Universities generate ideas, support for K-12 startup companies; Minnesota program launches company for early learning

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For 15 years, the University of Minnesota College of Education and Human Development researched the essential skills needed for preschool children to be ready for kindergarten. That research eventually became the framework for IGDIs, a university-funded set of early-literacy assessment materials.

Teachers could order free flashcards that measure students’ literacy skills and log in to a university website to manage the results. The university says 180,000 students have used IGDIs, which stands for Individual Growth and Development Indicators.

Now, this research project has a new identity: as a startup company, Early Learning Labs, launched this month.

Innovations in areas like science, engineering, and medicine commonly make the transition from academia to the market, benefiting from financial and intellectual resources and university patent offices. As technology increasingly brings venture capital and a startup culture into K-12 education, some universities are seeing a similar opportunity in that sector.

At the University of Minnesota, Twin Cities, the office for technology commercialization identified IGDIs a few years ago as a potentially marketable commodity, not just a free tool, if given the proper investment and business development.

As one of the university’s “internal business units,” or IBUs, Early Learning Labs received a $100,000 investment from the university, and underwent a 20-month internal business-development program. Once that period ended, the company became independent of the university. It is free to raise outside investment and develop new products.

“The problem became that teachers were downloading these tools, but [the tools] weren’t providing a full solution,” said Steve Johnson, the 26-year-old president of Early Learning Labs and a former intern in the office for technology commercialization. “The only way to provide a full solution is to increase the resources behind it.”


Research to Product

The IBU program at the University of Minnesota isn’t exclusive to education ventures, but its structure lends itself to the field, university officials said.

The amount of funding to take an idea from the research level to the product phase is fairly modest in education, compared with other areas, said Rick Huebsch, an associate director of the university’s office for technology commercialization.

Because of those relatively low costs, education startups like Early Learning Labs can become self-sustaining quickly and focus more on product development. Other areas, like science or medicine, require lengthy and costly approvals and tests to reach the same stage of development, Mr. Huebsch said.

Through various other arrangements, universities have become active in fostering education entrepreneurship.

The University of Pennsylvania, along with the Milken Family Foundation in Santa Monica, Calif., sponsors a business-plan competition for education with a cash prize. Stanford University’s StartX “incubator” program for its students has included education companies. But in both cases the universities do not get a stake in the companies.

A new doctor of education program at Johns Hopkins University will offer courses in entrepreneurship and include a program for startup companies and for small, established companies looking for acceleration. The school and its partner on the program, the Education Industry Association, are now raising funds for the incubator, and terms have not been determined, said Steven Pines, the executive director of the EIA, a Vienna, Va.-based trade group.

For years, research in education has found its way to the marketplace, but not necessarily through a formal business-development program. In 1998, for instance, Carnegie Mellon University founded Carnegie Learning, a publisher of middle school, high school, and postsecondary math curricula, based on 20 years of research at the university.

Other universities foster new companies by teaming with corporate sponsors that become investors or owners of technology developed at the schools. The MIT Media Lab, at the Massachusetts Institute of Technology, is one such program that spun off education companies and nonprofit ventures.

Last year, the University of Wisconsin-Madison launched the Center for Education Products and Services to license and market intellectual property created by faculty members, according to its website. But those products are not independent of the university.

CaseNEX, an online professional-development tool, was founded at the University of Virginia’s Curry School of Education.


Planting Seeds

Stanford is known for backing technology created at the university; many faculty members invest in student-driven products, most notably Google.

But Stanford’s support of education technology companies consists mostly of advising students who have market-ready ideas on how to build a business, and putting them in touch with potential investors, faculty members said.

“We like to think of what we do in this program as planting a lot of seeds and seeing what grows, rather than, ‘We are going to start a company,’ ” said Karin Forssell, the director of the learning, design, and technology program in Stanford’s graduate school of education.

Master’s projects from the school have gone on to become notable education companies, most recently Motion Math and Toontastic, both popular educational mobile applications for young students. But those companies operate independently of the university.

That’s why the University of Minnesota-Twin Cities initiative is unusual: It spins off independent companies with direct investment dollars from the university.

Proceeds the university earns from its stake in a company will go first to covering its costs and then be split among the inventors, related departments, and university funds, Mr. Huebsch said.

Scott McConnell, who led the IGDIs research along with two other professors and two research associates, is also a shareholder in Early Learning Labs and will serve as a senior adviser. University alumni also invest in the company and are shareholders, Mr. Johnson said.

