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6 BLACKS IN THE ECONOMY 269

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Jacob Lawrence Cabinet Makers (1946) Gouache with pencil underdrawing on paper sheet Hirshhorn Museum and Sculpture Garden, Smithsonian Institution, Gift of Joseph H. Hirshhorn, 1966

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Four decades ago Gunnar Myrdal sum marized the economic status of black Americans in dismal terms (1944:205~: Except for a small minority enjoying upper or middle class status, the masses of American Negroes, in the rural South and in the segregated slum quarters in Southern and Northern cities, are destitute. They own lircle property: even their household goods are mostly inadequate and dilapidated. Their incomes are not only low but irregular. They thus live from day to day and have scant security for the fixture. The 1940 census confirmed Myrdal's assessment. Crippled by the Great Depression, America was poor, and blacks were very poor. The 1939 in- comes of 48 percent of white families and 87 percent of black families are estimated to have been below the federal poverty thresholds (Smith, 1988. And while a total of one-half of all white families were below the poverty line, the per capita income of blacks was only 39 percent of white income (Taynes et al., 1986) . In addition to cash income, much of the population- including a slight majority of all blacks-lived on the land and depended on home-grown food and fiber; one-third of southern blacks were sharecroppers or tenant farmers, who scraped together a meager subsistence in primitive conditions of work and life. Adding these "in-kind" products to cash in 1. These calculations are based on the official 1964 poverty thresholds with all incomes converted to 1984 dollars; see also note 2. As discussed below, the percentage of white and black individuab who were poor was even higher. 27

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY come (if it were possible to estimate them) would not change the portrait of blacks' absolute and relative destitution. A HALF CENTURY OF UNEVEN CHANGE GAINS AND STAGNATION World War II put America to work, and postwar prosperity and growth lifted living standards. Twenty years after Myrdal's study, 36 percent of black families and 9 percent of white families received incomes below poverty thresholds. Per capita black income was about 4 times higher than it had been in 1939, although it was still only one-half of white income. By the 1960s, blacks were no longer concentrated in southern agriculture. Even as Myrdal was writing in the 1940s, they were migrating by the thousands to cities in the North and South, pulled by wartime industrial jobs and wages and pushed by the inexorable labor-saving mechanization of cotton plantations. The net emigration to the North eventually totaled 3.5 million blacks, more than one-quarter of the national 1940 black population of 13 million. Myrdal viewed blacks' urbanization and industrialization with great opti- mism. He heralded it as the beginning of fundamental changes in American race relations after more than a half century of no fundamental change. Fundamental changes were indeed occurring in the 1960s, largely as a result of changing social conditions and blacks' own insistence on their civil and democratic rights. During this period, black men moved from unemployment and farm labor to an array of blue-collar industrial jobs and a few white-collar positions. Comparing the employment situation of black men in 1973 with that of 1940 shows that the proportion of labor force participants who were unem- ployed, on public emergency jobs, or working on farms declined from 52 to 11 percent (Farley, 1987:42~; those working as machine operators, factory laborers, or blue-collar craftsmen rose from 31 to 50 percent. During the same period, black women moved from domestic service and farm labor into factories, shops, offices, and some professional and managerial positions (see Table 6-1~. Moving from the rural or small-town South of 1940 to the nation's cities gradually brought to blacks the common comforts of American consumer technology-inside plumbing, electricity, refrigeration, telephones, automo- biles, radio, and, eventually, television. They also gained much greater access to medical care, especially after President Johnson's Great Society inaugu- rated Medicare and Medicaid. Yet urban, industrial America, North or South, was not the promised land. In cities, unlike on farms, you cannot feed a family without cash income. In the 1960s blacks deeply resented their continuing second-class status. Despite their gains since 1939, blacks in general did not share the affluent 272

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BLACKS IN THE ECONOMY TABLE 6-1 Occupation and Industry of Employment for Black Men and Women (in percent), 1939-1984 Sex and Occupation or Industry Employed in major industry groupings Black men 1939 1949 1959 1969 1979 1984 Agriculture, forestry, fisheries 42.5 24.9 12.7 5.3 2.8 3.4 Construction, manufacturing, mining 21.8 32.9 35.0 41.3 37.7 33.6 Transportation, communication, pub lic utilities 6.5 9.0 8.2 9.9 12.6 12.6 Wholesale and retail trades 10.1 12.1 13.8 15.1 15.1 16.7 Service, including finance, insurance, real estate 15.8 15.6 17.4 21.1 24.7 27.5 Public administration 1.6 3.9 5.6 7.3 7.0 6.2 Black women Agriculture, forestry, fisheries 16.1 9.4 3.6 1.4 0.6 0.4 Construction, manufacturing, mining 3.7 9.4 9.3 16.1 18.1 16.5 Transportation, communication, pub lic utilities 0.2 0.9 1.0 3.0 5.2 5.4 Wholesale and retail trades 4.2 10.3 10.1 12.2 12.6 14.3 Service, including finance, insurance, real estate 73.9 65.9 65.0 61.4 55.4 56.5 Public administration 0.6 2.2 3.8 5.9 8.0 6.9 Employed in major occupations Black men Professional 1.8 2.2 3.8 7.8 10.7 8.0 Proprietors, managers, officials 1.3 2.0 3.0 4.7 6.7 6.3 Clerical and sales 2.1 4.2 7.0 9.2 11.1 13.1 Craftsmen 4.4 7.8 9.5 13.8 17.1 15.8 Operatives 12.6 21.4 24.3 28.3 23.4 22.6 Domestic service 2.9 1.0 0.4 0.3 0.2 0.1 Other service 12.4 13.5 14.9 12.8 15.8 18.3 Farmers and farm workers 41.1 23.9 14.3 5.6 3.0 4.9 Nonfarm laborers 21.4 24.0 22.8 17.5 12.0 11.0 Black women Professional 4.3 5.7 6.0 10.8 14.8 13.9 Proprietors, managers, officials 0.7 1.4 1.8 1.9 3.7 5.2 Clerical and sales 1.4 5.4 10.8 23.4 32.4 33.1 Craftsmen 0.1 0.7 0.5 0.8 1.4 2.6 Operatives 6.2 14.9 14.1 17.6 14.9 12.0 Domestic service 60.0 42.0 35.2 17.5 6.5 5.9 Other service 10.5 19.1 21.4 25.7 24.3 24.8 Farmers and farm workers 16.0 9.3 9.6 1.6 0.6 0.5 Nonfarm laborers 0.8 1.5 0.6 0.7 1.4 1.8 Sources: Data from decennial censuses and the Bureau of Labor Statistics. 273

