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America Becoming: Racial Trends and Their Consequences: Volume II (2001)

Chapter: 5. Racial Differences in Labor Market Outcomes Among Men

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Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

5
Racial Differences in Labor Market Outcomes Among Men

Harry J.Holzer

This paper reviews evidence of racial differences, among men, in labor-market outcomes such as wages, employment, and labor-force participation. Data are presented for trends over time and differences across racial and ethnic groups. Differences between Whites and Blacks are considered, as are some differences involving Hispanic and Asian men, both immigrants and U.S. born. Also considered are various explanations for the noted trends. Possible future trends are discussed, as well as implications for policy and further research.

RELATIVE WAGES AND EMPLOYMENT: TRENDS AND REMAINING DIFFERENCES

Figure 5–1 plots trends in the Black/White wage ratio from 1940 to 1990. Table 5–1 gives a brief list of earnings ratios, based on amounts of labor-market experience, for 1971, 1981, and 1988. The data plotted in Figure 5–1 indicate that the wages of Black men improved dramatically during this time period. In 1940, the wages of Black men were, on average, only 40 percent as high as those of White men; by 1990, they were roughly 75 percent as high. Within this overall trend, however, the rate of progress has been quite uneven. There were two periods of sharp improvement—1940 to 1950 and 1960 to 1975. In contrast, improvements during 1950 to 1960 were much more modest; and since 1975, the relative wages of Black men have stagnated or even declined.

Table 5–1 lists differences in the ratios of relative wages based on

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

FIGURE 5–1 Relative wages of White and Black males: Trends in Black-White wage ratio, 1940–1990. Reprinted with permission from George Borjas, John F. Kennedy School of Government, Harvard University.

TABLE 5–1 Adjusted Black/White Earnings Ratios Based on Years of Experience, 1971, 1981, 1988

 

Years of Experience

Year

0–9

10–19

20+

1971

0.88

0.78

0.79

1981

0.85

0.80

0.83

1988

0.82

0.84

0.84

Note: Adjusted for differences in education, veteran and marital status, region, urban residence, number of children, and hours worked.

SOURCE: Blau and Beller (1992). Reprinted by permission.

years of experience. Although Black men with 10 or more years of labor-market experience continued to gain in relative wages during the 1980s, the group with the fewest years of experience lost ground relative to Whites. Data indicate that the deterioration in earnings relative to Whites was greatest among young Black men with a college degree; but the deterioration in absolute terms was much greater among the less educated (Juhn et al., 1993; Bound and Holzer, 1996), and reflected the dramatic

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

decline in earnings experienced by less-educated young men of all races during the past 20 years.

The deterioration in relative earnings among young Black men can be observed even after one adjusts for Black-White differences in education, region of residence, etc. In the mid-1970s, young Black men were earning 10 percent less than White men with similar education, age, and area of residence; by the late 1980s, that gap had risen to about 20 percent (Bound and Freeman, 1992). Controlling for differences in other measures of skills, however, such as test scores, will account for at least some of the remaining racial difference (a point addressed below).

Table 5–2 shows differences, by race, in rates of employment, labor-force participation, and unemployment. The data indicate that in 1970, compared to Whites, Blacks’ labor-force participation rate was roughly 3 percentage points lower, and their unemployment rate was roughly 3 percentage points higher. But the labor-force activity of Black men deteriorated substantially during the 1970s and 1980s relative to Whites, while unemployment rose. Some of this deterioration in the relative employment of Black men was occurring during the early 1970s, while their relative wages were still improving (Cogan, 1982). Although part of this can be attributed to increases in school enrollment rates among young Black men, the trend can be found even among the nonenrolled. The deterioration continued into the late 1970s and 1980s, during which time relative wages were also deteriorating.

Of course, employment and unemployment rates for both Whites and Blacks follow a strong cyclical pattern, and both groups showed strong improvement in the late 1990s. Unemployment rates during 1998 aver-

TABLE 5–2 Employment Ratios, Labor Force Participation Rates, and Unemployment Rates (percent), by Race

 

Employment

Labor-Force Participation

Unemployment

Year

Blacks

Whites

Blacks

Whites

Blacks

Whites

1970

71.9

77.8

77.6

81.0

7.3

4.0

1975

62.7

73.6

72.7

79.3

13.7

7.2

1980

62.5

74.0

72.1

78.8

13.3

6.1

1985

60.0

72.3

70.8

77.0

15.3

6.1

1990

61.8

73.2

70.1

76.9

11.8

4.8

1994

60.8

71.8

69.1

75.9

12.0

5.4

 

SOURCE: Bureau of Labor Statistics data from Employment and Earnings, January 1971 through January 1998.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

TABLE 5–3 Unemployment Rates (percent) for White, Black, and Hispanic Males, by Age, 1994

Age (years)

Whites

Blacks

Hispanics

16–17

16.5

39.3

33.3

18–19

14.7

36.5

22.5

20–24

8.8

19.4

10.8

25–54

4.3

9.1

7.7

>55

4.0

6.4

8.0

All ages>6

5.4

12.0

9.4

 

SOURCE: Blau and Beller (1992). Reprinted by permission.

aged roughly 4 and 9 percent for White and Black men, respectively, even though the absolute decline in unemployment among Blacks during the 1990s was greater. The Black/White unemployment ratio, however, remained roughly constant during this period. Recent gains are important, but how long will they last? Even while they last, they do not fully reverse the strong secular trend toward lower relative employment activity among Black men.

