America Becoming Racial Trends and Their Consequences: Volume II (2001) / Chapter Skim
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4. Race and Ethnicity in the Labor Market: Trends Over the Short and Long Term
4. Race and Ethnicity in the Labor Market: Trends Over the Short and Long Term
Pages 52-97
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From page 52... ...
This paper describes major, long-term trends that have had an impact on the economic status of Blacks and Hispanics, including long-term trends that appear to be influenced mostly by skill-related factors. Also addressed are alternative explanations for the 1960s-to-199Os stagnation in the economic position of minority households; explanations include changes in schooling, quality of students, affirmative action, and rising wage inequality.
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From page 53... ...
The largest improvement occurred during the 1940s; during the 1950s, advances slowed considerably; during the 1960s and 1970s, the rise in Black men's wages was more than 10 percent higher than the rise in White men's wages; but after 1980, the pace of relative labor-market progress for Blacks slowed considerably. Although the improvement in the relative economic status of Blacks from 1940 to 1990 was impressive, by 1990 incomes of Black males were still significantly lower than those of White males.
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From page 54... ...
For 1979, I selected as the initial criterion an income level such that 11 percent of average White male earnings equaled "poor." This poverty threshold was then adjusted for any real income growth or contraction relative to that year. My definition of affluent is asymmetric i.e., to be affluent, one must have an income equal to 1.33 percent of the White median income for that year (Smith and Welch, 1989~.
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From page 55... ...
Similarly, more than one-half of all Hispanic men in 1940 worked in jobs that confined them and their families within the ranks of the poor; only one in three earned middle-class wages; and the Hispanic affluent comprised one-eleventh of that population. Among Hispanics, Mexicans fared the worst; almost two-thirds of working Mexican men earned wages below the poverty threshold.
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From page 56... ...
By 1970, only one in every 11 White male workers earned wages below the poverty threshold, and almost two-thirds earned middle-class incomes. Unfortunately, this historic trend reversed during the 1970s and 1980s.
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From page 58... ...
Data in Table 4-4 indicate that the changing composition of recent immigration and the increasing percentage of immigrants within the Hispanic population are two dominant underlying trends. Given the better educational opportunities available in the United States, compared to those in their home countries, it is not surprising that U.S.-born Hispanic men have more schooling than their foreign-born counterparts; however, the different secular trends for the U.S.-born and foreign-born Hispanics are more surprising.
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From page 59... ...
In sum, the slow rate of Hispanic educational progress largely reflects a changing composition of the Hispanic immigrant workforce. The rising percentage of immigrants in the Hispanic male workforce in recent decades slowed aggregate gains in Hispanic schooling.
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From page 60... ...
60 A B RACE AND ETHNICITY IN THE LABOR MARKET 800 7nn White 600 500 400 300 500 450 400 350 300 250 200 150 100 50 OBlack ~ \ Hispanic / 1962 1967 1972 1977 1982 1987 1992 1997 ~ Bl:_ / Hispanic __ ~ , ~ / __ ~ - _ ~ _ 1962 1967 1972 1977 1982 1987 1992 1997 FIGURE 4-1 Yearly trends (1962 to 1997) in mean inflation-adjusted weekly wages for (A)
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From page 61... ...
These departures are captured in Figure 4-2, which measures yearly wage gaps, as percentages, for Hispanic and Black men and women, relative to White male wages. Consider, first, working Black men.
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From page 62... ...
62 A -0.20 -0.25 -0.30 -0.35 -0.40 -0.45 -0.50 -0.55 -0.60 B -0.40 -0.50 -0.60 -0.70 -0.80 -0.90 -1 .00 -1 .10 RACE AND ETHNICITY IN THE LABOR MARKET Hispanic V B:/\ \ ~ \ \' 1962 1967 1972 White 1977 1982 1987 1992 1997 , I,' It's Hispanic in\/ Black `_ _ -1.20 1962 1967 1972 1977 / \ 1982 1987 1992 1997 FIGURE 4-2 Percentage wage deficits, relative to White males, for Black and Hispanic (A) males and (B)
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From page 63... ...
Starting with a relatively large wage gap in the early 1960s, wages of Black male college graduates increased sharply until parity with White male college graduates had almost been reached by 1973. That near parity would, however, be short lived as the male racial wage gap among college graduates eventually expanded until almost coming full circle by 1994.
