National Center for Policy Analysis

MONTH IN REVIEW

Affirmative Action
July, 1996

FEDERAL QUOTA POLICE

The little-known but extremely powerful Office of Federal Contract Compliance Programs (OFCCP) in the Labor Department enjoys more coercive power and less judicial scrutiny than any other agency enforcing affirmative action, according to researchers.

Set up by executive order in 1965, the OFCCP requires the more than 200,000 companies doing business with the federal government to give preferences in hiring and promotion to women and certain racial and ethnic groups.

The compliance office can bar private companies from federal contracts -- which would put many of them out of business -- but usually just demands back pay and compensation to people not hired or promoted. Before a company can take the office to court, it must exhaust the Labor Department appeals process -- which can take five years.

Compliance officers exercise enormous discretion and are judged according to the number of violations they find. Thus it is not surprising that the agency finds violations in 73 percent of the more than 4,000 compliance reviews it conducts each year.

Regardless of a company's efforts, the OFCCP can usually find a violation:

Carolina Steel had a higher percentage of black employees than the local labor market -- but it rejected too high a percentage of black applicants for jobs at a remote site and therefore had to compensate rejected applicants.
A temp firm in New Jersey had almost three times the percentage of blacks on its payroll as in the local population -- but the compliance officer was "obsessed" with those not hired.
A trucking company had to pay back wages to five applicants denied jobs that required heavy lifting of hazardous wastes while breathing with respirators -- although they were heavy smokers with diminished lung capacity.
In a "comparable worth" factory case, the OFCCP is demanding $550,000 in back pay because women choose to work in lower-paying jobs not requiring heavy labor; although under union contracts they can bid for any job opening.

The OFCCP assumes any written pre-employment test is discriminatory -- and discourages the use of merit in hiring or promotion. Industrial psychologist John Hunter estimates that total U.S. output would be about $150 billion higher -- about 2.5 percent of gross domestic product -- if every employer in the country were free to use tests and select on merit.

Source: James Bovard (Hoover Institution), "Here Comes the Goon Squad," American Spectator, July 1996; "Bureaucratic Carpet Bombing," Wall Street Journal, July 1, 1996.

HISPANIC FIRMS BARGE AHEAD

The number of Hispanic-owned businesses increased at three times the rate for all U. S. firms in the last economic census, and their revenues rose at twice the overall rate, according to the Census Bureau.

From 1987 to 1992, the number of Hispanic firms rose more than 76 percent -- to a total of 863,000.
Their annual revenues jumped 134 percent over the period -- to $76.8 billion.
For all U. S. firms, revenue rose 65 percent -- to $3.3 trillion.
Of Hispanic-owned firms, 403,900 are owned by Mexican Americans; 183,700 by Americans of Central or South American origin; and 103,000 by Cuban Americans.

California has the most Hispanic-owned businesses, with Texas and Florida coming in second and third. One in every five businesses in New Mexico is Hispanic-owned, one in eight in Texas and one in nine in Florida and California.

Source: Staff and wire reports, "Hispanic Firms on Fast Track in Number, Revenue," USA Today, July 11, 1996.

RACE-BASED PREFERENCES IN CONTRACTING

"Low bid wins" used to be the rule in competitive bidding, but racial preferences are the rule for federal contracts.

There are a number of drawbacks to this policy:

Last year, the Defense Department's inspector general reported that preference contracts for long-distance services over an eight-month period in 1992 cost taxpayers $1.1 million over competitively bid prices.
It invites fraud -- such as minorities and women recruited to serve as figureheads for white-owned firms.
It doesn't help poor young people -- participants in the Small Business Administration's preference program may have a net worth of up to $250,000, excluding home and business equity when a contract is first awarded, and up to $750,000 thereafter.
The SBA's inspector general found that 35 of 50 randomly selected participants had net worths of more than $1 million, and 12 received annual compensation in excess of $750,000.

