Labor Market
Labor Market
INCOME AND EDUCATIONAL INEQUALITY
A HISTORY OF RACIAL DISCRIMINATION AND EXCLUSION
Inequality in the labor market is an especially critical component of racial and ethnic relations in the United States. Virtually all aspects of peoples” lives are affected fundamentally by what they do for a living, how much they earn, and how much wealth they are able to accumulate. These factors have serious implications for the schools children attend and how long they stay in school, for their health and the kind of health care they receive, and for where and how long they live. The term labor market refers to the exchange of labor for a wage or salary, or to the matching of individuals to jobs. According to orthodox economic theory, the laws of supply and demand govern labor market processes in a capitalist economy. The race, ethnicity, or gender of a worker should not be of any consequence in determining whether he or she is hired or how much he or she is paid, yet, historically, women and members of subordinate racial and ethnic groups in the United States have not fared as well as their dominant-group counterparts in the labor market. Group differences, in fact, call into question the fairness of labor processes and the labor market.
One critique of orthodox economic theory is labor market segmentation theory, which states that the labor market is segmented into “primary” (core) and “secondary” (periphery) jobs (see Doeringer and Piore 1971). Secondary jobs pay lower wages, offer fewer possibilities for advancement and lower levels of job security, and require fewer years of education. In the primary sector of the economy, workers earn more, are better educated, are much more likely to have careers, are more likely to exercise discretion on the job, and are more likely to be unionized. Racial and ethnic minority-group members tend to fill secondary labor-market jobs disproportionately, and native-born white males predominate in primary jobs. Typical primary-sector jobs include most white-collar jobs, including teachers, engineers, managers, lawyers, and doctors. Examples of secondary-sector jobs include busboys, sales clerks, domestics, typists, and janitors. Meanwhile, the informal labor market has grown since the 1970s. This market involves the exchange of work and wages (between workers and employers) outside of the legal and regulatory context that regulates the formal economy, and it employs immigrant workers in disproportionate numbers.
INCOME AND EDUCATIONAL INEQUALITY
In the 2000 U.S. Census, 36.2 million people, or almost 13 percent of the population, reported they were black (12.2% of the population reported black as their only race). Latinos (or Hispanics), largely of Mexican descent, accounted for 12.5 percent of the population (35.2 million people). Latinos have since surpassed blacks in number. In 2004, the Latino population totaled almost 40.5 million and the black population was nearly 37.7 million, according to the U.S. Census Bureau. Both populations lag behind the white population in education, which accounts in some measure for the economic inequality between both groups and whites. In 2000 just over 80 percent of the total population were high school graduates, compared to 72.3 percent of blacks and 52.4 percent of Latinos. While 24.4 percent of the population had earned a bachelor’s degree or higher, according to 2000 Census data, only 14.3 percent of blacks and 10.4 percent of Latinos had achieved this level of education (see McKinnon and Bennett 2005, Ramirez 2004). In some respects, the picture is more dismal than these figures suggest, since another important difference between minority and majority groups is the quality of the education they receive. White students are more likely than black and Latino students to attend better-funded and resource-rich schools, and they are more likely to attend more prestigious institutions of higher education. The networks they form in these institutions can be critical when they enter the labor market.
The labor force participation rates of blacks and Latinos are comparable to those of the total population, but the nature of their participation is not. In 2000, for example, 63.9 percent of the total population and 60.2 percent the black population participated in the labor force, but compared to the white population, blacks (and Latinos) were much more likely to work in low-wage, low-prestige jobs, earn appreciably less on average, and accumulate much less wealth. While 33.6 percent of the total population was employed in management, professional, and related jobs in 2000, the corresponding figure for blacks was 25.2 percent, and it was even lower for Latinos.
Both black and Latino workers are much more likely than white workers to be employed in the service sector. In both categories, whites are more likely to hold the highest-paying and most prestigious jobs. For example, white managers are more likely than their black and Latino counterparts to hold high-level management positions, and they are more likely to be promoted. Blacks and Latinos are disproportionately concentrated in, and are more likely to languish in, mid- and low-level positions. These and educational differences account for a portion of the wage differential (see McKinnon and Bennett 2005, Ramirez 2004, Oliver and Shapiro 1995).