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY life-styles of the white majority. In one city after another, rising dissatisfac- tion and black consciousness erupted in violence and civil disorder. The blue-ribbon Kerner Commission, charged to help the nation understand the black rage, echoed An Am~can Dilemma 25 years earlier (National Advisory Commission on Civil Disorders, 1968:253~: Negro workers are concentrated in the lowest skilled and lowest-paying occupations. These jobs often involve substandard wages, great instability and uncertainty of tenure, extremely low status in the eyes of both em- ployer and employee, lircle or no chance for meaningful advancement, and unpleasant or exhausting duties. And now, two decades later, black-white differences are still large. These differences remain despite significant improvements since 1940 in the abso- lute and relative positions of blacks. But after initial decades of rising relative black economic status, black gains have stagnated on many measures of economic position since the early 1970s. Two important examples are pov- ert~y rates and per capita income. In 1985, 31 percent of black and 11 percent of white families lived below the federal poverty line; the 1974 poverty rates had been 29.3 percent of black families and 7.3 percent of white families. Black's real per capita income in 1984 was one-third higher than it had been in 1968 and about 6 times its 1939 level; but that income was only 57 percent of white income, the same relative position as in 1971. The lack of progress in these important indicators of economic status during the past two decades is largely a consequence of two conflicting trends: rising average black wages relative to white wages but decreasing black employment relative to white employment. The rising weekly or hourly wages and occupational positions for employed blacks have been accompa- nied by falling and unstable employment patterns that have made employ ment increasingly unlikely for many blacks. The greatest share of this de- creased employment has fallen on the least educated workers, who, faced with rising unemployment and stagnant or declining real wages, have often responded by dropping out of the labor force. The uneven distribution of employment and earnings losses has had consequences for the distribution of income among blacks. BLACK INEQUALITY: THE POOR AND THE MIDDLE CLASS Uneven change over time in the average economic position of blacks over the past half century has been accompanied, especially in the last quarter century, by accentuated differences in status among blacks. One of the most important developments since the 1960s has been that some segments of the black population gained dramatically relative to whites while others have been left far behind. During the 1960s, incomes were growing for most black (and white) families. Blacks in all income ranges gained relative to their counterparts in the white family income distribution. In fact, as the rate of poverty declined, the relative gains were greatest for black families with the 274

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BLACKS IN THE ECONOMY lowest incomes (Taynes et al., 1986~. Then, during the 1970s, reductions in poverty rates slowed, leaving approximately one-third of black families with incomes below the poverty line throughout the decade and into the 1980s. A major reason for the divergence in the economic status of black families is that the economy has been especially unstable with respect to the jobs and wages of black adult males. Their gains and setbacks, absolutely as well as relative to whites, are a major part of the economic experiences of blacks over the past 50 years. Conditions within the black community began to diverge sharply in the 1970s. This divergence can be seen very clearly in the experience of young men. By the early 1980s, black men aged 25-34 with at least some college earned 80-85 percent as much as their white counter- parts. They also achieved some gains in private-sector white-collar positions. In terms of education, these black men represented the top one-third of their age group. At the other end of the group were the one-quarter of black men aged 25-34 who had not finished high school and who could not compete in the stagnant 1970s economy. An increasing number dropped out of the labor force altogether. These differing experiences lie behind the growing polarization that appears in economic statistics. Earnings inequality has been increasing over the past 25 years for both white and black adult men, but especially among blacks (Taynes et al., 1986~. Since 1959, inequality among black men has been consistently greater than among white men. The lowest earning 40 percent of black men earned about 8 percent of the total earnings of black men in 1959, but 5 percent in 1984. The highest earning 20 percent of black men earned 50 percent of the total in 1959, but 60 percent in 1984. As noted above and discussed in detail below, a major source of the greater inequality is the increasing fraction of black men without any earnings. More generally, in 1984, about 40 percent of black men and 20 percent of white men (aged 25-55) earned less than $10,000. In 1969, approximately 10 and 25 percent of white and black men, respectively, had earnings below $10,000 (in 1984 constant dollars). This income was insufficient to maintain a family of four above the federal poverty threshold. Polarization of the family income distribution has also taken place. In 1970, 15.7 percent of black families had incomes over $35,000; by 1986, this proportion had grown to 21.2 percent (in 1986 constant dollars). Simi- larly, the proportion of black families with incomes of more than $50,000 increased from 4.7 percent in 1970 to 8.8 percent in 1986 (22 percent of white families had incomes of more than $50,000 in 1986) . During the same years, the proportion of black families with incomes of less than $10,000 also grew, from 26.8 to 30.2 percent. An important aspect of this polarization in the incomes of black men and black families has been the growth, during the years since 1960, of female- headed black families. It is among such families that the incidence of poverty is highest. While some female-headed families are middle class just as some two-parent families are poor, it is not an exaggeration to say that the two most numerically important components of the black class structure have 275

