Corporate Welfare

The 7.63% Solution

A small contractor learns affirmative action arithmetic.


Sensitive, compassionate people–like you and me–appreciate the benevolent impulses underlying affirmative action. Less well known is the cost, in terms of money, time, and sheer brain damage, that putting this doctrine into practice entails. As the employer of 87 skilled workers in three construction trades, plus support staff–who have always come in all colors, races, and genders without any help from me–I've experienced firsthand the excruciating reality of complying with affirmative action's bureaucratic edicts.

I submit for your disbelief an actual contract that my company undertook last summer. It is a typical contract that anyone in the construction trades would recognize. Accompany me on a journey through it. Your benevolence will never be the same again.

The job itself is straightforward: the fabrication and installation of a set of 15-foot-tall metal letters on the roof of a factory building. Doing the work is child's play compared with following the contract. The distinguishing features of the project are: a) the "progressive" character of the customer, a large publisher, and b) my city government's corporate welfare policy, which, by supporting the project with tax abatements and other subsidies, subjects it to the same equal-employment-opportunity requirements as a public project. Thus, four levels of affirmative action: corporate, city, state, and federal.

The main part of the contract, printed in normal-size type, is only two and a half pages long. It says, in essence, "You do the work, and we will pay you." Then there is a "Scope of Work," describing the work, and a set of drawings depicting the work. There is a set of "Special Conditions" containing provisions for force majeure, change orders, and warranties, and a discussion of the sales-tax exemption. There is a standard insurance certificate.

And then there is a 101-page "exhibit" consisting of 20 separate documents embodying the affirmative action requirements. Let's have a look at some highlights.

The first document is the oxymoronic "Affirmative Action/Non-Discrimination/MBE-WBE Requirement." It lists "participation goals" by trade. For example, carpenters on this job are expected to be 42.74 percent minority and 1.58 percent female. Iron workers, both ornamental and structural, are to be 58.53 percent minority and 7.63 percent female. There is no clue as to how those numbers were derived, but you can immediately see the value of a minority female iron worker. Don't think, however, if you are fortunate enough to have access to one, that you can circumvent the requirements by transferring her around, or by renting her to or from a competitor. The document sternly warns: "Compliance by [sic] the Contractor's specific affirmative action obligations required herein of minority and female employment and training must be substantially uniform throughout the length of this Trade Contract and in each trade. The transfer of minority or female employees or trainees from contractor to contractor or from project to project for the sole purpose of meeting the Subcontractor's goals shall be a violation of this Trade Contract."

We are a union shop, which means that we hire only from within the unions' respective labor pools. For their part, the unions maintain quality control, putting all the workers through apprenticeship and education programs. But they never promised (who would have thought to ask?) to provide painters who are 62.57 percent minority and 3.52 percent female, as required here. And, warns the document, "neither the provisions of any collective bargaining agreement, nor the failure by a union" to refer the correctly composed work force "shall excuse the Contractor's obligations hereunder."

So we are commanded to direct our recruitment efforts "to schools with minority and female students, to minority, female and community organizations, and to minority and female recruitment and training organizations," and to keep careful records of the disposition of minority and female job applicants who come in off the street. But we can't hire off the street. No matter. We are not only required to "meet with union officials to inform them of the policy" and to "bargain with respect to the inclusion of [the policy] in all union agreements," but also to report any noncooperation by any union to the proper authorities, failure to report being itself a misdemeanor. This will certainly do wonders for our relationship with the unions (who, in fairness, are feeling the heavy hand of these requirements at least as keenly as we are).

Next, the document lists 16 "specific affirmative actions" to be taken, the first of which is to "assign two or more women to each Phase of the construction project." Now here's a problem. One of the phases is structural installation, which entails landing big steel and welding it while perched on a scaffold 100 feet or more above the ground, sometimes in zero-degree weather. For some reason, I don't get a lot of female applicants for this position. So if you know of any women–preferably minority and, even better, disabled–who would enjoy this work, please send them on over!

