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Improving Minority Business and Worker Participationin Connecticut’s Construction IndustryA Study Funded by The Greater New Haven CommunityFoundation, The Hartford Foundation for Community Giving andthe Fairfield County Community’s Foundation December 21, 2023 

2 Table of Contents Executive Summary with Recommendations .................................................................................. 3 Section 1: Construction Industry Overview ................................................................................... 13 Section 2: Minorities in the Construction Industry ........................................................................ 14 Section 3: Employment: The Pipeline to the Construction Trades ................................................ 21 Section 4: Self-Employment and Entrepreneurship in the Construction Trades ........................... 33 Section 5: Disparities in Business Performance ............................................................................ 39 Section 6: Understanding Barriers Facing MBE Construction Companies ................................... 42 Section 7: Special Issues of Women MBEs ..................................................................................... 57 Section 8: Programs for MBEs in Construction .............................................................................. 61 Section 9: Lessons Learned ............................................................................................................ 63 Appendices ..................................................................................................................................... 77 Appendix 1: Construction Industry Statistics ............................................................................. 77 Appendix 2: Legal Case History of Minority Utilization Programs ............................................. 79 Appendix 3: The Strange Case of William Lanson: Black Legacy in the Connecticut Construction Industry ....................................................................................................................................... 82 Appendix 4: About the Minority Construction Council and BJM Solutions ............................... 86

3 Executive Summary with RecommendationsStatement of Objectives and Recommendations Due to ongoing demographic change in Connecticut’s population and labor force, minority participation in construction contracting and increased minority employment are imperative. Changing Connecticut’s construction landscape to meet the changing demographics requires intentionality and contribution from all stakeholders. However, overcoming inherited systemic biases is challenging. It necessitates committed cooperation from industry leaders, labor organizations, educational institutions, and owners of construction projects. Without leaders in the public and private sector making the kinds of changes recommended in this report, conditions are unlikely to change, and this portends serious problems for the State. The continuing success of Connecticut’s economy will not be possible without minority and non-minority construction industry associations, trades unions, and owners of construction projects (including private and public sector owners) entering a new spirit of cooperation with minority organizations to institute programs of mutual benefit to all parties. Aware of the State’s demographic destiny, many organizations in the construction industry see the need for greater participation of minorities and want to do their part to bring about meaningful change. Recognizing this situation, Connecticut’s three largest community foundations, i) The Community Foundation for Greater New Haven; ii) The Hartford Foundation for Public Giving; and iii) Fairfield County’s Community Foundation, asked the Minority Construction Council to assess the current conditions of minority participation in the State’s construction industry. To achieve this assessment, the Minority Construction Council elicited BJM Return to table of contents

4 to study the State of minority participation in Connecticut’s construction industry. We offer the following recommendations: 1 Recommendation #1 Owners of private sector construction projects exceeding $25 million should establish Minority Business Enterprise (MBE) and employment diversity goals. As stakeholders in the Connecticut economy, the private sector should do its part ensuring the continued vitality and growth of the economy. Large super projects that involve hundreds of millions of dollars of construction spending are important. However, frequently smaller projects allow small firms to develop relationships and the expertise needed to grow their capacity. Recommendation #2 Only firms that are certified by the State of Connecticut Department of Administrative Services (DAS), the Connecticut Department of Transportation (ConnDOT), or the Greater New England Minority Supplier Development Council (GNEMSDC) should be counted as MBEs. At present, the spending on companies that are not legitimate MBEs or Women Business Enterprise (WBEs) is counted as diverse spend by owners of construction projects. Although third-party certification will not guarantee the elimination of fraudulent MBE and WBE companies, reliance on the named organizations’ rigorous methods of certification will significantly level the playing field for legitimate M/WBEs. 1 The body of the report provides support for each of the recommendations. Return to table of contents

5 Recommendation #3 Project Labor Agreements (PLAs) should be signed by all crucial stakeholders including representatives of MBEs who should participate in the agreement's development. PLAs are important construction industry instruments that ensure union workers are utilized on a project and provide assurances to a project’s owner that the work will finish on time and on budget. If MBE participation is not formally included during the development of a PLA, MBE participation during the construction project is difficult to achieve. In Connecticut, the Minority Construction Council (MCC) is best situated to represent MBEs during the development of PLAs. Recommendation #4 The State and its municipalities should increase support for Connecticut Technical Education and Career System (CTECS) construction employment training & skills development programs and support innovative programs designed for non-traditional adult workers. As an industry employing large numbers of non-college educated workers, the construction industry is incredibly important to those minority groups in the State with lower rates of educational attainment than the State average. CTECS is the State’s public vocational training program that produces about one thousand graduates a year. This number is insufficient. Our review of industry trends and the construction trade programs in the CTECS system support the conclusion that the current system is insufficient to meet the future construction needs of Connecticut. Men and women in the trades are aging and will need to be replaced if construction in the State can be done efficiently and safely. Return to table of contents

6 Recommendation #5 Public and large private sector firms buying construction services should enact procedures for requiring and monitoring employment diversity goals for the workforces of the construction contractors they use. There should be sanctions for compliance failures. The lessons on MBE utilization are clear: without enforcement, compliance with MBE goals fails. Enforcement and compliance do cost money, and to accomplish MBE hiring and workforce goals, this cost must be recognized as a cost of doing business for all contractors. Recommendation #6 The MCC, DAS, ConnDOT, GNEMSDC, and the Associated General Contractors of Connecticut (AGC-CT) should establish a consortium that collects and manages information on MBE utilization in construction. One of the commonly heard complaints of large and small non-minority construction companies is that they do not know how to find and efficiently vet MBEs. A consortium comprised of these public and private organizations would provide valuable information to the industry and aid the development of critical relationships between MBEs and other contractors. Recommendation #7 The State should invest in MBE training programs specifically designed for MBEs in Construction. The State Department of Transportation uses Federal Highway Administration funds to support Disadvantaged Business Enterprise (DBE) development. The MCC offers training for Return to table of contents

7 MBEs in Construction. Both programs are effective, but of insufficient scale. The training should be expanded to include training for non-MBE contractors who are working on State and private sector projects so that they have a better understanding of MBE goals, certification, and utilization. Recommendation #8 Industry leaders in insurance companies, bonding companies, banks, and other sources of capital need to be convened in meetings to develop a program to improve MBE construction firms’ access to cash flow. In construction, contractors often pay their subcontractors only after they have been paid by the construction management firm or the project's owner. MBEs are often subcontractors to other subcontractors. Therefore, if the prime contractor is paid thirty days after an invoice is submitted, its subcontractor might be paid in sixty days and the MBE might not be paid for ninety-days. Longer wait times are not unusual. Ninety to 120 days of waiting to get paid is a serious impediment to growth and financial stability. An alternative to this system needs to be developed or MBEs will be restricted in their growth and development. Recommendation #9 Connecticut Unions need to expand their recruitment of minority workers, particularly in electrical, carpentry, HVAC, plumbing, estimating, equipment operators, and construction inspection. The unions play a critical role in industry, and this is not likely to change in the foreseeable future. Many public and private construction contracts and PLAs require union workers and thus contractors must be union shops. However, many MBEs currently are not unionized, and are disqualified from participating in such projects. There are multiple complex and historical reasons Return to table of contents

8 why this is the case, but it is important that MBEs need to become unionized if they are to grow. A necessary condition for this is that more minority workers in the trades need to be members of the unions. Construction companies are often started by union workers. Currently, the disconnect between unions and minority workers exacerbates the dearth of MBE union firms. Growing the number of minority workers in the unions is a key component of growing the number of MBE firms that are union shops. Recommendation #10 The AGC-CT needs to be more engaged in the development of MBE firms in the State. The AGC-CT has historically been an opponent of MBE programs that set-aside spending for MBEs. However, due to the demographic facts that minority workers and MBEs are becoming a greater proportion of the construction workforce and its contractors, it is in the AGC-CT’s interest to become more inclusive. Recommendation #11 Federal dollars coming into the State for infrastructure improvements should establish explicit goals for MBE utilization that are distinct from WBE utilization goals. The State of Connecticut’s MBE program is a small business program that treats MBEs and WBEs as fungible when it comes to utilization. Dollars spent with WBEs and MBEs are not specifically targeted to separate MBE and WBE goals, which is required by U.S. constitutional doctrine. In addition to being constitutionally suspect, this setup creates results wherein the State may meet its overall goal even though it has low or even zero utilization of various racial and ethnic MBEs. We recommend correcting this major flaw by the establishment of separate MBE and WBE goals. Return to table of contents

9 Recommendations #12 The State needs to separate the contracting goals for WBEs from the goals for racial and ethnic minority “MBEs.” Currently, State law identifies women owned, operated and controlled businesses and businesses operated by Black, Hispanic, Asian, Native American, and Portuguese businesses all as “Minority Business Enterprises” (MBEs). This lack of distinction allows State agencies to reach the current goal of 6.25% of all contracts by utilizing any combination of the businesses listed above. The interchangeability of MBEs creates an opportunity for agencies to utilize few if any Black or Brown contractors and still meet or exceed their goals. This definition is unique to Connecticut and needs to be ended immediately. Recommendation #13 The U.S. Department of Justice should aggressively prosecute violators of anti-trust behavior that have occurred in recent year and MBE fraud behavior which several of the MBEs we spoke with believe is rampant in the State. In September 2022, five Connecticut based HVAC companies were convicted and sentenced to serve prison terms and pay large fines for their roles in schemes to defraud public and private entities by rigging bids and colluding in other ways. These convictions could represent the “tip of the iceberg.” The effect of these illegal schemes is to reduce opportunities for Black and Brown contractors. The U.S. Justice Department has also brought fraud cases in recent years against non-minority construction firms who have abused State and federal law by creating “minority front” companies to meet their Disadvantaged Business Enterprise (DBE) goals associated with Federal Highway Administration contracts. Both actions need aggressive enforcement if this behavior is to cease. Return to table of contents

10 Recommendation #14 As neutral stakeholders in the well-being of Connecticut, the Community Foundations should convene meetings with all the construction industry stakeholders. These meetings should be aimed at discussing minority participation in construction, and the thirteen previous recommendations can serve as a starting point for the discussions. Findings to Support the Recommendations  Demographic change in the construction workforce and among contractors is ongoing andlikely to accelerate towards greater representation of minorities and women. During the past two decades, minorities’ share of U.S. construction employmentincreased from 29% to 39%. Minorities’ share will continue increasing withimportant implications for the industry’s future. Minorities’ share of construction employment in Connecticut is below the U.S.aggregate. Connecticut will likely experience a large increase in the minority sharesoon. The aging of the Construction workforce will accelerate demographic change. Between 2003 and 2020, the percentage of U.S. construction workers who were age55 and over nearly doubled, from 11.5% to 22.7%. Aging effects are morepronounced for White workers than minorities. The Great Resignation, an aging workforce, restrictions on immigration, and risinginflation all contribute to a labor shortage in construction. Contractors, their clients,and unions will continue to struggle to find qualified contractors and employeesReturn to table of contents

11 from a growing labor force if steps are not taken to invest in the productive skills and job opportunities of minority workers.  Minority shares of Connecticut’s construction workforce and contractor roles are destined to rise. Maintaining the quality of both the workforce and contractors requires addressing significant barriers to skilled training and business formation and survival.  Minorities continue to be underrepresented in Connecticut’s unions and skilled apprenticeship programs.  MBEs face significant barriers gaining fair access to credit, bonding, and forming beneficial networking ties with non-minority firms.  Connecticut will face insufficient construction capacity if it fails to better integrate minorities and women into its workforce and contractors’ ranks.  A projected $10 billion spent in Connecticut from the anticipated $890 billion federal Inflation Reduction Act (IRA) will be jeopardized in Connecticut due to emerging Capacity constraints caused by the aging of the State’s construction workforce and the underutilization, mismanagement, and underinvestment in minority and women construction workers who will be a growing indispensable part of the labor force.  Women business owners (WBEs), because of their special position as being a WBE and an MBE, face additional challenges in the construction industry.  Women’s share of employment in construction has improved since 1991 but has been stuck at about 10% throughout the past two decades. Return to table of contents

12  Community impact: reconciling minority shares of construction employment and contractorranks with their State population and workforce shares has important social welfare benefitsfor all. Construction has historically provided a pathway to the middle-class because of high wages.Growth and inclusion create opportunities for Black and Brown workers to enter the middleclass and for urban communities to grow. Construction jobs do not require higher education but do require training and apprenticeships.The State’s CTECS is not training enough workers to meet the industry’s needs.Methodology This study used data from the U.S. Census, construction industry data, and State of Connecticut data. In addition, dozens of industry stakeholders, including owners of projects, construction management firms, general contractors, construction industry executives, minority business owners, educators, students, and government officials were interviewed. The interviews provided several diverse perspectives and gave the kind of contextual depth needed to validate the findings and recommendations. Like all studies, we were unable to find all the data we sought nor were we able to interview all the stakeholders we contacted. Thus, we believe there is more to learn about minority participation in the construction industry in Connecticut, and we acknowledge this report, like all others, has inevitable errors of omission and commission that we tried to minimize. We thank the Community Foundation for Greater New Haven, The Hartford Foundation for Public Giving, and the Fairfield County’s Community Foundation for their support of this project. We also thank our partner, the Minority Construction Council, for their support. Any errors in the report are of course solely BJM’s responsibility. Return to table of contents

13 The study makes the distinction between how the State of Connecticut defines Minority Business Enterprises and how the term is used universally outside of Connecticut. Connecticut defines MBEs as inclusive of Women Owned Business Enterprises AND racial and ethnic owned enterprises. African American, Hispanic, Asian, and Native American owned businesses are known as MBEs and include women owned enterprises if they fit in these same ethnic/racial categories. The State of Connecticut lumps them all together as MBEs. This generalization is key to problems facing racial and ethnic MBEs, particularly on State contracts. The focus of this report is on Black and Brown contractors in the State and therefore a much more focused approach than the reports issued by the State on “MBE” performance. Section 1: Construction Industry Overview Historically, Connecticut’s minorities have received significantly lower shares of jobs and business contracts in the State’s construction industry than their proportion of the State’s population. Although minority representation in Connectivity’s construction industry has improved, it continues to lag. The underrepresentation of minorities in construction raises special concern for various reasons. Most importantly, construction is a high wage and large business revenue industry that is an important sector of the State’s economy in terms of general income produced and employment. During 2021, the construction sector contributed $8.1 billion to Connecticut's Gross Domestic Product (GDP), and during 2022, according to the Connecticut Department of Labor, it employed about 61,000 workers. Furthermore, higher skilled jobs in the construction industry are generally higher pay jobs, especially for workers without college degrees. During 2022, the average wage of Connecticut’s construction workers was $31.86 per hour compared to $33.32 per hour for workers in Connecticut. However, many construction workers in skilled trades such as brick masons, equipment operators, electricians, and plumbers exceeded the Return to table of contents

