Chicago Affirmative Action Debated

ELIZABETH BRACKETT:

The Carlo Steel Corporation has been fabricating steel on Chicago's south side for the last 35 years. Seventy employees work here, and last year's sales topped $14 million. Company president Nelson Carlo attributes his success to hard work and the city of Chicago's affirmative action programs.

The programs reserve 25 percent of the work on city contracts for minority-owned companies, and 5 percent for companies owned by women. Carlo, who was born in Puerto Rico and came to Chicago in 1952, calls the programs essential.

NELSON CARLO, Carlo Steel Corporation:

If the programs weren't here, I would assure you I wouldn't have any more than ten or fifteen employees here. And now we're doing jobs that are three, four, five million dollars.

ELIZABETH BRACKETT:

Chicago was the first city in the nation to implement an affirmative action program for city contracts, and it has served as a model for other programs across the country. The program has strong backing from the city's mayor, Richard M. Daley. His administration passed the ordinance defining the program in 1990.

RICHARD M. DALEY, Mayor of Chicago: If you're going to have a global community, which we really have in the United States, you have to have economic opportunities and diversity of workforce, because if you don't, then you have a certain segment of society really cut out of the economic opportunities. But you're not discriminating against anyone; you're just giving someone an opportunity that never had it before.

ELIZABETH BRACKETT:

But that's not how many white contractors see the program. They have sued the city in federal court, calling the programs unconstitutional. The suit was filed by the Builders Association of Greater Chicago, a group of essentially all white male contractors. The builders association also sued the county's programs, and three years ago, those programs were struck down. The suit essentially alleges that the city's affirmative action programs discriminate against white contractors.

John Vande Velde says he has lost millions of dollars in public contracts because he is white. His company rents out barricades, signs and message boards for road construction projects. Of his 170 employees, 60 percent are minorities. He says the city's affirmative action programs cut him out of contracts even when he has the lowest bid.

JOHN VANDE VELDE, United Rental Technologies:

On many, many projects, we're low, and the subcon — the contractor, rather — calls us up and tells us, "we'd love to use you; you're low; we know you have a good product; we know you can give good service; but we can't use you because of the quotas on this job."

Therefore, the city doesn't give any waivers. The city does not give waivers. Therefore, it is reverse discrimination and non-constitutional.

ELIZABETH BRACKETT:

The attorney for the Association of Minority and Women-Owned Businesses, who joined the city in defending the suit, says the Supreme Court laid out the constitutional basis for affirmative action programs for groups that have been discriminated against by race or gender in a 1989 decision.

MICHAEL FRIDKIN, Chicago Lawyers Committee for Civil Rights: The Supreme Court has said that that is permissible if there is sufficient proof of ongoing or historical discrimination against those groups, so that the remedy of using race in allocating current public benefits is appropriate to correct the problems that have been created in the past and by ongoing practices.

ELIZABETH BRACKETT:

Colette Holt helped formulate the city's affirmative action ordinance, and now serves as a consultant to affirmative action programs around the country. She testified as an expert witness for the city.

COLETTE HOLT, Attorney/Expert Witness:

Some of the plaintiff firms have been in business for over a hundred years, and it's unlikely to correct those types of market inequalities quickly.

It takes a while for firms to grow, for them to access capital, for them to develop economies of scale. And so certainly at some point, we hope not to need the program, but we have no evidence right now that there's a level playing field out there for minorities and women.

ELIZABETH BRACKETT:

Marilu Meyer says she saw plenty of discrimination when she began her substructure concrete contracting business in 1981.

With the help of affirmative action goals, she built her company into a $15 million business by 1996. But it was a struggle.

MARILU MEYER, Former Contractor:

At the beginning, I was 100 percent goal work for the city of Chicago, the County of Cook, state of Illinois, Metropolitan Water Reclamation District. All of those agencies had goals, and I took advantage of every contract that I could possibly get through those agencies.

ELIZABETH BRACKETT:

Testifying for the Minority and Women's Associations at the trial, Meyer says she sold her construction company not long after this document was delivered to her office: "How to Evade Affirmative Action Programs for Minority Contractors."

She could not identify the source, but the document was introduced in the trial to allegedly indicate the discriminatory attitudes of many majority contractors. The document contains lines like: "Who wants a bunch of inexperienced, incompetent, financially weak subcontractors messing up a good job?"

MARILU MEYER:

My first reaction was I couldn't believe that a general contractor had actually put ink to paper to tell everyone else how to avoid using minorities and women. My second reaction was, it's not going to get any better. And my third reaction was, I've got to figure out an exit strategy so I don't have to do this the rest of my life.

ELIZABETH BRACKETT:

Not all white contractors oppose the affirmative action program. In fact, the city's largest contractor, Walsh Construction, with billions of dollars in public and private contracts every year, is strongly supportive of the program.

Walsh's contracts include the new downtown lakefront park construction, and the renovation of Lakeshore Drive along Lake Michigan. Both these and all Walsh projects adhere to the 25 and 5 percent affirmative action goals via subcontracts. Daniel Walsh says his company did not join the builders association lawsuit.

DANIEL J. WALSH, President, Walsh Construction:

I think if the builders association prevails, then the government's program for inclusion of the emerging female and minority companies or just small disadvantaged businesses, won't provide that same stimulus. And I think that would be a shame. If the government doesn't do it, you know, the cold-bloodedness of the capital system just isn't going to provide it in the alternative.

ELIZABETH BRACKETT:

The affirmative action programs don't impact the mega-general contractors like Walsh, says Vande Velde.

JOHN VANDE VELD:

The subcontractors, the non-minority specialty subcontractors– that is where the impact is felt. That's the place where the prime contractors go to fill their quotas. That — I mean, that — and when you can't get a job because of the quota, then you're out of business.

ELIZABETH BRACKETT:

But Nelson Carlo says white subcontractors have a better shot at private contracts, which are still, by and large, closed to minorities and women.

Despite working with majority contractors on public projects for years, Carlo says he gets almost no private sector work from the same contractors. He was particularly angry about the contracts that went out to bid for the renovated Chicago Bears football stadium.

NELSON CARLO:

Ultimately, out of $44 million, I got $880,000 worth of work. And I'm 30 minutes away from the job site, at the most; I have acreage of land for storage, for staging. I could have been a good supplier to them, but they chose not to, and then the owners didn't do a damn thing about it.

ELIZABETH BRACKETT:

And if the goals hadn't been in place, would you have gotten anything?

NELSON CARLO:

I would have gotten zip.

ELIZABETH BRACKETT:

Affirmative action programs for minorities and women in pubic contracting have been challenged in two dozen states, and several have been struck down as unconstitutional. The federal judge is expected to rule on the constitutionality of Chicago's affirmative action programs within the next several months.