13
Employment and Income

Michael D. Woodard
Verna J. Henson

• Employment Trends

• Labor Force Participation and Unemployment

• Federal Government Response to Employment Discrimination

• Income Trends

• Federal and State Programs that Address Poverty

• Status of African Americans

• Employment and Income Statistics

The last quarter of the twentieth century brought about significant changes in the social and economic status of African Americans. Educated and skilled African Americans experienced considerable upward mobility. Analysts pointed to the passage of equal opportunity legislation during the civil rights era as the primary reason why African Americans with education and skills were able to take advantage of once-denied opportunities in employment and income growth. On the other hand, downsizing, job restructuring, and job dislocation were widespread in the government and private sector. Companies eliminated many blue collar jobs—some by relocating them to countries with cheaper labor—that once provided upward mobility for the less skilled. As a result, African Americans with less education and less skill have experienced decreased income, higher rates of unemployment, or removal from the labor force altogether.

EMPLOYMENT TRENDS

The most significant change in twentieth century American race relations was that African Americans were participating in all areas of employment. Historically, including much of the twentieth century, African Americans were restricted to service jobs in all industry sectors. For example, in the corporate arena, the idea of an African American leading a major corporation was not considered. In the entertainment industry, African Americans were severely underutilized and the roles available to them were limited to buffoonery. African Americans were locked out of professional sports and restricted to segregated leagues, ignored in the arts, and not considered seriously as politicians. By 2002, while still underrepresented, African Americans headed major corporations and sat on corporate boards of directors. African Americans were well represented in both Democratic and Republican administrations, heading important federal departments and influencing the policy by which this and other countries operate. There was a plethora of African American stars in the music, television, and film industries. In addition, African Americans were increasingly making strides in production and executive positions. Once admitted, African Americans dominated in professional sports, including golf and tennis. Indeed for the first time in history, both teams competing for the 2007 Super Bowl football teams were coached by African Americans, Lovie Smith of the Chicago Bears and Tony Dungy of the Indianapolis Colts. To say that the racial caste system in employment opportunities did not improve for African Americans would certainly be inconsistent with the facts.

Despite the recent dramatic changes in employment opportunities, not every segment of the African American population benefited. The growing African American middle class experienced a greater range of occupational and economic opportunities than ever before, but an

increasing number of African Americans who are disadvantaged were, in effect, locked out of the mainstream of American life. This growing schism in the social and economic conditions among African Americans has serious implications for the way African Americans should be viewed as a group and as well as for public policy that focuses on African Americans in the twenty-first century.

LABOR FORCE PARTICIPATION AND UNEMPLOYMENT

In March 2000, there were approximately 16 million African Americans in the civilian labor force comprising 12% of the civilian labor force. The labor force participation rate for black men was 68.1% and 63.9% for black women. The labor force participation rate for white men was 74.3% and 60.8% for white women. Thus, black men were less likely to be in the job market than white men.

Unemployment remained a major problem among African Americans in the labor force as high levels of unemployment have persisted for several decades. Data from the U.S. Bureau of the Census showed that this pattern continued. For example, during the early 1990s, the unemployment rate for African Americans fluctuated but remained above 11%. It was not until 1995 that the unemployment rate for African Americans dropped below 11%. In 1997, the unemployment rate was 10%, and, by 1999, the unemployment rate for African Americans declined to 9%. The steady decline in unemployment was attributed to the overall health of the economy. Even with a steady decline, since the 1950s, the unemployment rate for African Americans was consistently twice as high as for whites: 4% for white men and 3% for white women in 1999.

THE EFFECTS OF OCCUPATIONAL DISCRIMINATION

Much of the variance in unemployment rates between blacks and whites is a direct result of discrimination in the job market, past and present. In fact, for a long time, there were many occupations that African Americans could not hold, regardless of their education level. This resulted in an occupational structure for blacks substantially different from that for whites, remaining in place despite civil rights legislation.