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY become a lower class dominated by female-headed families and a middle class largely composed of families headed by a husband and wife. The divergent experiences of upwardly mobile blacks and those on the fringe or outside the economic mainstream are evident in statistics on edu- cation and earnings and on family composition and income: Among college graduates, the annual earnings of black males rose 6 percent relative to those of whites between 1969 and 1984; among persons with 1 to 3 years of post-high school education, the relative gain was 2 percent; but among high school graduates, blacks fell 5 percent further behind. Among two-parent households with children, black earnings rose 4 percent between 1973 and 1984, while white earnings fell 4 percent. Earn- ings of female-headed households fell for both blacks (9 percent) and whites (8 percent), but there are proportionately many more female-headed black households than white. The divergent experiences of blacks are also evident in some comparisons of black and white economic statistics on wealth and poverty: The median wealth of black households is 9 percent of the white house- hold median. However, among black and white households with incomes of less than $10,800 in 1984, the black median was 2 percent of the white. At all higher income levels, the relative median net worth of black house- holds is more than 9 percent, but because the lowest income group con- tained a much larger fraction of black households (40 compared with 20 percent of white households), the median wealth of all white households was more than 11 times higher than the median of all black households. In 1969, 58 percent of all poor black children were in female-headed families (compared with 36 percent of white children); in 1984, 75 percent of poor black children were in female-headed families (compared with 42 percent of white children) . While much better off than blacks of lower status, middle and upper income blacks remain well behind comparable white households (see Landry, 1987~. For example, although the absolute and relative gaps between average incomes of two-parent black and white families are not very large, black families need more members in the work force in order to approach the living standard of white families. Because the earnings gap between black and white women is smaller than the gap between men, black working wives contribute a greater share of total black income than do white working wives. In addition, black wives have a higher labor force participation rate than do . . w. :llte wives. Even the most well-off black families in 1979 still had a difficult time meeting the standards set by the Bureau of Labor Statistics (BLS) as the income needed by an urban family of 4 to maintain middle-class living standards. The last year thedatawerepublished,theupperincomestandardwas$34,317;intermedi- ate, $20,517; and lower, $12,582. In 1979, approximately 24 percent of black 276

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BLACKS IN THE ECONOMY families were in the middle-income range compared with 50 percent of white families. At the beginning of the 1970s, 23 percent of black and 47 percent of white families had been In the middle-income range (Hill, 1987:47~. Thus, there was visually no growth in the number of middle-income families during the 1970s by this measure. Although comparable data have not been pub- lished by BLS since 1979, all other economic statistics suggest that blacks are likely to have fallen further behind whites. The rest of this chapter elaborates on these principal points concerning uneven changes in blacks' economic status over time, the divergence in wages and employment since the 1960s, and rising inequality. The next two sections discuss poverty and income and wealth: trends in poverty and the underlying social forces behind the trends, changes in the sources and sizes of the incomes received by whites and blacks, and the very large black-white differences in wealth and types of asset holdings. Blacks' labor market posi- tion is examined next through a description of their comparative earnings, employment, and occupational position. The last major section looks at equal employment laws and their enforcement, and then considers the spe- cial situation faced by black youth in the contemporary labor market. POVERTY TREN DS I N POVERTY Sl NCE 1939 In 1939, the poverty rates for black and white people were 93 and 65 percent, respectively (see Figure 6-1~.2 The odds that a black person would 2. In the late 1950s, the U.S. Department of Agriculture determined the minimum cost of a nutritionally adequate diet for families of various sizes. In the> 1960s, officials at the Social Security Administration took these cost estimates and assumed that one-third of a household budget should be spent for food. This led to poverty "thresholds" or "lines" for households of different sizes, which arc adjusted annually for inflation using the consumer price index. In 1986, the poverty threshold for an adult living alone was $5,701; for a family of two adults and two children, $11,203. If the pretax cash income of a person living alone or all members of a household falls below this poverty line, all members of that household are considered poor. Some analysts argue that this procedure substantially overestimates poverty because of the access of farm and rural families to home-grown food and because of noncash federal transfer programs (such as food stamps) that have been available to the poor since the late 1960s. Experimental work at the Bureau of the Census suggests that the widely cited poverty rates would be reduced by about 10 percent were households to receive credit for food stamps, school lunches, and subsidized housing. In 1985, for example, the poverty rate among blacks would have fallen from 31 to 28 percent; among whites, the change would have been from 11 to 10 percent. However, other analysts argue that the official poverty rate is too low since it is challenging or impossible for a person to live on $5,700 or for a family of four to live on $11,000, especially in New York, Chicago, Detroit, and Los Angeles, where many of the minority poor reside. The Bureau of the Census has taken this into account by providing information about people in households whose incomes fall below 124 percent of the poverty line. If this definition is used, in 1986 the poverty rate for blacks would increase from 32 to 39 percent and from 11 to 15 percent for whites (see Levine and Ingram, 1988). 277

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY FIGURE 6-1 Poverty rates of blacks and whites and odds of being in poverty, estimated percentages, 1939-1985. 100 90 80 us 70 a: 60 LL > o CL ~ 50 o m ~ 40 He IL c: 30 20 10 ..... o 1 1 1 1 1 1 . . .! 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 8 A Relative Black/White Odds / \ A of Being I/ V \ in Poverty 4,: White - ~' - YEAR Source: Data from decennial censuses and Current Population Surveys. 278 7 4 5 (9 z ILL m IL o cn o LL] > LIJ cr 1

