A recent study has revealed widespread racial and gender disparities in how the City of Houston allocates spending among businesses.
Conducted by consulting firm MGT, the analysis compared the availability of minority-owned businesses across the Greater Houston area to the firms that secured city contracts for construction, goods, and professional services. MGT said its goal was to understand the effects of race, ethnicity, and gender on businesses’ ability to do business in the city’s marketplace—both public and private sectors—acquire capital, and win contracts or subcontracts in the markets in which the City of Houston does business.
“There were disparities across nearly all categories, showing that minority and women-owned business enterprises (MWBEs) are not earning wages or revenues on par with their non-MWBE counterparts,” explained MGT Project Director Vernetta Mitchell.
The study, which reviewed city spending from 2017 to 2022, found that while MWBEs accounted for 34% of available firms, they received only $2.2 billion of the $7.7 billion spent by the city—roughly 29%.
Black-owned businesses face significant disparities
According to the report, black-owned businesses experienced statistically significant disparities in all spending categories. Other non-white groups also faced disparities in certain areas. All non-white groups except Asian and Hispanic-owned businesses encountered significant disparities in professional services, while Hispanic-owned firms saw no disparities in construction spending.
Despite some isolated parity areas, the study concluded that when all spending categories were combined, non-white groups experienced systemic disparities.
“There’s disparity for all groups collectively,” Mitchell emphasized.
Federally funded projects show mixed results
The report noted a stark contrast in federally funded projects, where Black-owned firms did not face disparities. However, other non-white groups, along with non-minority women, experienced substantial to significant gaps in city spending for these projects.
“These findings raise important questions and warrant further discussion,” commented Council Member Julian Ramirez.
Next steps
The study concludes that the disparities provide evidence of potential marketplace discrimination, creating legal grounds for measures to support MWBEs. Recommendations include:
- Enhanced data collection and transparency
- Increased advertising for procurement opportunities
- Expanded opportunities for subcontractors
- Growth of the Small Business Enterprise program to better serve historically underserved groups
The Houston Office of Business Opportunity will host a virtual town hall on December 10 at 11 a.m. to discuss the findings and potential solutions.
