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Closed-Door Policy

The Supreme Court's refusal to hear a set-aside case deals a blow to affirmative action.

In the latest blow against minority- and women-owned business set-aside programs, the U.S. Supreme Court declined to review a Philadelphia law setting aside one-fourth of the city's public works contracts for businesses owned by women or minority entrepreneurs.

By refusing to hear the case in February, the Supreme Court upheld a judge's 1995 ruling that the city's set-aside law should be struck down because it was "motivated by racial and gender politics." Indirectly, the court also took another step toward eliminating similar programs nationwide, as many other cities were closely watching the Philadelphia case to determine whether their own set-aside programs could survive.

In fact, Philadelphia's struggle mirrors the dilemma facing many areas across the country. "The city alleged it was necessary to remedy prior discriminatory exclusion of such firms, when in reality there were very few minority- and female-owned firms that were qualified to do the work," says Jack Widman, the attorney who represented the Contractors Association of Eastern Pennsylvania in the case filed against the city of Philadelphia in 1989. "There is a real-life problem of discrimination, and there has been one for hundreds of years. I would be the first to acknowledge those problems and the devastating effect they've had. But you don't remedy the absence of qualified minority contractors by requiring 25 percent participation. That polarizes society because the nonminority contractors are suddenly told they can't compete for 25 percent of the work because of who they are. And it impedes the development of legitimate minority contractors because there's no competitive pressure for them to learn the business. All the money taxpayers spent to enforce this program created the very result the program was trying to avoid: the continued absence of qualified minority and female contractors."

Yet Carole Robinson, owner of Robins Industrial & Building Supplies Inc. in Philadelphia, says minority and women entrepreneurs are suffering as a result of the decision. Since an executive order from the mayor two years ago barred the city from enforcing its set-aside program, Robinson has seen many of her peers close their doors. "It's just status quo," Robinson says of the Supreme Court's lack of action.

Robinson agrees with Widman on one point: that for all the legal turmoil, the basic problem has not been resolved. "There are fewer and fewer businesses that are able to sustain themselves without affirmative action," she says. "This will continue to be a challenge nationwide."

Whether the effects of the Philadelphia case will indeed create a ripple effect across the country remains to be seen. Erwin Chemerinsky, professor of constitutional law at the University of Southern California Law School in Los Angeles, says, "It's hard to read much into a denial of review. It simply means there weren't four votes to hear the case and could mean the justices were waiting for another case or wanted to focus on other things."

Chances are, however, that the denial is not an aberration on the part of the Supreme Court. "This is a court," notes Chemerinksy, "that has been consistently hostile to affirmative action programs and has in fact invalidated every affirmative action program that's been before it in recent years." Considering the court's stance--and the refusal of minority and women-owned businesses to back down from their need for set-aside programs--this sticky issue is clearly far from over.

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This article was originally published in the May 1997 print edition of Entrepreneur with the headline: Closed-Door Policy.

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