To get around last year's Supreme Court ruling in Adarand v. Pena , the Clinton administration supports "race-conscious procurement" under which contracting officers consider bids from non-minority firms as 10 percent higher than their face value.

This sort of handicapping uses race as "a factor," rather than the "sole factor" -- but race still determines the outcome. The concept is now used by the Defense Department, and the Clinton administration wants to expand it to all government bids.

Source: Terry Eastland, "Affirmative Action: A New Idea," Weekly Standard, June 24, 1996.

FREE MARKETS BENEFITING WOMEN

Women have made stunning gains in almost every field of endeavor over the last generation, and have reached near parity with men in wages and salaries, according to statistics.

While free markets and changing social attitudes have combined to generate huge gains for women, some women's advocacy groups distort the numbers by ignoring differences with men in education, job tenure and hours spent on the job.

As Michael Lynch and Catherine Post note in the summer issue of the Public Interest:

Men are more likely to get bachelor's degrees and advanced degrees in engineering and business, while women are more drawn to education, English literature and communications.
Engineers -- regardless of sex -- generally earn more than teachers.
Women are more apt to interrupt their careers to have children -- costing them seniority and experience that would boost their incomes later.
Men tend to toil for longer hours -- with 75 percent putting in more than 40 hours a week, compared to 55 percent of women.

According to the article, the pay gap between men and women virtually disappears when age, educational attainment and continuous time spent in the workforce are factored in as wage determinants. One study found that women between 27 and 33 who have never had children earn 98 percent as much as their male counterparts.

While the federal Glass Ceiling Commission last year deplored the fact that 97 percent of senior executives at the 1,000 largest industrial corporations were men, it was ignoring the obvious.

Managers generally don't obtain such jobs until late in their working lives and the average senior female manager is just 44 years old, eight years younger than the average male.
In 1970, when today's 50ish managers were just getting started, men accounted for 96 percent of all recipients of Master of Business Administration degrees (MBAs).
Today, women are earning 36 percent of MBAs -- a change that will lead more women to top corporate positions in the future.
And there are fewer female CEOs -- perhaps because only 14 percent of female managers aspire to the top spot, versus 45 percent of male managers.

Source: Stephen Chapman, "Affirmative Mobilization," Washington Times, July 13, 1996.

HIGH COURT SAYING "NO" TO RACIAL PREFERENCES

Supreme Court observers say it is sending a clear message: race-based programs are out and a new colorblind society is in.

Before it adjourned earlier this month, the Court struck down congressional districting plans in North Carolina and Texas that had been drawn mainly to create majority-black and majority-Hispanic voting districts -- noting in the Texas case that racial classifications may "foster harmful and divisive stereotypes."
The Court also declined to review an appeals court decision that struck down an affirmative action program at the University of Texas law school.
In 1995, the Court let stand a decision that eliminated black-only scholarships at the University of Maryland.
Last year it also left standing a decision that invalidated a quota plan for promotions in the Birmingham, Alabama, fire department.

Judicial experts say the Court has developed a pattern of denying review in cases where lower courts have struck down affirmative action programs, and granting review where such programs were upheld.

They say the Court is influenced by two factors in its attitudes towards affirmative action. First is the general intellectual assault against race preferences taking place in society as a whole. The other is the intellectual bent of the five justices appointed by presidents Reagan and Bush.

Source: David A. Price, "Demise of Racial Preferences," Investor's Business Daily, July 15, 1996.

ADMISSIONS BY RACE

The famous opinion of Justice Lewis Powell in the Bakke case, decided in 1978, is still the supposed basis for racial preference in American law: race can be a "plus factor" so long as it is not the decisive one.

Just as nonintellectual attributes like athletic prowess, musical ability or the alumni status of parents are taken into account, one might defend the modest use of racial preferences in college admissions, according to sociologist James Q. Wilson. But in practice, race and ethnicity are decisive.

For example, at the University of California (UC), between 40 percent and 60 percent of students are admitted on strictly academic grounds. The next group consists of people admitted based on combined academic and socio-economic rankings -- but being disadvantaged may count for more than being smart. The final group are those whose rankings, academic and supplemental, are low.