According to the 2000 U.S. census, in 1997, 7.3% of all employed African Americans held managerial and professional specialty positions; 15.1% were employed as operators, fabricators, or laborers; and 17.6% worked in service occupations. African American males were more likely than any other group to be in the most vulnerable blue-collar occupational category, operators, fabricators, and laborers. Furthermore, the occupational marginalization of African American men seemed to be worsening. In 1999, 31% of all employed black males held these types of jobs compared to 17% of all white males. In addition, 17% of employed black males maintained jobs in the lower-paying service sector compared to 8% of white males. In contrast, only 17% of employed black males held managerial and professional jobs compared to 32% for white males. Whereas the operators, fabricators, and laborers category was the largest occupation group for black men, the managerial and professional category was the largest single category for white men. For females, the greatest disparity was in service jobs and managerial and professional jobs: white women had greater representation in managerial and professional jobs (35%); black women had greater representation in service jobs (27%).

Racial discrimination continued to exacerbate African American employment problems. A single-minded focus on racial discrimination in the workplace, however, would neglect and discount the impact of economic changes in the global economy on a skewed occupational distribution, increased joblessness, and lowered real wages among many African Americans in the last quarter century. These economic changes included: the shift from mass production in a manufacturing-based economy to highly computerized data management in an information-based economy; the decrease

in the number, quality, and variety of blue-collar jobs; and shifting patterns and location of business and industry.

These economic changes have had an adverse effect on demand for blue-collar labor. Coupled with the cumulative experiences of racial restrictions, the higher number of less-skilled African American workers suffered the most. This circumstance was further compounded for the less-skilled, inner-city African Americans who were geographically isolated from the growing number of jobs that shifted to the suburbs and socially isolated from informal job networks that have become a major source of job placement.

Structural changes in labor demand did not just benefit the more educated and highly trained African Americans and white Americans, though. The impact of these structural changes on African Americans were first noted by William J. Wilson in his path-breaking book, The Declining Significance of Race (1980) and further elaborated in The Truly Disadvantaged (1987) and When Work Disappears (2004). Nevertheless, one cannot ignore the persistent impact of racial discrimination in maintaining disparity between blacks and whites even when education levels are the same.

FEDERAL GOVERNMENT RESPONSE TO EMPLOYMENT DISCRIMINATION

DISCRIMINATION LAWSUITS DECIDED BY THE COURTS

Although job discrimination does still exist, African Americans found recourse in the court system in the late 1990s as several high-profile lawsuits forced companies to treat their employees equally, regardless of race. In 1996, African American workers won a case against Circuit City after charging that the retailer systematically discriminated against them in promotions at the company’s headquarters. That same year, Texaco agreed to pay $176 million in the largest race discrimination settlement ever after 1,350 African American employees filed a class action suit to protest the oil company’s discriminatory work environment. In addition to the settlement, the company set up diversity workshops for all 20,000 of its employees and boosted its minority hiring from 23% to 26%.

The federal government has not been exempt from discrimination lawsuits. In 1999, Secretary of Agriculture Dan Glickman settled a class action lawsuit against his department filed by African American farmers in 1997. The settlement attempted to make amends to the thousands of minority farmers who were denied government loans over the years because of their race. According to the terms of the settlement, each farmer would receive $50,000, and any government loans would be forgiven. Many farmers pointed out that their commercial loans, which would not be forgiven and which carry a higher interest rate than government loans, in general, far exceeded the amount of money being granted, leaving them with significant debts they may not have accrued had they been granted government loans in the first place. In addition, none of the agents who applied discriminatory practices were punished for their past actions. However upon taking office, the second Bush Administration set aside the settlement hard-won by black farmers.

INCOME TRENDS

The median income for African American families has increased. In 1993, the median income for African American families was $22,974; by 1999, it had increased to $27,900 and, by 2005, it had increased to $30,858, a 34.5% increase since 1993. In comparison, median income for white families was $40,195 in 1993; $44,400 by 1999; and $50,784 by 2005, a 26.3% increase. In contrast, the median income for Hispanic households was $35,967 and Asians households had the greatest median income at $61,094 in 2005. While black families experienced a greater percentage income increase from 1993 to 2005 than white families, black families had the lowest median income among race groups.