Table 5–3 indicates that overall unemployment rates in 1994 were more than twice as high among Black men as among White men. Unemployment rates were dramatically higher among teenagers than among prime-age (25 to 64 years old) males for each racial group; but the numbers for Blacks were particularly striking, as almost 40 percent of Black teenagers in the labor force were unemployed. In fact, labor-force activity was, in 1994, declining among all racial groups for young men with low levels of education—i.e., high school diplomas only and especially high school dropouts—apparently in response to the decline in real wages they had experienced in the 1970s and 1980s (Juhn, 1992). But, again, the decline among less-educated young Black men was most dramatic.

Table 5–4 presents relative wages for various groups of Hispanic and Asian men in 1979. The unadjusted ratios show raw differences in means between various ethnic groups and White males; the adjusted ratios adjust for differences in education level, age, region of residence, English proficiency, etc. The raw (or unadjusted) data indicate the wide range of earnings across these groups relative to Whites. On the one hand, Asian Indian and Japanese men were earning somewhat more than White men; however, Mexican, Puerto Rican, and Vietnamese men were earning less than two-thirds as much. But, after adjusting for differences in the characteristics mentioned above—education level, age, etc. —the range of rela-

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

TABLE 5–4 Unadjusted and Adjusted Ethnic/White Earnings Ratios, 1979

Ethnic Group

Unadjusted

Adjusted

American Indian

0.74

0.92

Asian Indian

1.13

0.98

Chinese

0.89

0.89

Cuban

0.79

0.96

Filipino

0.79

0.92

Japanese

1.05

1.01

Korean

0.89

0.82

Mexican

0.66

0.98

Puerto Rican

0.63

0.95

Vietnamese

0.64

0.98

Note: Adjusted for differences in education, age, hours worked, marital status, region, knowledge of English, and place of birth.

SOURCE: Carlson and Schwartz (1988). Reprinted by permission.

tive earnings narrows dramatically; in fact, virtually all these groups of men, were, in 1979, earning 90 percent or more of what White men earned. Differences in educational attainment and language ability seem to account for much of the differences in the raw data, especially for Hispanics (Reimers, 1983; Trejo, 1997).

Dramatic differences in educational attainment and language proficiency across ethnic groups often reflect a high concentration of immigrants among some of the groups. Figure 5–2 presents wage rates, obtained from the 1990 Census, of U.S.-born Hispanic and Asian men in comparison to those of Whites. The data reveal much smaller differences in wages across groups than are shown in the unadjusted data in Table 5–4. Indeed, U.S.-born Chinese and Japanese men were earning more than White men; and U.S.-born Cuban and Puerto Rican men were earning almost 90 percent as much, even in the raw data.

However, the relative importance of educational and language deficiencies among some groups of Hispanic and Asian men has grown over the past few decades, as large numbers of less-educated immigrants have arrived in the United States. This largely accounts for the fact that overall educational attainment and earnings for Hispanic men fell over the past 20 years (Council of Economic Advisers, 1998). As the children of these groups assimilate, their relative education and earnings should improve

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

FIGURE 5–2 Relative wage rates in 1990 of U.S.-born Asian and Hispanic men aged 25–64. (A) Asian. (B) Hispanic. Reprinted with permission from George Borjas, John F.Kennedy School of Government, Harvard University.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

substantially, although some differences of opinion exist as to whether the convergence in earnings over time for the more recent immigrant groups has been as rapid as for earlier immigrant groups (Chiswick; 1986; Borjas, 1994).

To sum up, these data indicate substantial differences in employment and earnings across groups, and in trends over time. Although the relative earnings of Black men have improved since 1940, the rate of progress has been uneven; and there has been some recent deterioration in their relative earnings. Overall, Hispanic and Asian men earn considerably less than Whites, but much of this is accounted for by lower levels of education and language proficiency, particularly among recent immigrants.

EXPLAINING THE BLACK-WHITE TRENDS

How do we account for the improvements in relative earnings of Black men from, roughly, 1940 to 1975, especially during 1940 to 1950 and 1960 to 1975? And what accounts for the deterioration in relative earnings and employment more recently?