14 State’s wage average. As an industry employing large numbers of non-college educated workers, the construction industry is incredibly important to those minority groups in the State with lower rates of educational attainment than the State average. 2 This report discusses the conditions of minorities in Connecticut’s Construction industry. Its objectives are to highlight the major causes of minority underrepresentation in the industry, and to discuss some possible solutions to the underrepresentation problem. The proposed solutions are aimed at bringing minority participation rates as business owners and employees into better alignment with their population and education percentages of the State’s people. By the term “minorities,” we refer to Connecticut’s Asian, Black, Latinx, Native American, and Cape Verdean populations. When data to do so is available and we draw out special circumstances, we use the designated name of a specific group. It should be noted at the outset that Latinx people may be members of any of the traditional groups in the U.S. population colloquially referred to as races. Without further mention, when we use the term “White,” we refer to the White not Latinx population, and similarly for the use of Black and Asian American. Section 2: Minorities in the Construction Industry Firms in the U.S. During 2020, the United States had about 738,281 construction firms with approximately 733,000 having employees other than the owner. Most of these firms were engaged in residential construction. The most highly represented specialties were residential remodelers, plumbing, and 2 Ken Simonson, Chief Economist, AGC of America, The Economic Impact of Construction in the United States and Connecticut, September 23, 2022. Connecticut Department of Labor, www1.ctdol.state.ct.us/lmi/sectors/ Construction.asp. U.S. Bureau of Labor Statistics, May 2022, https://www.bls.gov/oes/current/oes_ct.htm#47-0000. Return to table of contents

15 heating and air conditioning (HVAC) contractors. Many firms serviced electrical installation and the construction of new single-family homes. About 102,000 of the construction firms with employees were MBEs, which is about 14% of all such firms (Figures 1-3). Ownership of construction firms differed by minority group with Latinx and Asian American owned firms being most represented. Nonetheless, all MBE groups except American Indian and Alaska Natives were underrepresented according to their respective shares of the U.S. population.Construction Firms in Connecticut The MBE share of construction firms in Connecticut is representative of their share in the U.S. According to the most recent available data, during 2018, approximately 5,500 MBE construction firms represented slightly more than 14% of construction firms in Connecticut (Figure 4). Significantly, the MBE share of construction firms in Connecticut during 2018 represented a substantial increase since 2002 when MBEs were only 8.5% of construction firms in Connecticut. Moreover, the increase in MBE’s share was the result of substantial growth in MBE firms relative to White owned firms in every category excepting Native Americans (Figure 6). Return to table of contents

16 62,789 17,917 10,330 9,660 1,543 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000LatinxAsianBlackAIANNHPI# of Construction FirmsMinorityFigure 1: Number of Minority-Owned U.S. Construction Firms with Employees, 202086%8.6%1.4% 2.7%1.3%Figure 2: Percentage of U.S. Construction Firms with Employees Owned by Ethnic Group, 2020White Latinx Black Asian Native AmReturn to table of contents

14%86%Figure 3: Percentage of U.S. Construction Firms with Employees, MBE and White, 2020MBE White14.34%8.50%Figure 4: MBE % of Construction Firms, Connecticut,2002 versus 20182018 200217 Return to table of contents

18 Minority and Women Owned Businesses in Connecticut 5,50032,8442,30224,78005,00010,00015,00020,00025,00030,00035,000MBE WHITE# of Construction FirmsRaceFigure 5: Number of MBE and White Owned Construction Firms, Connecticut, 2002 & 20182018 20025,5004,2803501,400602032,8442,3021,38612084521224,78005,00010,00015,00020,00025,00030,00035,000MBE Latinx Asian Black AIAN NHPI WHITE# of Construction FirmsRaceFigure 6: Number of Construction Firms by Ethnicity, Connecticut 20182018 2002Return to table of contents

19 The State of Connecticut Human Rights and Opportunities (CHRO) collects purchasing data from State agencies to monitor their compliance with the State of Connecticut’s set-aside program. Currently, the State has a goal of 25% of State contracts should go to businesses defined as Small Business Enterprises (SBEs). The State uses federal government “size standards” which are industry specific definitions of small businesses, based on annual revenues and total employment. The State then sets the MBE goal as 25% of the SBE goal, or 6.25% of total spending. The MBE goal includes WBEs, Black, Hispanic, Asian, Native American, and Portuguese owned business enterprises. Below is the spending by category for all State contracts (construction and other goods and services) for the years 2015 to 2023. Table 1: Total Spending for SBEs, MBEs, and WBEs and Percentages of Goals Achieved Fiscal Year Total SBE Goal Total MBE Goal Actual SBE Award % of Goal Actual MBE Award % of Goal 15/16 $143,939,512 $35,915,999 302% 384% 16/17 $82,995,537 $20,748,876 202% 358% 17/18 $140,092,716 $35,022,169 125% 343% 18/19 $128,318,235 $32,979,137 154% 407% 19/20 $130,881,977 $31,710,492 93% 309% 20/21 $116,972,091 $29,243,003 142% 486% 21/22 $218,571,957 $54,641,235 58% 183% 22/23 $183,563,642 $45,890,914 97% 261% The State also collects information on “public works” spending which is largely construction spending for the same fiscal years. Return to table of contents

20 Table 2: State of Connecticut Spending with MWBEs and Small Businesses, FY 2015 - FY 20233 Fiscal Year Total Contract Value SBE Achievement MBE Achievement WBE Achievement 15/16 $123,705,836 $28,949,837 $84,489 $9,688,009 15/16 $197,714 $156,000 $- $41,714 16/17 $7,431,384 $1,838,832 $803,481 $371,908 17/18 $214,929,211 $38,351,568 $18,461,704 $25,331,289 18/19 $1,181,418,492 $216,469,451 $65,069,255 $132,146,269 19/20 $711,648,459 $132,733,168 $45,523,291 $84,422,343 20/21 $823,827,588 $133,447,194 $28,053,922 $99,734,761 21/22 $799,684,889 $186,303,239 $43,890,784 $115,565,764 22/23 $896,345,124 $209,597,659 $57,872,519 $160,957,119 Table 3: State of Connecticut Spending with MWBEs and Small Businesses as a Percentage of Total State Spending, FY 2015 - FY 20233 3 https://portal.ct.gov/-/media/CHRO/Reports/Contract-Compliance-and-Small-and-Minority-Owned-Business-Utilization-FY-23.pdf Fiscal Year SBE % of Total MBE % of Total WBE % of Total 15/16 23.4% 0.1% 7.8% 15/16 78.9% 0.0% 21.1% 16/17 24.7% 10.8% 5.0% 17/18 17.8% 8.6% 11.8% 18/19 18.3% 5.5% 11.2% 19/20 18.7% 6.4% 11.9% 20/21 16.2% 3.4% 12.1% 21/22 23.3% 5.5% 14.5% 22/23 23.4% 6.5% 18.0% Goal 25.0% 6.3% N/A Return to table of contents

21 Connecticut is the single largest procurer of construction services in the State. It is important to note that the WBE Achievement column includes both WBEs that qualify as SBEs and WBEs that exceed the SBE income limits. The MBE Achievement column includes both racial/ethnic small businesses and WBE small businesses. Table 3 from the Connecticut Commission on Human Rights and Opportunities shows the actual performance on public works contracts for the years 2015 through 2023. You cannot calculate the percentage of contracts going to ethnic and racial MBEs from this public data because, the WBE numbers include both small and large WBE firms while the MBE numbers only include small MBEs which include both racial and ethnic and WBE firms. Interestingly, the WBE performance far exceeds the MBE goals in all but one year. The State of Connecticut is far exceeding its WBE goals but is not utilizing a comparable number or percentage of racial or ethnic minority owned enterprises, which suggests that the design of the program treats WBEs and racial/ethnic firms as fungible. Connecticut is currently conducting a disparity study that may address this flaw in the program. But without a separation of WBEs from MBEs and separate goals for each, Connecticut is unlikely to be a force for economic development of Black and Brown firms in the industry. The current flaw in the program also creates great mistrust in the industry. MBEs know that WBEs, from a contract compliance perspective, are perfect substitutes for Black and Brown firms. Some WBEs are operated by the husbands, brothers and sons, and uncles of the women who claim the eligibility, this unnecessary and harmful competition and animus between WBEs and MBEs. Section 3: Employment: The Pipeline to the Construction TradesDue to historical barriers entering construction jobs, particularly the skilled trades controlled by unions, minority workers have been severely underrepresented in construction Return to table of contents

22 employment. Minority underrepresentation in construction jobs is important to MBE representation in the industry because the future of minority construction companies is directly tied to the pipeline of minority workers in the construction trades. The primary source of new construction firms is the movement from employee to self-employed by workers in the construction trades. Moreover, because of the shrinking size of the construction labor force, the increasing median age of its workers, and ongoing demographic transition to majority minority among those workers, the State of the pipeline is of immense importance to all stakeholders in the industry, not just minorities. To understand this last proposition, we first consider the different histories of the major minority groups in construction. Recent Changes in the Demographic Composition of the Construction Workforce There are significant differences in the timeline of construction employment experiences among minority groups. As recently as the 1960s, Blacks represented over nine-of-ten people of color in the United States, and as such they bore the brunt of discrimination and exclusion in the construction industry. Consequently, most studies of discrimination and participation in all industries focused on the experiences of Black Americans. Nonetheless, during the early decades of the 20th century, Asian and Native Americans who were much more concentrated in the West than today and therefore represented a significant part of the labor force in Pacific West States also faced harsh discrimination in the Northwest. Latinx workers were also discriminated against in the Northeast, Southwest, and California, their experience in construction is different from the timeline experienced by Blacks, Asians, and Native Americans because of very recent population changes. That different timeline is characterized by a long history of discrimination that was like those faced by the other groups, but a more recent Latinx experience that has been heavily influenced by their disproportionate representation in construction due to two factors. First, large Return to table of contents

23 scale immigration into the U.S. since 1980 of non-college educated Latinx workers emerged as a significant source of construction employment. Second, rapid increases in the proportion of non-college educated Latinx workers in the labor force occurred during decades when the U.S. political environment and economic change were severely weakening the ability of mostly White male unions to exclude minorities from employment. Figure 7 shows that the share of Latinx employment in construction increased by half from 20% to 30% between 2003 and 2020. This rapid increase in the Latinx share has been accompanied by a reduction of 14.4% in White’s share of construction employment. The share of Asian Americans rose from 1% to 1.8% and the share of Blacks fell from 5.8% to 5.1%. The overall effects of these changes are that, during the past two decades, the share of construction employment held by minorities overall has increased from 29% to 39.1%. While this significant increase in minority construction employment was occurring, the proportion of construction workers who were members of unions also fell significantly from 16% in 2003 to 12.7% in 2020 (Figure 8). Even so, unlike union membership in the entire economy, White construction workers continue to be more likely affiliated with a union than do minorities (Figure 9). Return to table of contents

24 010203040506070802002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022% of Construction EmploymentYearsFigure 7: % Construction Employment By Ethnicity, 2003 to 2020 Latinx White0246810121416182002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022SharesYearsFigure 8: Share of Workers Belonging to a Union, 2003 to 2020 ConstructionReturn to table of contents

25 Construction Employment in the U.S. As shown in Figures 7 and 8, Whites make up a substantial majority of the U.S. construction workforce, but unlike their overrepresentation among construction firm owners, they are represented at their share of the entire U.S. workforce. This difference in Whites’ representation as owners versus employees is an important development of the last few decades. Just twenty years ago, Whites were 71% of all construction workers compared to about 61% in 2020. This recent change in the demographic makeup of the construction industry’s workforce has important implications for the industry’s future that is discussed below. Among the three largest minority groups, Latinx workers are overrepresented in construction employment nationwide, while Blacks and Asian Americans are underrepresented. Construction Employment in Connecticut Employment patterns in Connecticut differ from the U. S. (Figures 10 through 12). Connecticut’s Whites are overrepresented in construction as are Latinx workers, although the latter 0246810121416Total Latinx White Black Asian% of Workers Affilaited with UnionRaceFigure 9: Percentage of Private Industry Workers Affiliated with a Union by Ethnic Group, 2020Construction All industriesReturn to table of contents

26 are less overrepresented than in the nation. Asian Americans and Blacks remain significantly underrepresented in Connecticut’s construction labor force. These employment data are important. Whites’ overrepresentation in Connecticut’s construction workforce (compared to the U.S. total) is indicative of some of the more crucial factors resulting in MBEs poor representation among the State’s construction firms, see below especially sections on discrimination and unions. 62%31%5%2%Figure 10: Percentage of U.S. Construction Workers by Ethnicity, 2020White Latinx Black AsianReturn to table of contents

27 Rising Age of the Construction Workforce One consequence of the overrepresentation of Whites in the construction workforce is that construction workers are aging faster than the rest of the workforce. This poses severe problems for the efficiency of the industry because of labor shortages, especially among skilled workers. The aging of the baby boomer population has significantly increased the age structure of the U.S. workforce during the past few decades. For the employed overall, the percentage age 55 and over 60.930.05.11.862.417.611.86.2010203040506070White Latinx Black AsianWorkforceRaceFigure 11: Employment in Construction versus Total Workforce, U.S., 2020 % Construction % All Workers75.314.56.32.167.310.817.33.901020304050607080White Latinx Black AsianWorkforceRaceFigure 12: Employment in Construction versus Total Workforce, Connecticut, 2019% Construction % All WorkersReturn to table of contents

