Study Shows Disparities for Minneapolis Businesses

A recent study found that that are large disparities in Minneapolis' contracting and procurement activity, and wage and earnings for minority- and women-owned businesses.

Minneapolis businesses owned by women and minorities are not getting the same benefits as other businesses in the city, according to a study released Thursday by Austin, Texas-based NERA Economic Consulting.

The study, which covered 2003-2007, found that there is strong evidence of disparities between minority and female participation in Minneapolis' business enterprise.

For example, the study found that companies owned by women or minorities only got 5.56 percent of the city's dollars for purchasing contracts, even through they represent 21.4 percent of all eligible companies.

In addition, the study found that discrimination exists in the small business credit market, especially for African American-owned companies. The study said that minority-owned firms reported that they did not apply for a loan because they feared the loan would be denied. If those firms did apply and received a loan, they often paid higher interest rates than comparable non-minority-owned firms.

The study also looked at disparities in formation and wages for minority- and women- owned businesses. Minorities and women are substantially less likely to own their own businesses as the result of marketplace discrimination, according to the study. The study found that these groups also suffer significant earnings disadvantages compared to non-minority males, whether they work as employees or entrepreneurs.

Specifically, the study reported that the annual average wages for African Americans were 33 percent lower in the Minneapolis market area than for non-minority males who were otherwise similar in terms of geographic location, industry, age, and education.

Along with the statistical evidence, the study also outlined anecdotal evidence to show inequality for minority- and women-owned businesses in Minneapolis. NERA mailed surveys to businesses in Minneapolis to find out whether and how often firms had experienced discrimination in business dealings in the previous five years.

About 44 percent of minority- and women-owned firms said they had experienced at least one instance of disparate treatment in one or more areas of business dealings identified on the survey.

In reference to applying for commercial loans, minority- and women-owned firms reported being discriminated more than three times more frequently than non-minority males.

In response to the findings, the Minneapolis City Council has begun a public comment period and will make recommendations based on the study and public comments on December 9.