Improvements in the relative earnings of Blacks during the pre-Civil Rights period seem to be explained primarily by their immigration from the rural South to the industrial North and Midwest, and by improvements in the quantity and quality of education attained, particularly in the South (Smith and Welch, 1989; Margo, 1990; Card and Krueger, 1992). Improvements in education, in turn, seem at least partly to reflect political and legal developments, including the Supreme Court decision in Brown v. Board of Education of Topeka in 1954 (Boozer et al., 1992; Donohue et al., 1998). Improvements during the 1940s seem to reflect advances made by Black men during World War II, as they moved into more skilled positions vacated by White men who went away to war.

The dramatic progress made by Black men during the 1960s and early 1970s also seems to reflect rapid improvements in their quantity and quality of education and occupational status, as well as in relative earnings within education and occupation groups. Much of this improvement can be tied to social and economic changes induced by the Civil Rights Acts of 1964 and 1972 (Freeman, 1981; Heckman and Payner, 1989; Chay, 1995). Declines in discriminatory behavior seem to be particularly apparent in the South, where discrimination against Blacks had historically been greatest, as Black men began to be increasingly employed in professional/ managerial occupations. Other administrative actions and court decisions, such as the implementation of Affirmative Action requirements for government contractors and the “disparate impact” cases brought in the af-

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

termath of Griggs v. Duke Power in 1971, likely contributed as well (Brown, 1982; Leonard, 1990).1

Given the strong improvements that occurred during 1960 to 1975, what accounts for the stagnation and even deterioration in relative earnings, and employment, since then? A number of developments seem to be responsible for these reversals, on both the demand and the supply sides of the labor market, reflecting both employers/jobs and Black workers. Some of these developments, such as rising employer demand for skills and declining industrialization/unionism, seem to account for the deterioration in employment rates and earnings observed among young Blacks. Other factors, such as labor-market discrimination and social/ spatial factors, have not necessarily worsened over time, but no doubt contribute to the persistence of racial gaps in employment and earnings noted above.

Rising Employer Demand for Skills

During the past two decades, earnings inequality has risen quite dramatically in the labor market. Earnings gaps have risen between educational groups and between those with different levels of cognitive ability, after controlling for education (Levy and Murnane, 1992; Murnane et al., 1995). Although the educational attainment and test scores of Blacks improved somewhat over the past two decades (e.g., Mare, 1995; Hauser and Huang, 1996), large gaps remain relative to Whites. The high school graduation rates of Blacks continued to improve significantly during the 1980s, though their tendency to graduate from college improved much more slowly. Improvements in test scores among students continued until roughly the mid-1980s and have leveled off or mildly deteriorated since then.

Thus, as Blacks remained more concentrated among the less-educated and less-skilled groups, they were likely disproportionately hurt when the relative earnings of men in the less-educated, less-skilled groups declined (Juhn et al., 1993).2 Furthermore, differences in educational attainment and test scores together may account for most of the racial

1  

Although Affirmative Action requirements of federal government contractors were first introduced by Executive Order 11246 in 1965, enforcement of these provisions was limited until the late 1960s and early 1970s. Similarly, changes in the enforcement of the Civil Rights Act, such as the use of class-action suits after 1972, likely contributed to the economic effects of the act as well.

2  

Questions about the extent to which rising returns to unmeasured skills can account for the relative stagnation or deterioration of Black earnings have been raised by Card and Lemieux (1994) and by Chay and Lee (1997), largely on the basis of timing issues and differences in patterns across educational groups.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

difference in wages, though less so for differences in employment rates. Ferguson (1993) and Neal and Johnson (1996) provide evidence of lower test scores based on the National Longitudinal Survey of Youth (NLSY). Rodgers and Spriggs (1996) note, however, that racial differences remain in the market returns to these scores and also in their determinants. Significant racial differences in wages remain in other datasets besides the NLSY, even after controlling for education and test scores—e.g., in the High School and Beyond data (Murnane et al., 1995).

Employers continue to be reluctant to hire Blacks for jobs that require significant cognitive skills and credentials, such as specific experience or previous training, even those jobs for which formal educational requirements are not high (Holzer, 1996).

Declining Industrialization and Unionism

Rising demand for skills can account for some of the increase in inequality during the past two decades, but some part of that increase also seems to reflect factors such as declining employment in manufacturing and declining levels of union membership (Levy and Murnane, 1992). Although Black males were no more heavily concentrated in manufacturing jobs nationwide than were White males in the 1960s, they were more heavily concentrated in manufacturing jobs in the urban Midwest. Declines in manufacturing and union membership help account for the particularly strong declines in Blacks’ relative employment and earnings in the Midwest since 1970 (Bound and Freeman, 1992; Bound and Holzer, 1993, 1996). Black men have traditionally been more likely to be members of unions than White men, and enjoyed particularly large wage gains from such membership (Freeman and Medoff, 1984). The declining presence of unionism in the economy has, no doubt, hurt Blacks disproportionately.