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BLACKS IN THE ECONOMY be in poverty (the ratio of the poverty to the nonpoverty populations) were 7 times higher than those for a white. After that date, poverty rates fell rapidly for Americans. By 1974, poverty rates had declined significantly: 30 percent of blacks and 9 percent of whites lived in households whose incomes fell below the poverty line. The odds that a black would be poor (3 to 7) were more than 4 times those for a white (1 to 10~. As for many economic measures, the early 1970s were a watershed, when progress, begun with recovery from the Great Depression, slowed or reversed. In 1986, both black and white poverty rates were higher, 31 and 11 percent, respectively, and the relative odds were similar to their levels in 1974. The poverty of black children, in particular, is striking: 44 percent of black children lived in poor households in 1985. The comparable figure for white children was 16 percent. These figures were computed after family assistance benefits and other government transfers were added to household incomes (see note 2~. Comparisons of pretransfer resources are even more distressing, especially for children in the decisive and vulnerable first 10 years of life. While a large majority of white children raised during the 1970s escaped poverty in their first 10 years, two-thirds of black children were not so fortunate. And 5 of 10 black children were poor for 4 of their first 10 years; only 1 of 12 white children knew that much poverty during the 1970s. One black child in 3, but only 1 white child in 33, was poor at least 7 of the 10 years (Ellwood, 1988~. Perhaps most important among the many contributing factors to the de- cline in poverty among blacks between 1939 and 1973 was the high rate of national economic growth sustained, with moderate cyclical interruptions, throughout the period. Per capita real gross national product (GNP, adjusted for price changes) grew at an average annual rate of 2.6 percent. During this period of sustained growth, blacks left the low-income rural South for cities and industries where wages were much higher. Between the census enumer- ations of 1940 and 1970, the percentage of blacks living in urban locations increased from 49 to 81 percent, and the percentage of blacks living in the South fell from 77 to 53 percent. The adverse change in poverty trends after the early 1970s can be attrib- uted to three major factors. First, again perhaps most important, has been the nation's economic growth. Between 1973 and 1986, per capita real GNP rose by only 1.5 percent per year. Second, while black men with jobs have continued to approach whites in the occupational ladder and in hourly wage rates, these gains have been offset by employment losses so great that relative per capita annual earnings of black men have stagnated. Third, changes in family structure have resulted in more black women and children in poverty. In 1985, 75 percent of the black children living in poverty were in female- headed households; 42 percent of poor white children were in such house- holds. The proportions of persons in poverty from 1959 to 1986, by family type (male or female headed) and race, are shown in Figure 6-2. Virtually all 279

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY in the economic position Freeman (1973) concluded that the improvements of blacks during the late 1960s were largely consequences of government antidiscriminatory activity following the 1964 Civil Rights Act. Vroman (1975) reported similar findings, and Leonard (1985), using data on more than 1,700 class-action suits under Title VII, presented evidence that litiga- tion under Title VII played an important and independent role in advancing the employment of blacks and had a relatively greater impact than affirmative action. But the research literature also contains studies that find very weak or nonexistent effects of government employment laws on black employ- ment status; for a review, see Brown (1984a). Most notably, Smith and Welch (1977, 1986), the two strongest proponents of improvements in education as the major source of black economic gains, have reported either nonexistent effects or effects during the 1970s of short duration for equal employment policy. Many of the latter studies suffer from a set of common problems. Given the ubiquity of the changes, studies that compare public-sector employers to private-sector employers have not been adequately specified to assess the impact of antidiscrimination activity or affirmative action that has been aimed at both sectors. In addition, if firms hire and fire within competitive labor markets, evidence of little difference in the relative wages between workers in contractor and noncontractor sectors is consistent with either strong or no effects of antidiscrimination programs: in a competitive market, the wages of identical labor would be equal in both sectors. Thus, the effects of equal employment opportunity programs cannot be measured by comparing wages across sectors as has been attempted in some studies (Smith and Welch, 1977~. A major problem is that it is difficult to measure the specific effects of general antidiscrimination laws. In addition, many programs, policies, and economic events occur contemporaneously. A recent study by Heckman and Payner (1989) overcomes many of these difficulties by using a variety of methods of empirical analysis on a single large and important industry, South Carolina textiles. Their analysis eliminates alternative hypotheses and strongly supports the conclusion that EEOC and OFCCP were major factors in the large increase in black employment during the 1960s in an industry that previously had barred almost all black workers. The Heckman and Payner study also illustrates, in a positive manner, how difficult it is to isolate the effects of a few programs or events when many of them are changing at the same time. The changes in employment law occurred during a period when rapid changes in attitudes toward black-white relations were taking place across the entire nation (see Chapter 3). White Americans during the 1960s moved from significant verbal resistance of equal treatment of blacks in employment to overwhelming verbal acceptance. Many public and private institutions of higher and secondary education opened their doors to more than token numbers of blacks for the first time, and occupational and earnings upgrad- ing escalated for many blacks. These signal events did not occur in a vacuum. 318

