Expert Commentary

Labor markets, politics and the historical basis of black economic fortunes

2011 paper from the University of Chicago consolidating previous scholarship that explores ongoing employment and earnings disparities for African-Americans.

In 2011, the ratio of employed population to full population among racial groups was 51.7% for African Americans and 59.4% for whites, according to the Bureau of Labor Statistics. That same year, the ratio between the median wealth (assets minus debts) of white households versus that of black households was the largest since the government started collecting such data in 1984, and approximately twice what it had been before the Great Recession of 2007-2009. The racial economic gap — also present in other measures of economic well-being, such as wage and unemployment gaps — has persisted over time in the United States. Further, in 2010 the number of African-American households in poverty rose to 27.4%, followed by Hispanic households (26.6%) Asian households (12.1%), and white households (9.9%), according to the U.S. Census Bureau. Traditional explanations of these gaps have focused on the decline in manufacturing, in addition to skills and education disparities in the new service economy.

A 2011 paper in the Journal of Politics & Society, “What Do We Really Know About Racial Inequality? Labor Markets, Politics, and the Historical Basis of Black Economic Fortunes,” reviews and synthesizes a large volume of scholarly work to better understand the reasons for these continuing economic disparities. The researchers, Virginia Parks and William Sites of the University of Chicago, note that racial wage and employment disparities between blacks and whites since the 1940’s have been shaped by both market and non-market factors, including: racial discrimination; political and institutional factors such as social-movement mobilizations; shifting government policies; unionization efforts; and evolving public employment opportunities.

The paper’s findings include:

  • “Recent studies in economic history make it clear that the post–World War II era for African Americans was neither an age of steady relative progress nor one of persistent immobility. Instead, these decades might be best characterized as an extended period of racial-inequality stasis bracketed by two quantum-leap advances.”
  • The first period of rapid gain was in the 1940s, when wartime mobilization and a rejuvenated Great Migration from the South stimulated increases in African American earnings, both in absolute terms and in relation to whites. Traditional explanations for racial gains in wage equality in the 1940’s include the migration of millions of African Americans to northern cities, moving them away from agricultural labor toward industrial work. A second explanation is the rising level of education among this group that partly resulted from this northern migration.
  • More current research has linked a number of government actions to these decreases in racial disparities in the 1940’s. These include practices of the National War Labor Board, which allowed wage increases for low-paying jobs despite wartime wage controls. In addition, wage inequality among government jobs narrowed, facilitated by initiatives such as the Roosevelt administration’s Fair Employment Practice Committee (FEPC). Furthermore, increased levels of union activity helped raise wages at the lower end of the wage scale, as unions also pressured employers to include anti-discrimination policies; and anti-discrimination laws passed at the state-level  impacted the labor market generally for black men and women.
  • “A second moment of relative black economic progress took place between the mid-1960s and the mid-1970s, when federal civil rights policies played an especially prominent role in generating wage gains among blacks that significantly outstripped those of whites.” Researchers have identified a number of factors that may have influenced the earnings compression in the period between 1965 and 1975. These included federal civil rights policies, including anti-discrimination mandates in the south, the Civil Rights Act of 1964, and the Voting Rights Act of 1965. Unionization in the public sector also likely had a positive effect on the wages earned by African Americans.
  • “…Black–white male earnings ratio stood at .62 in 1964, rose to .72 by 1975, then fell to .69 by 1987. Black women experienced a similar increase during this period (relative to the wages of white women and white men), though without the same drop-off thereafter.”
  • After the mid-1970’s, wage gains for African Americans came to a halt. The authors note that conventional sociological wisdom suggests that the shift from a manufacturing economy to a service economy required new levels of education and new skills. African American workers had difficulty meeting the skills demand for these jobs, especially as public schools declined. But there has been a “revised explanation” among more recent historians. This more recent scholarship argues that the reasons for this change go beyond demand and supply-side economics: These include a drop in the real value of minimum wage; and declines in unionization also likely played a role in overall wage inequality.
  • An unemployment gap between white and black workers has persisted, even in the 1940’s and 1970’s when African Americans experienced wage gains, and this gap continued through the end of the 20th century. Research has shown that much of this gap since 1960’s cannot be explained by deindustrialization or the mismatch of skills, and the emergence of this gap preceded de-industrialization, first emerging in the 1940’s. Researchers have suggested a number of alternative explanations, including: discriminatory hiring practices; reduced anti-discrimination enforcement; and the effects of the criminal justice system. However, “much remains unknown about the causes of a persistent gap in racial unemployment over the past half-century.”

The authors conclude that “racial economic gains have relied most directly upon momentary shifts in political mobilization, state strategy, and union power rather than on secular trends in human capital or economic restructuring; yet these shifts (perhaps because they have been so momentary) often failed to sustain or build upon whatever gains have been achieved.”

Despite these ongoing economic challenges for the African-American community, other areas merit attention. For example, the national jobs picture for African-Americans also improved slightly in 2012, relative to prior years. Black voter turnout in 2012 was exceptionally high — and may for the first time have equaled that of whites among eligible voters– suggesting growing political clout, according to the Pew Research Center. A wide variety of contemporary academic literature has also focused on how traditional high-poverty U.S. urban areas are changing in complexion.

Tags: African-American, poverty, civil rights

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