With or without actual investment from a university, there are pros and cons to starting a company under the umbrella of higher education.

To start, there is far more credibility for a product that is backed by lengthy, intensive research, like Early Learning Labs, Mr. Huebsch said. And such a product already has thousands of users.

“Sometimes you have to actually produce a customer base, and sometimes doing that while part of a university is easier than starting up a company in a garage,” Mr. Huebsch said.

And as Mr. Pines, of the EIA, pointed out, universities are great environments for research and development.

“You already have faculty researchers in that environment that are doing the heavy lifting of product development,” he said.

Early Learning Labs’ first goal is to repackage the print materials into a more organized assessment tool and to beef up the reporting and tracking software. Eventually, the company will offer mobile applications, Mr. Johnson said.

Building those products with the intellectual capital of a university available, and with the patience that a university environment affords, is invaluable, Mr. Johnson said. Conversely, $100,000 isn’t a large amount of actual capital.

“There’s a lot of help you don’t have to pay for, but there’s not a lot of cash,” Mr. Huebsch said.

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Rejean Lepage

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Rejean Lepage was doing 3D computer graphics for a Saskatoon-based manufacturer of steel-frame buildings when he started to worry that he was turning into a couch potato. So he got out of his chair, quit his job and is now living his dream as the owner-operator of Wrench Fitness in nearby Martensville.

Lepage, who has several diplomas in computer animation, spent four years as a computer programmer and general factotum with now-defunct Coverall Building Systems before quitting in August 2008 to return to school.

“I got bored sitting at a desk all day and I was tired of working hard for someone else and only getting a paycheque in return,” says Lepage, 27. “At the same time I got serious about fitness, competed in two bodybuilding competitions, and started thinking about opening a gym.”

He took a stab at writing a business plan but ran into trouble with it. That’s when he decided to enroll in the Entrepreneurship and Small Business certificate program at SIAST (Saskatchewan Institute of Applied Science and Technology).


The 32-week program prepares students to start and operate new business ventures or work as small business managers. In addition to developing their own business plans, students learn bookkeeping, communications, marketing and human resources.

Lepage moved to Prince Albert, where he studied full-time at SIAST’s Woodland campus while tending bar on weekends. Because the program is partially available online, he was able to catch up on anything he missed via computer.

“It was exactly what I wanted,” he says. “The classes were very focused so no time was wasted. And because they were small, we had plenty of access to our instructors.”

The fact that several instructors ran their own businesses made their advice particularly valuable, he adds. “They were quite demanding–one teacher told me to re-write part of my business plan several times. They expected a lot and they pushed me to do my best.”

Just how good Lepage’s best turned out to be became apparent when his business plan for Wrench Fitness won the platinum award in the 2009 Venture Forward Business Plan Competition. The province-wide entrepreneurship competition is hosted by Global Infobrokers Inc. and RSVP Event Design.

In addition to the $25,000 grand prize from Cameco, Lepage won a wide range of professional services, including access to legal, financial, marketing and mentoring support.


“The judges said mine was the best business plan they’d seen in five years,” he recalls.

In September 2009, Lepage opened his 5,000-sq-ft facility, which features free weights, cardio equipment, and services such as personal training and fitness classes.

The timing was right, he says. “We’re the only game in town right now and Martensville is a growing area with a lot of potential.”

His plans for the future include having his own building and a larger facility where he can continue to offer people the opportunity to get into better shape to live longer and happier lives. “Fitness is just a matter of being consistent and having patience,” he says. “Nothing in life comes easy, but with the right mindset and attitude you can accomplish anything.”

Sounds a lot like Lepage’s own formula for success.

>>> View more: Gossip sells the goods: celebrities and the paparazzi are now in the business plan

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Gossip sells the goods: celebrities and the paparazzi are now in the business plan

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Before last Wednesday, few people had heard of plainmary.com, a website selling posh baby gear. By week’s end, the site had more than two million hits and had received orders from as far away as Dubai. Credit a tiny item in Rush & Molloy, a gossip column in the New York Daily News, that reported Brad Pitt and Angelina Jolie had, six weeks earlier, ordered two of its US$190 monogrammed mats for their then-unborn twins. What made the story buzz-worthy was the news one of the mats had been ordered for “Rex Leon,” not “Knox Leon,” as their latest little boy is named, suggesting a last-minute change of mind.

