Not since the 1960s has the issue of race threatened to reshape both the politics of California and the nation. At the center of the dispute is the proposed California Civil Rights Initiative, which would eliminate race- and gender-based preferences in state employment, contracting and school admissions. The measure, which, if it qualifies, would appear on the 1996 ballot, feeds off the perception that the "top-down" approach of racial preferences is losing its relevance in an economy shaped by the needs of small, rapidly growing companies instead of a Hughes Aircraft. Yet, the character of the emerging economy suggests a different and more sustainable means of helping those who need it most.
Designed as a remedy for past discrimination, the regime of racial and gender preferences that has grown up since passage of the Civil Rights Act in 1964 is increasingly seen as ineffective in addressing the most pressing problem facing society--the growing economic gap between the educated and affluent and those with fewer skills, less money and less hope. It is difficult, for example, to see how gender- and race-normed tenure tracking in the California State University System elevates the conditions of the \o7 vatos\f7 in the barrio or gang members in South Central.
The growing inadequacy of racial preferences as an agent of social justice and economic uplift has been underscored by dramatic changes in the U.S. economy since the preferential scheme were first implemented in the 1970s. Then, the economy was dominated by large, public-ly owned corporations whose compliance with government-imposed regulations could be easily monitored. Government-related employment was also surging, adding thousands of jobs that were amenable to race and gender classification.
Today, virtually all job growth comes from small companies, many of which boast too few employees to be effectively scrutinized by government diversity cops. Many of the opportunities for upward mobility are not found in large, unionized companies, as was the case before 1970, but in self-employment. By 1990, for example, there were 4 million more business proprietors than union members, a differential that is widening.
This trend is especially notable in the manufacturing sector, traditionally the first step toward minority economic uplift. Between 1987-92, the 500 largest U.S. industrial firms shed more than 1.3 million jobs while smaller manufacturers, often niche-oriented and privately held, added nearly 500,000 positions.
In California, and particularly in the Los Angeles region, these shifts have been even more pronounced. In the 1970s and early 1980s, government and defense-related employers were nearly ideal agents to carry out mandates concerning racial and gender preferences. Because such employment was largely shielded from competition, compliance with race-based regulations was less of a financial handicap.
But as in the nation, most of the new job growth in California is occurring in smaller, often start-up companies, many of which are home-based. Virtually all the 200,000 jobs created since the trough of the recession are in the volatile, non-unionized service industries. The portion of these jobs that are high paying, representing about half the total, are in "knowledge-based" industries such as entertainment, software, engineering services and international trade.
The very newness of these firms works against the traditional basis for racial or gender preferences: the existence of a longstanding record of discrimination. Indeed, the majority of L.A. County private employment is in companies that did not exist when the rationale for race and gender preferences was articulated.
Furthermore, many of these firms do not enjoy the kind of insulation from competitive forces characteristic of government or defense employment. Locked in an often vicious struggle for economic survival with competitors across the country and around the world, they simply cannot afford to hire on any ground other than merit.
In short, the changing character of economic development in the state is less and less amenable to the demands imposed by racial and gender preferences. For example, does it make any economic sense for a software company in Orange County or Silicon Valley to hire programmers based strictly on race or gender?
Or why should companies owned by "minorities" be compelled to diversify their work forces? In California, especially in the Los Angeles region, there has been a proliferation of new ethnic-owned businesses, many of which tend to hire within their own ethnic groups. Whether Asian, Latino, Middle Eastern or from the former Soviet Union, the firms are among the fastest-growing job producers. In many respects, these new entrepreneurs have created a multicultural economy without the heavy hand of government or the courts.