In 1999 the median family income of Latinos ($34,397) was higher than that of blacks ($33,255), but both were well below the $50,046 median family income of the total population. However, the total population median family income for married couples ($57,345) was only $7,000 higher than the black median family income for married couples ($50,690). Income and education gaps between black and white Americans have narrowed significantly since the 1950s, but since 1990 the unemployment rate of blacks has been at least twice the rate of whites, with Latinos in the middle, and Asians closer to, but still higher than, whites. Furthermore, the return on education for whites and Asians is greater than it is for blacks and Latinos. Even when controlling for education, whites” average earnings are higher than those of blacks and Latinos (see McKinnon and Bennett 2005, Ramirez 2004, Reeves and Bennett 2004). In large cities, for example, one study found that for each year of education, whites chances of being employed in a position of authority increased by 9 percent, but for blacks they increased only 1 percent (see Mooney et al. 2002). An additional measure of inequality that is of growing concern to many is the racial wealth or assets differential.
WEALTH DISPARITIES
In their book Black households have barely one-tenth the net worth of white households. The black middle class has expanded substantially since the 1950s, but it is fragile, principally because its status rests principally on income rather than on assets or wealth. In their book Black Wealth, White Wealth: A New Perspective on Racial Inequality (1995), Melvin Oliver and Thomas Shapiro argue that the racial wealth gap is the “fundamental axis of racial inequality” in the United States. In this landmark study they found a wealth gap of $60,980 in 1988. By 2002, however, the gap had increased to $82,663. Furthermore, they contend, residential segregation, “the lynchpin of race relations” in the United States, prevents blacks from producing the housing wealth generated by white homeowners and providing their children with the kind of education that they will need to produce more wealth as adults. As a consequence, blacks cannot weather economic storms as well as whites, and they are more likely to fall into poverty in the event of an unexpected decline in income.
The 2000 poverty rate in the United States was 12.4 percent, but for blacks it was 24.9 percent and for Latinos it was 22.6 percent. The rate for the American Indian and Alaska Native population was even higher, at 25.7 percent. Every major American Indian group had a poverty rate above the national average, but the Apaches, Navajos, and Sioux had poverty rates of more than 34 percent. The poverty rate for the Sioux was 39 percent. Not unexpectedly, the American Indian and Alaska Native population lagged behind the total population in virtually every area discussed thus far. Only 71 percent of this population completed high school or higher, compared to 80 percent of the total population. On reservations, where roughly one-third of American Indians reside, the figures are more disquieting. On the Fort Apache reservation in Arizona, for example, 49 percent of the residents did not complete high school.
In the labor force, Native Americans are underrepresented in the management, professional, and related ranks and overrepresented in service sector jobs. These educational and occupational differences are reflected in lower median earnings for American Indians relative to the total population (see McKinnon and Bennett 2005, Ramirez 2004, Ogunwole 2006).
A HISTORY OF RACIAL DISCRIMINATION AND EXCLUSION
Why are society’s goods and services not shared equally by society’s racial and ethnic groups? Some of the earliest explanations were biological and drew on Charles Darwin’s work. At the turn of the twentieth century, social Darwinists argued that the fittest (intellectually and morally) were at the top of the social and economic hierarchy, and that the less fit were at the bottom. Slavery, for example, did not explain why blacks were at the bottom. Instead, they argued, slavery was simply evidence of African Americans’ inferiority. Eventually, biological deficiency theories gave way to cultural deficiency theories, and these theories remain popular in the early twenty-first century. Advocates of the “culture of poverty” theory blamed the poor for their poverty, arguing that they were poor because of their inability to embrace the proper values to pull themselves out of poverty. These theorists posited that it was the inability to defer gratification, the propensity to engage in criminal activity, fatalism, and other cultural values that resulted in poverty.
Conservatives employ versions of this theory to oppose government programs designed to assist the poor and racial and ethnic minority groups. Predictably, critics of this and other individual-focused theories shift the focus from the individual and place it instead on structural factors and institutional forms of racial and ethnic discrimination. The institutional racism explanation relies heavily on the cumulative effects of historical discrimination and exclusion. (For an explanation and critique of the culture of poverty theory, see Leacock 1971.)
After the abolition of slavery, the United States, on the brink of becoming the most industrialized and wealthiest nation in the world, could have integrated black workers into the industrial mainstream. Instead, the South and North collaborated to “reconstruct black servitude” in the South (See chapter 7 in Steinberg 2001, pp. 173–200).
Freed slaves in the South labored as farm workers, sharecroppers, and tenant farmers and were subjected to a system of apartheid known as Jim Crow well into the twentieth century. In 1896 the Supreme Court of the United States established, in Plessy v. Ferguson, the doctrine of “separate but equal,” which gave legal sanction to this system segregation. The ruling stood until the landmark Brown v. Board of Education in 1954, but by then the damage had been done, and the effects are still evident in the twenty-first century.
