05/14/2012 04:42 pm ET

Government Contracts With Hispanic Owned Businesses Fell For First Time In Decade

For the first time in a decade, U.S. government contracts with Latino-owned small businesses fell.

According to last year's federal procurement report, contracts to purchase supplies, goods or services from Latino-owned small businesses dropped by $7.89 billion, or 7 percent compared to the prior year. Small firms with African-American owners also faced an 8 percent drop, or $7.12 billion decrease in contract spending last year.

Contact spending with minority-owned business fell at a far faster clip than did total government spending in the private sector. In fact, total contract spending dipped by only 1 percent, The Washington Post reported.

In December of 2011, Javier Palomarez, president and CEO of the United States Hispanic Chamber of Commerce (USHCC) sang the praises of the Department of Treasury, saying that it had done an exceptional job creating new opportunities for Latinos in business, according to

But now, after ten consecutive years of increasing contract spending with minority-owned businesses, the U.S. government has slashed expenditures with Latino and black-owned companies. The reasons for the decline in spending remains the subject of some debate. Some economists believe the recession may have put out of business some of the minority-owned companies that vied for federal contracts in the past. Others suspect that limited opportunities in the private sector ramped up the number of companies competing for federal contracts and, in doing so, reduced spending with minority-owned firms, The Washington Post reported.

Federal efforts to stimulate the economy have also largely failed to help people of color who own businesses. Businesses owned by blacks, Latinos, and women together represent 40 percent of firms in the U.S., but "have only received 5 percent of stimulus-related government contracts," according to a 2010 analysis of stimulus spending by the the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University,

Unemployment statistics reflect a similar disparity between minorities and whites in the economic recovery. In April, the most recent period for which unemployment figures are available, 6.8 percent of white workers were jobless compared to 13 percent of black workers and 10.3 percent of Latinos. Minority-owned companies are more likely to employ black and Latino workers, federal data indicates. Hiring inside white-owned companies also reflects a similar pattern.

When the economy takes a hit, minorities get the worst of it, Harry Alford, the president of the National Black Chamber of Commerce told The Washington Post.

“When the masses catch a cold, we get pneumonia,’’ he said.

The federal government generally defines small businesses as those that have fewer than 500 employees or less than $7 million in average annual sales.