The income disparity was even more troubling when factoring educational attainment. Sociological studies have consistently shown that blacks with comparable

levels of education, occupation, and experience tend to earn less than their white counterparts. Data on household income from the U.S. Census Bureau confirm those findings. The table “Earnings by Highest Degree Earned: 1999” presents average income by educational level and reveals that greater education translates into greater income for both blacks and whites. However, the income benefit that white males derive from education far outstrips that for black men and women, as well as for white women. Another troubling pattern is that the amount of disparity between blacks and whites increases as the educational level increases. At the high school graduation level, black men average $22,698 annually while white male high school graduates average $29,782. In other words, black men with a high school diploma earn 76% of the income that high school educated white men earn. Black men with a bachelor’s degree earn 75% of the amount their white counterparts; those with professional degrees earn 61%; at the doctorate level, black men earn only 54% as much as white men with the same education. To make the point another way, in 1999, black men with a doctorate averaged less income than white men with a bachelor’s degree. This table also makes clear that, regardless of race, men derive greater income benefit from their educational accomplishment than women. Therefore, black women receive the smallest financial increase at each level of educational attainment.

THE IMPACT OF FAMILY STRUCTURE ON THE INCOME OF AFRICAN AMERICAN FAMILIES

Family structure also impacts the income potential of African American families. In 1998, 28% of all African Americans had incomes of $50,000 or more, with married couples more likely than other family types to be in this group. Forty-eight percent of African American married couples earned $50,000 or more and 23% reported incomes that exceeded $75,000. For white married-couple families, 58% had incomes that exceeded $50,000, with 33% in excess of $75,000.

Single parent, female-headed families were concentrated more in the lower income groups. Sixty-seven percent of black female-headed families had incomes of less than $25,000. Forty-six percent of white female-headed families earned less than $25,000. For male-headed families, 43% of black families had incomes of less that $25,000, while 26% of white families earned less than $25,000. Among racial comparisons based on family structure types, black female-headed households fared the worst.

AGE OF HOUSEHOLDER AND AFRICAN AMERICAN FAMILY INCOME

Age is a reasonably accurate measure of work experience and therefore one of the most important factors to consider when assessing income. One fact that is often overlooked when considering black-white income differences is the significant variation in the age distributions of the two groups—variation in itself reflecting sociological factors. In other words, it is necessary to compare blacks and whites in the same age categories to obtain a complete picture of the African American income situation. Family income data for the 2005 Current Population Survey confirm the relationship between income and age. Generally speaking, family income increases for African Americans as the age of the householder increases. African American householders in the 15- to 24-year-old age category had a median family income of $17,986. For those between 25 and 34, the median family income was $27,530. Family income gradually rises for African Americans until it peaks at $49,842 for householders between 45 and 54 years old. Beyond that age, there is a gradual and expected decline in income as they withdraw from the labor force. Nonetheless, in no age category do blacks equal whites in median family income. The figures range from 50% as much in the 24 to 35 age group to 66% as much in the 45 to 54 age group. Overall, black householders under age 65 earn only 58% as much as their white counterparts.

REGIONAL DIFFERENCES IN BLACK FAMILY INCOME

Income for African American families is likely to vary among different regions of the country. The South continued to have the lowest median household income of any region. At $38,410, the South’s average represented about 86% of the median household income of the remaining regions. Notably, about half of the African American population resides in this region. The 2000 median household incomes in the other regions were $44,744 in the West, $44,646 in the Midwest, and $45,106 in the Northeast. These differences reflect the variations in regional economies and occupational opportunities for blacks and whites.

POVERTY AND THE AFRICAN AMERICAN COMMUNITY

Employment, unemployment, and income all have an impact on the level of poverty that exists in the African American community. Government statistics on poverty showed a 20% decrease in the number of African Americans in poverty since 1960. In 1959, there were 9.9 million blacks living below the poverty line. In 2000, the number declined to 7.9 million. The major difference was the poverty rates in the two periods. In 1959, the poverty rate was 55.2%. The poverty rate for African Americans declined to 22.1% in 2000, a historical low. The economic recovery since the 1990–1991 recession accounted for the decline in the poverty rate for blacks.

The difference between the African American poverty rate and the white poverty rate narrowed over the last decade. In 1996, the poverty rate for whites was 9.6% while the poverty rate for blacks was 26.1%. By 2005, the poverty rate for whites fell to 8.6% while the poverty rate for blacks declined to 22.1%. The reality is that the proportion of blacks living at or below the poverty line is nearly three times as great as for whites.