28 increased from 15.4% to 23.9% during the past two decades. However, the increase in senior workers was greater in the construction industry where the percentage of construction workers aged 55 or more doubled, from 11.5% to 22.7%. This increase reflects the aging of the White population that has dominated both the baby boomer population and employment in construction. The average age of all construction workers is 42.5 years compared to 41.7 years for all workers. Although this difference in the ages of construction workers and all workers seems negligible, it is consequential because construction work is so physically demanding and frequently performed under hazardous conditions. An example of the hazards such aging poses for the construction workforce is that during the recent pandemic, over 1 million construction workers lost their jobs and many of the older workers chose to permanently retire from the trades. 4 The National Center for Construction Education and Research (NCCER) reported in a 2023 report: “As the labor shortage continues, construction companies and clients struggle to find qualified contractors. The Great Resignation, an aging workforce, restrictions on immigration and rising inflation all contribute to the industry-wide shortfall.” Construction firms fill their labor needs by supporting apprenticeships within their firms. They also supplement these traditional routes into the trades by hiring temporary workers who are frequently non-union and often undocumented. A sign of the labor shortages that have not been addressed by traditional pathways to construction employment is the many workers who can be found aggregating around businesses such as Home Depot and Lowes where companies go to purchase building materials. One of the reasons these spot markets where workers wait for employers to come and hire them for short-term projects exist is because of short supplies of 4 Claire McAnaw Gallagher, The Construction Industry: Characteristics of the Employed, 2003 – 2020, U.S. Bureau of labor Statistics, April, 2022. Return to table of contents

29 workers coming through the traditional pipeline. Construction labor shortages in Connecticut can be expected to cause project delays, increasing costs, lack of quality control, safety issues, and lost business and employment opportunities throughout the State. 5 Replacing the Aging Construction Workforce If the construction industry is to thrive, retiring, mostly White skilled trades workers must be replaced by younger people starting their careers. In the nation and Connecticut, much larger proportions of young workers entering the labor force in coming years will be minorities. However, at present, the construction industry is not doing a good job receiving minorities into training programs in the skilled construction trades. Access to education and training programs has been limited for many minority groups. As will be documented later in this report, the construction industry has been especially negligent or outright opposed to providing minorities access to vocational training and apprenticeship programs providing needed technical skills to successfully run a firm in the industry. In Connecticut, one of the three ways someone can receive training in the construction trades is during high school attend one of the States 17 Connecticut Technical Education and Career System (CTECS) diploma granting technical schools and take classes in trade specialties such as architecture, carpentry, electrical, Heating, Ventilation and Air Conditioning, Masonry, Plumbing (Other areas of study are also available in the technical schools). Adults can also attend private for-profit schools in the State to take classes in these and other trades, and people with the right network connections in one of the trades unions can apprentice directly with a construction firm, see below at pages 40 - 41. Over 11,000 students attend CTECS schools. A ranking of the five largest construction occupations in Connecticut’s construction industry shows that the types 5 U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, September 8, 2022. Telephone interview with Brent McCartney, Educational Consultant, Architectural Construction Trades, CTECS. Return to table of contents

30 of training offered by course of study programs in CTECS schools do a good job reflecting construction industry needs. The top five construction occupations with numbers of workers in the State are:  Laborers (7830) Electricians (7160) Carpenters (6720) Plumbers (4960) Equipment Operators (3010)Graduates of these programs (including adult learning programs) are an estimated 11,200 total CTECS students Statewide. During the next decade, combining new jobs and replacement of retiring workers, construction jobs are expected to grow about 7% per year. Just considering one skilled trade, the State will need about 500 new electricians annually to keep up with demand. In addition to the CTECS pipeline, there are other sources of entry into the construction trades, but these numbers indicate that labor shortages in the Connecticut construction industry, like much of the United States, is likely to persist for some time unless minorities receive greater access to apprenticeships through unions. 6 Inadequate Training of Minority Youth Although there is historical enrollment data for the CTECS, it was not available for this report. Hence, it is not known how underrepresented minorities and women may be in the student bodies of these schools. An interview with Brent McCartney, an educational Consultant for the architectural construction trades, revealed his assessment that enrollment demographics at the CTECS reflect the community where the schools are located. Thus, CTECS programs that are 6 U.S. Bureau of labor Statistics, Occupational Employment and Wage Statistics, Connecticut, April 2022. Return to table of contents

31 known to be more diverse are in cities such as Manchester, Hartford, and New Britain. Although there is student demand for more slots in these programs, the system cannot serve more students. One major reason for a dearth of qualified minorities and women in the construction trades is what Mr. McCartney observes is the strong “societal pressure to go to college.” He believes that in the inner city, parents are pushing children to go to college. And parents and students need to be provided effective informational sessions educating them that every student does not need to go to college to become successful. 7 Women (who represent less than 10% of all construction workers are the most underrepresented group in the construction trades. For generations, construction has been dominated by male workers, and its male dominated culture has not changed much in the last 100 years. Given their high participation rate in construction, very little research has been done on Latinx participants in apprenticeship programs. However, a study produced for the Iowa Department of Transportation emphasized the need to use culturally and linguistically appropriate teaching materials when instructing Latinx students learning skilled trades. This study also recommended that organizations recruiting people for on-the-job training and pre-apprenticeships advertise in bilingual media sources. It is necessary to understand that a strategy that has proven effective for non-Latinx women might not necessarily work well for even other female populations. For example, Latinx women, in general, have lower employment rates than non-Latinx, Black and Asian women. An organization that wants to attract Latinx women workers, will need to understand the reasons for this demographic pattern. While research on impediments to the entry of underrepresented groups in construction work is important for understanding the 7 Telephone interview with Brent McCartney, Educational Consultant, Architectural Construction Trades. Return to table of contents

32 current terrain, it only gives information on the existing problems—not on how to overcome them! It is important that State and local agencies expend resources to design workable programs to increase labor pool diversity through more effective recruitment strategies. 8 Several issues discussed in this section of the report are illustrated by observations made at the Construction Career Fair held at W.F. Kaynor Technical High School in Waterbury, Connecticut on Tuesday May 23, 2023. All nine CTECS schools offering construction training programs in Connecticut were represented at the Fair as were representatives from construction companies, trade unions, and students and teachers from the CTECS high schools located across the State. BJM interviewed students, teachers, construction union representatives, construction companies and other industry stakeholders. These stakeholders’ participation at the Fair may be taken to demonstrate their recognition of the importance of technical training at the State level to the maintenance of the construction pipeline. However, BJM’s interviews with high school seniors who represented several of the CTECS high schools revealed several of the issues this report has been highlighting. Foremost, among these observations was the high level of interest among minority students who also lacked concrete information about and network connections to construction trades apprenticeships. Among several students who were graduating from plumbing electrical, and HVAC programs, only one of the Black or Latinx students interviewed was female. All the students attended the Fair to learn more about opportunities in the trades and foremost on their list of priorities was their hope to secure jobs for the summer and beyond. However, at the time of their interviews only one of the ten students had an apprenticeship lined up after his 8 Bureau of labor Statistics, Labor Force Characteristics by Race and Ethnicity, 2021, January 2023. Return to table of contents

33 forthcoming graduation. Tellingly, the only student interviewed who had an apprenticeship lined up at the time of the Fair also had a parent working in the trade he had chosen to study. 9 The students were aware that becoming a member of the union controlling access to the best jobs in their trade was essential to the success of their career plans. They were also aware that they needed to secure apprenticeships for two years before they could become eligible for union membership. The students were excited about the career paths they had chosen. When asked why they chose to pursue education in the trades, they uniformly Stated job security and income. Several of the students also Stated their lifetime goal was to create a construction business that could create jobs and income for themselves, their family members, and their community. Section 4: Self-Employment and Entrepreneurship in the Construction Trades Most construction firms in the U.S. and in Connecticut (even more so MBEs) is small businesses. Moreover, construction ranks 3rd among Connecticut industries with respect to the number of employees hired by small businesses. For this reason, gaining insight into the business environment of MBEs in general is highly informative about the many common issues facing MBEs in construction. Foremost on the list of issues facing MBEs in construction and other industries are barriers to self-employment that are a crucial factor in the underrepresentation of MBEs in many industries including construction. As Figure 13 shows, about one-fourth of 9 Nepotism in skilled trades unions reigned for over 100 years and has only recently begun to break down. Because of the success of the trade unions in increasing their wages, the sons (and daughters) of Baby Boomer construction workers have the resources and exposure to even higher paying professional occupations. It will be interesting to see if the new generation of Hispanic construction workers follow the pattern of White Baby Boomers or the pattern established by earlier generations. The awareness of how to get into the trades remains tied to nepotism, and it is still a family tradition to become a member in a trade. Return to table of contents

34 construction workers in the U.S. are self-employed. Although many of these self-employed workers represent exceedingly small construction firms, this number highlights the importance of self-employment to the construction industry. Becoming an owner of a successful construction firm requires one first to be self-employed. Examining the reasons for lower self-employment among minorities in general reveals important issues relevant to the construction industry. Although the number of MBEs with employees is not negligible (see Figure 14), during 2020, although minorities were about 38% of the U.S. population, only about 20% (1.15 million businesses with employees were minority owned. Because of the substantial number of exceedingly small one-proprietor MBEs, a larger share of businesses without paid employees were MBEs, about 35% in 2019. These latter MBEs accounted for $342.9 billion in revenues. 10Salient Facts on MBEs in the United States, 2020  375,256 Latinx MBEs accounted for about 6.5% of all businesses with employees They had an estimated $472.3 billion in annual revenue 2.9 million employees About $105.6 billion in annual payroll. Construction was their largest specialty. 612,194 Asian American MBEs accounted for 10.6% of all businesses.10 2021 Annual Business Survey (ABS), U.S. Census Bureau. Overall Small businesses make up 99% of the state’s businesses and have 48% of its employees. Total employer and nonemployer businesses): Minorities owned and operated 10,630,319 businesses, with $1.9 trillion in receipts. Latinx owned and operated 4,537,836 businesses, with $619.8 billion in receipts. Return to table of contents

35  They had an estimated $841.1 billion in annual revenue, the largest estimated revenues among MBEs.  Food Service and restaurants were their largest specialty.  140,918 Black MBEs accounted for 2.44% of all businesses.  They had an estimated $141.1 billion in annual revenue.  1.3 million employees.  $42.2 billion in annual payroll.  Healthcare services were their largest specialty.  40,392 Native American MBEs accounted for .70% of all businesses.  They had an estimated $39.7 billion in revenue.  243,523 employees  $9.6 billion in annual payroll  8,822 Native Hawaiian and Other Pacific Islander MBEs accounted for 0.15% of businesses.  They had an estimated $8.8 billion in revenue.  60,129 employees  $2.3 billion in annual payroll Connecticut MBEs Although Connecticut’s minority population share is smaller than the minority share throughout the U.S., the share of businesses owned by MBEs in the State is significantly lower than in the entire U.S. In contrast to MBEs being about 20% of U.S. employer firms, in Return to table of contents

36 Connecticut MBE employer firms composed about 12% of all employer firms (8,322 of 68,248 total employer firms). However, the key point is that the MBE share of businesses owned is significantly smaller than the minority population share in both Connecticut and the nation. We now discuss some of the general reasons for the underrepresentation of MBEs. Afterwards, we will discuss specific exacerbating factors causing lower MBE rates in the construction industry. 23.28%76.72%Figure 13: Percentage of Self-Employed and Employed U.S. Construction Workers, 2020Self-Employed Employed40,392612,194140,918375,2568,8220 100,000 200,000 300,000 400,000 500,000 600,000 700,000AIANAsianBlackLatinxNHPIEmployeesMBEsFigure 14: Number of MBEs with Employees, U.S., 2020Return to table of contents

37 An extensive research literature has found that minority groups in the United States are often less likely to be entrepreneurs than Whites, that their businesses are less likely to survive, and that their performance in terms of the revenues and employment they generate are less satisfactory. A recent report commissioned by the Connecticut State government corroborated these findings of minority underrepresentation for the Nutmeg State. The report concluded that minorities in Connecticut have experienced “long-standing but decreasing disparities in business ownership and formation.” Compared to Whites, minority groups face several barriers in achieving and sustaining self-employment. These barriers include lower overall labor market earnings and limited access to both business credit and home mortgage credit. The latter is important because reduced access to home mortgage markets decreases homeownership rates, and therefore, wealth accumulation and the ability to start a business. The following brief discussion provides details comparing the extent of these disparities in Connecticut compared to a nearby section of the State’s regional New England market area as well as the entire United States. The focus of the comparisons is on business performance viewed across minority groups. 11 As in the nation, minorities in the regional market and in Connecticut were less likely to report being self-employed. Given the barriers to self-employment discussed below, this finding is expected. However, it is important to observe that minorities’ lower self-employment rates are not chiefly due to any reluctance they might have to be self-employed. After accounting for key 11 This section of the report draws extensively from the study done for the State of Connecticut by the Connecticut Academy of Science and Engineering (CASE). Historically, most of these studies have focused on Black owned businesses, see Bailey (1971); Jaynes and Williams (1989). Fairlie and Meyer (1996) found disparities in self-employment rates across 60 ethnic and racial groups using 1990 Census data and controlling for age, education, immigrant status, and assimilation (see also Hout & Rosen, 1999; Blanchflower, 2008). Using more recent data, Fairlie and Krashinsky (2012) found these disadvantages were continuing. Connecticut Academy of Science and Engineering, Connecticut Disparity Study: Phase 3, 2016. By Regional market the CASE report includes the states of Connecticut, Massachusetts, New York, and Rhode Island that together accounted for more than three-quarters of the state government’s procurement, page 4. Return to table of contents

