Advancement Project

March 4, 2010

Obama Must Ensure that Stimulus Funds Go Where Need is Greatest; Analysis Shows Least Diverse States Get the Most

Part of Obama’s goal with the $787 billion stimulus package, also known as the American Recovery and Reinvestment Act, was to aim federal dollars and stimulate the economy in areas that have been hardest hit by the recession. The Act was intended to preserve and create jobs and promote economic recovery to assist those most impacted by the recession.
Unfortunately, as a recent Advancement Project analysis shows, far less of the billions in federal stimulus dollars, when examined on a per capita basis, are being distributed to the states that are the most racially and ethically diverse and have the highest levels of unemployment.

Advancement Project’s analysis, based on new data released on www.recovery.gov-, which is the Web site established to give out information on ARRA funds--shows that more federal dollars are going out on a per capita basis to states that have the least racial and ethnic diversity.

If you look at data from some of the most diverse states, Hawaii, Texas, Arizona, New York, and New Jersey, roughly $600 per state resident was doled out in 2009. But in the least diverse states, like Montana and South Dakota, nearly double that amount, about $1,200 per state resident, was distributed.

In fact, Advancement Project’s analysis of state ARRA fund allocations in 2009 and diversity levels shows a significant inverse relationship between the per capita level of ARRA funds distributed and a state’s diversity. In other words, for every one point increase on the diversity index--a zero-to-100 point scale that is a standard way to measure diversity-- there was a $3 decrease in ARRA spending per state resident.

Similarly, there is a significant inverse relationship between unemployment rates and per capita ARRA funds received. States with higher unemployment rates received less ARRA funding in 2009. For every 1 percent increase in a state’s unemployment rate, there was a decrease in ARRA fund distribution of $28.48 per state resident.

The reasons for the disparities in the distribution off ARRA funds will not be clear without further study. Yet, the data revealed by the federal government is already alarming given the far greater levels of unemployment and poverty in Black and Latino communities.

Consider the U.S. Department of Labor’s most recent unemployment data: Some 8.7 percent of White workers were unemployed in January yet about 16.5 percent of African Americans and 12.6 percent of Latinos were unemployed in January.

Furthermore, a report by United for a Fair Economy, State of the Dream 2010: Drained, shows that Blacks and Latinos are 2.9 and 2.7 times as likely, respectively, to live in poverty than Whites. If the goal of the stimulus bill is to target federal dollars at communities that have suffered the worst impact of the recession, clearly, much still remains to be done.

Despite these revelations, there are steps the Obama administration and the Recovery Board can take, to ensure a more equitable distribution of AARA funds that would help meet the intended goals. The administration and the Board should:

Make targeted investments: Create mechanisms and incentives for the receipt of ARRA funds so the moneys are disbursed where they can clearly accomplish the greatest economic turnaround. Investment should be targeted to communities and individuals that have a history of economic distress and have been most impacted by the recession. The money in such communities would directly boost the economy immediately and help those communities the most due to the increase in jobs.
Collect specific data to ensure equity: Require data collection by race, ethnicity, and gender as a condition of funding to ensure that ARRA dollars are spent equitably. Disaggregated data by race and ethnicity should be maintained showing the race or ethnicity of job and contract recipients, as well as the demographics of the communities impacted by ARRA‐funded projects.
Conduct equity assessments: Perform systematic evaluations of the effect of ARRA spending in order to maximize equity and inclusion and minimize adverse and unintended impacts. These assessments should be conducted quarterly and made public.
Enforce civil rights laws: Investigate these disparities to ensure that states are not discriminating in the use of ARRA funds and, where necessary, pursue enforcement of Title VI of the Civil Rights Act, which prohibits discrimination in the use of federal funds.

Advancement Project believes that linking the distribution of ARRA funds to measurements of diversity and unemployment levels could help the stimulus package achieve its critical goals and engender greater social and economic equality.

To read more Advancement Project’s stimulus report, click here:

www.advancementproject.org/digital-library/publications/states-with-grea...

Advancement Project is a national civil rights organization that advocates for racial justice.