An even more troubling picture of economic hardship can be seen when examining the depth of poverty. Slightly less than half (3.4 million) of the black poor in 2000 were “severely poor”—that is, they had incomes less than 507% of the poverty threshold. These are the families William J. Wilson described in his book, The Truly Disadvantaged, suffering from the relocation of jobs and disproportionately locked in the central city, thus, outside of the job information network. In total, some 10.1 million African Americans were near poor in 2000—that is, they had incomes above the poverty threshold, but by only 25% or less. Taken together, the severely poor, the poor, and the near poor comprised 33% of the African American population.

POVERTY AND AFRICAN AMERICAN TEENAGE PREGNANCY

One problem associated with poverty in the African American community is that of single-parent families, of which many teenage mothers made up the most challenged. Rates of pregnancy and non-marital childbirth are higher for black teenagers than whites, though the gap closed at the end of the twentieth century. Studies indicate that the differences between the two groups can be explained by differences in sexual activity, rates of abortion, the use of contraceptives, and rates of marriage before the child’s birth.

Irrespective of the causes of African American teenage pregnancy, the consequences are dramatic for the African American community. Generally speaking, teenage mothers are more likely to be poor and are less likely to finish high school. In more cases than not, the fathers are absent or non-supportive. Thus, it is not unusual for teenage mothers to be dependent on public assistance as a means of support. In large part, this accounts for 38.7% of female-headed (spouse absent) households falling below the poverty line in 2000. Teenage mothers tend to be unprepared for the adult responsibilities of parenting. Their children are more likely to be the victims of child abuse and to suffer physical, emotional, and educational problems later on in life.

African American community organizations have attempted to tackle the problem of teenage pregnancy. Groups such as the Children’s Defense Fund, the National Urban League, Delta Sigma Theta, and a host of others have developed teenage pregnancy prevention programs. Often, these efforts focus on teenage males as well as females.

FEDERAL AND STATE PROGRAMS THAT ADDRESS POVERTY

The issue of African American teenage pregnancy is only one dimension of the overall problem of poverty within the African American community. Many of the programs that address the needs of the poor, such as Headstart, Medicaid, Medicare, the Food Stamp Program, and several other forms of assistance, were part of a comprehensive effort referred to as the “War on Poverty.” Critics argue that these programs were expensive, wasteful, and ineffective. Supporters claim that the programs have not failed, but that America is ambivalent in its determination to provide equal opportunity in employment and the political arena.

WELFARE REFORM

The most abrupt shift in public policy regarding poverty occurred in 1996 when President Bill Clinton signed sweeping welfare reform legislation into law, replacing the traditional Aid to Families with Dependent Children (AFDC) program with a new program called Temporary Assistance to Needy Families (TANF). Welfare reform, for the first time, required many welfare recipients either to obtain jobs or to prepare for work. Welfare reform appeared to work. After the implementation of welfare reform, child poverty began to drop at an unprecedented rate for children in female-headed families, black children, and Hispanic children. Between 1995 and 2001, poverty in each of these three groups dropped by at least 11 percentage points. Among the nation’s poor, the impact of this legislation was swift, especially in the African American community. In early 1997, African Americans accounted for 37% of the nation’s welfare caseload, even though they only comprised 13% of the general population. After reform, child poverty declined twice as rapidly among African Americans and Hispanics as it did among whites. For example, Hispanic child poverty fell by nearly one-third, from 40% in 1995 to 28% in 2001. According to the Department of Health and Human Services, welfare reform helped to move 4.7 million Americans from welfare dependency to self-sufficiency within three years of enactment, and the number of welfare caseloads has declined by 54% since 1996.

Most studies demonstrated that approximately 50% of those who left welfare had jobs, though many of them paid minimum wage only.

AFFIRMATIVE ACTION PROGRAMS RECEIVE CRITICISM

The social intervention created the greatest backlash against affirmative action. Affirmative action was initiated during the 1960s during the Kennedy and Johnson era. As such, it provided guidelines and required the establishment of goals and timetables in the hiring of underutilized groups, specifically racial/ethnic minorities, the disabled, and women. The guidelines do not require, however, the hiring of unqualified individuals, despite what opponents argue. Rather, affirmative action rules require the documentation of a good faith effort to hire qualified persons from underutilized groups. Affirmative action rules have been effective in changing hiring practices because they have the weight of the federal government enforcement. As a direct result, a broader range of opportunities became available for African Americans in government, the corporate world, and colleges and universities.