I suppose I could halfway comply with this provision by assigning myself. But the female-assignment provision is accompanied by the statement that I will "ensure and maintain a working environment free of harassment, intimidation, and coercion." And with all these requirements, I don't feel free of harassment, intimidation, and coercion at all. But maybe I'm not supposed to. I'm the boss, so I'm not in a protected class.

The rest of the 16 points (two pages of very small print) describe, in exquisite detail, the special recruitment, monitoring, notification, review, and record-keeping procedures to be undertaken with respect to hiring and cultivating minority and female employees. Most noteworthy here is the invasion of their privacy. I am required to "encourage present minority and female employees to recruit other minority persons and women." What form is this "encouragement" supposed to take? "Hello, Ms. Wong, I see you are Asian. Got any sisters at home?"

My favorite paragraph in this document is what I call the "desperate" clause: "Goals for minorities and a separate single goal for women have been established. The Contractor, however, is required…to take affirmative action for all minority groups, both male and female, and all women, both minority and non-minority. Consequently the Contractor may be in violation hereof if a particular group is employed in a substantially desperate [sic] manner (for example, even though the Contractor has achieved its goals for women generally, the Contractor may be in violation hereof if a specific minority group of women is underutilized)." So even after I've desperately hired Ms. Wong's sister as a high-mast welder, I may still be in trouble if there aren't enough female Aleuts or Samoans on the team.

Part II of this document provides for "meaningful participation" by Minority Business Enterprises and Women-Owned Business Enterprises (MBE/WBE). What is "meaningful participation"? It is defined in bold type and underlined: " `Meaningful participation' shall mean that at least seventeen percent (17%) of the total dollar value of the construction contracts (including subcontracts) covering the Work are for the participation of Minority Business Enterprises and Women-Owned Business Enterprises, of which at least twelve percent (12%) are for the participation of Minority Business Enterprises and at least 5% [sic] are for the participation of Women-Owned Business Enterprises."

This section suggests interesting ideas for restructuring one's business, including forming joint ventures or partnerships with MBEs and WBEs, and "not requiring bonds from and/or providing bonds and insurance for MBEs and WBEs," even (or especially) where one is required to provide bonds and/or insurance oneself. Again, there are impeccably detailed record-keeping requirements, including, most notably, "the reason for such decision" when any of the required discussions with MBEs and WBEs fails to result in a joint venture, partnership, or subcontract.

Part III summarizes and incorporates by reference the Mayor's Executive Order #50, which emphasizes, among other things, that the contractor "will not discriminate…on the basis of…race, color, creed, national origin, sex, age, handicap, marital status, sexual orientation or affectional preference." (What, may one ask, is the distinction between "sexual orientation" and "affectional preference"? And does it matter, at least until the lawsuits come?) That is all very nice, but on the previous page, the contractor was required to discriminate, that is, to intervene positively, on the basis of race, sex, etc. Oh well.

This is not a trivial point. E.O. #50 provides for the Department of Labor Services to have access to all of your "books, records and accounts" to ascertain compliance. And the DLS can hurt you bad if you are not in compliance. It can not only void your contract, withhold payment for work you've already done, and "reduce the Contract payments by a percentage equal to that designated as the business enterprise goal percentage," but also physically enter your premises and "impose an employment program" (50.65B[iv]). But do not feel your rights are unprotected. The DLS can impose these sanctions only "after a hearing, held pursuant to the rules of the DLS."

The "employment program," by the way, may include sentencing your workers to "participation by minority, female and handicapped employees in career days, job fairs, youth motivation programs, and related activities in their communities." I'm sure they'll love that. But they've no choice. Among the crimes that can bring the wrath of the DLS down upon you is that your "minorities, women, handicapped, or older employees are excluded from or are not participating in company-sponsored activities or programs." (Emphasis added.) Your non-minorities, however, apparently can skip the company picnic with impunity.

The climax of the document is the contractor's agreement "to include the provisions of the foregoing paragraphs in every subcontract or purchase order to which it becomes a party…so that the provisions will be binding upon each Contractor or vendor." An interesting example of infinite recursion. The "foregoing paragraphs" include their own inclusion–so all subordinate contractors and vendors are required to include them in their subcontracts and purchase orders, ad infinitum. Clearly the intent is to infect the entire commercial community.