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From page 64... ...
; ed 16 = 16 years of schooling (college graduates)
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From page 65... ...
; ed 16 = 16 years of schooling (college graduates)
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From page 66... ...
Another point to note is that the narrowing of the gender wage gap in comparison to men was generally more pronounced among college graduates. For example, data begin with 1964 showing higher wage gaps among White female college graduates, but by the mid-199Os this ranking had reversed and the gender wage deficit was greatest among White high school graduates.
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From page 67... ...
67 1962 1973 1982 1991 1997 White Men Poor 10 11 12 12 12 Middle Class 66 62 57 55 54 Affluent 24 27 31 33 34 Black Men Poor 26 17 17 19 16 Middle Class 70 75 70 65 65 Affluent 4 8 13 16 19 Hispanic Men Poor NA 14 14 17 17 Middle Class NA 66 72 70 69 Affluent NA 10 14 13 14 Mexican Men Poor NA 15 14 19 18 Middle Class NA 75 71 70 70 Affluent NA 8 15 11 12 White Women Poor 32 31 30 25 23 Middle Class 65 66 66 64 62 Affluent 3 3 4 11 15 Black Women Poor 60 34 30 27 24 Middle Class 39 63 67 65 65 Affluent 1 3 3 8 10 Hispanic Women Poor NA 31 30 31 28 Middle Class NA 68 67 67 65 Affluent NA 1 3 6 7 Mexican Women Poor NA 39 29 34 31 Middle Class NA 60 68 61 63 Affluent NA 1 3 5 6
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From page 68... ...
Not all was stagnant in the economic status of the Black community, however. In the 35 years spanned by the data in Table 4-5, there was almost a quintupling in the relative number of affluent Black male workers.
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From page 69... ...
Figure 4-5A shows the education deficit of Black male workers steadily decreased from a more than 2-year schooling deficit, and plateaued at 0.5 year by the mid-199Os. If these schooling trends are compared with trends in the male racial wage gap, the issue is not the early years when the two series (wage gap and schooling deficit)
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From page 70... ...
, clearly a steady narrowing of schooling deficits took place in the 20 years between 1962 and 1982. Throughout this century, schooling has been the engine of Black economic progress, but educational progress for men stopped abruptly in the 1980s when the schooling gap of young Black male workers remained constant at about 0.5 year.
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From page 71... ...
JAMES P SMITH A B 3.002.50 2.00 1.50 1.00 0.50 0.00 3.00 2.50 2.00 1.50 1.00 0.50 0.00 71 /\ in/\ Black \ __~—_ /\ Hispanic "I, \/ / ~ ,4 \ 'N// \ 1962 1967 1972 1977 \ Black \ Hispanic \ \, 1982 1987 1992 1997 / \ _ _ \ \,^\ / \,`''\ \ ~ _ ' 1 1 1 1 1 - 1 1962 1967 1972 1977 1982 1987 1992 1997 FIGURE 4-5 Education deficits, as percentages, for Black and Hispanic (A)
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From page 72... ...
72 A B 2.00 1.50 1.00 0.50 nnn . -0.50 -1 .00 1962 1967 1972 1977 / \` I ~ \ _ Hispanic / '- \ '/ ~ ~~~ White RACE AND ETHNICITY IN THE LABOR MARKET 2.50 2.00 1.50 1.00 0.50 0.00 -0.50 1962 1967 1972 1977 / \ Hispanic Black White ~ / / \' ~ \ _ ~ \ _ 1982 1987 1992 1997 ~ _ \ \ /\ \ / __ ~_ \/ 1982 1987 1992 1997 FIGURE 4-6 Education deficits with White men, as percentages, for Black and Hispanic (A)
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From page 73... ...
The stagnation and decrease in Hispanic wages relative to U.S.-born Whites, however, is consistent with the apparent lack of relative educational progress of the average Hispanic worker. The adjective apparent is necessary because the absence of progress is mostly the result of a compositional effect of the addition of new Hispanic immigrants with low levels of schooling.
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From page 74... ...