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BLACKS IN THE ECONOMY The civil rights movement had been waged long and hard to effect just such changes. It is beyond the scope of available data to determine unambiguously the precise numerical contribution of any one event, program, or executive order. Laws change and, if they are enforced, those laws change people's attitudes and behavior, as well as social institutions, or a social crisis emerges. Laws do not and cannot rely entirely on direct enforcement. If a society is to function, its justice system must depend to a large extent on voluntary compliance, although this must often be backed by governmental threat of sanctions. Title VII has had a tremendous effect on behavior in the U.S. labor market. The EEOC and private individuals and organizations have taken hundreds of Title VII discrimination cases to the federal judicial courts. These cases have produced dozens of important judicial rulings that changed the behavior of employers and unions toward blacks and other discriminated groups (Taynes et al., 1986~. Many employers charged with discrimination modified their personnel procedures extensively even before the cases were decided. Other employers altered their procedures after observing companies in their industry being charged with violation of employment discrimination statutes. Major legal changes have occurred in seniority rules, hiring and promotion practices, and even in what constitutes labor market discrimina- tion and have had wide-reaching effects on blacks' relative position in the labor market. These legal changes and their enforcement altered the social context of hiring, firing, and promoting. Firms in the private sector as well as local, state, and federal governments designed and instituted equal em- ployment policies and affirmative action plans (Burstein, 1985; Marshall et al., 1978; Wallace, 1984:25~. Other important supporting evidence for the positive effects of EEOC laws and enforcement is contained in case studies of litigation involving unions and large employers. Cases producing consent decrees-such as a landmark agreement between AT&T, the EEOC, the U.S. Department of Justice, and the U.S. Department of Labor-provide specific examples of how equal opportunity employment has positively affected blacks' employment posi- tion (Wallace, 1985~. In summary, while we cannot determine with the available data the precise numerical effect of antidiscrimination programs, the evidence does show positive effects. General changes in race relations, educational improvement, the state of the economy, and government policies that facilitate these factors and provide incentives for the equal employment opportunity of minorities have each had an important role in determining blacks' labor market status. SOCIAL NETWORKS AND JOB OPPORTUNITIES Increases in the concentration of urban poverty among blacks (see above) has been especially damaging to the opportunities available for black youths. Highly concentrated poverty areas can be distinguished from other areas not merely by the race of the residents but, more importantly, by the kinds of 319

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY access that the residents of these neighborhoods have to jobs and job net- works, availability of marriageable partners, involvement in quality schools, and exposure to conventional role models (Anderson, 1986; Clark, 1965; Wilson, 1987) . When urban analysts speak of the "ghetto underclass," they refer to these extreme areas of poverty. Very few whites, even poor whites, live in extreme poverty areas. The effects of adverse opportunities and per- verse incentives on young black women and men can be seen in all of the data presented above. The data analyzed from an early 1980s National Bureau of Economic Research (NBER) survey of young black men (aged 16-24; see note 5 above) identify many of the severe economic problems confronted by black youth in the most poverty-stricken areas of U.S. inner cities. As reported by Freeman and Holzer (1986:8), extensive analysis of these data found: [Black youths living in the poorest areas of inner cities were] much more likely to be unemployed and less likely to be employed than white youths or all black youths. They tend to have slightly lower wages than other youths and they work fewer weeks per year. In addition, those youths have far worse family backgrounds than others. One-third of them live in public housing; almost one-half of them have a family member on welfare. Only 28 percent of them have an adult man in their household. Two particular effects stand out in relation to the employment of black youth. First, employment and labor force participation rates are especially low among inner-city black youths from households below the poverty income line (Freeman and Holzer, 1986~. Second, young blacks with 12 or fewer years of education report earnings and occupations below those of equivalently educated whites. In contrast, the earnings and occupations of college-educated black youths are much more comparable to those of simi- larly educated young whites (Taynes et al., 1986) . Investigators of the NBER data reported that much of the unemployment of the most disadvantaged black youths is due to two facts: they are fre- quently unemployed for long periods of time, and once out of work they have a very difficult time finding another job. Twenty percent of the young black men in the sample who were out of school experienced periods of joblessness that lasted longer than 1 year. And the durations of these periods of nonemployment do not appear to shorten with age (Freeman and Holzer, 1986:9; see also Clark and Summers, 1982~. These employment problems are likely to continue as black youths age. Freeman and Holzer (1986:9) estimated that "if the rate of increase in employment with age remains at the level of the 1970s, the cohort of inner-city black youths 18 to 19 years old in 1979 will not achieve a rate of emolovment of 80 percent until they reach their mid-thirties." ~, 1 Social networks and differential methods of job search are linked to the declining employment opportunities for poor black youths. Geographical dispersion of industry has probably contributed to an intensified competition for jobs at a time when the labor supply of women has increased and real 320

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BLACKS IN THE ECONOMY wages have been generally falling (Bor~as, 1986~. As a result, the importance of social networks for gaining information about and access to jobs has probably been magnified. Many young blacks are outside the principal em- ployment networks because of residential and educational segregation and resulting social separation. A number of studies have found that young blacks and whites often use different techniques of job search. Blacks more often walk in and apply. Whites are more often referred by friends and relatives or public employment agencies. The search techniques of blacks are likely to lead to lower paying jobs. Higher paying positions for both high school graduates and college- educated youths are usually filled through informal social networks, to which blacks, especially those from poor inner-city neighborhoods, are not con- nected (Braddock and McPartland, 1987; Bradshaw, 1973; Culp and Dun- son, 1986; Holzer, 1987~. These different search techniques are related to the fact that blacks and whites have separate social ties and networks. Young blacks have ties to other blacks who, like themselves, have attended predom- inantly black schools and lived in black neighborhoods. Older black males- concentrated in blue-collar jobs in now-declining manufacturing industries- are of little help to young blacks seeking jobs in service industries today. Braddock and McPartland (1987) report that the quality of employment blacks obtain is correlated with the racial composition of their social net- works. Specifically, they found that blacks who attended racially mixed secondary schools are more likely to reside in racially mixed neighborhoods and work in racially mixed environments. They also earn more. If they go to college, they are more likely to attend racially mixed colleges. In short, they concluded that for blacks (Braddock and McPartland, 1987:11) "seg- regated networks lead to poor paying, more segregated jobs (it is better on the average to depend on some other job-search technique), and desegre- gated networks lead to better paying, less segregated work. " Interestingly, this association did not show up for black women. A possible explanation may be that black females gained access to expanding nonper- sonal service employment and clerical opportunities during the 1950s and 1960s when fewer white females were in the labor force. The social employ- ment networks of black females may therefore be more helpful to young black women attempting to gain access to clerical positions and other white- and pink-collar jobs. Employers appear to devalue diplomas granted by predominantly black high schools. Employers may also associate young black males with "criminal behavior or aggression" (Braddock et al., 1986:21; see also Anderson, 1980, 1986~. Such kinds of attribution may arise in social contexts in which a person has to decide on incomplete information whether to serve or hire or admit another. A job decision may go against a black youth, for example, simply because in the absence of specific evidence to the contrary, black youths are statistically more likely than whites or older adults to be poorly educated, inexperienced, unreliable, and even to have a criminal record. This sort of probabilistic prejudgment is unfair to an individual black to whom is 321