The source of this breaking news? That would be Andy Behrman, plainmary.com’s publicist, who learned gossip fundamentals writing for New York magazine. “It’s critical for a company like plain mary to have celebrity associations” he says. “I mean who gives a s–t about a plain mary baby mat? But, all of a sudden, if the tush of a sainted Jolie-Pitt is peeing on this $190 microfibre mat, that’s a $10,000 mat that we’ll see on eBay shortly.”

Behrman comes to the job having sharpened his tabloid incisors repping Petit Tresor, the celebrity-gossip-fuelled Los Angeles purveyor of baby paraphernalia recently hyped in People’s gushing coverage of Jennifer Lopez’s Versailles-style nursery. Its two stores have become go-to destinations for paparazzi seeking “baby bumps,” and the celebrities vying for their attention. “When Tori Spelling goes into Petit Tresor, she knows there will be 10 photographers there because I’m going to call,” he says. Even negative publicity has burnished the store’s celebrity cred. In May, Tom Cruise and Katie Holmes thrust the company into headlines with a cease-and-desist letter that complained bogus information had been leaked that they had dropped between US$350,000 and US$400,000 at Petit Tresor in the two years since their daughter had been born, in an “off the record” quote to Life & Style magazine “for the purpose of enhancing [the store’s] image and obtaining a commercial advantage.” (Behrman says the number was an estimate of what they’d spent in total, not only at the store.)


Such is the power of strategically placed celebrity gossip, next to which product placement in movies seems downright quaint. Today’s smuthound may think she’s catching up on the latest chapter in the Kate Hudson-Lance Armstrong romance as the pair are paparazzi-ed playing tennis. But the fact they’re outfitted in gear from Nike, a company Armstrong represents, suggests another agenda may be at work, one in which the gossip consumer is in fact the one being consumed. Paparazzi and celebrities routinely work together, says Mario Lavandeira, a.k.a. Perez Hilton, whose blog PerezHilton.com has made him a bona fide celebrity. It’s not uncommon for paparazzi to pay a celebrity for exclusive shots, he says. “They all work differently. Some will get cash upfront–$10,000, $15,000. Or they’ll get a cut of the profit.” Product placement happens a lot, he says, noting Lindsay Lohan was paid to carry a nicotine replacement a while back. “Spencer and Heidi were photographed last week holding up some Nintendo game,” he says, referring to the much-gossiped-about stars of The Hills. “It’s like a free ad.”

Bonnie Fuller, the former editor of Star who has just formed Bonnie Fuller Media, views the current scandal involving Madorma’s alleged affair with New York Yankee Alex Rodriguez as a classic example of gossip being marshalled into marketing buzz. Her sources tell her the two have known each other for months. Yet Madonna chose to make their association public–appearing ha Rodriguez’s box at Yankee Stadium–just as reports that sales for her upcoming world tour and latest CD were flagging, Fuller notes. “She’s very sophisticated and aware of how publicity plays into celebrity. She has courted controversy throughout her career to boost her profile.” Madonna is un touched by negative press, says Fuller. Being named an alleged home wrecker able to lure a much younger athlete only reinstates her bad girl, man-eater rep, a shrewd move for the 49-year-old, she says.


“There are no coincidences in Hollywood,” says Elaine Lui, the Vancouver-based blogger behind Laineygossip.com, the popular site that avidly chronicles the photo ops and smut eruptions that occur just before a tour or movie release. “I think certain celebrities and publicists are savvy to the fact that they can no longer control the message the way they did before, so this is their attempt to control the message and use it to their advantage,” says Lui, who’s currently trying to track down whether Naomi Watts, who recently appeared at a Donald Trump-sponsored event, is angling for an apartment in one of his buildings. “She’s not like Nicole Kidman, she’s not a fame whore, so I’m thinking, what’s going on here? And real estate is at such a premium in New York. Even rich people can’t get the home that they want. So I’m like what can Donald Trump offer? Real estate.”

Jennifer Aniston is a masterful player of the game, says Lui, referring to news of her relationship with singer John Mayer breaking a month before his North American tour. “I do think it’s a real thing,” she says of the relationship. “But it doesn’t mean people don’t exploit what’s real to further their careers.” Aniston is also known to exploit “candid” paparazzi imagery: last year, the British model Paul Sculfor was photographed leaving her house carrying a bottle of Smart-Water, the brand she endorses.