38 characteristics that predict if an individual will choose self-employment, estimates of the likelihood of self-employed do not differ among minorities and Whites in Connecticut as much as might be expected. Although the two largest minorities (Black and Latinx) do have lower predicted self-employment rates than Whites, in Connecticut, each is only about 3 percentage points less likely to be self-employed than Whites. The predicted self-employment rates of other Connecticut minority groups were not statistically significant (a result due to their small numbers in the data). Furthermore, comparing Connecticut to other markets, the Black-White self-employment disparity for Connecticut was similar in both the region and the nation, and the Latinx self-employment rate was just 2 percentage points below Whites in the region and the nation. Alternatively, Native- and Asian-Americans faced significant disparities in both the region and the United States. An important implication of the small or negligible differences in predicted self-employment rates for minorities and Whites is that minorities are about as likely to seek self-employment when their market circumstances support the endeavor. In fact, evidence corroborating this inference is that minorities in Connecticut appear to have a higher propensity to seek self-employment than do Whites. For example, Blacks, who had the highest propensity to become self-employed, were more than twice as likely as Whites to attempt to start a business. Yet, despite this higher propensity to start a business, counts of business ownership reveal a statistically significant disparity in the percentage of established Black business owners compared to Whites. This indicates Black owned firms in Connecticut have a higher failure rate after a business start-up. Dating back to the 1980s, studies using U.S. Census of Business owners’ data Return to table of contents

39 have made the findings that Black firms had the highest discontinuance rate (29.6%) compared to Whites (26.0%); Asian-owned firms had the lowest discontinuance rates (21.7%). 12 Section 5: Disparities in Business Performance MBEs have fewer employees and smaller sales than White-owned firms in Connecticut. The magnitude of the difference is much greater for sales than for employee size. There are, however, differences in the average number of employees and average sales among the different minority groups.  Native American MBEs in Connecticut, averaging 56% fewer employees than White-owned businesses, have the largest difference in business size compared to White-owned businesses.  In contrast, Native American MBEs have more employees than White-owned businesses in the Regional and United States marketplaces (although neither of these estimates was statistically significant).  Asian MBEs averaged 48% fewer employees than White-owned businesses in Connecticut.  In the United States, Asian MBEs had the largest size disparity compared to White-owned businesses.  Black MBEs averaged 21% fewer employees in Connecticut.  The average number of employees in Black owned firms was 18% less in the region and 7% less in the United States. 12 Based on International Global Entrepreneurship Monitor data, Kollinger and Minniti (2006) found Blacks more likely to start a business. Bates (1989) found similar results based on data from the US Census of Business Owners from 1982-1986. See Jaynes and Williams (1989). Return to table of contents

40  Latinx MBEs in Connecticut employed 8% fewer people than White owned businesses. The difference in the region was only one-half the State difference at 9%.Firm Sales MBEs are also smaller than White-owned businesses when the measure of size is firm sales. Furthermore, the MBE deficit was larger in both Connecticut and the State’s regional area than in the nation.  Relative to White-owned firms, the sales of MBEs were found to be 31% less inConnecticut. 29% less in the regional market. 25% less for the United States.Sales also varied significantly among MBE groups and across the broad market regions.  The gap between White-owned businesses and Black MBEs was the largest in eachof the three markets, although geographic MBE differences were similar withingroups.  Black firms were 50% smaller in Connecticut, 48% smaller in the State’sregional market, and 47% smaller in the United States. Asian MBEs were 25% smaller in Connecticut and the region, and 18%smaller in the United States. MBEs with a multi-racial owner or owners were 39% smaller in Connecticut,28% smaller in the region, and 27% smaller nationally.Return to table of contents

41  Latinx MBEs were 15% smaller than in the Connecticut marketplace, 13% smaller in the region, and 14% smaller nationally. 13 Labor Market Earnings The lower sales for MBEs are consistent with findings of lower minority employee earnings, especially for self-employed minorities.  Significant disparities in hourly wages favoring White men were largest in the Connecticut labor market, although disparities also existed in New England and the United States.  Moreover, hourly wage disparities were greater for self-employed minorities than minorities employed by others. In Connecticut, the hourly wage disparity for self-employed minorities as a group was 8 percentage points greater than in the regional labor market. Comparing minority groups with one another revealed disparities across subgroups as well. For example, the earnings disparity for some self-employed minority groups was more than twice that experienced by others.  Multi-racial and Latinx workers in Connecticut faced a 27 percentage point disparity in hourly wages.  Wage disparities for multi-racial and Native American workers were 21 and 35 percentage points higher in Connecticut than in the regional labor market. Summary The decision to become self-employed is crucially affected by an individual’s financial resources. Thus, minority groups’ disparities in earnings impose a significant negative effect on 13 These differences were statistically significant with the exception of Native American-owned businesses in the Connecticut and Regional markets, CASE, Report, pages. 51-2. Return to table of contents

42 their entrepreneurship rates. This is primarily because lower earnings inhibit wealth accumulation and thereby undercut successful access to capital markets. It follows that those minority groups with higher average wealth holdings have the highest self-employment rates. Lower earning and less wealthy groups also have lower rates of business survival once they become self-employed. Taking into consideration minority groups’ high propensity to form businesses, an important conclusion is that the strongest barriers to minority-owned businesses are the ongoing factors that undermine their performance and not their desire to enter business. Section 6: Understanding Barriers Facing MBE Construction Companies As with minority-owned firms in any industry, MBEs in construction face significant barriers to business contracting in Connecticut. Familiar challenges faced by MBEs may be summarized under four general categories: Direct Discrimination; Education and Skill Development; Limited Networking Opportunities; and Access to Capital. Although it is useful to discuss them under these headings, it should be understood these factors are interdependent, mainly because discrimination and implicit or subjective bias are principal factors that connect each of them. I. DiscriminationMBEs in construction encounter discrimination based in prejudice and stereotype driven bias when they seek contracts, attempt to establish relationships with other firms and clients, and attempt to obtain working capital in credit markets. Discrimination in construction employment is the major reason for MBE’s underrepresentation in the construction industry. The reason is that, unless its owner(s) inherit a firm, employment in one of the many construction trades and jobs is the major path to owning a Return to table of contents

43 construction firm. Unfortunately, although conditions have abated since decades past, people of color have historically faced job discrimination in the construction industry where they have been completely shut out of the highest paying construction occupations. Many of these conditions continue today. Even so, for assorted reasons, the extent of their employment in construction today varies among minority groups. The U.S. Bureau of Labor Statistics reports that nationally, Blacks comprise just 6% of the workforce in construction, a number that has been unchanged for 25 years, and which is only one-half Blacks 12% representation in the entire U.S. workforce. Asian Americans are also significantly underrepresented in the construction workforce compared to their overall labor force representation. Alternatively, Latinx workers are significantly overrepresented in construction. In Connecticut, Black and Asian Americans are a larger proportion of the construction workforce than in the nation overall, but they are underrepresented according to their overall share of workers in the State, see Figures 10 and 11 above. Because there are significant differences in group average education levels, it need not be expected that population percentages should match group participation rates in construction. However, even considering this, Whites are overrepresented in the Connecticut construction workforce, to the detriment of minority workers. A 2020 article in Construction Manager cited a recent study that found 76% of Black and 77 of Asian employees in the construction industry believed their career advancement opportunity was limited because of their minority status or other legally protected characteristics. Moreover, almost one-half of all these respondents disagreed with the Statement that their organization “actively works to develop underrepresented groups, specifically into leadership roles.” Substantiating these beliefs, the U.S. Equal Employment Opportunity Commission (EEOC) conducting a hearing in Washington D.C. in 2022, concluded that discrimination against minorities Return to table of contents

44 continues to run rampant in the construction industry. In the construction industry, hostile workplaces created by discriminatory attitudes that inform minorities they are unwelcome need not be subtle. During 2020, there were numerous highly publicized incidents of flagrant racism on construction jobsites throughout North America such as workers of color finding hanging nooses or racist graffiti in their workplaces. In 2022, Charlotte A. Burrows, Chair of the EEOC issued this Statement: “The construction sector has always been an important component of the American economy, as a major employer of America’s workers, a pathway to prosperity and security, and a key indicator of the nation’s health,” … “Unfortunately, many women and people of color have either been shut out of construction jobs or face discrimination that limits their ability to thrive in these careers.” 14 The Role of Unions As this report emphasized earlier, a major reason opportunity in construction jobs is so important is because such jobs, especially in the skilled construction trades, are a main pathway to management and ownership of a construction firm. Trade unions exercise a great deal of control over who works, especially on the more sought-after jobs. As a White general contractor in Connecticut once explained, “I suppose if you have very few minorities in the unions you would have few minorities starting their own construction firms.” 15, trade unions exerted a powerful negative force in the exclusion of minorities of color from construction jobs. Among all industries and occupations, skilled construction crafts succeeded in erecting some of the most effective 14 Equal Employment Opportunity Commission, EEOC Shines Spotlight on Discrimination and Opportunities in Construction, Press Release, May 17, 2022. 15 Jaynes Associates (1990), p. 34. Arnesen (2001). Foner (1981). Spero and Harris (1931). Taft (1964). Takaki (1989). Return to table of contents

45 barriers to the entry of Black and other minorities of color into better jobs. Construction craft unions were controlled by the American Federation of Labor (AFL) an organization whose membership was composed of a federation of local craft unions existing throughout the nation. The local craft unions were dominated by White workers who colluded to keep minority workers from competing with them for jobs. As a result, minorities were denied access to skilled construction crafts. Where the numbers of minority workers were small, they were completely excluded from the unions; where minorities might be a considerable proportion of a local workforce such as Asians in sections of the Northwest, Blacks in the South, and Latinx workers in sections of the Southwest, the minorities were often forced to form separate and unequal locals. Collective bargaining agreements were usually written to guarantee Whites the choice of better jobs. In either case, minority workers in construction were pushed onto the marginal areas of work for lower wages on the least profitable projects, and for the most marginal firms. In practice, trade unions’ ability to restrict membership and exclude minorities is tied to how young men and women receive education and skill development in the construction trades. Education and Skill Development An important finding from early studies of the U.S. Census of Business Owners is that more successful MBEs had a higher survival rate than non-minority firms. Studies have also found that MBEs with owners possessing above average human capital inputs earned higher profits than their minority business owner peers, likely because better educated minority entrepreneurs are more able to expand into industries with higher income opportunities. MBEs in construction are no different. Operating a construction firm requires specialized expertise. Personal growth from worker to company owner has been a pathway to business for decades because of the way Return to table of contents

46 construction trades are organized. The common characteristic of becoming a licensed construction worker is the trade nature of the fields. Construction workers progress from helper to apprentice, to licensed tradesperson. Electricians, plumbers, roofers, carpenters, glazers, bricklayers, painters, and other skilled trade professionals are regulated by the State. Plumbers require a P1 or a P2 license to work as plumbers. P1 fully licensed plumbers can work independently. P2 fully licensed plumbers must work under the supervision of P1 licensed plumbers. To become a P2 licensed plumber, a worker must pass a test and work as an apprentice for at least two years. Similar requirements exist for the other trades. Unfortunately, becoming an apprentice presents a major barrier to minorities. As was discussed earlier, one entry path to the construction trades available to high school students is to attend one of the 17 Connecticut Technical Education and Career System (CTECS) diploma granting technical schools. CTECS students can enroll in classes instructing them in a wide variety of technical occupation skills including architecture, carpentry, electrical, Masonry, Plumbing, Heating and Cooling. Over 11,000 students attend CTECS schools. Adults can attend private for-profit schools to take classes in these and other trades in various locations throughout the State. In addition to the CTECS pathway, workers can enter the trades by becoming apprenticed directly by a union. Traditionally entrance into the trade unions was passed from father to son. It was ubiquitous to see how many trades businesses surname and sons were. The craft nature of the construction trades and their high wages have contributed to them being closed to “outsiders.” Studies of the construction industry during the pre-civil rights era show a national pattern of gross under-representation of minorities in apprenticeship for the building trades. Census figures for 1950 and 1960 when Blacks represented more than 90% of people of color in the United States, Return to table of contents

47 reveal that of the apprenticeship classifications used by the Census Bureau, in the building trades, unskilled labor was the only classification in which Black workers approximated their proportions of the total work force in 1960 (10.6%). Blacks in skilled jobs were concentrated in the so-called trowel occupations (cement masons, plasterers, bricklayers, and carpentry. At the cusp of some positive movement toward greater minority employment in construction due to the Civil Rights Movement and a growing economy, in 1965, the Presidents Commission on Equal Employment Opportunity (PCEEO) surveyed 989 construction industry contractors, 281 employer associations, and 731 unions. In the 30 southern cities surveyed, only 26 of 3696 persons (less than 1%) selected for apprenticeship programs of plumbers’, electricians’, sheet metal workers’, ironworkers’, and carpenters’ unions were Black, and 20 of those 26 were carpenters. In the non-southern States and cities 133 of 5906 persons (2%) in apprenticeship programs for the same five trades were Black, and 70 of the 133 were carpenters. The State of Connecticut contributed to these discriminatory patterns. In 1960, the State’s Commission on Civil Rights reported that Blacks were less than one percent (0.7%) of the construction trades apprentices in the State. In 1965, the electricians’ and carpenters’ unions were the only building trades that accepted new participants into their apprenticeship programs. Of the 40 people accepted (16 electricians and 24 carpenters) only 3, all carpenters, were Black. Conditions in New Haven were typical of the situation throughout Connecticut. In 1967, twelve building trades unions reported that 13.3% of their members were minorities, but most of them were in the lower paid lesser skilled unions. In three highly paid unions (plumbers, electrical workers, and iron workers) there were 5 minorities from a total membership of 1221 (.4 of 1%). Seven non-mechanical building trades unions reported a minority group membership of 15.3% in Return to table of contents