Affirmative action programs have been under particularly heavy attack in the 1990s with several programs being restricted or dismantled altogether. For instance, the 1989 landmark U.S. Supreme Court ruling in City of Richmond v. J. A. Croson Co. struck down as unconstitutional under the Fourteenth Amendment a city ordinance of Richmond, Virginia, requiring that 30% of each public construction contract be set aside for minority businesses. In June 1995, Adarand Constructors Inc. filed suit against the U.S. Department of Transportation claiming that consideration of “disadvantaged” status—assumed to include women and minorities—in awarding subcontracts violated the equal protection component of the Fifth Amendment’s due process clause. The U.S. Supreme Court, in Adarand v. Peña remanded the case for further consideration at the appellate level using the “strict scrutiny” criteria established in Croson. The Adarand and Croson rulings greatly limited the access of disadvantaged entrepreneurs to procurement opportunities in the private and government sectors.

Studies have documented that while whites support the general principle of equality for all, most do not support the idea of programs and social intervention specifically designed to improve the conditions of African Americans and other minorities. The American belief in rugged individualism leads white Americans to the opinion that social and economic differences between blacks and whites are due to individual factors, not systemic factors.

Affirmative action programs have their share of African American critics as well. Many African American conservatives argue that affirmative action programs do not help the disadvantaged. They claim that these programs primarily benefit the African American middle class—a group, they say, that needs no assistance in achieving its economic goals. In addition, critics of affirmative action argue that it unfairly stigmatizes all African Americans, whereby the success of African Americans in any field is often dismissed as being due to affirmative action. In other words, many whites perceive the need for affirmative action as confirming their belief in the inferiority of blacks.

STATUS OF AFRICAN AMERICANS

The social and economic status of African Americans is complex. It is clear that major improvements have occurred as a result of the civil rights movement, civil rights legislation, and affirmative action policies. Many African Americans are holding more high-status jobs and earn higher incomes than ever before. While the percentage of poor African Americans is declining slightly, the number of African Americans who are impoverished remains extremely high. In other words, when one speaks of the future of the African American community, one has to be clear that it is a community that consists of many segments. The lifestyles and opportunities for African Americans in one segment may be vastly different than the conditions experienced by those in another.

Despite the dramatic changes that have occurred within the African American community as a whole, one thing has remained the same: blacks have yet to achieve equality with whites on any measure of social and economic standing. African Americans have consistently had rates of unemployment at least twice as high as those for whites. Blacks who are employed are more likely than whites to hold blue-collar jobs—the type of jobs most likely to be eliminated during the restructuring of the American economy. African Americans are more likely than whites to be among the severely poor. The future will continue to be filled with obstacles for African American workers, families, and businesses.

The disparity in economic indicators also leads to disparity in access to health care. In 2005, 247.3 million Americans had health insurance coverage while 46.6 million were without such coverage. The uninsured rate for whites was 11.3% and accounted for 22.1 million persons, while the uninsured rate for blacks was at 19.6% and accounted for 7.2 million persons.

TOWARD GREATER SELF-SUFFICIENCY

At the beginning of the twenty-first century, increasingly resistance and resentment has emerged toward programs that address poverty and racial discrimination in employment. Such programs that secure economic opportunities for African Americans and other minorities had some success. As opportunities decline for whites, the competition for good jobs is expected to increase. Blacks and other minority populations are growing at rates that far exceed that of whites. As these populations become better educated, the struggle for desirable jobs will intensify.

The political climate in the “New Millennium” is such that major social intervention programs are not likely to be initiated by the federal government within the near future. Because of the social and political climate in the United States, many African Americans are advocating a greater emphasis on self-help and internal community development. One sociological model of African American community development is the Black Organizational Autonomy Model. This model maintains that viable African American communities possess community-based organizations with five basic components: economic autonomy; internally developed and controlled data sources; programs to develop and promote African American female leadership; programs that emphasize African American history and culture; and programs that are socially inclusive in leadership. The model proved successful in Little Rock, Arkansas, in a church-based African American community organization, and has considerable potential for meeting the needs of African American communities nationwide.