Quantifying the value of gossip as marketing currency is difficult, but it’s increasingly being done. In 2006, Fraser Ross, the Toronto native who operates Kitson, the Los Angeles store beloved by celebutards like the Hilton sisters, took a stab at it during a legal skirmish with Us Weekly, not long after the magazine gushed that Kitson was “L.A.’s hippest hot spot.” Ross opened the store in 2000 on a strip of Robertson Boulevard frequently staked out by paparazzi covering the nearby celebrity hangout The Ivy. Shunning traditional advertising, he forged a symbiotic relationship with photographers and publications who displayed the Kitson name and products prominently. Halle Berry was captured by paparazzi leaving the store in 2002 just after her Oscar win with an initialled “H” handbag, which became a million-dollar seller, says Ross. Nicole Richie held her book-signing party there. Matthew McConaughey’s girlfriend will be launching her new jewellery line there next month.

The formula has garnered Ross a US$25-million-a-year business, a place on the Los Angeles Times’ “100 most powerful” in southern California for controlling the “celebrity fashion machine,” and he’s turned the store into a tourist destination. In a legal action that exposed the quid pro quo underlying the machine, Ross sued a Us Weekly editor for not paying the bill for a private party held at the store. He claimed he had been guaranteed a two-page spread that didn’t materialize. He also alleged the magazine had suppressed the Kitson logo in credits, captions or photographs, a snub that cost him an estimated US$10,000 a week in lost publicity. All’s been patched over, says Ross. Indeed, in January of this year, Us Weekly featured photographs of pop singer Britney Spears during her highly public breakdown during a 2 a.m. shopping spree at the store, which opened specially for her.

The Canadian outfitter Roots has also long parlayed celebrity associations with both athletes and performers-from Wayne Gretzky to Jessica Biel and Justin Timberlake. Recently, Paris Hilton was photographed in a Roots “Stop Global Warming” leather bracelet, and Catherine Zeta-Jones was shot carrying a Roots Midtown Slide bag on the New York set of an upcoming movie, Rebound. “We like celebrated people wearing our product” says Roots’ co-founder Michael Budman. “We encourage them. We’re not throwing crazy money at people. But we definitely give people product when it’s appropriate and when we feel it’s appreciated.” Hilton, who’s said to collect six figures to show up at Las Vegas clubs, wasn’t paid a dime for shopping at the store, he says. “She loves Roots and sweats. Look, that really helps the brand. Paris Hilton is probably one of the most popular figures in pop culture.” Celebrity endorsement of a specific product does register in a spike in sales, he says. “And if you get a great item in Us Weekly or People on a celebrity, that’s the formula for success. It can take it into the stratosphere.”


Debra Goldblatt, a publicist with Toronto’s rock-it promotions whose clients included the Drake Hotel, Lobby Restaurant, and Hazelton Hotel, says celebrity association is crucial. “We strategically invite certain people to visit stores, hotels, restaurants and then tell [the press],” she says.

The ever-increasing clout of gossip columnists and bloggers reflects a bovine public eager to imitate celebrities who have become products themselves, able to earn more money for endorsement than performance. “The stigma that used to accompany making commercials has disappeared,” says Joanna Molloy of Rush & Molloy. “Just five years ago, any serious actor would be ashamed to do a commercial in the U.S.; they used to sneak off to Japan. But with the Internet, there’s nowhere to hide.”

Given the obsession with what stars purchase, it seems only reasonable some are paid to shop. “I’d say about 20 people are being paid to shop and those people are tabloid fodder who are tabloid friendly,” says Lavandeira of PerezHilton.com. “Her career isn’t hot, but Lindsay Lohan gets paid to shop.”

Ross blames the managers and publicists who get a cut: “They’re pimping these people out far too much,” he says. Lavandeira, whose own fame has resulted in a clothing line and record imprint at Warner Records, sees it as smart business. “Look at Las Vegas” he says. “There’s so much competition you have to do whatever it takes to stand out, get noticed, and get people into your venue. Even if they’re paying someone like Kevin Federline 10K to 15K to show up somewhere, he may not draw a big crowd but he’ll draw a lot of media.”

He believes the concept of “selling out” is outdated, noting that even indie musicians do it. “Feist, one of my favourite Canadians, sold out big-time with iTunes, but it didn’t seem like she sold out because it really helped boost her career. People make music because they want people to hear it.”