Persistent Discrimination

Although labor-market discrimination against Blacks has clearly declined over time, there is evidence that it persists. The clearest evidence comes from audit studies, in which matched pairs of Black and White job seekers with comparable credentials, in terms of education and experience, apply for various advertised job openings. These studies found that Blacks are less likely to receive job offers, on average, than Whites (Fix and Struyk, 1994; Bendick et al., 1994).

When comparing the likelihood of White and Black applicants to be employed, clear differences can be found across various kinds of firms: Black applicants are much less likely to be hired by small establishments

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

than by large ones and are less likely to be hired for jobs that involve significant contact with White customers (Holzer, 1998; Holzer and Ihlanfeldt, 1998). The greater degree of informality and subjectivity in the hiring procedures of smaller establishments likely contributes to their more discriminatory behavior (Braddock and McPartland, 1987; Holzer, 1987). Discrimination might also be greater in establishments located in the suburbs than those located in central cities.

The greater tendencies of some of these establishments to discriminate seem to be, at least partly, related to the lower level of monitoring of smaller and/or suburban establishments by Civil Rights enforcement agencies. For instance, only firms with 100 or more employees are required to file Equal Employment Opportunity (EEO)-1 forms with the federal government, unless they have federal contracts. Suburban firms are also less likely to be monitored, and are therefore less likely to be found in violation of antidiscrimination statutes, as they receive fewer Black applicants and have fewer Blacks in their relevant local labor markets (Bloch, 1994).

Discrimination against Blacks seems more clearly pronounced at the hiring stage, perhaps because of how EEO laws are implemented. Donohue and Siegelman (1991) show that most EEO cases involve allegations of discrimination in promotions or discharges, rather than hiring. Thus, some employers might feel they’d face a greater likelihood of being sued if they do hire young Blacks than if they don’t (Bloch, 1994).

The tendency of employers to discriminate in hiring seems to more clearly impact Blacks than Hispanics, and Black males than Black females (Holzer, 1998b). Kirschenman (1991) provides evidence that employers have a greater fear of Black men than Black women. The greater tendency to discriminate against Blacks seems consistent with ethnographic evidence showing that employers prefer other ethnic groups, especially immigrants, to U.S.-born Blacks, believing that other ethnic groups have a better “work ethic” (Kirschenman and Neckerman, 1991). Although the audit studies suggest that some hiring discrimination against Hispanics remains (Kenney and Wissoker, 1994), Hispanics might be able to avoid the adverse effects of this discrimination by applying for jobs primarily in sectors where it is known that employers do not discriminate against Hispanics and where they have strong networks (Holzer and Reaser, forthcoming [2000]; Waldinger, 1996).

If discrimination against Black men is heavily related to employer (and perhaps customer) fear of crime or violence, it is likely more serious against less-educated than more-educated Blacks. In fact, relative wage gaps are higher among less-educated Blacks (Council of Economic Advisers, 1998). It is possible that such discrimination has grown more serious over the past few decades as crime rates, and their correlation with educa-

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

tion levels, have increased in regard to Black men (Freeman, 1992). The growing value that employers seem to put on “soft skills,” such as social and verbal skills, might also contribute to a growing reluctance to hire less-educated Black men for jobs where such skills are important (Moss and Tilly, 1995).

Social/Spatial Factors

Although residential segregation between Whites and Blacks has declined modestly over the past few decades, it remains high (Massey and Denton, 1992; Farley and Frey, 1993). Furthermore, economic segregation seems to be rising, especially the tendency of low-income Blacks to live in predominantly Black and poor neighborhoods (Jargowsky, 1997).

These facts are likely to have a number of implications for the labor-market performance of Blacks, especially those with lower incomes. For one thing, residential segregation seems to be associated with lower educational attainment and lower employment outcomes (Cutler and Glaeser, 1997). Economic segregation of Blacks also seems to contribute to these problems (O’Regan and Quigley, 1996). Although the exact mechanisms through which these effects occur are somewhat obscure, data suggest that “social isolation” contributes to a lower quality of education and a variety of problematic behaviors among Blacks.3 The social isolation of low-income Blacks might also limit their access to employment and/or higher wages because it denies them access to effective employment networks (Braddock and McPartland, 1987; Holzer, 1987).