48 1967, but that percentage was heavily influenced by disproportionate minority membership among unskilled laborers. Studies of specific Connecticut cities and the State government have documented a history of blatant discrimination against minorities attempting to gain admission to construction craft unions and unskilled jobs in construction. Noting centuries long discrimination against people of color in the construction industry cities such as New Haven produced a series of fact-finding reports and investigations dating back to the 1940s finding discrimination in the construction trades and the industry against minorities and people of color. During the early 1960s, the New Haven Human Rights Committee made general findings of social discrimination and specific findings of discrimination against minorities in the construction industry of the Greater New Haven area. Unionization benefitted only White workers. As one Black informant explained, “They won’t let you work unless you belong to the union, and they won’t let you Join.” William Wilson, a Black native of New Haven, trained by his father as a carpenter and mason during the 1940s, recalled his experiences trying to join a trade union during the 1950s: “tried to join the mason’s union, but could not get anyone to talk to him – no one would vouch for him. He also tried the carpenters’ union, but they would not talk to him – said “hey boy what do you want?” The business agent was never available, and he could not get an application to apply. Later he tried to enter Waterbury’s mason’s union because he was befriended by the business agent. During the 1960s, Wilson’s brother did get into New Haven’s carpenters’ Union. But minority participation in the labor unions were almost nonexistent until the 1960s. At the time, there were 2 blacks in the city’s building trades unions. 16 16 “Redressing the Exclusion of and Discrimination Against Black Workers in the Skilled Construction Trades: The Approach of the Washington Lawyers’ Committee for Civil Rights Under Law, WDC, September 26, 1983. Ray Marshall, Employment Discrimination (New York: Praeger Press, 1978. Gerald D. Jaynes and Robin M. Williams Jr. Return to table of contents

49 Late into the 20th century, the State of Connecticut (through its apprenticeship training programs and its general vocational educational policies ratified the discriminatory practices of construction contractors and unions. As indicated earlier, even during the 1960s, the only practical routes for a person to enter the construction trades and acquire the skills needed to become a construction entrepreneur were: 1, participate in an apprenticeship training program, or 2, attend a State or City technical high school. At that time, the State’s apprenticeship program operated under the auspices of the Connecticut Apprenticeship Training Council (hereinafter, CAT Council). Mr. Leo Dunn, Deputy Commissioner of Labor of the State of Connecticut, and Mr. Vincent Sirabella member of the New Haven Human Rights Committee testified to the State’s complicit activity in discrimination into the apprenticeship program. At the beginning of the Sixties, Blacks composed fewer than 1% of the students enrolled in apprenticeship training programs conducted under the auspices of the Connecticut Apprenticeship Council. That figure had not risen significantly over the ten years from 1950 to 1960, despite large increases in Blacks’ share of the State’s population. The CAT Council was composed of nine members, appointed by the Governor, representing the public, industry management, and trade unions. It provided guidance, through its field staff, to Joint Apprenticeship Committees (hereafter, JACs), established by firms and employer groups that participated in collective bargaining agreements. JACs governed admissions into local, company-based, and sectorial apprenticeship training programs. Although the JACs were not statutory A Common Destiny: Blacks and American Society, National Academy Press, WDC, 1989. Herbert Hill, Black Labor and the American Legal System, Vol I, Bureau of National Affairs, 1977. Jaynes Associates, Minority and Women’s Participation in the New Haven Construction Industry, January 18, 1990. Jaynes Associates, ibid., p. 30. Return to table of contents

50 bodies, the statutory CAT Council was responsible for servicing, assisting, and regulating the JACs. Two staff members of the CAT Council were responsible for developing the specific opportunities for training – the development of JACs. The JACs recruited apprenticeship trainees entirely through the participating companies and trade unions, which, according to evidence provided to various Human Rights Committees in Connecticut discriminated against people of color pervasively. Thus, the State’s apprenticeship training program perpetuated patterns of discrimination in private industry. Articles from the Middletown Press featured charges by Professor John Maquire of Wesleyan University (a member of the Connecticut State Advisory Committee to the U.S. Civil Rights Commission) Stated that officials of the State Department of Education were actively discouraging Black students from applying to technical schools, because the counsellors knew trade unions would not accept them for membership upon graduation. Professor Maquire Stated that Black students were victims of two forms of discrimination: first failures of “omission” occurring when counsellors fail to tell them of opportunities at the technical schools, and second, instances where Black students inquire about vocational schools and were discouraged from taking the entrance examination. Professor Maquire believed that the counsellors thought they were acting humanely because they knew trade unions were close to Blacks even if they acquired the training. Dr. Joseph Nerden, Director of the Bureau of Vocational Training of the State Department of Education, admitted that the charges were true when he informed the press that he had tried to stop the practice in the spring of 1963. 17 Limited Networking Opportunities 17 See Jaynes Associates, ibid., especially pp. 13 -22 on educational and technical trades discrimination by the State of Connecticut. Return to table of contents

51 The legacy of discrimination and continuing bias undermines MBE’s ability to build relationships within Connecticut’s construction Industry. Without the network ties fostered by such relationships, MBEs are at a severe disadvantage in their efforts to grow their client base and the supporting organizations of prime and subcontractors, suppliers, and creditors needed to compete in Connecticut’s construction industry. In particular, the opportunity to develop networks among the State’s established large contractors must expand. In the absence of such expansion in networking opportunities, MBEs will continue to face headwinds gaining the experience to participate in the kinds of large-scale construction projects that enable greater development of skills needed to successfully engage complicated bidding processes and performance schedules typical of the construction industry. Mentorship and Support Opportunities from Industry Leaders, the Role of Subcontracting To survive in the construction industry a firm must have access to a steady stream of contracts. For a small firm to expand its capacity to do larger scale construction projects, it must gain valuable experience learning to make successful bids on larger contracts. In general, experience with larger contracts is only available to smaller firms when they collaborate with larger prime contractors as subcontractors. Thus, if a new entrant cannot gain access to and forge strong relationships with the large general contractors in its area, it will not be able to grow or even survive. There are several reasons for the existence of subcontracting. Two of the most important are: 1. General contractors win exceptionally large contracts only intermittently and usually do smaller jobs. It would be too costly to maintain a large workforce and equipment that would Return to table of contents

52 be frequently idle. Operations are made more flexible and costs are reduced if subcontractors are used to help with the larger jobs when needed; 2. There is always an element of risk in any construction project. A contractor bids a priceon a job and then must keep costs low enough to make a profit. Some of this risk can bereduced by subcontracting various parts of the job to other firms with specific expertiseand experience.The primary drawback to subcontracting is that by entering these agreements the general contractor exposes itself to a different risk – part of the project (and its profit and reputation) is placed in the hands of another firm whose interests are not necessarily identical with the general contractor’s. For a variety of reasons, including pure incompetence and working for too many projects simultaneously, a subcontractor may not finish work on time or do work of poor quality. For these reasons, general contractors often enter long-term working relationships with one or more subcontractors whereby the general contractor provides work to them on a regular basis, and the subcontractor, in turn, agrees to be available as much as possible for the schedule needs of the general contractor. The arrangement is founded on dependability and trust. In the vernacular of the industry these long-term relationships are sometimes referred to as “marriages.” In the context of White/minority intergroup relations the metaphor is very appropriate even if inadvertent, because just like marriages between spouses, general contractor and subcontractor marriages have been White on White. Long-standing issues of ethnic and racial segregation permeating Americans’ social and business lives means marriages between general and subcontractors have been less likely to be interracial. Therefore, White WBEs have an advantage networking in business, and marriages between large White owned general contractors Return to table of contents

53 and White WBEs are more likely. Moreover, many WBEs are previously White male firms that became WBEs by transferring ownership to a daughter or spouse. The “marriage” metaphor is also suggestive because it shows how the dynamics of ethnic segregation throughout society reduces intergroup opportunities for social relationships, and thus, like barriers to union membership, also reduces minorities’ opportunities to form ties with large contractors due to the historical conditions that have made all large general contractors White owned. Access to Capital Limited access to capital and financing (loans, lines of credit, insurance bonding) remains a significant barrier for many active and potential MBEs in the construction industry. Although insufficient access to credit can have a plethora of causes, the most prevalent are a prospective borrower’s limited credit history, insufficient collateral, and systemic bias in lending markets. A large research literature has produced evidence of significant disparities in minorities ability to borrow or obtain insurance bonding either in their capacities as MBEs or as householders. Compared to White males, these studies find there exist significant and often large disparities in banks’ treatment of loan applications from MBEs and businesses owned by White males. MBE applicants for loans often face statistical discrimination – a decision-making process whereby lenders evaluate applicants of different ethnic groups differently. Because of incomplete or biased information, a borrower’s demographic identity (including ethnicity) becomes a proxy for credit risk. Although basing credit even partially on ethnic identity is strictly illegal, it is indulged in and difficult to detect. What is more, statistical discrimination based in objective group traits can merge with negative perceptions of MBE borrowers even when significant differences in creditworthiness do not exist. A great preponderance of studies of treatment of borrowers in Return to table of contents

54 credit markets have compared Blacks and Whites. Principle findings in these studies are that even after controlling creditworthiness, Blacks sometimes are twice as likely to be denied credit as Whites. Black-owned firms are often required to provide more documentation to lenders when they do receive a loan and must pay higher interest rates. Experience with credit denials and fear of repeating these experiences leads many MBEs to substitute personal saving for market credit, a process that retards business formation and sustainability. Fear of getting denied for a loan can also make MBEs less likely to apply for loans because they anticipate a loan denial will have a negative effect on their credit score and undermine chances for borrowing in the future. In some surveys of business owners, Black owners were disproportionately more likely to report concerns about credit and more likely to have funded their business with personal equity as opposed to credit or bank loans. Evidence of disparities in loan access affecting firm structure among new start-ups, found that credit scores do differ by race, but differences in firm characteristics like firm size, age, and management experience only explain about 30% of the disparity in Black and White business credit scores. This led researchers to conclude that MBEs were penalized both in the determination of credit scores and in their access to credit. Gender has also been found to influence financial structure by impeding access to credit for WBEs. 18 Role of Homeownership in Business Formation Homeownership is important for understanding business formation and survival because a household’s largest asset is often a home it owns. Because it represents loan collateral, owning a 18 Cavalluzzo and Cavalluzzo (1998). Ards and Meyer (2001). (Blanchflower (1998); Van Auken & Horton, 1994). Robb and Fairlie (2007). Blanchflower, (1998); Van Auken & Horton, (1994). Henderson et al. (2015). Robb and Wolken (2002). Coleman (2000), p.42. Carter et al. (2007). Mijid (2015) and Robb and Wolken (2002). CASE, 40. While the extent of ease of access to credit can change over time, Jappelli (1990) found that “young, single, nonhome-owning, and non-White households” are more likely to be squeezed out of tight credit markets and also tend to ask for less credit than equally creditworthy Whites. Return to table of contents

55 home increases access to credit because the equity a business owner has in a home can be drawn on to start or maintain a business. Thus, the primary importance of homeownership for small business formation is that owning a home allows a business owner to use the home as collateral when accessing business loans or other personal lines of credit needed to support their businesses. For these reasons, personal wealth, including home equity, is included among the positive factors contributing to an individual’s potential to enter self-employment. Studies find that available equity in a home increases the likelihood a person becomes self-employed or remains so if already self-employed. For example, a study of the effects of liquidity constraints on career choice that used data from the Federal Reserve’s Survey of Income and Program Participation from 1996 to 2006 found that a 10% increase in a householder’s home equity increases the probability the householder will transition to self-employment by 14%. There is even an increased likelihood of entering self-employment when a homeowner anticipates having an increase in the value of home equity. Because of homeowners’ greater ability to leverage accumulated wealth, reductions in credit quality over time occur primarily for renters. Because MBEs have often been forced to rely on personal savings to finance their business operations more than White-owned firms, disparities in homeownership are a crucial factor determining MBEs ability to form and maintain businesses. For the self-financing of a business, homeownership is one of the most important assets from which business owners can draw when access to other credit is limited. If MBEs have lower rates of homeownership than Whites, their likelihood of entering self-employment is also lowered. MBEs in Connecticut, the New England Region, and United States geographic marketplaces experience lower levels of homeownership and lower average home values than Whites. Moreover, MBEs also tend to face a higher probability of their applications for home mortgages being denied than White applicants even after Return to table of contents

56 studies control for many factors that influence lenders’ credit decisions. Each of these findings indicate that, in Connecticut, the New England region, and the nation, minorities face significant barriers to wealth accumulation because of difficulties in obtaining various types of credit. Obviously, these barriers to credit at all levels negatively affect the ability of MBEs to form or sustain their business operations. For each of the above reasons, in each of the three geographic marketplaces considered by the CASE:  Except for Asian Americans in the Regional marketplace, all MBEs had higher rates of loan denial than White firms.  Native American mortgage applicants have the highest denial rate. Compared to Whites, they are 9 percentage points more likely to be denied in Connecticut and 6 percentage points more likely to be denied in the Regional and national marketplaces.  Black applicants have a substantial probability of denial in all marketplaces, 7 percentage points higher than Whites in the Connecticut and United States marketplaces.  Latinx borrowers also had significant probabilities of denial, although the probabilities were smaller than for Black and Native American applicants. Return to table of contents

57 Section 7: Special Issues of Women MBEs19 During 2018, women owned about 44% of all MBEs in Connecticut, and, although there was variation across groups, WMBEs were a significant percentage within each minority group (Figure 15). Because women business owners (WBEs) encounter each of the barriers we have been discussing, the special position of being both a WBE and an MBE subjects women MBEs with what is sometimes referred to as a double whammy in the business world. They face barriers that are independently due to their two status markers and that can combine to produce barriers greater than the sum of the two effects. The discussion that follows first outlines barriers all WBEs must confront. 19 During 2020, approximately 1.15 million (19.9%) of businesses with employees were minority owned. About 1.24 million (21.4%) were owned by women. 19 Women-owned businesses had an estimated $1.9 trillion in receipts, 10.9 million employees, and $432.1 billion in annual payroll. Women owned 41.1% of the nation’s businesses without paid employees and had $313.6 billion in receipts in 2019, according to the latest Nonemployer Statistics by Demographics (NES-D) released today from the U.S. Census Bureau.19 In contrast to the US numbers, Connecticut MBE employer firms in 2017 the latest data available composed 12.19% of all employer firms (8,322 of 68,248 total employer firms). 12,014 WBE employer firms. 38.134.549.145.843.244.134.861.957.850.153.756.853.260.807.70.80.502.74.4010203040506070AIAN ASIAN BLACK LATINX NHPI MBE WHITE% of OwnershipRaceFigure 15: Firm Ownership by Group & Gender, Connecticut, 2018Female Male Equally Female-MaleReturn to table of contents

