Employment and Earnings of African Americans Fifty Years After: Progress?
50 Pages Posted: 13 Aug 2020 Last revised: 14 Aug 2020
Date Written: July 13, 2020
The Equal Employment Opportunity Commission (EEOC) was established in 1965 to implement Title VII of the Civil Rights Act of 1964, which made it illegal to discriminate against an individual in employment on the basis of race, color, religion, sex or national origin. Coming into the 1960s, the employment opportunity that privileged the white male was much more than a job. By the 1960s, growing numbers of white men had employment that gave them steadily rising real earnings, often with decades of tenure at one organization. The “career-with-one-company” (CWOC) that had become the employment norm by the beginning of the 1960s included health insurance and a defined-benefit pension, both funded by the employee’s business corporation or government agency. CWOC is what, in the decades immediately after World War II, turned much of white America into a growing and thriving middle class.
This was a white middle class made up of, at the lower end, blue-collar workers with no more than a high-school education. Union representation in collective bargaining enforced the unions’ firsthired, last fired “seniority” principle while securing wage increases in step with productivity growth, with “cost-of-living allowances” that adjusted wages for inflation usually built into the contracts. Aided by government subsidies such as the federal GI Bill and tuition-free higher education at state “land grant” colleges, the male offspring of the white blue-collar worker had ample opportunity to transition to higher incomes, superior benefits, and even more employment security as a white-collar worker. In the 1950s, the white male who had recently ascended to the upper echelons of the middle class became known as “the organization man.”
In the immediate aftermath of the 1964 Civil Rights Act, African Americans with no more than a high-school education gained access to CWOC employment at the blue-collar level. Owing to strong demand for production workers in the 1960s and 1970s and affirmative-action support under the EEOC, Blacks were making inroads into white-male privilege by gaining substantial access to well-paid and secure operative and craft occupations; big steps up from the common-laborer jobs into which they had previously been segregated. In the first Working Paper of this series https://www.ineteconomics.org/research/research-papers/how-the-disappearance-of-unionizedjobs-obliterated-an-emergent-black-middle-class , we outlined how the decline of unionized jobs from the beginning of the 1980s decimated an emergent African American blue-collar middle class. Over the decades it became clear, however, that, while African Americans were hit earlier and harder than whites, they were not the only ones to fall out of the middle class. Increasingly, white blue-collar workers with no more than a high-school education also lost their middle-class status as the ideology that companies should be run to “maximize shareholder value” put a permanent end to the CWOC norm. Over subsequent decades and up to the present, growing numbers of American workers with only a high-school education, regardless of race, have experienced stagnating incomes, downward socioeconomic mobility, and even, at certain times, declining life expectancy.
In this, the second working paper of our Fifty Years After book manuscript, we provide a statistical overview of the changes in employment and earnings of Blacks since the mid-1960s. If Title VII of the Civil Rights Act of 1964, along with other anti-discrimination laws from that period, and the formation of the Equal Employment Opportunity Commission promised progress toward racial equality in employment and general well-being, the current situation shows a very troubling picture. Across all dimensions of economic well-being that are dependent on access to decent paying, secure jobs, Blacks fare worse than whites. We present the most recent available data on the occupations (for 2019) and the industries (for 2018) in which the different Black, white, Hispanic, and Asian members of the U.S. labor force are employed. Then, using the decennial censuses, we examine the distributions of Blacks across aggregate categories of occupations from 1960 to 2010 to see the changing pattern of jobs held by Blacks, in broad terms, from the time of the Civil Rights Act to the present. We then look at the differences in Black and white unemployment and wage rates, with and without accounting for differences in education. The racial gap in wages, after accounting for education level, has widened.
Stable jobs that enable employees to share in productivity gains and hence increase their real earnings over time facilitate the accumulation of wealth. In its various forms, wealth influences the current and future well-being of families and their children by enabling investments in education and training, providing savings to offset unforeseen circumstances, and funding retirement. Although manifest progress has been made by a portion of better-educated Blacks, the overall picture for wealth accumulation by Blacks in comparison with whites is grim. A race-based wealth gap should be no surprise, as access of African Americans to stable, well-paid jobs has always been much less than for whites. Yet, the size of wealth disparities is extremely large and has worsened over the last fifty years. Currently the median family wealth for whites is ten times that of Blacks. We examine the wealth gap within separate categories, including housing equity, housing stability measured by delinquency on mortgages and foreclosure, retirement savings and liquid savings, corporate shareholding, and student-loan debt. We also look at health insurance coverage because it functions, in part, like savings that can be called upon to deal with unanticipated events. And lack of health insurance can wipe out one’s accumulated wealth should one require hospitalization and/or expensive drugs. In every one of these components of wealth, Blacks trail whites by large and increasing amounts. Each of these indicators reflects the persistent and even growing Black-white disparities in earnings, employment security, and career patterns over time.
Which leaves us with the question that the “Fifty Years After” project seeks to answer: What happened to equal employment opportunity? For a quest for economic equality to become a reality, the pay and stability of employment for Blacks must be improved far more than for whites. But in view of the downward mobility of white workers, even a substantial closing of the Black-white income gap will not solve the problems of poverty and injustice in the United States. Contrary to the situation in the 1960s, in the presence of the impoverished and vulnerable American working class of the 2020s, “equal employment opportunity” will not yield the upward socioeconomic mobility for Blacks that was possible in the 1960s and 1970s. The Covid-19 crisis is having an especially devastating impact on people of color, but workers of every race and ethnicity are feeling immense pain. Even when the public-health crisis has abated, the gargantuan political task for the years and decades ahead will be the restoration of employment opportunity that will enable all Americans to live healthy, secure, and happy lives.
Keywords: African American, occupations, industries, education, employment opportunity, employment relations, income distribution, wealth accumulation, stock buybacks
JEL Classification: D2, D3, G3, J0, L2, L6, N8, O3, P1
Suggested Citation: Suggested Citation
https://doi.org/10.36687/inetwp129 , Available at SSRN: https://ssrn.com/abstract=3671038