Race and the Shifting Burden of Job Displacement: 1982-93

Abstract

Advances in the relative labor market position of black men stagnated in the 1980s, after nearly four decades of steady improvement. The structural change of the early 1980s was particularly costly for black men. Past research shows that black men faced a substantially higher risk of job displacement than white men during this period. In contrast, we provide evidence that the black disadvantage in the incidence of displacement narrowed over the 1980s and vanished by 1992-93. We document this change over the past decade and analyze its potential causes. We also examine trends in the probability of survey date employment and post-displacement earnings losses. Our analysis, based on the 1984 to 1994 Displaced Worker Surveys, shows that over the 1980s and continuing into the 1990s, racial differences in the risk of job displacement narrowed significantly. In the early 1980s recession, the displacement rate for black men employed full-time was 7.05 percent, 43.9 percent higher than the white male displacement rate of 4.9 percent. In 1992-93, the black displacement rate was 4.02 percent, 2.7 percent lower than the white rate of 4.13 percent. The characteristics of job displacement were notably different in the 1990s than in the 1980s. Perhaps the most important difference was that white-collar workers faced a higher risk of losing their jobs in the 1990s than in the 1980s. At the same time, semi-skilled blue-collar workers experienced a substantial reduction in the likelihood of job loss in the slack labor market period in the 1990s as compared to their dramatic job losses of the early 1980s. These trends, combined with the underrepresentation of black men in white-collar occupations and overrepresentation of black men in semi-skilled blue-collar occupations, contributed to the decline in the black/white displacement rate gap in the 1990s. A substantial part of the decline in the aggregate racial gap was due to large reductions in the racial displacement rate gaps within occupations. When we consider the roles of education, region and industry, we find that there were large decreases in the displacement rate gap within most categories. The decline in the probability of job displacement for blacks relative to whites was not confined to only a few types of jobs, sectors of the economy or regions of the country. The relative and absolute decline in displacement rates for black men is an improvement in their labor market situation. Our view of this improvement is tempered by our finding that black relative post-displacement outcomes remained largely unchanged over the decade.

JEL Classification: J65, J60