Students Call on Michigan’s Top Two Universities to Support Women and Minority-Owned Businesses

By Roosevelt Institute |

By Roosevelt @ U Michigan and Roosevelt @ Michigan State

The University of Michigan and Michigan State University, the two largest universities in the state, together purchase more than $2 billion of goods and services each year, including everything from desks to high-powered computers. Much of this money is spent in Michigan, supporting local businesses even through tough economic times. Unfortunately, state policies have prevented U of M and MSU from fully using their purchasing power for the benefit of all of Michigan’s business owners.

According the most recent census, only 30 percent of Michigan firms are owned by women and 13 percent by minorities. One of the major causes of this is an unfair lack of access to capital: women and minority entrepreneurs are less likely to have loans approved and more likely to pay higher interest rates even after controlling for credit score and other factors. This lack of entrepreneurship opportunities hurts job growth and drives both wealth and income inequality.

Many universities around the country have recognized similar conditions in their communities and used their purchasing power to help give a fair shot to all entrepreneurs. For example, by focusing on local suppliers and increasing its purchases from minority-owned firms from $41.4 million to $105.7 million, University of Pennsylvania has generated about 200 jobs and $6 million in local wages. Regionally similar schools like Ohio State University, the University of Illinois, Indiana University, and the University of Wisconsin have all set specific spending goals for businesses with women and minority owners.

However, two current state policies inhibit Michigan’s universities from making a similar impact.

In 2006 a state constitutional amendment was passed banning affirmative action by publicly funded institutions. While much has been written about how the ban has affected minority enrollment in higher education, there has been far less discussion about how the ban has affected university procurement departments. Section 2 of the amendment states that “the state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting (emphasis ours).”

Because of this specific ban on affirmative action in public contracting, universities in Michigan are unable to systematically support disadvantaged business owners through their procurement. This prevents both the University of Michigan and Michigan State University from setting specific disadvantaged business spending goals like many universities in the Midwest.

Additionally, unlike many states both red and blue, there is no comprehensive statewide agency that is set up to support or certify women- and minority-owned businesses (WBEs and MBEs, respectively). While the state Department of Transportation maintains a small transportation-specific database (as mandated by federal law) and the nonprofit Michigan Minority Supplier Development Council maintains an MBE certification, both of these programs include only incomplete listings that are not publicly searchable.

As a result, neither public nor private institutions have an available list of such businesses. So even if MSU, U of M, or another local enterprise believe they might be able to use a WBE or MBE for a specific contract, they have to rely on a variety of private groups for information. (MSU once maintained its own diverse vendor database, but it was lost in a software switch and is only slowly being reconstructed.)

While other states’ diverse business programs vary, Michigan’s lack of an agency or public database is unusual. Every state that surrounds it in the Midwest, including Ohio, Indiana, Illinois, and Wisconsin, maintains a searchable database. Some actually set benchmarks for state agency procurement.

There’s nothing partisan or left-leaning about these other states’ MBE and WBE programs. Alabama’s Republican-dominated state government not only certifies businesses through its Office of Minority Business Enterprises but also advocates for and offers training to small and diverse businesses. South Carolina’s Republican governor, Nikki Haley, maintains a Governor’s Office of Small and Minority Business Assistance. This office has established a database of diverse vendors, works with state agencies to monitor minority contracting, and offers policy guidance on issues involving small and minority-owned businesses.

These states have recognized that creating entrepreneurship opportunities for all of their citizens creates jobs and combats inequality in their communities. It’s time for Michigan to do the same.

Michigan’s legislators must support universities’ efforts to purchase from disadvantaged businesses throughout the state. A repeal of the state’s controversial constitutional amendment banning affirmative action would create lasting change but is currently unlikely. Right now, however, our legislators and governor can work to establish an office that creates a database of diverse firms. Doing so would allow Michigan universities to join with others around the country in creating more vibrant, inclusive communities.

Trevor Dolan, Julius Goldberg-Lewis, Ruby Kirby, Steven O’Neill, Alec Ramsay-Smith, Dominic Russell, Michael Spaeth, and Ashley White are the members of Roosevelt @ U Michigan. Julia Christiansen, and Mario Gruszczynski are the members of Roosevelt @ Michigan State.

The Roosevelt Institute brings together thousands of thinkers and doers—from emerging leaders in every state to Nobel laureate economists. We reimagine the rules that guide our social and economic realities. Follow us on Twitter @rooseveltinst and like us on Facebook.