Another mechanism through which residential segregation appears to limit labor-market opportunities for Blacks is “spatial mismatch,” in which inner-city Blacks have difficulty gaining access to jobs located in relatively distant suburbs. Although this notion has been controversial for decades, recent evidence seems largely to bear it out (e.g., Holzer, 1991; Kain, 1992). Blacks are generally located further away from areas of strong employment growth and high job vacancy rates than are Whites, and this distance seems to be associated with lower employment rates for them (Hughes and Sternberg, 1992; Raphael, 1998; Ihlanfeldt, 1998). Black employees at central-city firms are also more likely to quit their jobs when such firms relocate to suburban areas (Zax and Kain, 1996; Fernandez,

3  

See Ellen and Turner (1997) for a recent review of the literature on “social isolation” and neighborhood effects. The best micro-level evidence that social contacts affect behavior adversely among young people in poor Black neighborhoods can be found in Case and Katz (1991). Borjas (1992) also presents evidence that neighborhoods may have intergenerational effects across a wide range of ethnic groups.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

1994). Among the factors that seem to contribute to “spatial mismatch” are the lack of automobile ownership among lower-income Blacks, and the distance of many suburban firms from public transportation (Holzer et al., 1994; Holzer and Ihlanfeldt, 1996). Limited information about firms and job openings in these areas seems to play some role as well (Ihlanfeldt, 1997; Raphael et al., 1998).

Expectations, Alternative Income, and Illegal Activity

Declining employment rates among young Black men in the 1960s and 1970s, even while their relative wages were improving, suggest that shifts in labor supply away from the low-wage labor market might have contributed to their declining employment in this and later periods. One possible reason might be that wage expectations among young Blacks appear to have risen more rapidly than did the wage offers they received; and “menial” work that was once regarded as acceptable came to be regarded as unacceptable (Anderson, 1980). These notions receive some support from an analysis of self-reported “reservation wages” (or the lowest wages considered acceptable) among young people. Although absolute levels of reservation wages reported by young Blacks are generally lower than those reported by young Whites, they appear to be higher relative to wages actually offered in the market (Holzer, 1986; Petterson, 1996); and this likely contributes somewhat to their longer durations of nonemployment.4

The issue of high-wage expectations and unwillingness to accept low-wage employment appears to be one explanation for the high rate of participation of young Black men in illegal activities. These rates are particularly pronounced among Black male high school dropouts (Freeman, 1992), whose earnings have declined dramatically in recent years. Indeed, perceptions that one can do better on the “street” than in a regular job gained popularity during the 1980s, regardless of the overall state of the labor market (Freeman, 1991); and participation in crime seems to be related to this perception of relative returns in the legal and illegal sectors, even after adjusting for risks of incarceration or violence (Viscusi, 1986). Survey evidence suggests that many young men involved in illegal

4  

In Holzer’s analysis, the higher reservation wages relative to offered wages of Blacks contribute somewhat to their longer spells without employment, although in Petterson’s work they do not appear to. But, in both cases, the individuals for whom this is most likely true, such as those who have dropped out of the labor force altogether and are involved in illegal activities or in prison, are not even present in the sample, thus leading to downward biased estimates of effects on employment outcomes.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

activities would demand hourly wages of $8 to $10 before they would consider returning to legal work (Freeman, 1992).

WHAT DOES THE FUTURE HOLD?

Given these past trends in Black-White employment outcomes among men, and their causes, what do we expect these trends to look like in the future? There are at least some reasons to be hopeful. For one thing, there continue to be signs of long-term progress in college-enrollment rates and educational attainment in the Black community (Council of Economic Advisers, 1998). Residential segregation, at least for those in the middle class, seems to be slowly but steadily declining, especially in metropolitan areas of the South and West with more racially diverse populations (Farley and Frey, 1993). The impressive drop in urban crime rates of the past few years suggest that fewer young Black men are leaving the labor force for this kind of activity, and might even lead to further declines in segregation and employment discrimination against these young men, as middle-class Whites, and Blacks, become less fearful of them.

Finally, if the current level of labor-market tightness can be sustained for some period of time, it might have longer term effects on labor-market outcomes for Black men, as occurred, for example, during World War II. Discriminatory behavior seems to decline in tight labor markets, as employers are willing to hire workers whom they otherwise would not consider. If their experiences with these groups, and with newer modes of recruiting and screening, are more positive than they expected, their hiring behavior over the longer term might be affected. Also, some young men might gain early labor-market experience during this time that will have positive effects on their future employability and wages.

On the other hand, there are reasons for pessimism as well. The rising costs of postsecondary education make it relatively more difficult for enrollment rates among Blacks to continue to grow (Kane, 1994). Declining political and legal support for affirmative action, especially in university admissions policies, could threaten these enrollment rates as well. Furthermore, children in poor Black families are growing up in more economically segregated neighborhoods, with greater threats from crime and drugs, and less income support from the welfare system, than did those of earlier generations. If family poverty and “neighborhood effects” /social isolation have important causal effects on the educational and employment outcomes of children, this does not bode well for their future. The long-term labor-market prospects of the roughly 1 million Black men who have been incarcerated for illegal activity also look particularly grim.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

IMPLICATIONS FOR POLICY

One important implication of the above discussion for policy is the need to maintain, for as long as possible, the labor-market tightness of the past few years. Whether current low rates of inflation can be sustained with unemployment rates lower than 5 percent is unknown, but the important benefits that accrue to disadvantaged groups such as Black men from tight markets must not be lost in the evaluation of these tradeoffs.