Denied the same opportunities as whites in education, politics, and the economy, blacks were unable to provide their progeny with the same opportunities as whites for a better life. De jure segregation may have ended with Brown v. Board of Education, but de facto segregation persists. Blacks, however, were not alone in being denied the fruits of industrialization. “Like European overseas colonialism, America had used African, Asian, Mexican, and, to a lesser degree, Indian workers for the cheapest labor, concentrating people of color in the most unskilled jobs, the least advanced sectors of the economy, and the most industrially backward regions of the nation” (Blauner 1972, p. 62).
In the Southwest, the United States seized from roughly half of Mexico’s territory. Initially, it was the border that crossed Mexicans in the new Southwest, but subsequently it would be millions of Mexicans who would cross the border to perform the most menial and least desirable work in the mines, fields, and factories of the United States. Their contribution to the economic development of the Southwest was enormous, but they received very little of the wealth. They were denied, as were their African-American counterparts in the Southeast, full participation in the social, political, and economic life of the country, with similar effect. Indians fared no better. Uprooted from lands they and their ancestors had occupied for centuries, nearly wiped out by war and disease, their cultures decimated, and relegated to life on reservations as wards of the state, they remain in the early 2000s the poorest of the poor. Despite difficulties of their own, as Robert Blauner explains in Racial Oppression in America, European immigrants fared much better:
In an historical sense, people of color provided much of the hard labor (and technical skills) that built up the agricultural base and the mineral-transport-communication infrastructure necessary for industrialization and modernization, whereas the European worked primarily within the industrialized, modern sectors. The initial position of European ethnics, while low, was therefore strategic for movement up the economic and social pyramid. The placement of nonwhite groups, however, imposed barrier upon barrier on such mobility, freezing them for long periods of time in the least favorable segments of the economy. (Blauner 1972, p. 62)
The consequences of this history of exclusion and discrimination are reflected in the twenty-first century labor market.
INSTITUTIONAL RACISM
Stiff resistance to the implementation of the Supreme Court’s decision in Brown v. Board of Education underscored how entrenched racial and ethnic bigotry and inequality were in the United States. The ruling nonetheless helped to spur a movement that eventually resulted in civil rights legislation, legal rulings, and executive orders that generally improved the lives of blacks and other minority groups and created new opportunities in the labor market. Within a few decades, blacks, Latinos, and other minority groups were represented in all occupations. The number of blacks, Latinos, and other groups graduating from high school and college increased markedly in a relatively short period of time, and the dual-wage system and other “legal” means to deny minorities a fair wage became illegal. But blacks and Latinos continue to lag behind whites in education and the economy.
Proponents of structural theories insist that the racial and ethnic inequality that exists in the United States in the first decade of the twenty-first century in income, wealth, education, and jobs are best explained by the effects of a long history of discrimination and institutional racism, and by the persistence of overt and direct forms of discrimination. College admissions criteria that do not take into account conditions of poverty, for example, discriminate against blacks and Latinos, even if there is no intent to discriminate. This is an example of institutional racism. Refusing to hire an individual because she is Asian is an example of individual racism. Both of these forms of racism continue to be practiced in the labor market, and both reinforce economic and other forms of racial and ethnic inequality.
Employers continue to discriminate illegally against minorities in all phases of the employment process, including recruitment, the interview, the job offer, salary, and promotion. White males continue to hold the highest, most powerful positions in firms. Exclusion from exclusively or predominantly white male social clubs hamstring minority and women professionals, because important business is conducted and important connections are made over drinks and during a round of golf. Attempts to reduce the effects of unintentional racial discrimination have met with some success. Affirmative action, for example, has markedly improved the lives of many minorities and women. By the end of the twentieth century, however, affirmative action was disappearing in many parts of the country.
Two other theories are worth noting. Marxist economic theory postulates that the capitalist class benefits from and acts to create or deepen divisions among workers along racial and ethnic lines. By discriminating against blacks, for example, employers create and maintain a reserve army of cheap labor. In the process, labor solidarity is undermined, employers can appropriate more surplus from black workers, and white worker militancy can be dampened by replacing or threatening to replace white workers with black workers. Edna Bonacich, a professor of sociology at the University of California, Riverside, has proposed a related but alternative explanation, the split labor-market theory, to explain ethnic antagonism. In a 2001 essay, Bonacich argues that employers are interested in hiring the cheapest labor, regardless of race or ethnicity. Because the labor market is split along racial lines, higher-priced white labor is threatened by cheaper black or immigrant labor and therefore acts to restrict black and immigrant labor participation in the labor market.