“Celebrities have become part of the business plan and the business model,” observes Sam Frier, a New York City publicist and cofounder of The Hall Company, whose clients include high-profile restaurants Bouley and Dos Caminos. Bold face mention in the New York Post’s Page Six, the Mount Sinai of gossip, can have definite financial consequences, he says, as can mention on certain high-profile blogs. “If a restaurateur is looking to open in Vegas, he wants Page Six name recognition; that will cinch the deal. Or if you want a better rent or better lease terms, you want it because it will guarantee to the landlord you’ll be around.” Julian Niccolini, a partner in New York’s Four Seasons restaurant, has said a one-line mention in Page Six is of more value to him than a full-page advertisement in the paper, which costs US$30,000. “Anybody can place an ad,” says Frier. “And you don’t want to be in their company.”

“Getting your name into Page Six is gossip’s equivalent of getting one’s company listed on the New York Stock Exchange” says Shinan Giovani, the society columnist for the National Post, whose scoops have been picked up by the column and who’s considered Canada’s closest equivalent. The smallness of the Canadian gossip universe distresses publicists. “In my dream world, I’d love to see 10 columns like that,” says Goldblatt of Giovani. The impact of a reference in his column can be measured two ways, she says: “From a marketing point of view, we quantify it through an ad value in a circulation rate: we calculate what it would cost to purchase that kind of ad mention in the National Post on a specific day, and how many people we are hitting. The second measure is response, both in website hits and mentions. So it does works; his mentions do push people to buy things and go places.”

For publicists, the upcoming Toronto Film Festival, which brings an influx of boldface names, is like Christmas, says Candice Best of Best PR Boutique. “Every day is like 10.” Cinema is secondary as newspaper writers are assigned to cover who was where, who ate where and who bought what. Goldblatt says she’s regularly contacted by People and Us Weekly to serve up dish on who was where with whom. Getting product in gift bags that might end up in celebrities’ hands is key, says Best. “That alignment with celebrity and gossip is instant validity.”

Given the mass-market appropriation of celebrity gossip, a new measure of exclusivity has emerged: no gossip mentions. “I have several clients who want no kind of gossip press at all,” says Frier. “They want to keep celebrities coming in. We tell no one, the staff is trained to tell no one, we obviously can’t help it if somebody spots someone, but we don’t force it and we don’t sell it.”

Meanwhile, Behrman is plotting how to publicize plainmary.com. “You want mention in anything with a nice-sized readership–New York Times, the New York Post, the New York Daily News. You want People, you want People.com, you want MSNBC, anything that’s going to drive traffic to an e-commerce site. You’d love to see it get to Canada, Australia, the U.K.–anywhere English-speaking,” he says. In a baby-obsessed culture in which pregnancy is viewed as a good career move, he holds the ultimate bait. “You’re talking to someone who has five pregnancies nobody knows about” he says. “I can tell you Uma Thurman is pregnant.” What she’s ordering, however, he’s saving for Page Six.

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The zen of ignoring the stock market

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At the very height of the dot-com boom, in the summer of 2000, I was working for a business wire service, and one of the most important jobs in the office was the daily stock market story. Two reporters and an editor were responsible for following the daily gyrations in equities markets.

Each morning the reporters would check out the stock futures, and then hit the phones to ask fund managers, traders and analysts why the market was heading up or down. After many calls, they’d connect with somebody willing to float a theory, and a few minutes later you’d get a headline like “Stocks poised to fall over interest rate worries.” That would become the conventional wisdom of the day, and you’d hear that same thesis repeated over and over on radio, TV and the Web.

In the years since then, little has changed. If anything, the noise has only increased. When the market is up you’ll find dozens of websites and broadcasters reporting Wall Street is “optimistic the credit crisis is passing and that the worst effects of the U.S. recession have already been felt.” If stocks are down, it’s because of “ongoing credit woes and fears the recession will be deeper than expected.” If the market recovers tomorrow, revert to thesis one.

This horse-race style of markets coverage is a mainstay of all major media outlets, but there is one central flaw, widely understood but rarely acknowledged in public: nobody has any earthly idea what they’re talking about at any given moment.


One of my favourite memories of working at that wire service was the time I was enlisted to help find a plausible reason for a midday downturn on the TSX. I called a fund manager and asked my earnest question: “Why did the market turn around?” His answer: “Who the f–k knows? Markets go up and down. People decided to sell some stock.”