58 Employment opportunities in construction are necessary if construction WMBEs are to grow for the same reasons MBEs need such opportunities. Thirty years ago, Katherine Bishop noted that the federal government had set a goal of 20% women’s participation in California’s construction apprenticeship programs in 1978, but she found that by 1991 women composed only 2% of the construction work force. Responding to the disparity in 1992, the U.S. Congress passed the Women in Apprenticeship and Nontraditional Occupations Act (WANTO) which provides technical assistance to employers and labor unions who hire women as apprentices and in non-traditional occupations and positions. Figure 16 shows that although women’s share of construction employment has improved since 1991, it has been stuck at about 10% throughout the past two decades. Two major schools of thought try to explain the low participation rates of women in construction: high rates of discrimination against women by employers and male employees versus women’s general disinterest in holding such jobs. There is evidence suggesting both explanations have a role in women’s low share of construction jobs. A literature review that concluded the construction industry has a culture of gender discrimination found that many women perceive construction as a field for men because of the outdoor work and the current level of male domination. A survey in Cincinnati found that women perceived problems with pay, benefits, and job security in construction. Many women and men perceive construction work as men’s work, and this belief is deeply rooted in our culture. An alternative explanation of women’s apparent reticence to work in construction is evidence showing that many women who, seeing that construction is an overwhelmingly male field, believe that would be employers and coworkers would not accept women as employees and coworkers. Beliefs of this kind are well known to affect application rates of underrepresented groups in an industry. Return to table of contents

59 Given the fact that minority and women applicants often encountered discrimination when seeking construction jobs, and that construction trades unions have historically not been receptive to minorities or women, women like other underrepresented groups are less likely to apply for construction apprenticeships or jobs because they anticipate they will encounter discrimination. These conditions are sometimes called “the chilling effect” that is caused by the existence of biased and discriminatory conditions in the first place. 20 Much research on women working in construction (especially in the transportation sector) has focused only on managers and professionals, primarily civil engineers. In line with the reasoning that leads to the chilling effect discussed above, studies focusing on blue collar workers tend to emphasize the reasons why women and minority group members do not enter construction work. This literature tends to look at the experience of women or minorities without considering how the joint markers of status (woman minority) interact to produce outcomes that can disadvantage minority women more than the sum of gender and minority effects. Women minorities have intersectional or interlocking gender and ethnic attributes. 21 20 Menches and Abraham’s (2007). Anderson et al (2007). Dabke et al (2008). Dainty and Lingard (2006). (Waldinger and Bailey 1991). (Zopp 2013). National Concrete Pavement Technology Center 2007). Anderson et al (2007). (Mayor’s Advisory Commission on Construction Industry Diversity 2009). 21 Bowling et al 2006. (Schachter 2005; Schachter 2008. (Anderson et al 2007; Transportation Equity Network 2011). (Coalition of Labor Union Women 2008). (U. S. Department of Labor 2011). 6. (Hankivsky 2014) Return to table of contents

60 Barriers to Credit WBEs encounter market driven biases in the processing of credit applications. Even after accounting for borrowers’ financial characteristics, WBEs have a higher probability of loan denial. This puts up barriers that disadvantage WBEs business opportunities and performance in ways like those faced by MBEs and discussed earlier. Studies have found that even when male and female owned businesses report similar credit histories, WBEs were considered greater credit risks by lenders. For similar reasons, like MBEs, WBEs are also less likely to use external financing, and when granted credit WBEs get charged higher interest rates and are required to pledge greater amounts of collateral. Outcomes at each step of the credit decision process are affected by the gender of the applicant and the loan officer. Both social biases and implicit biases due to psychological factors and statistical discrimination are at play. Unsurprisingly, like MBEs, WBEs were also less likely to have applied for credit lines because of fear of rejection and its negative consequences. When one combines gender effects on business owners’ access to credit with facts like Black and Asian self-employed women often face wage disparities in the labor market, the double whammy language applied to MWBEs becomes even more salient. 0246810122002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022% of EmploymentYearsFigure 16: Women's % of Construction Employment, 2003 - 2020 Return to table of contents

61 Section 8: Programs for MBEs in Construction The State of Connecticut, many of its cities, and various private organizations have initiated programs to support MBEs in the construction industry. The objective of most of these programs is to increase opportunities for MBEs in construction by fostering conditions that create greater diversity and opportunity in contracting and employment. Policies that support MBEs include minority utilization requirements for government spending; programs dedicated to facilitating access to credit; training programs that develop job skills and business skills such as bidding on construction proposals, obtaining needed certifications, and accessing commercial networks. We provide some examples that are not intended to be an exhaustive list. Minority Utilization Programs (sometimes called set-aside Programs) MBE utilization programs are the most visible and aggressive ways that a government can attempt to increase MBE participation within its jurisdiction. As in many geographic areas, the State of Connecticut and many municipalities have minority utilization programs aimed at increasing the participation rates of MBEs and minority employees on government contracts. For example, the Connecticut Department of Administrative Services (DAS) has a utilization Program that aims to increase opportunities for small contractors and minority-owned businesses. Under this program, a percentage of State contracts are set aside exclusively for small contractors and MBEs. Setting up and operating an MBE utilization program is a complicated process that requires substantial expertise about the State of business within a jurisdiction and knowledge of a formidable amount of federal and State constitutional and other legal issues, see appendix 1. In addition to various utilization programs found throughout the State, Connecticut also offers many services designed to ameliorate many of the barriers to MBE participation in Return to table of contents

62 construction this report has been discussing. A list of major State-run programs includes the following.  Supplier Diversity Program: The Supplier Diversity Program, administered by the Connecticut DAS, promotes the inclusion of minority-owned, women-owned, and small businesses in State procurement. The program encourages State agencies and contractors to actively seek diverse suppliers and consider them in their procurement decisions.  Small Contractor Development Program: The Connecticut Department of Transportation (CTDOT) has a Small Contractor Development Program (SCDP) that provides technical assistance, business development resources, and mentorship opportunities to small and minority-owned construction firms. The program aims to help these firms compete for and attain CTDOT contracts.  Contractor Prequalification: Connecticut's prequalification process for contractors includes measures to encourage the participation of minority-owned businesses. The process assesses the qualifications and capabilities of contractors bidding on State projects, and efforts are made to ensure fair treatment of MBEs.  Certification Programs: The State offers certification programs to identify and recognize minority-owned businesses. For example, the Connecticut Minority Business Enterprise (MBE) Certification Program, administered by the Connecticut DAS, certifies minority-owned businesses to enhance their visibility and credibility in the industry. Certification can enhance networking opportunities, bidding preferences, and other benefits.  Technical Assistance and Business Development Services: Connecticut provides resources and support to help minority construction firms improve their business operations. This includes access to technical assistance, workshops, training programs, and business development Return to table of contents

63 resources through organizations such as the Connecticut Small Business Development Center (SBDC) and local economic development agencies.  Department of Administrative Services, the Connecticut Department of Transportation, andother relevant State agencies involved in economic development and MBE support.Section 9: Lessons Learned This report will not attempt a program-by-program critique of these services. Instead, we provide an overview of BJM’s experiences in working on Minority participation issues in Connecticut over the past thirty years and use the lessons learned to offer some proposals for improving minority participation going forward. Based on our experience, the lessons provided in these recent studies are indicative of the key issues that need to be addressed to improve minority participation in Connecticut construction in a fair and balanced manner. We start this section with a review of two recent legal cases that demonstrate the structural challenges facing Black and Brown firms. State and Federal Legal Support for Black and Brown Construction Firms From a press release dated September 30, 2022, U.S. Department of Justice.“According to guilty pleas entered in 2020, the defendants conspired with other insulation contractors, to rig bids and engage in fraud on contracts for installing insulation around pipes and ducts on construction projects at universities, hospitals, and other public and private entities in Connecticut. The conspiracy ran for nearly seven years, beginning as early as October 2011 and continuing until as late as March 2018 Five other individuals and companies have pled guilty to criminal conduct arising out of this investigation and await sentencing.” 22 22 Office of Public Affairs | Insulation Contracting Firm and Co-Owner Sentenced for Rigging Bids and Fraud | United States Department of Justice Return to table of contents

64 From U.S. Department of Justice press release, Monday, April 7, 2014: “The joint investigation revealed that, in 2007, Manafort Brothers, Inc. Submitted a bid to ConnDOT to serve as the general contractor on a federally and State funded project that involved a two-mile relocation of Route 72 in Bristol and Plainville...the State of Connecticut Department of Transportation (ConnDOT) determined that Manafort was the apparent low bidder for the project with a bid of approximately $39,663,000. The contract was officially awarded to Manafort in August 2007 based in part on its representation that Company #1 would perform the work described in Manafort’s pre-award submission. During the project, it was determined that Company #1 was not performing most of the work Manafort claimed it was performing. In fact, the investigation revealed that Manafort was utilizing Company #1 essentially as a pass-through entity. The Government maintains that Manafort arranged to pay those contractors through Company #1 to skirt DBE regulations.” 23 Both U.S. Department of Justice press releases are important cases that illustrate illegal behavior by non-minority construction firms that negatively impact Black and Brown construction firms. Bid rigging by its very nature excludes firms outside of the illegal group. A common complaint heard by MBEs is that bid rigging is taking place on both public and private contracts. MBEs have also accused non-minority firms of “winning” contracts as the low bidder knowing that after the work has started, they can increase the value of the contract by utilizing change orders, and that this practice is known by owners of the contracts. The reason owners would collude with bid-riggers is because of the strength of past relationships with contractors and outright discrimination against Black and Brown firms. The utilization of MBE fronts to meet MBE goals is a practice that is particularly pernicious. The typical MBE front is a business with a racial/ethnic leader who may own a legally formed company, but only works for one non-minority firm. The arrangement can work for both parties with the non-minority firm meeting the MBE contracting goals without having to work with the MBE front and the MBE front getting a fee for their status utilization. When working on 23 District of Connecticut | Connecticut Construction Company Agrees To Pay $2.4 Million, Admits Making False Statements To U.S. | United States Department of Justice Return to table of contents

65 public contracts as in the case of Manafort Brothers and ConnDOT, these arrangements are illegal. These arrangements also do significant harm to legitimate MBEs who are not even considered by the non-minority companies leading these fronts. Legitimate MBEs need robust U.S. Justice Department actions against fraud, bid rigging and minority fronts. The State of Connecticut should also beef up its prosecution of firms engaged in these activities. Illegal behavior by Connecticut non-minority firms contributes to the systemic racial bias that has plagued the industry for decades and is a major inhibitor of development of MBE construction firms. BJM Solutions has worked with clients in Connecticut and other States on supplier diversity projects involving construction. Recent clients were in both the public and private sectors. In the interest of confidentiality, the private sector clients will not be mentioned by name, but they included a large Ivy League university – not Yale, and two large healthcare systems. The public organizations in Connecticut included the Town of Bloomfield and the City of New Haven. The examples discussed are not random selections but reflect Connecticut’s diverse economy that is nonetheless significantly influenced by its “eds and meds” industries as well as its large public sector. Lessons from the examples are common across the State and suggest actionable policies that can be expected to improve the development and utilization of MBEs in the construction industry. City of New Haven  During 2021, BJM Solutions was hired by the City of New Haven to conduct an analysisof the City’s MBE and diverse workforce Ordinances 12¼ and 12½. Ordinance 12¼ setstargets for the city’s utilization of MBE and WBE small businesses, and Ordinance 12½Return to table of contents

66 is designed to increase the representation of minorities and women in the construction workforce. Following several months of extensive research that included public hearings and dozens of interviews with public and private stakeholders in the City’s construction industry, BJM reported several conclusions to New Haven’s Mayor and Board of Alders.  The analysis uncovered several key indicators of Ordinance performance:  Ordinances 12 ¼ and 12 ½ are well written and demonstrably based on the relevant principles and facts regulating best practices in similar types of local government affirmative action programs since 2000.  New Haven Constituents hold four major concerns and perceptions:  Minorities and women do not receive a fair share of the City of New Haven’s construction employment.  Latinx individuals are over-represented on construction worksites.  Non-Connecticut Latinx workers take New Haven Latinx residents’ jobs.  White WBEs are frequently fronts for male relatives and take contracts away from "legitimate" MBEs and WBEs.  Procurement data revealed that:  While spending covered by Ordinance 12¼ meets program goals, most of such spending is disproportionately distributed to a small number of the 123 firms registered with the program.  Program firms received less than 10% of total City construction spending, a main grievance of program participants.  The Latinx proportion of construction employment is commensurate with their population share, however, Blacks and women are underutilized in construction employment. Return to table of contents

67  Qualified New Haven County businesses can participate in the City of New Haven’s smallbusiness program, but there is no reciprocity for New Haven city-based firms seekingbusiness in other jurisdictions within the county. Recommendations for Ordinance 12 ½ To incentivize prime contractors to work with MBEs, the city should enact a bid pricepreference for contractors whose past performance meets the goals of Ordinance 12 ½. The City should improve enforcement of sanctions on firms not complying with Ordinance12½. The city should use Project Labor Agreements (PLAs) to communicate its objectives andgoals to all construction stakeholders and to incentivize winning prime contractors of largeprojects to increase participation of City residents in union and non-union employmentopportunities. The city should implement employment training & skills development programs. Recommendations for Ordinance 12 ¼ The City should improve enforcement of sanctions on Prime Contractors not complyingwith Ordinance 12 ¼. The city should use Project Labor Agreements (PLAs) to assure greater utilization of MBEsand WBEs as subcontractors on large projects. The City’s small business utilization program should give preference to New Haven basedfirms and open the program to Minority firms located in other geographic areas of the State. The city should engage other municipalities in New Haven County to increaseopportunities for New Haven based small businesses in those towns.Return to table of contents

68  The city should enhance its small business training and development program, focusing onleadership, strategic planning, bidding, and back-office operation skills. The City should better promote opportunities for small MBEs and WBEs, for example,trade fairs connecting successful prime contractors with underutilized MBEs and WBEs.The Town of Bloomfield, Connecticut  BJM’s 2022 report describes the results of a four-month investigation of the employmentand procurement practices of the Town. The Town asked BJM to document and analyzeits utilization of diverse employees at all levels of the town’s workforce, and its use ofminority and women owned vendors within the town’s supply chain. The Town also askedBJM to recommend policies and programs to improve diversity in these areas.Procurement Spend The Town does an excellent job spending Town funds with vendors located in the State ofConnecticut (68%), its home County (56%), and the Town (22%). The Town spends a very small amount of its procurement dollars with Minority andWomen owned vendors. Only about 1/5th of 1% of the Town’s procurement spending accrued to MBEs during the2019– 2022 period. Only about 2/5th of 1% of the Town’s procurement spending accrued to WBEs during the2019 – 2022 period. Interviews with Town employees and vendor stakeholders revealed several importantprocurement bottlenecks that reduce the ability of the Town to contract with a more diverseset of vendors.Return to table of contents