However, community action may be hampered by a growing schism within the African American community itself. Following on the work of Dr. William Julius Wilson (1980, 1987), Dr. Henry Louis Gates Jr. commented on “the two nations of Black America.” Gates sees a troubling divide between African American professionals and the African American underclass in the inner-cities. According

to Gates, the African American middle- and upper-classes have more in common with their white colleagues than with the poor of their own race. This disassociation could hinder the upward mobility of the underclass and cause community efforts to improve the conditions of the poor to stagnate if those African Americans with the resources to help feel less inclined to invest in a community of which they are not a part.

AFRICAN AMERICANS AND THE FINANCIAL STOCK MARKET

African Americans have traditionally steered clear of the investment arena—both in terms of employment and of participation in the buying and selling of stocks. Growing up without an understanding of the benefits of long-term investing, most African American children become adults who are leery of putting money into a system they do not understand. A 1998 survey showed that 64% of black non-investors attributed their lack of participation to a “lack of knowledge,” compared with 55% of whites. When African Americans did choose to invest, they typically selected avenues with low-yield returns such as insurance funds, savings accounts, or real estate—the result being that their money grew at a much slower rate than whites with a substantially greater number of stock portfolios.

The effect of this cautious investment strategy was a gross economic disparity between blacks and whites, particularly in the retirement years. A study of wealth distribution by the Rand Corporation revealed that, among people over 70, blacks have less than 10% of the average financial assets available to whites. Many elderly African Americans become overly dependent on Social Security and fall into poverty. The African American community is already financially handicapped by lower wages and overrepresentation in blue-collar jobs with few benefits programs such as 401(k) plans; the reluctance to become involved in the stock market has a further crippling effect on African American economic growth.

Toward the end of the 1990s, however, African American distrust of the stock market began to dissolve. Buoyed by a strong market, many African Americans sought out information on how to invest wisely, and investment companies started active minority recruitment programs to entice these new investors. Investment seminars specifically geared toward African American women have been particularly effective in recruiting a group that has typically been too burdened with family concerns to set aside money for investing. In addition, African American groups such as the Coalition of Black Investors have formed to promote financial literacy among African Americans and to connect black investors and investment clubs in order to exchange ideas and investment strategies.

Even as blacks close the investment gap, though, they continue to be far outnumbered by whites in investment jobs. Of the country’s 90,000 brokers, only 600 were African American in 1998. The percentage of African American employees in the securities industry actually fell from 10.6% in 1990 to 8.4% in 1996. In 1998, the Reverend Jesse Jackson held a three-day conference with some of the top names on Wall Street to discuss ways to improve minority participation in the financial arena.

MORTGAGE LENDING

African Americans have also experienced racism in the mortgage market. A recent study conducted by the Federal Bank of Boston posited that lending bias against minorities was rampant. In their much-debated findings, the researchers concluded that Boston-area banks rejected 11% of mortgage applications by whites and 29% of applications by minorities. Such numbers, they argued, proved that discrimination in lending still existed. However, other analysts claim that the study was flawed in its interpretation of the data, and those discrepancies that appear to point to discrimination actually clear up under careful analysis.

Apart from the debate, it is undisputed that there is a far greater rate of white homeowners than African American homeowners. In spite of the fact that the rate of home ownership reached a record 65.7% in 1997, a study found that while 71.3% of whites were homeowners, only 43.6% of blacks could boast the same. According to a report by the Federal Reserve Board and the Joint Center for Housing Studies at Harvard University, the main reason being “redlining”—banks refusing mortgage loans to low-income buyers, usually minorities. Unable to buy homes, African Americans have frequently been forced to rent in city neighborhoods, which are often destabilized by the lack of homeowners.

Some court decisions and corporate initiatives have been made to address incidents of lending bias. In 1998, three Texas mortgage lenders agreed to make nearly $1.4 billion available to low-income and minority home buyers through 2001 after they were found to have applied discriminatory practices against minority applicants. These civil rights violations were discovered when white federal government housing officials who posed as applicants received better treatment and larger loans than minority applicants of similar financial standing.

EMPLOYMENT AND INCOME STATISTICS