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Anecdotal Evidence of Disparities in the City of Cleveland’s Market Area
VIII. Anecdotal Evidence of Disparities in the City of Cleveland’s
Market Area
A. Introduction
We have presented a variety of economic and statistical findings above that are consistent with
and indicative of the presence of business discrimination against minorities and women in the
geographic and product markets that are relevant to the City’s contracting and procurement
activities. Chapters V and VI in particular have documented large and statistically significant
adverse disparities in the City’s relevant markets impacting minority and female entrepreneurs.
Commercial loan denial rates are higher, the cost of credit is higher, business formation rates are
lower, and business owner earnings are lower—even when comparisons are restricted to
similarly situated businesses and business owners.
As a further check on these findings, we investigated anecdotal evidence of disparities in the
City’s market area. First, we conducted a large scale survey of business establishments in these
markets—both M/WBE and non-M/WBE—and asked owners directly about their experiences, if
any, with contemporary business-related acts of discrimination. We find that M/WBEs in the
City’s markets report suffering business-related discrimination in large numbers and with
statistically significantly greater frequency than non-M/WBEs. These differences remain
statistically significant even when firm size and owner characteristics are held constant. We also
find that M/WBEs in these markets are more likely than similarly situated non-M/WBEs to
report that specific aspects of the regular business environment make it harder for them to
conduct their businesses, less likely than similarly situated non-M/WBEs to report that specific
aspects of the regular business environment make it easier for them to conduct their businesses,
and that these differences are statistically significant in many cases. Additionally, we find that
M/WBE firms that have been hired in the past by non-M/WBE prime contractors to work on
public sector contracts with M/WBE goals are rarely hired—or even solicited—by these prime
contractors to work on projects without M/WBE goals. The relative lack of M/WBE hiring and,
even more tellingly, the relative lack of solicitation of M/WBEs in the absence of affirmative
efforts by the City and other public entities in the City’s market area shows that business
discrimination continues to fetter M/WBE business opportunities in the City’s relevant markets.
We conclude that the statistical evidence presented in this report is consistent with these
anecdotal accounts of contemporary business discrimination.
Next, we conducted in-depth personal interviews with minority, women and majority business
owners about their experiences in seeking and performing contracts in the City’s marketplace.
These focus groups confirmed the results of the statistical evidence and the mail surveys:
minorities and women encounter significant barriers to the success of their firms in seeking
public and private sector work, and these barriers are often the result of discrimination.
The remainder of this Chapter is organized as follows. We first discuss the mail survey results in
Section A. In Section A.1, we discuss the survey questionnaire, sample frame, and response rate.
Section A.2 presents evidence on willingness of firms to do business with the public sector.
Section A.3 presents the key findings from the M/WBE and non-M/WBE respondents
concerning disparate treatment. Section A.4 documents disparities in firm experience and size
NERA Economic Consulting 266