74 RACE AND ETHNICITY IN THE LABOR MARKET TABLE 4-6 Achievement Scores of High School Students Proficiency in Year Reading 1971 1980 1984 1990 1996 White 13 yr old 261 264 263 262 267 Black 13 yr old 222 233 236 242 236 Hispanic 13 yr old 237 240 238 240 White 17 yr old 291 293 295 297 294 Black 17 yr old 239 243 264 267 265 Hispanic 17 yr old 261 268 275 265 Percent of students rated adept at reading 1971 1980 1984 1990 1996 White 43.2 43.3 46.3 50.1 45.1 Black 7.7 7.1 16.2 16.9 18.0 Hispanic 16.5 21.2 27.1 20.0 Science 1973 1977 1986 1990 1996 White 13 yr old 263 256 257 264 266 Black 13 yr old 205 208 221 226 226 Hispanic 13 yr old 213 226 232 232 White 17 yr old 304 298 298 301 307 Black 17 yr old 250 240 253 253 260 Hispanic 17 yr old 262 259 262 269 Mathematics 1973 1978 1986 1990 1996 White 13 yr old 274 272 274 276 281 Black 13 yr old 228 230 249 249 25z Hispanic 13 yr old 239 238 254 255 25( White 17 yr old 310 306 308 310 31= Black 17 yr old 270 268 279 289 28( Hispanic 17 yr old 277 276 283 284 29z SAT scores of college bound seniors 1976 1980 1990 1995 Verbal White 451 442 442 448 Black 332 330 352 356 Mexican-Americans 371 372 380 376 Mathematics White 493 482 491 498 Black 354 360 385 388 Mexican-Americans 410 413 429 426 SOURCE: National Center for Education Statistics: Education Testing Service (1991~.
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From page 75... ...
There is abundant evidence that affirmative action changed where Black men and women worked and the jobs they were able to obtain, especially in the late 1960s and early 1970s (Chay, 1998; Donahue and Heckman, 1991; Holzer and Neumark, 1999; Smith and Welch, 1984~. If affirmative action were effective, minority representation should have expanded more among firms required to report to the Equal Employment Opportunity Commission (EEOC)
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From page 76... ...
The wage effects that one can assign to affirmative action are far more controversial and uncertain; however, the rapidity and magnitude of the increases in Black male and female wages during the late 1960s and early 1970s cannot be easily explained by the more slowly evolving changes in the skill distributions between the races. For example, the case that affirmative action pressures, which lead to shifts in employment, contributed to relative gains in Black male wages in the late 1960s and early 1970s is a strong one.
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From page 77... ...
bSource: A Title VII of the Civil Rights Act of 1964 Charges FY 1991-1997. From Enforcement Data at EEOC's website.
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From page 78... ...
The main problem is that the timing of the wage stagnation had little connection to the timing of affirmative action cutbacks. For example, Figure 4-2A shows that the stagnation in aggregate Black male wages began in 1977 and remained so during the Carter years, when EEOC resources were expanding rapidly.
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From page 79... ...
First, it directly produced a decrease in the relative wages of Black male college graduates among new entrants; second, it also eventually eradicated the initial wage benefit received by the generation of Black college graduates most favorably affected by affirmative action. Another difficulty in assigning a significant wage role to affirmative action is that many other confounding forces were at work that could have altered the racial wage gap.
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From page 80... ...
Those whose wages were initially less than the median suffered significant real-wage losses, while workers earning more than the median enjoyed inflation-adjusted wage increases. Figure 4-7 summarizes these changes by plotting percent wage changes relative to 1962 for White male workers.
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From page 81... ...
For example, in 1971 the median Black male worker earned $412 a week equivalent to what a White worker earned at the 25th percentile of the White male wage distribution. Between 1971 and 1981, wages at the 25th percentile of the White wage distribution declined by 20 percent quite close to what was happening to the median Black worker.
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From page 82... ...
82 50 40 30 20 10 O-10 -20 -30 -40 -50 -60 RACE AND ETHNICITY IN THE LABOR MARKET - Native Whites Hispanics ~ f / J / l 0 10 20 30 40 50 60 70 80 90 FIGURE 4-8A Wage growth from 1970 to 1990 for U.S.-born male White and Hispanic Los Angeles County residents. 50 40 30 20 10 O-10 —20 -30 -40 -50 -60 1~ 10 20 30 40 50 60 70 80 90 FIGURE 4-8B Adjusted Hispanic wage growth from 1970 to 1990 for Los Angeles County residents.
