Proposition 209’s Costly Impact on California’s MBWEs

Proposition 209’s Costly Impact on California’s MBWEs


Oakland, CA

As California approaches the 20th anniversary of Proposition 209 most are keenly aware of the impact it continues to have on diversity in the state’s institutions of higher learning. Yet, few may be aware of the costly and distressing blow the Proposition delivered to the state’s minority and women owned business. 

In 2015, the nonprofit Equal Justice Society (EJS) published a groundbreaking report, “The Impact of Proposition 209 on California’s MWBEs.” The report, released during an informational hearing held by the California State Assembly Committee on Judiciary in February 2015, was presented along with other testimony related to Proposition 209’s impact on public contracting. 

According to the EJS report, MWBEs have lost the potential equivalent of one billion dollars in public contracts because of the initiative. Beyond putting an end to race conscious programs in the state, the Proposition had unintended consequences that included putting an end to the collection of procurement data related to race, ethnicity and gender in most jurisdictions of the state that had previously collected such information. As a result, the EJS report could only present the potential loss of contract dollars and not the actual dollars lost. 

When the report was presented, EJS President Eva Paterson stated, “Taxes from women and people of color help fund public contracts, but are denied equal opportunities to obtain those contracts. She continued, “We often tout the great economic engine of California, and public contracting is a major part of fueling that engine. This report clearly shows that Proposition 209 denied Black, Latino, Asian American, and women-owned businesses equal opportunities to contribute to our state’s economic growth.” 

The report highlighted how MWBEs were successfully closing the gap between their availability and their utilization by participating in race and gender conscious programs previous to the implementation of Proposition 209. All of that changed however, when the law was implemented; and, some of the businesses never recovered. 

Although some MWBEs did gain back some of those contract dollars through race-neutral small business enterprise programs, many other procurement and sub-contracting processes remain basically closed to MWBEs as a result of the changes that came with the implementation of the Proposition. 

As might be expected, some of the biggest losses occurred with the state of California.

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