Researchers found that of graduates of the UC at San Diego who applied to that university's medical school between 1987 and 1993, the only students admitted with admissions test (MCAT) scores below the sixtieth percentile or with college grades below 3.0 were from affirmative action groups.
A separate study showed that students from poorer families received no advantage per se -- the only criteria for preference were race and ethnicity.
At the UC Los Angeles Law School, students with a admissions test (LSAT) score below the ninetieth percentile and college grades below 3.5 are vastly more likely to be admitted if they are black or Hispanic than if they are white or Asian.
Since only certain minorities are preferred, researchers found they were 2.7 times more likely to be accepted as Vietnamese students, although the grades of most of the rejected Vietnamese were higher than most of the accepted minorities.

Source: James Q. Wilson, "Sins of Admission," Atlantic Monthly, July 8, 1996.

MISTAKING STATISTICS FOR PROOF

Court decisions and government policies are often based on statistical correlations. But correlation isn't causation. For example, if women or minorities are "under-represented" in certain occupations or the proportion of youngsters expelled from schools differs from one racial or ethnic group to another, it isn't necessarily the result of discrimination.

Yet the confusion of correlation with causation is so widespread that many people think an even representation of people is normal; and thus any deviations from the norm are suspicious. In reality, large statistical disparities exist among all sorts of groups in countries around the world. A few examples:

The first five runners across the finish line at this year's Boston marathon were all from Kenya.
All the baseball players who have stolen a hundred bases in a season are black.
Most of the people laying cable in Sydney, Australia are Irish.
All the billionaires in Thailand and Indonesia are of Chinese ancestry.
Four-fifths of the doughnut shops in California are owned by people of Cambodian ancestry.

Such statistical variations are used to support preconceptions, when the actual causes may lie elsewhere. For instance, after the attack on Pearl Harbor people noted that a larger number of Japanese-Americans lived near military bases than could be accounted for by random chance. The conclusion that they must be living there in order to be able to commit sabotage played a role in the decision to intern them. However, it turned out that Japanese-Americans chose the locations because the land was cheap, and the military later built installations in those areas for the same reason.

Source: Thomas Sowell (Hoover Institution), "Numbers Alone Don't Prove Discrimination," Conservative Chronicle, June 26, 1996.

PLAYING THE "RACE CARD"

Legal experts are concerned that race is playing an increasing role in the selection of jurors and deliberations of juries. But where once all-white juries, particularly in the South, freed whites accused of crimes against blacks, there is evidence that now some black jurors are letting race sway their judgment.

In Washington, D.C., where approximately 70 percent of jurors are black -- as are a high percentage of defendants -- 24 percent of all felony trials ended in acquittals in 1995, much higher than the national acquittal rate of 15 percent.
In the Bronx borough of New York City, where more than 70 percent of jurors are black or Hispanic, almost half of all minority defendants in felony cases go free.
In Detroit, which is 76 percent black, 30 percent of felony defendants are acquitted.

Judges and prosecutors also cite cases in which, despite overwhelming evidence of guilt, juries were hung 5 to 6 or 11 to 1 -- in Dallas, Texas; Hartford, Connecticut; Atlanta, Georgia; Fontana, California, and other cities. In jury deliberations, other jurors report that the lone dissenters categorically dismissed police testimony as racist or justified the defendant's violence as a normal reaction to poverty, the ghetto culture or racism.

Some defense attorneys use this so-called race card in arguments to juries; but more frequently attorneys use preemptory challenges -- a practice which allows attorneys to veto a certain number of jurors without cause -- to shape the most sympathetic jury possible.

However, attorneys aren't the only ones appealing to race. For example, Paul Butler, a criminal-law professor at George Washington University Law School in Washington, D.C., claims black jurors have a "moral responsibility to emancipate some guilty black outlaws."

Source: Daniel Levine, "Race Over Reason in the Jury Box," Reader's Digest, June 1996.