GLOBALIZATION
Complicating (and worsening) the picture for minority workers in the United States is the globalization of the labor market. Because of globalization and trade and immigration policies that facilitate outsourcing, segments of the workforce in the United States compete, usually unsuccessfully, with low-wage workers in the developing world. Low- and middle-wage black and Latino workers in the United States have been hit especially hard by these policies. Globalization has increased the demand for well-educated and highly skilled workers in the United States, good manufacturing jobs have left the country, and increased immigration has swelled the ranks of workers performing the least desirable manual and service jobs that cannot be outsourced. Many of the jobs that have not left the country have left the inner city for the suburbs, and the upper middle class, which is predominantly white, has gone with them. As a result, tax revenue needed to support the city’s services and infrastructure has been diminished. Left behind in the cities are poor people with deteriorating schools and high rates of unemployment. Between 1967 and 1987, for example, 65 percent of manufacturing jobs in Philadelphia disappeared (Kasarda 1995). The cost of transportation, discriminatory real estate practices, and the high cost of owning a home in the suburbs have made it all but impossible for many of the cities” poor to follow the jobs. Thus, globalization has sealed the fate of many of the cities” poor, who are disproportionately members of racial and ethnic minority groups.
The effects of historic discrimination are lasting, and they are aggravated by contemporary racial and ethnic discrimination in the labor market. The exclusion of racial and ethnic minority-group members from participation in the economic mainstream, especially during the late nineteenth century and the first half of the twentieth century, when the economy was expanding at a rapid pace and the demand for labor was unprecedented, resulted in disadvantages for these groups in virtually every area of social life, including education, housing, and health care. Despite legislation, executive orders, and court decisions protecting the rights of individuals in the labor market, discrimination persists. Along with the effects of prior discrimination and globalization, this makes it difficult for minority-group members to improve their labor market position.
SEE ALSO Braceros, Repatriation, and Seasonal Workers; Day Laborers, Latino; Labor Market, Informal; Occupational Segregation.
BIBLIOGRAPHY
Blauner, Robert. 1972. Racial Oppression in America. New York: Harper & Row.
Bonacich, Edna. 2001. “A Theory of Ethnic Antagonism: A Split Labor Market.” In Social Stratification: Class, Race, and Gender, 2nd ed., edited by David B. Grusky. Boulder, CO: Westview Press.
Doeringer, Peter B., and Michael J. Piore. 1971. Internal Labor Markets and Manpower Analysis. Lexington, MA: Heath.
Kasarda, John. 1995. “Industrial Restructuring and the Changing Location of Jobs.” In State of the Union: America in the 1990s. Vol. 1, edited by Reynolds Farley. New York: Russell Sage Foundation.
Leacock, Eleanor Burke. 1971. The “Culture of Poverty’: A Critique. New York: Simon & Schuster.
McKinnon, Jesse D., and Claudette E. Bennett. 2005. “We the People: Blacks in the United States.” Washington, DC: U.S. Census Bureau. Available from http://www.census.gov/prod/2005pubs/censr-25.pdf.
Mooney, Linda A., David Knox, and Caroline Schacht. 2006. Understanding Social Problems, 5th ed. Belmont, CA: Wadsworth/Thomson Learning.
Ogunwole, Stella U. 2006. “We the People: American Indians and Alaska Natives in the United States.” Washington, DC: U.S. Census Bureau. Available from http://www.census.gov/prod/2006pubs/censr-28.pdf.
Oliver, Melvin L., and Thomas M. Shapiro. 1995. Black Wealth/ White Wealth: A New Perspective on Racial Inequality. New York: Routledge.
Ramirez, Roberto R. 2004. “We the People: Hispanics in the United States.” Washington, DC: U.S. Census Bureau. Available from http://www.census.gov/prod/2004pubs/censr-18.pdf.
Reeves, Terrance J., and Claudette E. Bennett. 2004. “We the People: Asians in the United States.” Washington, DC: U.S. Census Bureau. Available from http://www.census.gov/prod/2004pubs/censr-17.pdf.
Shapiro, Thomas, and Melvin Oliver. 2005. “Closing the Racial Wealth Gap.” Institute on Assets and Social Policy: Monthly Perspective. Available from http://iasp.brandeis.edu/pdfs/columns/sept05.pdf.
Steinberg, Stephen. 2001. The Ethnic Myth: Race, Ethnicity, and Class in America, 3rd ed. Boston: Beacon Press.
U.S. Census Bureau 2004. The Black Population in the United States. Available from http://www.census.gov/population.
_____. 2004. Population by Sex, Age, Hispanic Origin, and Race: 2004. Available from http://www.census.gov/population.
Héctor L. Delgado