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A COMMON DESTI NY: BLACKS AN D AMERICAN SOCI ETY incorrectly attributed the characteristics of others, and it can lead to self- perpetuating circles. The victims of such prejudgments in hiring lose the experience and the references that would make them employable. They may turn to activities and life-styles that justify the stereotype and raise the adverse odds that similar blacks encounter in the future (see Anderson, 1980, 1986; Freeman and Holzer, 1986:14~. Poor employment experiences of black youths are due to many factors: inadequate demand for black youths by employers offering "good" jobs; discrimination; increased competition from white women who entered the labor force in great numbers during the late 1970s; and the relatively poor educational preparation of many black youths. Many young blacks thus move in and out of low-paying jobs that offer little advancement potential. Black youth, like white youth, appear willing to accept these jobs only as a temporary relief. As Holzer (1986:65) noted, the potential of public- or private-sector programs that offer more low-paying, dead-end jobs cannot be effective as a means of improving the employment conditions among disad- vantaged young blacks. Minimum-wage employment opportunities appear to be reasonably attainable. If the better employment opportunities to which many blacks aspire (see Chapter 10) are to be realized, there will need to be substantial improvements in the education and training opportunities avail- able to black youth. Several employment and training programs whose objectives are enhancing the long-term employment and earning opportunities available to disadvan- taged people have been initiated by federal and local governments since the early 1960s. These programs have been very diverse in their approaches and in their targeted client groups. The same may be said for the research strategies used to evaluate such programs and their cost-effectiveness; for recent reviews of the large literature, see Bassi and Ashenfelter (1986), Betsy and colleagues (1985), Rees (1986), and Sawhill (1988~. Conclusions about the overall effectiveness of the large and diverse set of employment and training programs have been mixed. For example, Bassi and Ashenfelter (1986) concluded that, on the whole, the programs Dad been neither overwhelmingly successful nor ~ great failure. Two kinds of programs stand out as notably ineffective and notably elective. ~norr-rerm programs that emphasize work (on-thejob) experience alone appear to be among the least effective: clients' opportunities after such programs are _ . _ am, ~1 1 ~, ~1 . . __ 1 1 virtually the same as they were before the program. Since low-skilled, disad- vantaged workers are likely to be placed only in low-paying, non-career- oriented jobs, this finding seems unsurprising (Burtless, 1984; Sawhill, 1988~. In contrast, one kind of program that appears particularly effective has been those that provide very intensive remedial education and job training for youths, particularly the Job Corps. Although the Job Corps is quite expensive relative to short-term programs, it has frequently been found to have benefits significantly greater than its costs. The most positive effects have been on the employment and earnings of black participants. Positive effects are generally reported for black males and females, and especially 322

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BLACKS IN THE ECONOMY young males, but not for whites (see Betsey et al., 1985; Burtless, 1984; Rees, 1986; Sawhill, 1988) . There are no satisfactory substitutes for a vigorous and expanding economy and an effective public school system to achieve an educated and employed work force. However, as complements to these important goals, intensive remedial education and job training programs are the most effective methods for ameliorating the very serious problems currently affecting the labor mar- ket condition of large numbers of poorly educated and disaffected black youths. CONCLUSIONS Changes in labor market conditions and social policies of governments have had great effects on the economic status of black Americans. Yet the current economic prospects are not good for many blacks. Adverse changes in labor market opportunities-falling real wages and employment, increases in one-parent families with one or no working adults-have made conditions especially difficult for those blacks from the most disadvantaged back- grounds. However, changes in family structure have not been a major cause of continuing high poverty rates since the early to mid-1970s; rather, lower real wages of men and women have increased the difficulty of rising from poverty through employment. This factor of lower real wages in recent years can be seen in the halt in reductions in poverty rates among all Americans. Overall, from 1940 through roughly 1970, black Americans experienced sometimes erratic but generally significant improvements in their relative economic status: average earnings of men and women, per capita and family incomes, and measures of occupational status generally all rose relative to those of whites. While black women's earnings have reached near parity with those of white women, women's earnings lag behind men's. After the early 1970s, black gains in relative earnings and incomes slowed and then deteri- orated for many indicators of average status (e.g., annual male earnings, per capita and family incomes). In particular, men's earnings and other aggregate measures of black income were, relative to white measures, lower in the mid- 1980s than in 1970 and in many cases no greater than the levels reached in the 1960s. An important explanation for these developments is that while the occu- pational positions and hourly wages received by employed blacks have con- tinued to improve relative to whites, blacks' relative employment has fallen significantly. As a consequence, incomes and aggregate measures of earnings, being largely composed of the product of wages and employment, have not kept up with gains in wages. Reductions in relative levels of employment since 1970 for both black adult men and women have arithmetically been due primarily to higher unemployment rates. Although available data do not provide a definitive explanation for the particularly low employment rate of 323

