Wealth Gap Widens as Obama Moves to End Minority Business Program, According to the American Small Business League

PETALUMA, Calif.--(BUSINESS WIRE)--The following is a statement by the American Small Business League:

“Dismantling this program could cost minorities millions of jobs.”

Lawmakers will convene in Washington today to examine the widening wealth gap between white households and African American and Hispanic households. This comes less than two weeks after the Obama administration announced plans to end one of the most successful programs to create jobs for minorities.

Friday, September 9, the Obama administration set a rule change in motion to dismantle a federal program that requires the Pentagon, NASA and the U.S. Coast Guard to award a minimum of five percent of federal contract dollars to minority-owned companies. A shocking move since, in the midst of one of the worst recessions in U.S. history, unemployment has hit minority groups especially hard. According the U.S. labor department, the jobless figure for African Americans is 16.7 percent and 11.3 among Hispanics. Moreover, a recent study of government data found that the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households.

Approximately 35 percent of the U.S. population is made up of ethnic minorities, and 5.8 million businesses are minority-owned. The American Small Business League (ASBL) estimates that if the rule change is implemented, minority-owned small businesses could lose close to $50 billion in federal contracts annually, which could lead to the loss of millions of jobs.

“Too often, these institutions lack the resources to compete with their larger counterparts, yet without the employment opportunities and economic revitalization they provide, many neighborhoods would find themselves in an even deeper hole,” said Congressman Jesse Jackson Jr. (D-IL). “Especially in these economically difficult times, I hope any attempt to eliminate or weaken these programs will keep in mind the need for these programs before any final decisions are made."

The ASBL has launched a national campaign to block this policy, and is reaching out to minority business leaders, Congress and the media. Minority business leaders nationwide have until November 8, 2011 to comment on the proposed policy, which was announced in the Federal Register.

“It is crucial that our representatives follow Congressman Jackson and voice concerns over the proposal to end the minority-owned small business contracting program,” said ASBL President Lloyd Chapman. “Dismantling this program could cost minorities millions of jobs.”