69  Departments’ wide discretion in selecting preferred vendors without diversity protocols in small budget item procurements results in repeated use of a smaller less ethnically and gender diverse set of vendors.  Some Town departments resist protocols requiring they obtain three quotes for medium $ procurements. There are two primary reasons for this: 1) the department knows who they want to do the job beforehand; 2) it is easier to just contact one preferred vendor to do a job than to make three solicitations.  Descriptions of procurement projects are sometimes poorly written leading to less effective contracting experiences.  A Town Council Enacted “Policy Memorandum” requiring all procurement projects exceeding $5 million set aside 30% of the contract for MBE vendors is not in compliance with established legal obligations as determined by the U.S. Supreme Court, see appendix 1 of this Report. Procurement Recommendations  The Town should draw up lists of available M/WBE vendors located in its home County and Connecticut and do outreach to inform them of contracting opportunities with the Town.  Departments should add available and able M/WBE vendors to their lists of vendors. In small procurements, quotes should be solicited from that vendor on the list of available vendors whose last contract with the department occurred furthest back in time. In medium category procurements, departments should be required to solicit 3 quotes from the 3 Return to table of contents

70 vendors on the relevant procurement list whose latest contracts with the department are dated furthest away.  Departments with large procurement projects requiring formal bidding by Townregulations should contact any M/WBEs on their vendor lists that deliver the requisiteservices or goods and invite them to submit a bid. In all cases, the Town’s purchasing and risk manager should review the procurement toascertain if the recommended actions have been undertaken and all vendors given a fairopportunity. Other than procurements deemed emergencies, no procurement should move forwardwithout the purchasing and risk manager’s sign off that the above steps have occurred. For procurements deemed emergencies, vendors should be contacted by going throughprecompiled lists of approved vendors. The list should contain M/WBE firms wheneverpossible. Each department should contact vendors on the list in alphabetical order and novendor should be contacted two consecutive times by the same department. To facilitate the implementation of these recommendations, we recommended: The Town should hire an assistant to the purchasing and risk manager. This new hire could be part-time, should only be expected to do some of the routineadministrative work of the office to release the Director’s time, and the position could befilled by a competent high school graduate. The Town should sponsor a workshop covering Best M/WBE Supplier Diversity Practicesattended by all the Town’s Department heads and procurement officers involved in itsspending.Return to table of contents

71 Large Ivy League University  BJM Solutions and JKA Solutions worked with an Ivy League University (not YaleUniversity) in 2021. The task was to help the university improve their supplier diversityprogram and to increase their spending throughout the university with M/WBE firms. Our assessment revealed that the University had made noteworthy progress in its supplierdiversity program since 2015. The improvement was the result of heightenedcommitments from senior leadership, particularly since the 2020 George Floyd murder. The University had researched and developed a university specific approach to thecommitted goal of diversifying its spending. The approach was initially tried in one officeof the University with a large procurement spend. The revised practice was to increase thenumber of procurements put out to bid so the market could determine the supplier. Thisrequired reducing the number of contracts awarded to incumbent suppliers that did not goout to bid. The second component was to increase the number of diverse suppliers whoparticipated in the bidding/RFP opportunities. As a result of increased marketopportunities and more diverse firms participating in those opportunities, the Universitywas able to increase the number of diverse suppliers and its spending with diverse firms.The successful approach demonstrated that fostering increased competition among itssuppliers can increase diverse supplier participation while also meeting cost goals. Thisapproach is counter to the received wisdom that increasing supplier diversity inevitablyleads to higher costs and reduced quality. The University convened an event wherein the results of this experiment were shared withother offices and sectors of the University. The event featured comments from TheUniversity President and other senior leaders who sent a strong message that supplierReturn to table of contents

72 diversity is important. Overall, a very convincing case was made for increasing diversity among procurement suppliers.  Recommendations: Extend the experimental procurement methods to other departments of theUniversity in a systematic manner – not all at once. Create a Supplier Diversity Training program for buyers, decision makers,and influencers that focuses on procurement process, management buy-inof new processes, and supplier diversity best practices. Make connections with BIPOC firms. Diverse spending has increased in all groupsdramatically except with Black firms. Procurement officers need to form better contactswith businesses in the larger nearby cities where there are larger populations of Blackowned businesses. Improve visibility of the University’s website so that diverse firms are more aware ofupcoming opportunities and university requirements. Expand the mentor-protégé program (used by the Department of Physics) to otherdepartments. Consider exploring diversity within diversity. Of the FY 20 Diverse Supplier engagement,60% of the spending was with WBE firms. Take appropriate action to ensure that a widerpool of diverse suppliers is engaged for opportunities. Engage with existing diverse suppliers to gain insight into their experience with theUniversity. Provide feedback to leadership and influencers that demonstrate the economic impact ofthe Supplier Diversity program.Return to table of contents

73  Continue engaging stakeholders to share information and receive their feedback. Large Healthcare System BJM Solutions was hired by a large healthcare system to assist their efforts to increase their spending with M/WBE firms and improve their supplier diversity processes. BJM provided advice to the client’s hospital and a large construction management firm working on a major construction project for the hospital. The major findings of BJM’s assessment were like those discovered in the case of the smaller Connecticut town discussed earlier.  The hospital system did not have established goals for M/WBE utilization.  Analysis of the hospital’s spending over the previous three years showed it averaged less than 2% of its total spend with MBE firms in all categories of spending including construction. Recommendations  BJM advised the client that they should establish a 5% MBE goal and a 5% WBE goal for the construction project. This was acknowledged to be an aggressive goal given the history of the organization, but the goal was achievable with the support of relevant stakeholders.  The steps taken to achieve the goals were done for this project, and the M\WBE goals were established after the work had started. Moreover, the PLA did not include exceptions for non-union MBE firms.  From the beginning of a project, its owner must establish M/WBE goals and communicate with the construction management firm and all subcontractors it selects that they are Return to table of contents

74 expected to achieve these goals. The communication must let participants know there will be consequences if the goals are not met.  The construction management firm must build into their contract the cost of monitoringthe project for compliance with the M/WBE goals. There must be constant communication between the construction management firm andthe owner on the status of M/WBE utilization. Goals for WBEs and MBEs must be separated. And only M/WBEs with valid third-partycertification should be counted in M/WBE utilization numbers. The hospital should engage directly with the minority construction community andconstantly monitor and manage the contracting done by the construction management firmresponsible for the project. The MBE goal was met and the WBE goal was exceeded by 300%, largely because thehospital system was advised to apply pressure to the construction management firm tostrongly encourage its non-minority contractors to identify MBEs to utilize on the project. The major lesson learned from this project was: When Project Labor Agreements (PLA) are signed between the owner of aproject, the construction management firm, and the unions, MBEs that arenon-union firms need to be included in the development of the PLA.Works Cited Return to table of contents

75 Ards, Sheila D. and Samuel L. Myers, Jr. “The Color of Money: Bad Credit, Wealth, and Race.” American Behavioral Scientist 42, no. 2 2001. Arnesen, Eric, Brotherhoods of Color: Black Railroad Workers and the Struggle for Equality, Cambridge, Mass: Harvard University Press, 2001. Bailey, Ronald W., editor, Black Business Enterprise: Historical and Contemporary Perspectives, New York: Basic Books, 1971. Blanchflower, David G. 2008. “Minority Self-Employment in the United States and the Impact of Affirmative Action Programs.” National Bureau of Economic Research Working Paper 13972. Blanchflower, David. G and Andrew J. Oswald. “What Makes and Entrepreneur?” Journal of Labor Economics 16, no. 1 1998. Carter, Sara, Eleanor Shaw, Wing Lam, and Fiona Wilson. “Gender, Entrepreneurship, and Bank Lending: The Criteria and Processes Used by Bank Loan Officers in Assessing Applications.” Entrepreneurship Theory and Practice 31, no. 3, 2007. Cavalluzzo, Ken S. and Linda C. Cavalluzzo. “Market Structure and Discrimination: The Case of Small Businesses.” Journal of Money, Credit, and Banking 30, no. 4, 1998. Fairlie, Robert W. and Meyer, Bruce D. “Ethnic and Racial Self-Employment Differences and Possible Explanations.” Journal of Human Resources 31, no. 4 (1996): 757-793. --- and Krashinsky, Harry A. “Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited.” Review of Income and Wealth 58, no. 2 (2012): 279-306. Foner, Philip S., Organized Labor, and the Black Worker. 1981. Henderson, Loren, Cedric Herring, Hayward Derrick Horton, and Melvin Thomas. “Credit Where Credit is Due? Race, Gender, and Discrimination in the Credit Scores of Business Startups.” The Review of Black Political Economy 42, 2015). Holtz-Eakin, Douglas, David Joulfaian, and Harvey S. Rosen. 1993. “Entrepreneurial Decisions and Liquidity Constraints.” National Bureau of Economic Research Working Paper 4526. Hout, Michael, and Harvey S. Rosen. 1999. “Self-Employment, Family Background, and Race.” National Bureau of Economic Research Working Paper 7344. Jappelli, Tullio. “Who Is Credit Constrained in the U.S. Economy?” The Quarterly Journal of Economics 105, no. 1, 1990. Jaynes Associates, Minority and Women Participation in the New Haven Connecticut Construction Industry, 1990. Jaynes, Gerald D. and Robin M. Williams Jr., A Common Destiny: Blacks and American Society, WDC: National Academy Press, 1989. Köllinger, P. and M. Minniti. “Not for Lack of Trying: American Entrepreneurship in Black and White.” Small Business Economics 27, no. 1 (2006): 59-79. Mijid, Naranchimeg. “Why Are Female Small Business Owners in the United States Less Likely to Apply for Bank Loans than Their Male Counterparts?” Journal of Small Business & Entrepreneurship 27, no. 2, 2015. Robb, Alicia, and John Wolken. 2002. “Firm, Owner, and Financing Characteristics: Differences between Female- and Male-Owned Small Businesses.” FEDS Working Paper No. 2002-18. Robb, Alicia M., and Robert W. Fairlie. “Access to Financial Capital among U.S. Businesses: The Case of African American Firms.” The Annals of the American Society, 613 2007. Sterling D. Spero and Abram L. Harris, The Black Worker: The Negro and the Labor Movement, New York: Columbia University Press, 1921. Return to table of contents

76 Taft, Philip, Organized Labor in American History, (New York: Harper and Row Publishers, 1964. Takaki, Ronald, Strangers from a Different Shore, New York: Penguin Books, 1989. Van Auken, Howard E., and Hayward Horton. “Financing Patterns of Minority-Owned Small Business.” Journal of Small Business Strategy, 1994, 31-43. Return to table of contents

77 Appendices Appendix 1: Construction Industry Statistics Table A1 : Racial Composition of Construction Industry in Selected Trades, 2022 Occupation Number of Employees (in thousands) % Black % Hispanic % White % Women All Workers 158,291 12.6 18.5 77 46.8 Carpenters 1,282 5.5 46.8 88.6 3.5 Laborers 2,227 8.4 50.7 89.9 4.9 Equipment Operators 369 5.4 18.9 89.9 1.7 Electricians 918 7.3 24.9 88.5 2.2 Painters 649 6.8 59.1 89.8 10.5 Plumbers, Pipe Fitters 610 8.9 28.2 83.3 1.1 Highway Maintenance 208 6.9 66.5 87.7 5 Roofers 106 12.9 16.1 83.4 3.9 Table A2 : Selected Construction Occupations by Number of Employees and Median Wage, 2021 (Connecticut Only) Occupation Number Employed Median Wage All Connecticut 1,631,000 $24.90 All Construction 49,320 $30.30 Carpenters 6720 $29.67 Laborers 7830 $23.85 Equipment Operators 3010 $36.65 Electricians 7160 $31.10 Painters 1840 $23.59 Plumbers, Pipe Fitters 4960 $34.97 Highway Maintenance 2080 $28.71 Cement Masons 700 $28.17 Roofers 750 $23.87 Building Inspectors 900 $40.23 Return to table of contents

78 Table A3 The Location of CTECS High Schools  AI Prince Technical High School (Hartford) Bristol Technical Education Center (Bristol) Bullard-Havens Technical High School (Bridgeport) CT Aero Tech School for Aviation (Hartford) E.C Goodwin Technical High School (New Britain) Eli Whitney Technical High School (Hamden) Ella Grasso Technical High School (Groton) Emmett O’Brien Technical High School (Ansonia) H.C. Wilcox Technical High School (Meriden) Harvard H. Ellis Technical High School (Danielson) Henry Abbott Technical High School (Danbury) Howell Cheney Technical High School (Manchester) J.M. Wright Technical High School (Stamford) Norwich Technical High School (Norwich) Oliver Wolcott Technical High School (Torrington) Platt Technical High School (Milford) Stratford School for Aviation Maintenance (Stratford) Vinal Technical High School (Middletown) W.F Kaynor Technical High School (Waterbury) Windham Technical High School (Willimantic)There are over 11 million workers in the construction trades in the United States. Table A1 of Appendix 1 shows the racial distribution and size of the largest construction trades. While significant, the number of construction workers has declined in recent decades. According to U.S. Census data, as recently as 1990, there were 18.4 million construction workers,1 by 2020, construction workers’ number had declined to 10.8 million. Despite this decline in the number of construction workers, the industry will continue to need skilled workers. 2 Table A1 also highlights differences in the racial, ethnic and gender composition of the construction workforce compared to the overall workforce. Latinx of all races are significantly over indexed in the construction trades. Over 50% of Laborers, Painters, and Highway Maintenance workers, self-report as Latinx. By comparison, Blacks are significantly Return to table of contents

