Bloomberg News reported today that "
U.S. Government Contractors Face New Minority Hiring Mandate." The article goes on to state that:
"U.S. financial regulators are required to open 20 offices this month endowed with new powers to force government contractors and subcontractors to diversify their staffs or risk losing federal business.
The Dodd-Frank law orders U.S. financial regulators to set up Offices of Minority and Women Inclusion to monitor whether they and their contractors are hiring enough women and minorities -- a mandate that could have far-reaching effects on public and private-sector hiring.
The offices are being established at agencies ranging from the Federal Deposit Insurance Corp. to each of the 12 Federal Reserve banks.
Among other duties, staff will scrutinize hiring at firms that do business with the regulators and take steps to terminate contracts if the companies haven’t made an adequate effort to employ women and minorities.
The law requires that most agencies must open their offices by this month. Some are getting a slow start. Citing budget concerns, the Securities and Exchange Commission said in December that it would delay opening several new offices mandated by the Dodd-Frank law, including the Office of Minority and Women Inclusion.
Congressional Democrats pushed to include the new offices in the law because some were unhappy that few of the major contracts awarded by government agencies in the aftermath of the 2008 financial crisis went to minority-owned firms. Of the $1.3 billion in current Treasury Department contracts, $263 million are held by minority-owned firms, and $130 million are held by companies owned by women, according to a Bloomberg Government analysis of the federal procurement database.
‘Fair Inclusion’
Democrats..have said they also were concerned about the issue because according to the Government Accountability Office, white men held 64 percent of senior management positions at financial services firms.
The law requires each new office to develop and apply a policy that will ensure 'to the maximum extent possible the fair inclusion' of women and minorities in the contracting process. The federal government defines a minority-owned business as one that is at least 51 percent owned and operated by U.S. citizens who are Asian, black, Hispanic, or American Indian.
'It’s an effort to bring more players into the marketplace with differing backgrounds,' said William Michael Cunningham, chief executive of Creative Investment Research Inc. a Washington-based investment advisory firm.
The congressional oversight panel monitoring the Troubled Asset Recovery Program reported in October that the Treasury Department had awarded 96 contracts worth $436.7 million to implement the program, but only one 'prime' contract had gone to a minority-owned business. The companies that received the contracts ranged from banks such as The Bank of New York Mellon Corp. to accounting firm Ernst & Young LLP and law firmCadwalader Wickersham & Taft LLP. It’s unclear exactly how the Offices of Minority and Women Inclusion will differ from the existing Office of Federal Contract Compliance Programs run through the Department of Labor, although they may have a broader mandate..
Firms that contract with financial regulatory agencies could see their compliance costs increase. If each agency creates its own rules and protocols, companies that work with more than one agency could be complying with several new sets of reporting requirements..
At the same time, the new offices will create some new opportunities for businesses owned by women and minorities, as well as for applicants for federal jobs.
In particular, firms owned by minorities and women that provide legal, financial, technology and human-resources services could find new opportunities.."
We disagree with the headline.
While Dodd/Frank calls for the creation of Offices of Minority and Women Inclusion at all Federal financial institution regulatory agencies, it is not a New Minority Hiring Mandate. (Only firms who have been discriminating against women and minorities could consider the law a new mandate: one to
obey the laws of the land.)
As we said in our
August, 2010 blog posting on the issue, the law:
"is actually called for by Adam Smith, who said, in The Wealth of Nations that, 'To promote the little interest of one little order of men in one country, it hurts the interest of all other orders of men in that country, and of all men in all other countries.' The law seeks to broaden 'one little order of men in one country' to include minorities and women."