Revised City of South Bend Disparity Study Report

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Ve ANALYSIS OF DISPARITIES IN THE SOUTH BEND ECONOMY A. Introduction The late Nobel Prize Laureate Kenneth Arrow, in his seminal paper on the eco- nomic analysis of discrimination, observed: Racial discrimination pervades every aspect of a society in which it is found. It is found above all in attitudes of both races, but also in social relations, in intermarriage, in residential location, and frequently in legal barriers. It is also found in levels of economic accomplishment; this is income, wages, prices paid, and credit extended .129 This Chapter explores the data and literature relevant to how discrimination in the City of South Bend's market and throughout the wider Indiana economy affects the ability of minorities and women to fairly and fully engage in the City's contract opportunities. 130 First, we examined the distribution of firms, their sales and their employees across different demographic groups. Next, we analyzed the rates at which M/WBEs in the State of Indiana form firms and their earnings from those firms. Next, we summarized the literature on barriers to equal access to commer- cial credit. Finally, we summarized the literature on barriers to equal access to human capital. All three types of evidence have been found by the courts to be rel- evant and probative of whether a government will be a passive participant in dis- crimination without some type of affirmative interventions. A key element to determine the need for government intervention through con- tract goals in the sectors of the economy where the City procures goods and ser- vices is an analysis of the extent of disparities in those sectors independent of the City's intervention through its contracting affirmative action programs. The courts have repeatedly held that analysis of disparities in the rates at which M/WBEs in the government's markets form businesses compared to similar non- M/WBEs, their earnings from such businesses, and their access to capital markets are highly relevant to the determination of whetherthe market functions properly for all firms regardless of the race or gender of their ownership. 131 These analyses 129. Arrow, Kenneth 1., "What Has Economics to say about racial discrimination?' Journal of Economic Perspectives, (1998), 12(2), pp. 91-100. 130. We analyzed data from the State of Indiana, because this best corresponded to the geographic market of the City of South Bend. O 2020 Colette Holt & Associates, All Rights Reserved. 69