Closed-Door Policy

This story appears in the May 1997 issue of Entrepreneur. Subscribe »

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.

Young And The Restless

Contest honors rising stars.

These kids nowadays. Not content to veg out on MTV and hang out at the mall like their '80s predecessors, a growing number of today's young adults are taking a more drastic, alternative route to combating teen angst--they're starting their own businesses.

Granted, succeeding in business provides more tangible satisfaction than progressing to a new level on a video game. "There's an art to it," says Steven Todd, an 18-year-old who started ST Hay Investments in Ojai, California, two years ago. "It's all about how you create your business, how you run it, and how you treat your customers."

Todd, the winner of the 1997 Outstanding High School Entrepreneur Contest sponsored by Johnson & Wales University, acknowledges that this drive sets him apart from the media portrayal of teens, which, he says, tends to publicize gangs. "When you're our age," he says, "people put you in a particular class."

In reality, life for this high school entrepreneur, who buys and sells livestock hay, is sort of like a campy John Hughes teen movie. "I go to school with a lot of preppies, and show up with hay in the back of my truck," says Todd. "Even the principal laughs. But I feel it's their loss. They just go home, and I'm building something."

The underdog phenomenon isn't anything new to those who dare to cross a new border in business ownership. When Gertrude Johnson and Mary Wales started their Providence, Rhode Island, school in 1914 with seven secretarial students, many considered the entrepreneurial women an aberration rather than pioneers. "They probably had a tougher time, simply because it wasn't `the thing to do,' " says Daniel Viveiros, a Johnson & Wales professor of business who's been involved in the high school entrepreneur contest since it started six years ago. "Now it's more accepted for younger people to go into business. There's been more exposure to the benefits of entrepreneurship in the past few years, which stimulates their interest."

This new generation of entrepreneurs, says Viveiros, "is more independent, more free-spirited, more creative. The business ideas are getting better. They're always looking for an angle."

And, like Johnson and Wales before him, Todd and the other seven contest finalists are always looking for the opportunity to break down barriers. "I hope a lot of kids follow in our footsteps," Todd says, "and that the number of entrepreneurs doubles or triples."

Contact Sources

Robins Industrial & Building Supplies Inc., (215) 877-2252