The federal Historically Underutilized Business Zone (HUBZone) program may be a mess as public policy, but it’s hard to beat as a source of unintended consequences. A good argument could be made for killing the program entirely. But as a minimum, Congress ought to follow Sen. Jeff Merkley’s lead and tackle some of its most egregious flaws.
In concept, the HUBZone program is both simple and well-intentioned. It gives small businesses in economically depressed areas preferential treatment in securing some federal contracts. But implementing this concept in a reasonable fashion has been virtually impossible.
The program establishes HUBZones according to unemployment rates, which, of course, fluctuate regularly and sometimes widely. In order to dole out preferential treatment as intended, therefore, the government ought to reset the HUBZone map regularly in keeping with shifting unemployment. But this task has proven far too complex, and the feds have responded by freezing HUBZone status. They intend to redo the map next year using data collected during the 2010 Census.
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