The dénouement is a promise to "refrain from entering into any contract…with a subcontractor who is not in compliance with the requirements of E.O. #50 and the rules and regulations promulgated thereunder." It's not clear how, exactly, one is supposed to know who is and who is not in compliance with the "requirements of E.O. #50" etc. Yet any failure to comply with any part of the agreement is a "material breach," subject to the punishments described above.

The second document in the exhibit is the customer's "EEO/ Payroll Package," which, we are informed, has helpfully "been prepared to assist each contractor/subcontractor in meeting all Equal Opportunity/Affirmative Action requirements for this project." Item I reiterates the 17 percent MBE/WBE goal and instructs the contractor on the proper, appropriately complex procedure for undertaking "documented efforts" to meet the goal. Item II, "Minority and Female Workforce Participation Goals," requires compliance with "the Federal goals for the construction industry" (included later) and reiterates the "participation goals" for the various construction trades. It is interesting to note that while operating engineers are required to be 46.52 percent minority and 9.26 female, cement masons, required to be 37.73 percent minority, have to be just 0.00 percent female. Is this a misprint? Who is protecting the oppressed female cement masons? Class action, anybody?

Item III reiterates the requirement for compliance with E.O. #50 and requires "attendance at all meetings requested by the monitoring agency, the Division of Labor Services." Items IV through VII delineate the differences in reporting requirements between contracts over and under $1 million and companies over and under 100 employees. When contracts and companies grow past a certain size, the reporting requirements increase exponentially. Even Forrest Gump (a Protected Person under the Americans with Disabilities Act) would recognize the importance of keeping all contracts under $1 million and all companies under 100 employees. "Smaller is better" apparently is now public policy.

Items VII through XVII (there are two Items VII) describe the forms, certificates, documents, reports, letters, and statements required to document compliance. Item XVIII, "Sexual Harassment Fact Sheet," says, "Each contractor must include this fact sheet in all subcontracts." Another virus: Each subcontractor must include it in all of his subcontracts and purchase orders, and require those subcontractors and vendors to include it in theirs. The fact sheet offers examples of sexual harassment that not even your most imaginative subcontractors can have thought of.

The next document is the Mayor's Executive Order #50 itself (29 pages of tiny, single-spaced type), so you can't claim you haven't seen it. Next is the city's required "Construction Employment Report" (seven pages), of which perhaps the most interesting part is a chart breaking down the work force "for each trade currently employed by your company" into various categories segregated by sex, including white (non-Hispanic), black (non-Hispanic), Hispanic, Asian, and Native American. These charts must be filled out for journey-level workers, apprentices, helpers, and trainees. In our case, we must fill out 12 charts, covering all four levels of workers in each of our three trades, and submit them monthly. The contractor must also attach to these reports "All Collective Bargaining Agreements, Employment Application [sic], EEO Policy Statement and your most recent EEO-1 Report." Somebody up there sure loves paper.

What puzzles me is why these charts are restricted to race and sex. Why don't they include religion, age, marital status, sexual orientation, affectional preference, etc.? How else can I prove my innocence? But I'm sure we'll get around to that. The precedents are there.

Next are the "Less Than One Hundred (100) Employees Certificate" and the "Less Than $1,000,000 Subcontract Certificate," each bearing a legend to the effect that any incorrect data "may result in criminal prosecution."

Then we have the "Boilerplate for Equal Employment Opportunity Statement," a resounding personal affirmation by the company's CEO (me!) stating that "we will take specific action to ensure that applicants are employed and that employees are treated during employment, without regard to their race, creed, color, national origin, sex, age, disability, marital status, sexual orientation or citizenship status…" (clearly a lie, given the rest of the documents) and announcing that "[Name] has been appointed Director of our equal employment opportunity programs and will report directly to me on the results of such program [sic]." Interesting here is the implied admission of guilt. "[Name]'s responsibilities include…assisting in the identification of problem areas" and "assisting line management in arriving at solutions to problems." The possibility that there are no problems is assumed away.