79 underrepresented with fewer than 10% of workers in the seven largest construction trades being Black. Connecticut’s construction workers are paid higher than the average worker in the State, Table A2. The median wage for all Connecticut workers is $24.30 per hour compared to $30.30 for all construction workers. Moreover, some construction workers like building inspectors earn over $40 per hour, an amount 67% higher than the median wage for all Connecticut workers. Appendix 2: Legal Case History of Minority Utilization Programs Understanding the Constitutionality of ‘Set-asides” and Related Affirmative Action Plans Arguments for and against the permissibility of the affirmative action plans like business utilization programs rest in disputing the 5th and 14th Amendments of the United States’ Constitution, which prevent the abridgement of rights without “due process of law” and ensure “equal protection of the laws” in any actions of Federal and State governments. These clauses, respectively known as the Due Process Clause and the Equal Protection Clause, have long been used to further equality concerns and affirm certain liberties. Under direction of the Supreme Court, laws drawing judicial review under these Amendments are subject to a certain standard, from “strict scrutiny” to “rational basis review,” under which the law must be evaluated. Given their association with certain, “protected classes” affirmative action plans like those presented in so-called business set asides have been evaluated under strict scrutiny, meaning the government must show that the challenged action serves a “compelling State interest” and that any classification resulting from the action is narrowly tailored to serving that interest. Although, “set aside” programs seem to conflict with the guarantees of equality of the 5th and 14th Amendments, the theory of ‘disparate impact’ (here understood to be the exclusion of a certain protected group from commerce) justifies providing preferential economic treatment to a group in a way that would Return to table of contents

80 otherwise violate the 5th and 14th Amendments. What follows is a summary of hallmark cases that have shaped the constitutionality of the Ordinances as well as their limits. Geller v. Markham (1979): Miriam Geller, a Connecticut schoolteacher, brought a suit against the School Board’s use of a “sixth step policy” in which only teachers below a salary threshold would be favored for recruiting. Due to experience graded pay scales, the policy disproportionately impacted teachers between ages 40-65, already classified as a protected class in the State and was thus brought to court. The District Court decided that the practice had a disparate impact and was thus discriminatory; establishing that employment discrimination cases brought on charge of “disparate impact,” need not show improper motive for said discriminatory practice (as would be the case in questions of disparate treatment). This distinction is notable as the contractual hiring practices promoted by many utilization programs tread the line between disparate impact and disparate treatment. While explicit instances of disparate treatment in the form of favored economic treatment may seem to run counter to Title VII, the legacies of the past have contributed to persistent disparate impacts through which these remedies are deemed permissible. Fullilove v Klutznick (1980): Congress passed the Public Works Employment Act in 1977, requiring that at least 10% of federal funds granted for local public works projects be used to procure services or supplies from businesses owned by minority group members. Petitioners argued this provision violated the Equal Protection Clause of the 14th Amendment. The court found that this set aside did pass constitutional muster as it was in line with spending powers vested to Congress in the Constitution and was tailored to ameliorating past discrimination that kept minority businesses from participating in public works projects. The affirmation of the Return to table of contents

81 constitutionality of such set-aside programs bolstered confidence in similar programs within States and municipalities. Wygant v Jackson board of Ed (1986): A Mississippi public school board laid off workers primarily on a seniority basis, provided that the percentage of laid-off minority personnel was not greater than the percentage of minority personnel still employed. Petitioners argued this mechanism violated the Equal Protection Clause of the 14th Amendment. The Supreme Court ruled against the School Board, arguing that societal discrimination alone did not provide a compelling State interest to justify the layoff provision, nor was it the “least” restrictive means of amelioration required under the “strict scrutiny” level of review. This case solidified this standard for race-based classifications aimed at remedying the impact of past discrimination. The heightened level of scrutiny leveraged during the evaluation of affirmative action like plans such as MBE utilization programs has meant that considerable caution must be used when drafting and updating set-aside programs. City of Richmond v J.A. Croson Co (1989): The city of Richmond, Virginia passed a plan requiring that all city contractors must subcontract 30% of an awarded contract to a minority business enterprise. The plan was brought to the Supreme Court under violation of the Equal Protection Clause of the 14th Amendment. Reviewed under strict scrutiny, the Court found that a city may not enact a plan to provide a race-based set-aside to exclusively promote minority business enterprises, without first identifying a specific need for remedial action (i.e., specific evidence of past or present discrimination), as this does not constitute narrowly tailored means for accomplishing a compelling State interest. This case is especially significant because the Court’s ruling on the constitutionality of Richmond, Virginia’s 30% set-aside directly impacted many existing and all subsequent affirmative action plans which provide for ethnicity- and gender-based Return to table of contents

82 utilization goals. The constitutionality of such plans now largely requires explicit proof of a governmental jurisdiction’s discrimination against each protected group included in a plan. Ricci v DeStefano (2009): Firefighters in New Haven, Connecticut prepared for an objective exam determining eligibility for 10 promotion slots. When the test yielded the promotion of 10 White individuals, the results were thrown out for fear of a discrimination suit by minority firefighters (on grounds of disparate impact). One firefighter sued, alleging such race-conscious action to be in violation of Title VII of the Civil Rights Act (which prohibits disparate treatment) and the Equal Protection Clause of the 14th Amendment. While Title VII prohibits instances of disparate treatment and impact, the legislation did not provide guidance for balancing these contradictory prohibitions. Given this tension, the Court opted for a new standard of review (as opposed to strict scrutiny), asserting that employers must have a “strong basis in evidence” that race-conscious hiring practices will have an unconstitutionally disparate impact before deciding whether to implement such practices. Under this new standard, when applied to hiring practices, any race-based classification at the State or local level must be grounded solidly in evidence of measured and specific discriminatory activity or outcome for each group included in the plan. In accordance with this standard, M/WBE utilization provisions require continued review to justify need. Appendix 3: William Lanson’s Strange Case: Black Legacy in the Connecticut Construction Industry24 In 1845, Hartford’s Daily Courant ran a story about William Lanson, one of the “African Kings” of Connecticut. Starting in the first decade of the nineteenth century, Lanson became one 24 https://www.neh.gov/article/william-lanson-shaped-new-haven. This article is re-printed in its entirety. Return to table of contents

83 of the most prominent citizens of New Haven. In business, religion, and society, he served as a beacon for an African American community that often found itself pushed to the margins. But his success made him a target to be brought down. Lanson was the key figure in two huge construction projects that changed the future of the city: the extensions of Long Wharf and the Farmington Canal. The building of the wharf in New Haven was one of the most impressive engineering accomplishments in the city’s history. Lanson contracted to complete the final 1,350-foot stretch, making it possible for larger cargo ships to dock. While other builders used wood on previous sections, Lanson, with a crew of African American men, cut stone from Blue Mountain in East Haven and transported the rock on specially built scows. The boats carried as much as 25 tons of stone to the wharf. In 1825, politician and abolitionist James Hillhouse hired Lanson to construct the New Haven section of the Farmington Canal. Lanson hired twenty to thirty African American men to quarry and transport the stone to build walls “two thousand and ten feet in length, eight feet thick at bottom, six at top, and eight feet high,” according to Lanson’s son Isaiah. Though he never received all the pay that had owed him, Lanson made sure to pay all his workers. By the 1830s, according to Isaiah, Lanson’s worth was around $20,000. In addition, he was well known and respected. Rev. Timothy Dwight of Yale praised Lanson as a good and honorable member of society. Lanson owned property, called “New Guinea,” near an Irish section of the city, and later decided to purchase a former slaughterhouse, which he developed into a series of “sheds and barracks for his tenants and customers,” as New Haven businessman Gardiner Morse described. Return to table of contents

84 His other business ventures included a livery stable, store, and hotel. His Liberian Hotel, located in a section of the city called New Liberia, provided lodging that boasted furnishings worth $1,000. In 1825, Lanson was elected “African King,” or Black governor, of New Haven, a title reserved for African American community leaders throughout New England in the eighteenth and nineteenth centuries. With the city’s Black community, he helped create the African United Ecclesiastical Society, which later became the Dixwell Avenue Congregational Church. Lanson sheltered enslaved runaways from the South, and also coordinated private religious gatherings for them. When a law forbidding African Americans to vote was passed in 1814, Lanson and others petitioned for voting rights or to be exempt from taxation. The bold filing with the Connecticut General Assembly revealed the depths of Lanson’s fight for justice. Within the pages of the Columbian Register, he declared African Americans to be an “industrious” and quality people. But in 1831, after Nat Turner led a rebellion of Black slaves in southeastern Virginia killing more than fifty white people, support for African American freedom in New Haven dissipated and turned into anger toward Lanson. Whites in New Haven organized to systematically rid themselves of African American challenges to white success. Although New Haven’s African American community of six hundred was considered to be one of the safest in the country from white hostilities, enraged whites targeted efforts of uplift for Blacks, such as a plan by Simeon Jocelyn, a respected white religious and antislavery leader, to build a college for African American residents. Using Nat Turner’s education as fuel, white groups turned their anger against the establishment of the “Negro College.” Even New Haven’s mayor and aldermen, who normally embraced the positives of education, condemned the establishment of the “Negro College” for the “supposed harm” it would bring to white students at Yale, female seminaries, and other schools. After Irish immigrants learned that the curriculum at the college included mechanical and Return to table of contents

85 industrial education, they too raged against the potential of competition from well-trained African American workers. Opposition came from the press, such as the Connecticut Herald, New Haven Palladium, Connecticut Journal, and Columbian Register. In one of the most vicious attacks on Lanson, the Columbian Register, a democratic publication, declared Lanson to be in charge of a criminal enterprise, which the paper referred to as an “African college” of vice led by President Lanson in the city. Riots erupted in the New Guinea and New Liberia sections of New Haven; a white mob rampaged through the area seeking whites engaged in immoral vice and allowed people of African ancestry to flee. Though poor areas of most cities included pockets of crime, Lanson insisted that his businesses were enterprising and upstanding. According to historian Katherine Harris, Lanson could not fathom why, throughout the 1830s, authorities called him before the courts so much. But many in power held Lanson responsible for corruption in the city. Local police, particularly Officer Jesse Knevalis, maintained a constant “surveillance for months at a time” on Lanson’s activities. On December 13, 1845, the Hartford Daily Courant published a short story from New Haven that joyously announced that finally Lanson, the “former proprietor of the Liberia Hotel, and rascal who has caused much trouble in the city has been found guilty, convicted, and sentenced to six months imprisonment in the County Jail, and a fine of $50.” Even forty plus years later in 1887, Gardiner Morse, a local tax collector and foe, referred to Lanson as the “king of the colored race,” then coldly remarked that Lanson once found himself forced to relinquish control of properties on Franklin Street and had to move to the waterfront. In 1851, Lanson died, following several years of poor health and business problems. Throughout his life, he had challenged laws that prohibited African Americans from voting. He had supported runaways via the Underground Railroad and helped create independent religious Return to table of contents

86 institutions for African Americans. His work on Long Wharf and the Farmington Canal changed the industry and fortune of New Haven. He not only hired African American workers but also paid them fairly. It was his support, along with that of other early founders, that allowed for the establishment and flowering of New Haven’s Dixwell Avenue Congregational Church. No image of Lanson exists, but a movement has emerged to honor his memory. In September 2020, sculptor Dana King and community supporters saw the unveiling of King’s seven-foot bronze image of William Lanson on the Farmington Canal Trail in New Haven. In addition, the Connecticut Humanities Council awarded a grant to Site Projects, Inc., to develop an educational program on Lanson. His story, says Laura Clarke, director of Site Projects, “in all its glory and tragedy,” needs to be told. Appendix 4: About the Minority Construction Council and BJM Solutions 1. Mission of MCCThe mission of the Minority Construction Council is to advocate, support, and create development opportunities for minority contractors throughout the State of Connecticut. We believe in partnering with our Corporate Members in their efforts to connect with MBE contractors. Our focus also includes building relationships between our MBE Members, Corporate Members, and partners in the public and private construction industries. 2. History of MCCThe Minority Construction Council was formed in 2002, as a Hartford-based group of small minority contractors positioned to support and help identify resources that would help grow the firms. Our initial years of success within the Hartford region motivated the increase of outreach efforts to State-wide minority contractors. These efforts influenced the Council to change its name Return to table of contents

87 from the Greater Hartford Minority Construction Council to the Minority Construction Council (MCC). Since 2007, The Minority Construction Council has matured into a non-profit organization with over 255 members throughout the State of Connecticut. The MCC strives to offer minority contractors opportunities and quality safety training and development tools. 3. Membership and Stakeholders of MCC MBEs, DBEs, Corporate Members, Associate Members, General Contractors,Construction Managers, Developers, Small Business Administration, CTDepartment of Transportation, CT Department of Administration, Commission onHuman Rights Non-MBE Construction Companies, Municipalities, State Agencies, EducationalInstitutions, Other Non-Profit Firms, Financial Institutions4. Legislative and Policy Efforts5. State Level Prompt Payment Bill Increase the Construction Prequalification Limit to $1,000,000 CT Disparity Study Municipal Efforts (City of Hartford) N/A6. MCC Events MCC Construction Expo & Matchmaker Quarterly MCC MBE/DBE Construction Capacity Building Boot Camp MCC Partnership Awards Dinner Celebrating MBE Women in ConstructionReturn to table of contents

88  Holiday Business Card Exchange Construction High School Career Fairs Monthly OSHA Safety Training Program Monthly Contracting Engagement Opportunity Meeting7. Issues and Challenges MBE Contractor inclusion is usually an afterthought with dividing up scopes ofwork. MBE Contractors are still struggling with estimating and bidding on projectscopes of work. Some MBE Contractors do not have a line of credit to float to them until paymentis received. MBE complained about their scope of service changes, but they are held tomaintain the same budget. Not enough quality work is allocated for MBE Contractors. Contractors are still getting paid greater than 30 days.Return to table of contents

89 Characteristics of MCC Companies The majority of MCC members (56%) are located in Hartford, CT, followed by New Haven (22%) and Fairfield County (18%). Return to table of contents

90 Sixty-five percent of MCC members are Black owned firms followed by 34% of members being non-white Hispanic. The chart above shows the distribution of MCC members by trade. Janitorial, Painting and Plumbing represent 30% of all the members. Return to table of contents