His quote never made it into the story, and that’s a shame because it spoke to an important reality that is completely lost in our hour-by-hour vigil over the Dow Jones Industrial Average. Stock markets are the distillation of billions of individual decisions, judgments, bets and guesses happening every single minute of every trading day all over the world. There are literally thousands of variables at work, and trying to determine one or two causal influences at any given moment is the very definition of a mug’s game–like weather reports consisting entirely of minute-by-minute updates on the speed and direction of the wind.

For a long time, I thought daily stock market reports were merely useless, but there is increasing evidence to suggest they are really much more problematic, and the consequences are getting worse.

A few months ago, Arthur Lupia, a professor at the University of Michigan, published a study demonstrating how these daily stock bulletins distort reality and misinform millions of people about their financial health. Lupia described a phenomenon that he calls “point blindness.” We’ve all heard hundreds of reports saying that “the Dow was up 100 points today,” but what most people don’t know is that the value of a “point” on the Dow Jones Industrial Average changes significantly over time. A 100-point gain today is not the same as a l00-point gain lo years ago, and even percentage changes are misleading because they don’t reflect the changing value of the American dollar. All U.S. stocks are priced in greenbacks, so if the stock market is rising while the value of the dollar is falling, investors aren’t any better off.

Lupia demonstrates this point by comparing stock market returns between 2001 and 2006, with the appreciation of the Canadian dollar. He gave study participants an imaginary US$10,000 and a choice of what to do with it. Option one: they could have invested it in the Dow Jones Industrial Average at the beginning of 2001 and cashed out five years later. Alternatively, they could have taken the money, converted it into loonies and left it under their bed for the same period of time.

Most Americans, naturally, opted for the stock. From listening to the news, they knew the Dow was coming off a major bull market and was up more than 17 per cent since 2001. What they didn’t realize is that the greenback had plunged against the loonie, meaning they’d be substantially better off if they’d just taken the Canadian cash and stashed it.

That alone is a serious indictment of the way we speak about stock market movements. All this talk about “record highs” on the Dow was sheer nonsense. But point blindness is just one of many problems with our stock market obsession. Contrary to popular belief, the Dow is a lousy indicator of economic health. The market crashed in 1987, but the economy didn’t run into trouble until three years later. By the same token, one of the longest and deepest stock market crashes in history started in 2000, but was followed by only a very mild recession. On the other hand, today economists worry about a deep grinding recession and mass layoffs, but stocks are rising.


It’s for all these reasons and more that monetary authorities like the U.S. Federal Reserve used to pretty much ignore the stock market. Paul Volcker and other central bankers knew their job was to fight inflation and protect the currency. But Alan Greenspan and his successor Ben Bernanke are as stock market obsessed as any day trader, slashing interest rates at the first sign of weakness and offering Wall Street multi-billion-dollar bailouts, based on the wafer-thin justification of shoring up confidence in the financial system. It’s madness. As Lupia’s study demonstrates, your stocks may be rising but it doesn’t much matter when the value of your dollars has cratered and the cost of living is through the roof.

The only useful advice is as boring as it is timeless: diversify your savings as much as you can–stocks, bonds, GICs, real estate etc. And next time you hear a stock market report, change the channel. It’s just the blind leading the blind anyway.


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A civil rights bill for workers

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With forty-seven sponsors in the Senate, including seven Republicans, and an apparently solid majority of House supporters, the Civil Rights Act of 1990 now seems likely to clear the House Judiciary Committee easily and survive floor fights during the summer. The threat of a presidential veto of this employment-discrimination bill has not dimmed the optimism of most civil rights leaders. I think the bill will be passed by Congress and approved by the President,’ says Julius Chambers, director of the NAACP Legal Defense and Educational Fund.

Propelled by the symbolic power of a crusade to stamp out bigotry, the legislation has encountered relatively smooth sailing thus far. But parts of it are hard for American business and its champions in Congress and in the Bush league to swallow; it is still too early to tell what kind of pressure they might apply as the Congressional session comes to a close. As Earl Weaver might have noted, the fat lady hasn’t sung yet; she’s only warming up in the wings.