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From page 83... ...
Table 4-9 lists wage differentials of newly arrived Hispanic male immigrants compared to U.S.-born Hispanics. Although recent arrivals have always earned much less than U.S.born workers, this wage gap widened considerably from 1970 to 1990 for both male and female Hispanic immigrants.
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From page 84... ...
Rising wage inequality implies larger wage differences, holding skill differences constant. Therefore, as skill differences between Hispanic immigrants and U.S.-born Hispanic workers expanded over time, the wage difference expanded even more.
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From page 85... ...
Both female and male Mexican immigrants essentially maintain their initial wage gaps with U.S.-born White workers. It is important, however, to keep the reference group U.S.-born White males in mind when interpreting this finding.
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From page 86... ...
other Mexican immigrants, and will probably have a shorter expected duration in the United States, selectivity of out-migrants from the original group alone would imply that the data should show improvement in relative incomes of Mexican immigrants as time since immigration lengthens. Because the data indicate, instead, a basically constant ratio, this
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From page 87... ...
~ -21 .0 -5.5 -1 .37 1 990 1 975-1 979 Arrivals -16.9 1 985-1 999 Arrivals -31 .0 -29.4 ~1970 ~11980 ~1990 -32.4 -40.9 -44.7 FIGURE 4-10 Career wage growth of new female immigrant cohorts. Each group consists of 25-34 year-old women.
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From page 88... ...
Until this problem of the nature of the selectivity of emigration of previous Mexican immigrant cohorts can be resolved, one should be cautious about reaching any strong conclusions about the nature of lifecycle labor-market careers of Mexican immigrants. Generational Assimilation Regarding the issue of generational assimilation, the conventional wisdom for Hispanics whom some argue have not enjoyed the same level of success of earlier European immigrants leans toward the pessimistic side.
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From page 89... ...
Each new Hispanic generation not only had higher incomes than their predecessors, but their economic status converged relative to White men with whom they had to compete. HOUSEHOLD WEALTH Until recently, data limitations forced most comparisons of racial economic status to rely only on income differences, but improvements in measuring wealth have made contrasts of household wealth levels feasible.
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From page 90... ...
A more complete description of racial wealth differences is given in Figure 4-11, which plots, for Whites and non-Whites, household wealth at percentiles of the wealth distribution. These data illustrate the extreme skew in wealth holdings the top 5 percent of White households have 50 percent more wealth than White households at the 90th percentile, while those at the 90th percentile have more than five times as much as the median White household.
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From page 91... ...
1 ,00O,000 1 90O,00080O,00070O,00060O,00050O,00040O,00030O,00020O,0001 0O,OOO O91 Non-White 1 6 11 16 21 26 31 36 41 46 47 Percentile White / f ~ Non-White 56 66 76 86 96 Percentile FIGURE 4-11 White and non-White wealth distribution in 1984 (in 1996 dollars)
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From page 92... ...
Even if these inheritances were completely saved so that they show up in current household wealth, they would account for a small percentage of racial wealth differences documented in Table 4-11. Similarly, two-thirds of all White households and 90 percent of all minority households received no financial inheritances by the time the householders were in their mid-50s.
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From page 93... ...
Because rates of stock ownership and holdings were larger among White households, wealth of White households increased more than wealth of Black households. This dismissal of financial inheritance as an important source of racial differences in household wealth does not imply that all forms of intergenerational transmission are unimportant.
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From page 94... ...
The rising percentage of immigrants in the Hispanic male workforce in recent decades slowed the aggregate gains in Hispanic schooling. Until the mid-1970s, schooling continued to assume its historical role as the primary determinant of the male racial wage gap; however, male
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From page 95... ...
However, the stagnation and decrease in Hispanic wages relative to U.S.-born Whites is consistent with the apparent lack of relative education progress of the average Hispanic worker. In addition, affirmative action led to changes in the location of minority employment and produced significant early jumps in the wages of Black men; however, these wages gains proved to be temporary.
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From page 96... ...
episodic change: The impact of affirmative action and civil rights policy on the economic status of Blacks. Journal of Economic Literature 29~4~:16031644.
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From page 97... ...
Smith J 1993 Affirmative action and the racial wage gap.
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