Crowding Hypothesis

BIBLIOGRAPHY

Societies have been stratified on the basis of income since ancient times. One of the main axes of stratification is the occupational hierarchy. Evidence of the nonrandom distribution of social groups among occupations is apparent in labor markets around the world (e.g., secretaries are disproportionately female). Social groups that are restricted from access to the range of occupations tend to concentrate in those occupations with the lowest economic rewards. For example in Black Metropolis: A Study of Negro Life in a Northern City (1993), St. Clair Drake and Horace R. Cayton noted that in 1930, 56 percent of black females in Chicago were servants of some kind.

The crowding hypothesis originated in the United States during the women’s union movement of 1890 to 1925. In 1922 British economist F. Y. Edgeworth (1845-1926) argued that women’s lower pay was explained by the fact that women crowded into a small number of occupations. Unions had excluded women from “men’s work,” causing an oversupply of female workers and reducing the price (wage) for their labor. Thus crowding was caused by institutional barriers that artificially distorted the operation of the labor market, resulting in lower wages for some groups and higher wages for others. The crowding hypothesis received little attention until 1971 when economist Barbara R. Bergmann published a pathbreaking paper called “The Effect on White Incomes of Discrimination in Employment.” She estimated that the integration of black male blue-collar workers into white occupations would have a negative effect on white male incomes. In 1974 Bergmann analyzed crowding among female workers and since then economists have considered occupational segregation by sex to be a major determinant of the gender disparity in wages.

The empirical evidence is clear that crowding benefits some groups by reducing competition for the most desirable occupations. This helps to explain why occupational segregation is so universal. The crowding hypothesis is simple yet very powerful because it employs the fundamental laws of economics, supply and demand, to explain intergroup wage disparity. Sir William Arthur Lewis (1915–1991), a Nobel-prize winning economist, stated in Racial Conflict and Economic Development (1985) that “The essence of discrimination is its measures to restrict relative numbers in higher paid occupations. Race is not a necessary factor; such measures are found even in homogenous societies” (Lewis 1985, p. 43). Discrimination occurs when devices such as unions and credentialing processes restrict entry; it becomes imbedded in the system and is not necessarily intentional. Lewis theorized that restrictions on access to preferred occupations can render groups noncompeting, making it easier to deny discrimination.

A critique of the crowding hypothesis is that crowding could arise from factors other than discrimination. Women may prefer jobs considered “women’s work,” such as the nurturing occupations of nursing and childcare. Human capital factors such as education and skill level may also influence crowding. Another critique is that market competition should eliminate crowding as profit-seeking employers replace high-wage workers with low-wage workers from crowded occupations. In “The Crowding Hypothesis” (2005) Timothy Bates and Daniel Fusfield reported little evidence of this. They consider racial crowding self-perpetuating because it traps workers in occupations requiring little skill and with high unemployment rates. Workers have little incentive to acquire skills and racial hostility is mutually reinforced—thus crowding is both the cause and effect of “racial antagonisms and the lack of human capital on the part of blacks and other minority groups” (Bates and Fusfield 2005, p. 109). The crowding hypothesis offers a most useful way to think about the problems of urban labor market structures (e.g., low wages, little training, and job insecurity) impacting low-income communities of color. Crowding plays an important role in the black unemployment rate, which has been double the white rate since the mid-1950s.

There is ample empirical evidence linking occupational crowding and lower wages, though most studies concern sex segregation. Estimates are that 12 to 37 percent of the U.S. gender wage gap is attributable to crowding. Analytical techniques for measuring this relationship have become more sophisticated to control for worker characteristics and adjust to data limitations, statistical bias, and other problems. Evidence from detailed, matched employer-employee datasets with sex, occupation, industry, and work establishment data supports the crowding hypothesis. Beginning in the 1970s women’s opportunities in white-collar and service employment widened. While black male and female occupational patterns (and wages) have improved as well, especially in public sector employment, white males still dominate high-skill blue collar occupations (e.g., carpenter). Blacks have made less progress in white-collar managerial and executive positions. In “Male Interracial Wage Differentials: Competing Explanations” (1999) Patrick L. Mason showed that wage discrimination accounts for 21 percent of the black male/white male wage differential and 17 percent of the Latino/non-Hispanic white male wage differential. However once the differences in the race-gender employment densities of the occupations are accounted for, the black male/white male unexplained wage differential declines to 7 percent, while the Latino/non-Hispanic white male unexplained wage differential declines to 11 percent. Hence crowding accounts for 14 percent of the black/white male wage differential and 6 percent of the Latino/white male differential. Further for all groups individual wages rise with white employment density, though white males receive the largest boost to individual wages.

Affirmative action policies have widened occupational choice for women and racial minorities. Continued occupational crowding, however, reveals the need for more rigorous enforcement of equal employment law. The notion of comparable worth (equal pay for different work) derives from the crowding hypothesis, but policies to achieve it are complicated and face stiff resistance. Some view economic growth as the most effective remedy, however this too has limits. Crowding is increasingly important as an impediment to equality and efficiency in a globalized economy.

SEE ALSO Affirmative Action; Credentialism; Discrimination; Drake, St. Clair; Economics, Stratification; Hierarchy; Human Capital; Inequality, Gender; Inequality, Racial; Lewis, W. Arthur; Occupational Status; Segregation; Stratification; Unemployment; Unions; Work and Women

BIBLIOGRAPHY

Bates, Timothy, and Daniel Fusfield. 2005. The Crowding Hypothesis. In African Americans in the U. S. Economy, eds. Cecilia A. Conrad, John Whitehead, Patrick Mason, and James Stewart, 101–109. Lanham, MD: Rowman and Littlefield.

Bergmann, Barbara R. 1971. The Effect on White Incomes of Discrimination in Employment. Journal of Political Economy 79 (2): 294–313.

Bergmann, Barbara R. 1974. Occupational Segregation, Wages and Profits When Employers Discriminate by Race or Sex. Eastern Economic Journal 1 (2): 103–110.

Blau, Francine D., Patricia Simpson, and Deborah Anderson. 1998. Continuing Progress? Trends in Occupational Segregation in the United States over the 1970s and 1980s. Feminist Economics 4 (3): 29–71.

Drake, St. Clair, and Horace R. Cayton. 1993. Black Metropolis: A Study of Negro Life in a Northern City. Rev. and enl. ed. Chicago: University of Chicago Press.

Edgeworth, Francis Y. 1922. Equal Pay to Men and Women for Equal Work. Economic Journal 32 (128): 431–457.

Lewis, W. Arthur. 1985. Racial Conflict and Economic Development. Cambridge, MA: Harvard University Press.

Mason, Patrick L. 1999. Male Interracial Wage Differentials: Competing Explanations. Cambridge Journal of Economics 23 (3): 261–299.

Karen J. Gibson