A small but far-reaching statement: "To ensure adherence to this policy, performance evaluations for supervisory personnel shall include ratings on their equal employment opportunity efforts and results." Some companies actually take this seriously. "Sorry, Sally. Your team invented a better mousetrap and added $15 million to our bottom line. But they were the wrong color, so it doesn't count."

"Additionally," the boilerplate section continues, "in furtherance of our equal employment opportunity commitment [Contractor name] shall insist [emphasis added] that labor unions and other recruiting sources actively recruit and refer members of all protected groups for all positions, incorporate non-discriminatory provisions in all its contracts and purchase orders [yet another virus] and include the EEO logo, slogan or statement in all solicitations or advertisements for employees."

How, I wonder, is my insistence to be measured? Is it worth a dollar an hour for all employees? Ten dollars an hour? Because in labor negotiations, every insistence has a price.

The next document is the "Contractor's Affirmative Action Plan," containing a chart called "Summary of Bid Activity with MBE and WBE Subcontractors/Vendors" that requires a listing of "all unsuccessful M/WBE subcontractors/vendors" by name, trade/item, date and amount of bid, date of elimination, and reason for elimination. Below the chart, above the notary seal, is a space for "Additional explanation of elimination: Include meetings held for negotiation, etc. (Use additional sheet if necessary)." I can easily imagine that any of the ordinary reasons for turning down a vendor or subcontractor–bad reputation, inability to perform work, criminality–might be considered to have a racist component and thereby seal one's doom.

Then comes the "Contractor/Subcontractor Affirmative Action Commitment," requiring the contractor to swear fealty once again by initialing various affirmations, and the weekly "Wage Requirement Letter," including space for each worker's name, address, Social Security number, race, sex, work classification, hours worked, rate of pay, deductions, and net wages. Interesting, again, how much privacy the workers give up for the privilege of participation in this brave new nondiscriminatory world. The document also contains a separately signed affirmation that "Contractor/Subcontractor certifies compliance with all Federal, State and Local EEO Requirements" (as if one could possibly understand what they are) and a warning that "the wilful [sic] falsification of any of the above statements may subject the contractor or subcontractor to civil or criminal prosecution see section 1001 [sic] of Title 18 and Section 231 of Title 31 of the United States Code." This part is in teeny-tiny print and very difficult to read.

The next five pages, apparently handwritten by a diligent sixth-grader, are instructions on "How to Complete the Payroll Forms." They offer many helpful hints. Under "work classification," for example, they say, "Fill in the classification exactly as it appears on the determination. If classification is for a power equipment operator, indicate type, size, horsepower." But they do not ask for the color of the horse.

The next document, "Workforce Projection," is important because it offers a rescue for those contractors whose race and sex composition is below par. It allows you to anticipate compliance by listing, for each job category (brick masons, equipment operators, etc.) your "Current Employees to be Assigned to Contract," both "None-Minority [sic]" (male and female) and "Minority" (male and female), and the "Projected New Hires" in these categories that will bring you into compliance. The document ends, "The contractor acknowledges that, to the extent that this workforce projection does not reflect anticipated achievement of the goals for minority and female employment contained in the contract for work on this project, it will work closely with the general contractor and resourse [sic] and referral sources to identify, consider, and employ qualified individuals whose participation will enable the contractor to achieve the goals." What a break.

Next is Form OC-257, the "Monthly Employment Utilization Report," which lists, for all trades and classifications, by "Work Hours of Employment (Federal & Non-Federal)," total employees (male and female), non-Hispanic blacks (male and female), Hispanics (male and female), Asians/Pacific Islanders (male and female), and American Indians/Alaskan Natives (male and female). It also breaks the total number of minorities down by sex and indicates percentages for total minorities, total females, and total female minorities. You won't have failed to notice–especially if you are the person filling out the forms–that these classifications are different from the ones required above. This report must be submitted monthly, and, needless to say, any inaccuracy constitutes a crime.