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY black men, the data do suggest that adverse changes in the demand for less educated workers had an especially important role in the employment status of black men. One effect of the improvement in blacks' occupations and wages for those who are employed has been the development of an appreciable black middle class that exists in the presence of a large percentage of low-status blacks whose condition has persisted through periods of recession and prospenty. As this chapter shows, the economic fortunes of blacks are strongly tied (more so than those of whites) to a strong economy and vigorously enforced policies against discnmination. Without these conditions, the black middle class may persist, but it is doubted it can grow or thrive. And the position of lower status blacks cannot be expected to improve. Improvements in blacks' relative economic status have been primarily due to sustained economic growth and blacks' migration to higher wage sectors of the economy (1940-1973), rising levels of black education, vigorous enforcement of equal opportunity laws and employment programs that ben- efited blacks, and overall improvements in attitudes toward race relations in the economy. When these important factors have not been present, blacks have not generally made progress in their relative economic status. . REFERENCES Anderson, Elijah 1980 Some observations on black youth employment. Pp. 64-87 in Bernard Anderson and Isabel Sawhill, eds., Youth Emp/~nent Issues and Policy. Englewood Cliffs, N.J.: Prentice-Hall. 1986 Of Old Heads and Young Boys: Notes on the Urban Black Experience. Paper prepared for the Committee on the Status of Black Americans, National Research Council, Washington, D.C. Ashenfelter, Orley 1968 Minority Employment Patterns, 1966. Princeton, N.J.: Industrial Relations Section, Department of Economics, Princeton University. Ashenfelter, Orley, and lames J. Heckman 1976 Measuring the effect of an anti-discrimination program. Pp. 46-84 in Orley Ash- enfelter and James Blum, eds., Evaluating the Labor Market Effects of Social J~o~grams. Princeton, N.J.: Industrial Relations Section, Department of Economics, Prince- ton University. Bassi, Laurie, and Orley Ashenfelter Bates, Timothy 1986 The effect of direct job creation and training programs on low-skilled workers. Pp. 133-151 in Sheldon Danziger and Daniel Weinberg, eds., Fighting Poverty: What Works and What Doesn't. Cambridge, Mass.: Harvard University Press. 1986 Paper prepared for the Committee on the Status of Black Americans, National Research Council, Washington, D.C. Becker, Gary 1981 A Treatise on the Family. Cambridge, Mass.: Harvard University Press. Belier, Andrea H. 1984 Trends in occupational segregation by sex and race, 1960-1981. In Barbara F. Reskin, ea., Sex Se,gregat~on in the Workplace. Committee on Women's Employment and Related Social Issues. Washington, D.C.: National Academy Press. 324

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BLACKS IN THE ECONOMY Betsey, Charles L., Robinson G. Hollister, Jr., anal Mary R. Papageorgiol1 1985 Couth Emphry7nent and Training Programs: The tEDPA ~ears. Committee on Youth Employment Programs. Washington, D.C.: National Academy Press. Borjas, George J. 1986 The demographic determinants of the demand for black labor. Pp. 191-232 in Richard B. Freeman and Harry J. Holzer, eds., The Black Youth Empk~ment Crisis. Chicago and London: University of Chicago Press. Braddock, JoMills Henry, II, Robert L. Crain, James M. McPartland, and Russell L. Dawkins 1986 Applicant race and job placement clecisions: a national survey experiment. Inter- national Journal of Sociology and Social Policy 6~1~:3-24. Braddock, JoMills Henry, II, and James M. McPartland 1987 How minorities continue to be excluded from equal employment opportunities: research on labor market and institutional barriers. Journal of Social Issues 43~1)[Spring] :5-39. Bradford, William D. 1987 Wealth, Assets, and Income of Black Households. Paper prepared for the Commit- tee on the Status of Black Americans, National [Research Council, Washington, D.C. Bradshaw, Thomas 1973 Jobseeking methods used by unemployed workers. Monthly Labor Review 96(February) :35-46. Brown, Charles 1984a The federal attack on labor market discrimination: the mouse that roared? In Ronald Ehrenburg, ea., Research in Labor Economics. New York: JAI Press. 1984b Black/white earnings ratios since the Civil Rights Act of 1964: the importance of labor market dropouts. Q~arterly~o?vrnal of Economics 99 (February) :31-44. Burman, George 1973 The Economics of Discrimination: The Impact of Public Policy. Ph.D. thesis, Graduate School of Business, University of Chicago. Burstein, Paul 1985 Discrimination, Jobs, and Politics: The Spangle for Equal Employment Opportunity in the United States Since the New Deal. Chicago: University of Chicago Press. Burtless, Gary 1984 Manpower policies for the disadvantaged: what works? The Brooking Revive 3~1) [Fall]: 18-22. 1987 The work response to a guaranteed income: a survey of experimental evidence. In Alicia H. Mannell, ea., Lessons from the Income Maintenance Experiments. Boston: Federal Reserve Bank of Boston. Clark, Kenneth B. 1965 Dark Ghetto. New York: Harper & Row. Clark, Kim B., and Lawrence Summers 1982 The dynamics of youth unemployment. In Richard B. Freeman and D. A. Wise, eds., The youth Labor Market Problem: Its Nature, Causes, and Consequences. Chi- cago: University of Chicago Press. Culp, Jerome, and Bruce H. Dunson 1986 Brothers of a different color: a preliminary look at employer treatment of white and black youth. Pp. 233-260 in Richard B. Freeman and Harry J. Holzer, eds., The Black Youth Emp/vyrnev~t Crisis. Chicago and London: University of Chicago Press. Danziger, Sheldon, and Peter Gottschalk 1986a Do rising tides lift all boats? The impact of secular and cyclical changes in poverty. American Economic Reriew 7642)[May]:405-410. 1986b Unemployment Insurance and the Safety Net for the Unemployed. Discussion paper, Institute for Poverty, University of Wisconsin. 325