The bill is generally touted by its proponents as remedial, repairing the damage done to equality in employment by a handful of Supreme Court cases decided last year. The United States, the world’s leader in civil rights, cannot regress at home,’ says American Bar Association president-elect John Curtin Jr. The Civil Rights Act of 1990 preserves victories won long ago’ and will ‘shore up the foundation of civil rights in our country.’ Most of those 1989 decisions made it more difficult for minorities and women to get legal redress for bias in hiring and promotion or for harassment in the workplace. One case allowed white male workers claiming reverse discrimination to file suit long after court-approved settlements of bias claims had been entered into, even though the workers had not availed themselves of the opportunity for such a challenge at the time of the settlement. While the business community and conservatives hailed the Court’s trend as a welcome change from social activism on the bench or downplayed it as finetuning’ that continues to protect equal opportunity (the characterization of Utah Senator Orrin Hatch), civil rights groups saw it as a disastrous setback, what N.A.A.C.P. executive director Benjamin Hooks called the legal lynching of black America’s hope.”


The law that would restore that hope touches many bases. It would amend Title VII of the Civil Rights Act of 1964 by providing a jury trial for plaintiffs claiming racial or sexual discrimination or harassment, as well as money damages for successful complainants (and punitive damages in cases of malicious abuse). It would effectively reinstate Griggs v. Duke Power, a unanimous 1971 Supreme Court decision that imposed on employers the burden of showing why a personnel practice that has the effect-whether intended or not – of excluding minorities or women is required by business necessity.’ The new law would invalidate seniority systems adopted with intent to discriminate and employment practices adopted with mixed motives which include bias. To the federal statute that bars discrimination in making and enforcing private contracts, it would add a prohibition against discriminatory conduct that occurs during the period when the agreement is in force. Finally, the bill sets forth provisions for the finality of court settlements in discrimination suits, disallowing challenges by people who could have made a timely protest but didn’t.

A parade of witnesses at House and Senate hearings in February presented a disheartening picture of an American workplace rife with racial and gender-based tension and bias. Representatives of such groups as the American Way Legal Defense Fund and the National Women’s Law Center summoned up case after case of demeaning assigments and demotions based on race, racist and sexist epithets hurled at defenseless employees, contracts terminated because of religious bigotry, and skills tests and educational requirements upgraded just as women and minorities began to apply for jobs. In most of those cases the Supreme Court decisions of 1989 had thwarted legal redress.

In, arguing that justice had been denied, the witnesses had a model in Patterson v. McLean Credit Union, the most widely publicized of last year’s Supreme Court rulings on civil rights. In that case the plaintiff, a black credit-union teller and file coordinator, had been repeatedly passed over for promotion and opportunities offered to whites and had been subjected to racial slurs; she testified that the head of her company had told her several times that blacks are known to work slower than whites’ by nature. She had been denied recovery on the ground that the federal statute that covers private contracts did not protect her against acts of bias that occurred after the contract was entered into and that didn’t interfere with its performance.

Opponents of the bill have rarely addressed the human impact of the Supreme Court’s retreat on civil rights. Instead they have groused about costs and railed against quotas. Business representatives know as well as anyone else that equality doesn’t come cheap. They decry the added inconvenience and cost of defending lawsuits that might be directed against them if the bill passes; one witness submitted to the House Labor and Education Committee a table purporting to show that the costs of litigation under Title VII – attorneys’ fees, settlements and monetary awards – would jump from $775 million to $2 billion. A lawyer for the National Association of Manufacturers reminded the Representatives that the bill would impose “crushing costs” on public-sector employers, saddling the taxpayers with protracted litigation in a federal system which is already overburdened.’ The most common target, however, is the section of the bill that deals with lawsuits attacking employment practices that are, as the Supreme Court said in Griggs, fair in form but discriminatory in operation.’ Griggs bit the dust with last year’s decision in Wards Cove Packing Co. v. Atonio, which forces plaintiffs to prove a negative: that the employer has no business justification for a discriminatory practice. Now that the Civil Rights Act proposes to shift the burden of proof back to the employer, those opposed to the bin are quota rattling. This provision threatens great harm,” said Charles Fried, Solicitor General under President Reagan and now a professor of jurisprudence at Harvard Law School, in Senate testimony in February. It would force employers to use quotas in hiring or else expose themselves to lawsuits they cannot win.’ The argument here is that employers faced with charges of bias because of a discrepancy between the demographics of the local labor market and the corporate work force are so lacking in imagination that they will be unable to think of anything to do but hire unqualified minorities and women.