For those whose skills at statistical analysis may be sub-par, help is available. See Mayor's Executive Order #50: "The statistical criteria for evaluating the composition of the contractor's workforce will be the following: (i) the term `underutilization' means a statistically significant disparity between the employment of members of a racial, ethnic, or sexual group and their availability as determined by the Bureau utilization analysis; and (ii) the term `utilization analysis' will mean an analysis of the contractor's workforce using standard statistical techniques to test a null hypothesis that utilization of a given protected group is within acceptable limits, given its availability. For the purpose of these regulations, the null hypothesis will be rejected (i.e., underutilization will be assumed) whenever there is reason to believe that the utilization rate is below the availability rate at the 80% level of significance." Got it? Good.

Next are a "Sample Letter" requesting Apprentice Certificates for personnel meeting the approved race/gender tests, a helpful list of "Recruitment Sources for Minority/Female Construction Workers," and the "Sexual Harassment Fact Sheet," which goes to considerable lengths to expand the definition of sexual harassment beyond the "most widely recognized pattern…in which a male supervisor sexually harasses a female employee."

The last document in the package is 26 pages of tiny print in two columns: Part 60-3 of the Office of Federal Contract Compliance Programs, the federal "Uniform Guidelines on Employee Selection Procedures." There are discrepancies between it and E.O. #50 and the other documents, but what can you do? You are a contractor with a work force to support, and you want the job. So you close your eyes and hope for the best.

The burden of all these requirements is a heavy one. I had to send my new Director of EEO Compliance (formerly the payroll manager) to school in New Jersey for two days to learn how to fill out the reports for this contract. The paperwork required to comply with the contract nearly outweighs the steel. Furthermore, the presumption of racial and sexual villainy criminalizes everybody and invites litigation–besides making us the laughingstock of the world.

I discussed this phenomenon with the Dallas-based CEO of another company in my industry that is four times the size of mine. He said, "Good companies run away! You won't see me bidding on any kind of government or government-subsidized work." So the government will get what it wants: contractors whose race/gender composition meets government goals, while taxpayers, as usual, foot the bill: in increased costs, in substandard work, and in the payroll of the genetically approved bureaucrats who scrutinize the reports.

It is not enough to repudiate affirmative action at the polls. It has become an ideology, embodied in layers of case law, executive orders, and consent decrees, as well as in the corporate culture of our largest employers and customers. But let us not despair. If we accept these conditions as facts of life, we have the opportunity for a happy solution.

The problem, especially for smaller companies that don't have millions of employees, is that while the goals are exact, the means of meeting them are crude. How do you really know that your electricians are 33.99 percent minority and 1.84 percent female, as required? The loss of one worker of the approved hue may necessitate firing another of a different hue to maintain the desired balance. This is unfair. But genetic analysis can solve the problem.

Hardly any Americans today are racially pure. Up to 95 percent of those checking certain categories on the census form could just as well check "multiracial" if that were an option. In the 204 years since the first U.S. census, we have used at least 26 racial categories because we couldn't decide what they are; currently, such groups as Arab Americans and Azorians (Afro-Portuguese) are lobbying for their own classifications. Advances in biotechnology should enable us to end the confusion. We can investigate the DNA of all job applicants and candidates for promotion, isolate racial markers, and, by means of simple, weight-averaged mathematics (per E.O. #50), identify the workers whose characteristics we require.

From there, it is only a small step to the genetic engineering that will enable us to create the sociobiologically desirable work force of the future. Want a female operating engineer who is one-third Caucasian, one-twelfth Pacific Islander, one-quarter Hispanic, one-sixth Asian, and one-sixth African-American? No problem! This will require making projections 20 years or so in advance, but isn't that economic planning at its best? I can foresee platoons of forepersons, journeyfolk, and apprentices, all genetically predisposed to their assigned occupations and trades, and all of the exact racial, ethnic, and even hormonal mix that nondiscrimination requires. What a beautiful, inspirational, glorious rainbow it will be. I can hardly wait. Can you?

Tama Starr ( is president of The Artkraft Strauss Sign Corp. in New York City. Her latest book is Eve's Revenge: Saints, Sinners, and Stand-Up Sisters on the Ultimate Extinction of Men (Harcourt Brace & Co.).