Education and Skill Development

Over the long term, enhancing the skills and employment credentials that young Black men bring to the labor market must be a top priority. Of course, there is no single policy intervention that will accomplish this, particularly for those who live in low-income neighborhoods with poor-quality schools. There are, nevertheless, policy options that need to be considered.

Early Childhood Development Programs

The work of Currie and Thomas (1996) suggests that Head Start has had positive long-term effects on cognitive outcomes for poor Whites and Hispanics but generally not for Blacks. Their reasoning is that Head Start is not sufficient to overcome negative family and neighborhood influences that limit the performance of poor Blacks; however, other, more intensive, early-childhood development programs have been more successful for young Blacks—e.g., the Perry Preschool Program and the Child-Parent Centers of Chicago (Reynolds and Temple, 1998). Currie and Thomas (1996) suggest that these programs might merit strengthening and expansion.

School Reforms and Choice

Improving the performance of schools located in the inner city is a high priority, though how to achieve this is not always clear. A number of reform models exist that have shown some promise in various evaluation programs—e.g., Robert Slavin’s “Success for All,” or James Comer’s School Development Program (Barnett, 1996). Using financial incentives to reward schools and teachers who achieve more progress is another approach (Clotfelter and Ladd, 1996). School-choice programs, if implemented in ways that provide inner-city children with real access to good schools, might improve the quality of the education the “movers” receive and also put competitive pressure on the schools they leave behind to

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

become more effective.5 Finally, some recent evidence suggests that Black inner-city students perform much better academically when they attend Catholic schools (Evans and Schwab, 1995; Neal, 1997). At a minimum, we need to understand better why these effects exist and the extent to which the reasons for them can be emulated in the public schools.

School-to-Work Programs

Establishing more effective links between employers and high schools might overcome early “mismatch” problems, and might improve student performance incentives. Through direct contact with employers, students might more clearly perceive the link between performance and later employment opportunities.

Support for Postsecondary Education

Expansion of Pell Grants and other financial support for postsecondary options is critical for maintaining and improving enrollment rates among Blacks. Combining financial aid with counseling about opportunities (Kane, 1994) might be useful as well.

Second-Chance Training for Out-of-School Youth

Far too many second-chance training programs do not appear to have worked for youth, for example, the Job Training Partnership Act or the National Supported Work Demonstration. A few have, perhaps, been more successful, such as the Job Corps (Lalonde, 1995). Successful programs may require taking young people out of their homes and neighborhood environments, offering a wide range of services and intensive interventions, and providing these over a sustained period of time. The up-front costs of these interventions might be high. Structure and communication of expectations might be critical as well (American Youth Policy Forum, 1997).

5  

For the best recent evidence on the effects of school vouchers for inner-city minorities in the well-known Milwaukee program, see Rouse (1997). But these data give us little guidance about what would happen in a larger, city-wide voucher program, where it is much less clear who would choose to move and how the slots at the most desirable schools would be rationed. Also, whether the resulting competition would improve the performance of schools that are losing students remains uncertain; see Hoxby (1996) and Kane (1996) for evidence and discussion of these issues.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

Improving Access to Housing and Transportation

Given the evidence that racial and economic segregation generate a wide range of negative outcomes among young Blacks, and that “spatial mismatch” also limits their employment opportunities, improving the access of Blacks to residences and jobs in suburban areas seems critical. Greater residential mobility would likely generate positive outcomes along a wide range of dimensions. Rosenbaum and Popkin (1991) provide such evidence from the well-known Gautreaux experiment, in which central-city residents who moved to suburban areas enjoyed improvements in their employment and earnings relative to those who did not move. Preliminary, and somewhat more ambiguous, evidence from the more recent Moving-to-Opportunity demonstration project is discussed by Katz et al. (1997). Greater residential mobility can be encouraged through greater enforcement of open housing laws, and pressure or incentives for suburban areas to limit zoning and other exclusionary practices (Haar, 1996).

Alternatively, greater job mobility could be provided for those who remain in poorer Black neighborhoods (Hughes and Sternberg, 1992; Harrison and Weiss, 1997), through the efforts of “labor-market intermediaries” who provide job-placement assistance and transportation to suburban employment. The Center for Employment and Training (CET), originally located in San Jose, California, is perhaps the best-known program that relies on a combination of these interventions, along with training that is customized to meet the needs of local employers. Evaluations have indicated positive effects on the employment and earnings of minority participants (Melendez, 1996); however, CET primarily serves disadvantaged Hispanics and their community, and it remains unclear whether this model would work for other groups, such as Black males.

