U.S. Rules Hasidim Not Disadvantaged As Group but Individuals May Get Aid
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U.S. Rules Hasidim Not Disadvantaged As Group but Individuals May Get Aid

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The U.S. Small Business Administration (SBA) announced last week it has rejected an application that would designate the Hasidic Jews as “a socially and economically disadvantaged group” that would entitle them to federal aid provided minority businesses but held that individual Hasidic-owned business firms could receive such assistance.

In a 25 page decision, the SBA held that “Hasidic firms owned and controlled by socially and economically disadvantaged persons are eligible to participate in the programs but not on the basis of a group designation of social disadvantage.

“Based on the information submitted in support of the Hasidic application and without prejudging any particular case,” the SBA decision said, “it is frankly anticipated that the typical Hasidic entrepreneur will have little difficulty in establishing his or her social disadvantage.”


In ruling out the Hasidim as a group “in light of the serious constitutional questions raised by the Hasidic application,” the SBA concluded, “it would be an abuse of discretion” in the absence of “express congressional direction, to render a decision which might establish an impermissible religious classification.”

The assistance program, the SBA held, “is based in part on a Congressional finding that groups with members who are socially disadvantaged ‘include but are not limited to, Black Americans, Hispanic Americans, native Americans, and other minorities’.” Noting that “none of those three groups designated in the statute is a religiously based cultural group,” the SBA held that “if anything, the absence of a statutory reference to a religiously based cultural group indicates Congressional disinterest in, or disapproval of, such a designation.”

The decision, signed by William Clement Jr. associate administrator, and A. Vernon Weaver, administrator of the SBA, culminates what they described as factual and legal issues that “are complex and have been exceedingly difficult to resolve.”


The issue generated widespread support for the Hasidim and intense opposition against their application. Some of the individual protests were tainted with prejudice. Most opposed aid on constitutional grounds — separation of church and state — and that aid to Hasidim would lessen the funds available to Blacks.

Among those siding with the Hasidim were 10 Senators, including those from New York, New Jersey and Maryland; and Stuart Eisenstadt, special assistant to President Carter. Also favoring the Hasidim were Black U.S. Representatives Shirley Chisholm (D.NY) and Louis Stokes (D.Ohio).

Communications to the SBA indicated that Rep. Parren Mitchell (D.Md.), a leading Black member of Congress, had circulated a letter suggesting protests. Groups opposing aid included the Washington offices of the National Urban League and the National Association for the Advancement of Colored People, the National Association of Black Manufacturers, and the Black elected Democrats of Ohio.


The issue originated on Dec. 27 when the Opportunity Development Association of Brooklyn, N.Y., and six Hasidic businessmen filed an application on behalf of the approximately 100,000 to 150,000 Hasidim as a minority group of Americans. Most of them live in Brooklyn — Williamsburg, Crown Heights and Boro Park — and other smaller communities “scattered across the country” as in Monroe and Monsey, N.Y., Lakewood, N.J., Boston and Los Angeles.

Pointing out that “the evidence of prejudice and discrimination experienced by Hasidim is overwhelming and essentially unrelated,” the SBA observed that “relatively few comments submitted in opposition to the Hasidic application even addressed this factual issue.” The “cultural bias imposed by the larger society upon the Hasidim,” the SBA said, is found in the discrimination in employment, by potential business customers, and in financing of Hasidic businesses.

The SBA cited the testimony of Norbert Weissberg, who headed a project in New York City designed in part to place young Hasidim in training programs with accounting and commercial firms but “not one single placement of Hasidic personnel was made by those businessmen contacted.”

“In addition to suffering from prejudice and discrimination, many Hasidic entrepreneurs — like other small businessmen — face on uphill battle to eke out a living for themselves and their families,” the SBA reported. “Many Hasidic firms are retail or service businesses located within their own communities” which “are a major source of employment for Hasidic Jews.” A director of “minority venders” in the SBA documentation showed that of 297 Hasidic firms, most are in textiles and in the special needs of Hasidic and other Orthodox Jews for religious articles, clothing and kosher food.


“Some comments submitted in opposition to the Hasidic application raised two major points,” the SBA said. These were that “Hasidic Jews control large parts of New York City’s diamond trade and that Jews control a significant portion of the wealth in this country and have generally succeeded in the business world.”

“Hasidic Jews play a significant role” in the diamond trade and related industries, the SBA said, but “while the wealthy diamond merchant is probably the most visible of all Hasidic entrepreneurs, it would appear that his numbers are small and that he is not representative of the larger Hasidic business community.”

“The second point — that Jews control great wealth and have succeeded in business — is irrelevant to an evaluation of Hasidic circumstances,” the SBA added. “Whatever the accuracy of this timeworn stereotype, there is little to suggest that the Hasidim, who are culturally distinct from most other American Jews, have control over the levers of economic power in this country. The allegation that Jews own a majority of communications property ignores the simple truth that the Hasidim — who disdain radio, television and most other public media — own few, if any communications properties …. Brood-based allegations about the economic power of American Jews have no probative value in deciding the issues raised by the Hasidic application.”

Discussing the economic status of Hasidim, the SBA said that “certain features of the Hasidic culture — large families, parochial schools, expensive kosher food — place economic demands on Hasidic Jews beyond those imposed on most other Americans” and that “thus the Hasidic family which is slightly above the poverty line may in fact face economic burdens which are greater than those confronting non-Hasidic families below the poverty line.”

In discussing the legal issues, the SBA observed that “numerous comments” opposing the application” on the basis that disadvantages suffered by the Hasidim are self-imposed” and the Hasidic lifestyle “is a matter of personal choice arising out of religious beliefs.”

“Many comments emphasized that, in contrast to the Hasidim, Blacks and other traditional minorities have no choice with respect to the color of their skin and hence literally no control over the social disadvantages imposed on them by race,” the SBA said. “From a literal standpoint, this argument is unassailable. The practice of the Hasidim which engender bias — their distinctive appearance for example — are ultimately matters of choice. No matter how deep-rooted the cultural convictions and religious beliefs which prompt behavior that is objectionable to others, the decision to adhere to and act upon those convictions is a voluntary one.”

But, “from a legal standpoint, however, this argument must be rejected,” the SBA added. “Congress did not intend the control test to be interpreted so literally as to disqualify individual Hasidim entry” into the aid program. “Even more fundamentally,” the SBA said, to exclude Hasidic firms from participation “because their principals refuse to renounce religious beliefs would raise serious constitutional questions. Such a decision might well abridge the right of Hasidic Jews to the free exercise of religion guaranteed them by the First Amendment.” The SBA held that “no individual could be excluded from the program simply because he was white or a member of a group not considered a traditional minority group.”

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