The Bottom LineThe Bottom Line

Economics in Brief: Small Business Administration Cancels Grants After Discrimination Lawsuit

Also: Data shows cutting federal aid isn’t increasing job searches, NYC fast-food workers get more protections, and more.

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(Photo by Ivan Radic / CC BY 2.0)

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SBA Cancels Grants to Minority-Led Restaurants After White Business Owners Claim Discrimination

The U.S. Small Business Administration (SBA) has rescinded thousands of grants to minority and women-owned restaurants after a series of lawsuits by white business owners in Tennessee and Texas, the New York Times reports.

The SBA had offered priority relief payments under its Restaurant Revitalization Fund program to women and/or minority-led businesses. The agency argued that its actions were based on data showing businesses owned by people of color were more likely to face economic distress during the pandemic — data which has been backed up by multiple studies and reports. The plaintiffs, some of whom are backed by a group led by former Trump adviser Stephen Miller, argued that putting minorities and women ahead of white men was a form of discrimination. Two federal judges sided with the plaintiffs, forcing the SBA to rescind promised payments to thousands of restaurant owners.

Nation’s Restaurant News, a trade publication, reports that grant cancelation letters are still going out after the initial nearly 3,000 applicants had their payments halted on June 14. There is no official count as to how many small businesses were affected by this second wave.

Indeed Report Suggests Cutting Unemployment Benefits Isn’t Increasing Job Searches

A new report from job board Indeed finds that Americans living in states where federal unemployment programs are being cut are not looking for new jobs, according to CNBC.

Indeed captures its data based on the number of clicks job posts generate. Their research shows that within the past week, states like Alaska, Iowa, Mississippi, and Missouri — which have all ended federal benefits as of June 12 — are seeing 4% fewer job searches than the national average. Another eight states that ended federal programs on June 19 have also seen a decrease in activity of 1%.

So far, only Republican governors have ended federal unemployment benefits early in an attempt, they say, to encourage Americans to get back into the workforce. This new report adds to evidence that cutting unemployment benefits is not encouraging a return to the workforce.

New York City Fast-Food Chain Workers Earn New Employment Protections

Starting July 5, New York City fast-food chains will have to provide just reasoning to fire their workers.

While many employees may believe they are protected from unjust termination, a majority of Americans actually work under at-will employment, allowing their companies to fire them as they please. Bloomberg Businessweek reports that at-will employment makes the few worker protections employees do have, such as anti-discrimination laws, difficult to enforce.

Employers will now have to set up a system that warns workers if they’ve engaged in misconduct. Bloomberg Businessweek adds that employees who feel that they’ve been unjustly terminated are now “able to pursue arbitration, complain to the city’s Department of Consumer and Worker Protection, or file a lawsuit in state court, where a judge could award punitive damages.”

The “just cause” protections apply to 67,000 workers, and similar efforts are underway in Seattle, as well as state legislatures in Illinois and New Jersey.

Supreme Court Rules Against Union Organizers and for College Athletes

The Supreme Court decided two cases this week that are of interest to readers of this newsletter… The court sided in favor of farm owners when it ruled that union organizers cannot legally access farm sites; NPR reports that this ruling will have effects on labor organizing nationwide, anywhere where union organizers may want to enter private property to speak to workers.

The Supreme Court also voted unanimously that the National Collegiate Athletic Association (NCAA) couldn’t limit educational benefits colleges offer to recruit athletes, according to the Associated Press.

In practice, this means that athletes will be allowed to receive additional perks through opportunities like graduate school tuition, study abroad, etc, and opens the door to future challenges to NCAA rules limiting how much college athletes can be paid.

Justice Brett Kavanaugh criticized the NCAA for profiting off of their sports stars, writing, “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. … The NCAA is not above the law.”

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Solcyre (Sol) Burga was an Emma Bowen Foundation Fellow with Next City for summer 2021. Burga graduated from Rutgers University with a degree in political science and journalism in May of 2022. As a Newark native and immigrant, she hopes to elevate the voices of underrepresented communities in her work.

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Tags: new york citycovid-19unionsrestaurantsunemploymentsupreme court

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