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A COMMON DESTINY: BLACKS AND AMERICAN SOCIETY Danziger, Sheldon, and Daniel Weinberg, eds. 1986 Fighting Poverty: What Works and What Doesn't. Cambridge, Mass.: Harvard University Press. Darity, William A., Jr., and Samuel L. Myers, Jr. 1980 Changes in black-white incomes inequality, 1968-1978: a decade of progress? The Row of Black Political Economy 1044)[Summer]:354, 356-379. Ellwood, David T. 1986a Targeting the Would-Be ~ Term Recipient of AFDC: Who Should Be Served? Prince- ton, N.J.: Mathematica Policy Research. 1986b The spatial mismatch hypothesis: are there teenage jobs missing in the ghetto? Pp. 147-196 in Richard B. Freeman and Harry J. Holzer, eds., The Black Couth Employment Crisis. Chicago and London: University of Chicago Press. 1988 Poor Support: Poverty in the American Family. New York: Basic Books. Farley, Reynolds 1987 Changes in the Status and Characteristics of Blacks: 1940 to Mid-1980s. Paper prepared for the Committee on the Status of Black Americans, National Research Council, Washington, D.C. Featherman, David L., and Robert M. Hauser 1976 Prestige or socioeconomic scales in the study of occupational achievement. Soci- olo~qicalMethodsandResearch4~4~[May]:403-422. 1978 Opportunity and Change. New York: Academic Press. Freeman, Richard B. 1973 Changes in the labor market for black Americans, 1948-1972. Brookin,gs Papers on Economic Activity. Vol. 1. Washington, D.C.: Brookings Institution. Freeman, Richard B., and Harry J. Holzer, eds. 1986 The Black Youth EmpEr~n~t Crisis. Chicago and London: University of Chicago Press. Goldstein, Morris, and Robert S. Smith 1976 The estimated impact of the antidiscrimination program aimed at federal con- tractors. Industrial and Labor Relations Row 29~4~[July]:523-543. Gueron, Judith 1986 Work Initiatives for Welfare Recipients: Lessons Mom a M?~lti-State Experiment. New York: Manpower Demonstration Research Corporation. Gwartney, James 1970 Changes in the nonwhite/white income ratio-1939-67. American Economic Re- mew 6045~:872-883. Haveman, Robert, and Barbara Wolfe 1984 The decline in male labor force participation comment. Journal of Political Econ- omy 92~3~[0ctober]:532-541. Haworth, J. G., J. D. Gwartney, and C. Haworth 1975 Earnings productivity and changes in employment discrimination during the 1960's. American Economic Ranier 65~2~[March]:158-168. Heckman, James J. 1987 The Impact of Government on the Economic Status of Black Americans. Un- published paper, Department of Economics, University of Chicago. Heckman, James J., and Brook S. Payner 1989 Determining the impact of federal antidiscrimination policy on the economic status of blacks: a study of South Carolina. American Economic Review 79~1~[March]: 138-177. Heckman, James J., and Kenneth I. Wolpin 1976 Does the Contract Compliance Program work? An analysis of Chicago data. Industrial and Indoor Relations Renew 29 (July): 511 564. 326

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BLACKS IN THE ECONOMY Hill, Robert B. 1987 The black middle class: past, present, and future. Pp. 43-64 in The State of Black America 1986. Washington, D.C.: National Urban League. Holzer, Harry J. 1986 Black youth nonemployment: duration and job search. Pp. 23-65 in Richard B. Freeman and Harry J. Holzer, eds., The Black youth Empk~nt Crisis. Chicago: University of Chicago Press. 1987 Informal job search and black youth unemployment. American Economic Renew 77~3)[June] :447-452. Hout, Michael 1984 Occupational mobility of black men. American Sociological Renew 49~3~:308-322. Jaynes, Gerald David, James Tobin, and Reynolds Farley, cds. 1986 Manuscript prepared for the Panel on Income, Employment, and Occupations, Committee on the Status of Black Americans, National Research Council, Wash- ington, D.C. Kain, John F. 1968 Housing segregation, Negro employment and metropolitan decentralization. Quarterly Journal of Economics 82 (May) :32-59. Kasarda, John D. 1985 Urban change and minority opportunities. Pp. 33-67 in P. Peterson, ea., The New Urban Reality Washington, D.C.: Brookings Institution. Landry, Bart 1987 The New Black Middle Class. Berkeley: University of California Press. Lazear, Edward 1979 The narrowing of black-white wage differentials is illusory. American Economic Renew 69~4)[September] :553-564. Leonard, Jonathan 1985 The Effectiveness of Equal Employment Law and Affirmative Action Regulation. Report to the Subcommittee on Employment Opportunities of the Education and Labor Committee and the Subcommittee on Civil and Constitutional Rights of the Judiciary Committee, U.S. Congress. School of Business Administration, University of California, Berkeley. 1987 The interaction of residential segregation and employment discrimination. Jo?~r- nal of Urban Economics 21:323-346. Levin, Daniel B., and Linda Ingram, eds. 1988 Income and Poverty Statistics: Problems of Concept and Measurement. Report of a Workshop. Committee on National Statistics, Commission on Behavioral and Social Sciences and Education, National Research Council. Washington, D.C.: National Academy Press. Malveaux, Julianne 1986 The Economic Status of Black Women: An Overview and Note on Interpreta- tion. Paper prepared for the Committee on the Status of Black Americans, National Research Council, Washington, D.C. Marshall, Ray, Charles B. Knapp, Malcolm H. Ligget, and Robert W. Glover 1978 Employment Discrimination. New York: Praeger. Moffitt, Robert 1985a Evaluating the effects of changes in AFDC: methodological issues and challenges. Journal of Policy Analysis and Management 4(Summer) :537-553. 1985b Work incentives in the AFDC system: an analysis of the 1981 reforms. American Economic Review 7642) (May) :219-223. Murray, Charles 1984 Losing Ground: Am~rzcan Social Policy, 1950-1980. New York: Basic Books. 327

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