The quota issue is also the sticking point for the Bush Administration. In a letter to Senator Edward Kennedy written the day before the Senate Committee on Labor and Human Resources markup, Attorney General Dick Thornburgh expressed concern that the legislation would encourage quota systems’ and warned, If S. 2104 were presented to the President in its current form, I and other senior advisers would recommend that it be vetoed.’ The veto threat has not been repeated, and President Bush has made it difficult for observers to read his lips, telling reporters on May 17, ‘I want to sign a civil rights bill, but I will not sign a quota bill.’ At a meeting with civil rights groups a few days earlier he was similarly noncommittal, making only general and platitudinous reassurances and allowing chief of staff John Sununu (undoubtedly one of the most important of the ‘senior advisers’ referred to in Thomburgh’s letter) to warn of “ghosts” in the legislation – presumably the specter of quotas – that would have to be banished before the Administration gives its blessing.

The Bush people may be in a real jam on this one. If they go along with the legislation they are open to the charge from business groups and conservatives that they are agreeing to quotas. To oppose it would seem politically dangerous in an election year, especially when the civil rights community has made clear that Bush’s reputation with blacks may stand or fall on his support of or opposition to the bill. Kennedy has now brought along several new supporters, including two Republicans, by a”% to modify the definition of the business necessity that employers must prove in defending an employment practice that results in the exclusion of minorities and women. The new language allows employers to justify an employment test or educational requirement that has a discriminatory effect if it can be shown that it “bears a substantial and demonstrable relationship to effective job performance.’ This is nearly identical with the Griggs standard there the permissible practice had to have a manifest relationship to the employment”) that prevailed for nineteen years, and it is less onerous than the standard originally written into the bill-that a discriminatory practice is defensible only if it is ‘essential to job performance.” if the Bush Administration can’t agree to the new formulation, it is rejecting the message of the old law: that employers mustn’t screen out, even unintentionally, minorities and women without a very good reason. Surely this is a message that most American voters, if they knew they had the choice of accepting or rejecting it, would endorse.


But the contest over the Civil Rights Act is not about providing voters with that kind of information. The opposition is playing bogyman politics, throwing up a symbolic smoke screen to protect what one Senate witness candidly referred to as the national ideology’ of an employees right to hire and fire at wil. The bill’s critics bemoan the loss of the merit system’ in employment policy, but they have not presented a single piece of evidence that competence in job performance was threatened or that quotas were in fact adopted when companies were doing business under the Griggs standard. When public visibility is low, opponents of the legislation may abandon recourse to the buzzwords and simply make bizarre proposals to protect bosses’ right to hire workers they are comfortable with. One of the twelve amendments that Hatch brought with him when he came to the Senate committee markup was a masterfully circular proposal essentially allowing anyone to sue at any time to throw out a court-approved affirmative action plan as long as the allegation charged a violation of equal protection. (What else would the plaintiff charge?)

Throughout the legislative process conservatives have been saying that this bill is not intended merely to correct a few Supreme Court errors but that it goes beyond preserving the pre-1989 status quo in employment discrimination law. They have a point. The law synthesizes the pre-1989 judge made rules into a thoroughgoing legislative commitment to end employment bias and to enlist employers in achieving equality in the job market, not just demographic balance in individual workplaces. Its larger aims surface in its use of the word “eliminate’ when describing what federal civil rights laws are supposed to do about discrimination, and in its stipulation that all such laws shall be broadly construed.’ While affirmative action is not directly addressed by the bill, its spirit is still at issue – not the legitimacy of formal plans with goals and timetables for achieving racial and gender representation but the informal extra mile employers must go to conform hiring standards to the likely backgrounds of the minorities and women who will be coming to them for jobs. Employers will also have to recruit more imaginatively and aggressively. Most important, in order to insure that educational and training requirements for workers don’t shut out minorities and women, they may have to do the training themselves and support general and vocational education that prepares a broader range of people for the jobs of the twenty-first century.

One of the troubling aspects of affirmative action has been that it often pits poor African-Americans and Latinos against working-class whites, whose choices in jobs and education are also very limited. Anything that contributes to better job preparation in the larger society will benefit whites and males as well as racial minorities and women. A continuing tension is the competition between the needy and the less needy for scarce resources, including jobs. The Civil Rights Act of 1990, contrary to the charge that it will rigidify the labor market, has the potential for stimulating some universal entitlements.

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