Local economic development assistance, which has traditionally occurred through “enterprise zones,” but which more recently can involve support for a broader range of institutions and services, is not inconsistent with this approach (Giloth, 1997). Although enterprise zones have not traditionally been a cost-effective mechanism for improving employment and earnings of disadvantaged zone residents (Papke, 1993), the more recent federally funded “empowerment zones” can potentially be used to fund a much wider array of services to disadvantaged workers who reside in a zone. However, no formal evaluations of the effects of these zones have been performed to date.

EEO Laws and Affirmative Action

Recent evidence suggests that affirmative action raises the employment of minorities and women in establishments that practice it, without

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

generating major losses of economic efficiency or productivity (Leonard, 1984, 1990; Holzer and Neumark, 1998, 1999; Conrad, 1997). Nevertheless, affirmative action remains extremely unpopular with White voters, especially when it is perceived as generating “preferential treatment.” There is evidence to support the notion that employment in the affirmative action sector is redistributed from White males to other groups whose educational credentials are lower than their own, even though their productivity is generally comparable. Evidence also suggests that employment of White males in firms that practice affirmative action is about 15 percent lower than it otherwise would be, but that most of this employment is redistributed to White females rather than minorities (Holzer and Neumark, 1999). The “displaced” White males presumably gain employment in the non-affirmative action sector, though perhaps at somewhat lower wages than they otherwise would earn. Holzer and Neumark (1999) also show that firms engaging in affirmative action recruit applicants much more broadly, screen them more intensely, and invest more heavily in training new employees. This, presumably, enables them to hire minorities whose credentials on paper might be weaker but whose actual job performance compares favorably with that of White males.

A clearer public discussion of the benefits as well as costs of affirmative action is desirable, particularly while so many political and legal efforts are under way to dismantle it. Furthermore, some investigation is needed of how alternative university admission mechanisms affect educational and employment outcomes of minorities. One such mechanism is affirmative action based on family income rather than race/gender, which has been analyzed by Kane (1995). Another approach, used at the University of Texas, guarantees admission to all Texas high school students who rank within the top 10 percent of their high school class.

If political and legal restrictions to affirmative action continue to grow, these restrictions should be accompanied by a strong public embrace of EEO principles, and better enforcement of existing EEO laws. More specifically, EEO laws at the hiring stage need to be strengthened precisely in those areas where employment discrimination against Blacks seems to be most serious—i.e., at smaller and/or suburban establishments. This could be done either through more extensive use of the audit methodology, or by relying on real applicants whose access to smaller/suburban establishments is encouraged through the kinds of job mobility policies described above. Because most firms traditionally do not keep records of the race of their job applicants, the courts have generally inferred these numbers from the number of Blacks who reside in the local area (Bloch, 1994). If mobility policies succeed in generating many more Black applicants in areas where few currently live, there would be some need to document exactly where they apply for work and where they are—and are not— being hired.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
×

Job Creation and Wage/Benefit Supports for Low-Wage Workers

Less-educated young Black males face many barriers in the labor market, and some—especially those with poor skills, little work experience, and/or criminal records—may not be employable in the private sector, even under the best of conditions. Therefore, greater use of employer-wage subsidies or public-sector employment to improve job availability for this group is probably warranted (Gottschalk, 1998; Katz, 1998). Some promising models of public-sector employment for young men include the Youth Corps and Youth Build (American Youth Policy Forum, 1997). For young males, these programs combine skills acquisition with employment and the provision of service to communities. When used, public-sector employment should be thought of as “transitional” and providing credentials that might make participants more attractive to private-sector employers.

Ultimately, however, low-wage employment in either the private or public sector will not enable young males to support families or resist the appeals of the illegal job market. Therefore, approaches to improve their earnings and benefits need to be considered. Two methods to directly increase the wages of low-wage workers are to (1) increase the minimum wage or (2) expand the Earned Income Tax Credit, perhaps by making it more generous to adults without custody of children. There remains some controversy among economists about whether minimum-wage increases reduce employment, though relatively modest increases, such as those legislated to date, are likely to generate only small disemployment effects.

Reducing Crime/Helping Incarcerated Youth

As noted above, crime reduction could have quite positive implications for young Black males in the labor market, if employers, both White and Black, become less fearful of them and become willing to employ them. Of course, this assumes that crime reduction can be accomplished in fair and racially unbiased ways (Kennedy, 1997). But it also raises the potential number of incarcerated young Black men, whose labor-market opportunities, once they leave prison, are severely constrained. Special training and job-creation efforts for them, perhaps undertaken with government financial support but administered by the kinds of effective labor-market intermediaries described above, would be an important complement to the kinds of “get tough” policies that have been implemented nationally.

