official statistics are available, there were 1.629 million firms in the industry and 36,554 were black-owned or. 2.24% of the total. The revenues of all construction firms that year were $202.5 billion and receipts of black firms were $2.105 billion or 1.04%. The disparity index was equal to 46.4% of 1.04% (revenues) divided by 2.24% (firms) times 100. If black firms' revenues had equaled their...

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