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May 1996, Vol. 119, No. 5
James Eaton and Manown Kisor, Jr.
Title VII of the Civil Rights Act of 1964 sought to reduce racial inequality by barring discrimination in the labor market. Employment and earnings data suggest that the Act has achieved mixed results. On the one hand, the compensation of nonwhite workers has risen relative to that of white workers. On the other hand, the employment rate of nonwhites has declined: nonwhites of working age are less likely than white workers to have a job, and their chances of having one were lower in 1993 than they were in 1964.
A number of studies have documented these conflicting trends through comparisons of decennial census data. For example, James P. Smith and Finis R. Welch observed that black men's real incomes increased fourfold over the period 1940-80, compared with a two-and-one-half-fold increase for white men's. Measured by weekly wages, black men's earnings rose from 43 percent to 73 percent of white men's earnings over the same period.1 Decade by decade, relative gains in earnings were larger for younger and better educated black workers. Smith and Welch cited migration from the South and relative increases in the quantity and quality of their education as the major factors responsible for blacks' gains.2
Black men and women were more likely than their white counterparts to be employed in 1940, but less likely to have jobs by the 1980's. In 1980, 1 in 5 black men aged 16 to 64, twice the rate for white men, was not active in the labor market. Declines in black labor force participation over the 1940-80 period are observed over most age ranges and are larger at lower levels of educational attainment.3 Furthermore, the unemployment rate for the blacks in the labor force remains more than twice that for whites, a differential that has persisted for decades. Two recent studies decomposed unemployment rate differentials into two parts: a so-called endowment effect based on nonracial demographic differences and a residual effect resulting from differences due to race per se. On the basis of data from the March 1990 Current Population Survey (CPS), Leslie S. Stratton concluded that only 20 percent to 40 percent of the observed unemployment differential between black and white men in 1990 can be explained by differences in demographic characteristics other than race.4
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1 James P. Smith and Finis R. Welsh, "Black Economic Progress after Mydral," Journal of Economic Literature, Jun 1989, pp. 519-64 ; see especially pp. 521-22.
2 Noting that the racial wage gap narrowed as rapidly in the 20 years before 1960 as during the 20 years afterward, Smith and Welch assert that the role of affirmative action is raising the relative earnings of blacks was marginal (p. 555). This assessment is challenged by John J. Donohue III and James Heckman, who claim that black economic progress after 1965 resulted largely from Federal civil rights policy. (See John J. Donohue III and James Heckman, "Continuous Versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks, Journal of Economic Literature, December 1991, pp. 1603-43, especially p. 1641.) Donohue and Heckman argue that net migration from South ended in the early 1960's and that reduced labor market discrimination, by raising the relative rewards to education, can account for education's contribution to black economic progress after the passage if civil rights legislation.
3 Gerald D. Jaynes, "The Labor market Status of Black Americans: 1939-1985," Journal of Economic Perspective, Fall 1990, pp. 9-24. especially pp. 13, 15; see also Finis Welch, "The Employment of Black Men," Journal of labor Economics, vol. 8 (1990), pp. S26-S74, especially pp. S26-S31. Welch defines a person's being active in the labor market as being neither employed, unemployed, nor in school.
4 Leslie S. Stratton, "Racial Differences in Men's Unemployment"Industrial Relations and Labor Relations Review, April 1993m pp. 451-63, especially p. 463. Lora P. Holcombe, "Demographic Factors Affecting the Black/White Unemployment Deferential," International Journal of Manpower, vol. 8 (1988), pp. 23-31, especially p. 29, express a similar conclusion.
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