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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IMPLICATIONS FOR RESEARCH

A number of issues remain unclear in the research literature about the differences in labor-market outcomes of men across racial groups. For many issues, there is a strong need for continued work.

What Are the Specific Mechanisms by Which Differential Labor Outcomes Occur?

Although there seems to be little doubt about the overall importance of factors such as skills, spatial location, and racial discrimination in the labor market for Black men, the exact mechanisms by which these effects operate remain somewhat unclear. For instance, is “spatial mismatch” primarily a function of limited transportation, limited information, or some other factor such as perceived hostility among White suburbanites? Regarding skills, exactly which skills do employers find most deficient among young Black men, and are the perceptions of these employers accurate? Do these deficiencies manifest themselves primarily through Black mens’ performance during job interviews, in which case the deficient skills are more “soft” than “hard,” through limited and/or unstable work experience, or through other means? And to what extent do their skill deficiencies limit their performance on the job when hired? As for discrimination against young Black men, is it really driven by employer fear of poor work performance, poor attitudes, crime, lawsuits, or some other factor? Answers to these questions are critical for developing effective policy responses; yet our knowledge of these matters remains quite limited.

What Are the Effects of the Interplay Between Personal, Familial, and Neighborhood Factors?

Related to the previous issue is an uncertainty about the extent to which the problems of Blacks in low-income communities are the result of personal, familial, or neighborhood forces. For instance, to what extent are the weaker skills that young Blacks bring to the labor market a result of underfunded schools, a poor social environment in the schools and neighborhood, or limited family educational resources? To what extent is participation in crime influenced by the same set of factors? Even when the right data are available, it is notoriously difficult to sort out neighborhood effects statistically from personal/family factors, given the problems of individual and family sorting (or self-selection) across neighborhoods (Ellen and Turner, 1997). Sorting out the exact causal patterns here

Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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is also difficult—e.g., does crime among young Black men lead to residential segregation and discrimination—especially among White suburbanites—or vice versa? And to what extent are the labor-market problems the result of interactions between their skills, social networks, etc.? If that is the case, is addressing these factors separately bound to fail?

Identifying Cost-Effective Policy Responses

In this critical area, our knowledge is perhaps weakest of all. Given the many programs that have failed to generate sustained improvements for disadvantaged Black youth, which ones are effective? When some programs or institutions do succeed for minority men, such as CET for Hispanics, or the Catholic schools for young Blacks, do we know why they work, and can we replicate their success elsewhere? This requires effective evaluation studies, using random-assignment methodology as much as possible, as well as more qualitative analyses of the processes underlying the various interventions.

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Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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Page 118
Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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Page 119
Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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Page 120
Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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Page 121
Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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Page 122
Suggested Citation:"5. Racial Differences in Labor Market Outcomes Among Men." National Research Council. 2001. America Becoming: Racial Trends and Their Consequences: Volume II. Washington, DC: The National Academies Press. doi: 10.17226/9719.
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Page 123
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America Becoming: Racial Trends and Their Consequences: Volume II Get This Book
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The 20th Century has been marked by enormous change in terms of how we define race. In large part, we have thrown out the antiquated notions of the 1800s, giving way to a more realistic, sociocultural view of the world. The United States is, perhaps more than any other industrialized country, distinguished by the size and diversity of its racial and ethnic minority populations. Current trends promise that these features will endure. Fifty years from now, there will most likely be no single majority group in the United States. How will we fare as a nation when race-based issues such as immigration, job opportunities, and affirmative action are already so contentious today?

In America Becoming, leading scholars and commentators explore past and current trends among African Americans, Hispanics, Asian Americans, and Native Americans in the context of a white majority. This volume presents the most up-to-date findings and analysis on racial and social dynamics, with recommendations for ongoing research. It examines compelling issues in the field of race relations, including:

  • Race and ethnicity in criminal justice.
  • Demographic and social trends for Hispanics, Asian Americans, and Native Americans.
  • Trends in minority-owned businesses.
  • Wealth, welfare, and racial stratification.
  • Residential segregation and the meaning of "neighborhood."
  • Disparities in educational test scores among races and ethnicities.
  • Health and development for minority children, adolescents, and adults.
  • Race and ethnicity in the labor market, including the role of minorities in America's military.
  • Immigration and the dynamics of race and ethnicity.
  • The changing meaning of race.
  • Changing racial attitudes.

This collection of papers, compiled and edited by distinguished leaders in the behavioral and social sciences, represents the most current literature in the field. Volume 1 covers demographic trends, immigration, racial attitudes, and the geography of opportunity. Volume 2 deals with the criminal justice system, the labor market, welfare, and health trends, Both books will be of great interest to educators, scholars, researchers, students, social scientists, and policymakers.

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