Business

African, Hispanic (Latino), and Asian Americans in Business

There are always a few bad apples in any organization or program, and minority business programs are no exception. Take for example Wallace Construction in Rhode Island.

According to a story in the Providence Journal, Wallace was certified as a minority owned business and eligible to participate in federally-funded transportation projects that targeted contracting/subcontracting a portion of the business with minority owned businesses. Christina Rosciti, the daughter of a principal in a much larger construction firm, purchased a 49% interest in Wallace apparently for the sole purpose of using it as a front to keep more of the business in the family.

All was going swimmingly until the founder Wallace (an African American male) died, and the authorities began to question the firm’s minority status. In order to qualify for the federal minority owned business program (and most state and local programs), firms must be majority owned AND controlled by minorities. After the founder’s widow assumed the title of President, the firm had its minority status reinstated.

The reinstatement occurred in spite of several disturbing facts. Neither the founder’s widow nor Rosciti had any previous executive management experience. Rosciti had not paid taxes in years and clearly lacked the financial resources to buy her equity stake in Wallace, which was not a successful business until becoming the beneficiary of millions of dollars of business from Rosciti’s family businesses. There was also evidence that 15 employees were employed by both Wallace and Rosciti’s companies.

Minority business programs are intended to give legitimate companies opportunities to compete and grow. If a majority company acquires a significant interest in a minority owned company, brings in its own people, and funnels business to it, the minority owner becomes nothing more than a front for the majority owners. These fronts give both the program and the legitimate minority owned companies a bad name, and should be aggressively investigated and banned from the program.

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Minority owned businesses, sometimes referred to as an MBE (Minority Owned Business Enterprise) or DBE (Disadvantaged Business Enterprise) are growing rapidly.   According to the 2002 Census Survey of Business Owners, the number of MBE grew 31% between 2002 and 1997 compared to 13% growth for non-minority businesses.  In 1982, Ethnic minorities owned fewer than 7% of all companies in the U.S.  By 2002, this percentage had grown to 18%.

America is rapidly becoming the land of the self-employed.  Seems like just about anyone with a "Dot-Com" idea is trying to become an entrepreneur.  For Ethnic minorities, starting their own businesses is a natural alternative to bumping up against the glass ceiling and fighting workplace discrimination. 

For additional information on starting and running a small or minority owned business, please visit our sister site at Diverse Strategies.

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