Labor Market Disparities: Not Just Black and White

Rashida Grant

Computer Skills

Annotated Bibliography

11/05/2008

Discrimination, not only exists in the everyday world, but it also exists in the labor market. It affects several aspects of the workforce for Black Americans. The following sources are the foundation to a paper which would explore the affects discrimination has on wage differences. However, this paper would not only explore differentials among black Americans and white Americans, but also black Americans and black immigrants.

1. Alexis, Marcus. “The Economics of Racism.” in Boston, Thomas D., Leading

Issues in Black Political Economy. New Brunswick, New Jersey: Transaction

Publishers, 2002, 279-303.

Alexis strives to inform the reader that not only is discrimination lurking within the labor market, but also of the economic consequences of its presence.

In the beginning of the article Alexis economically defines discrimination, “If an individual has a ‘taste for discrimination’ he must act as if he were willing to pay something, either directly or in the form of reduced income to be associated with some persons instead of others. When actual discrimination occurs he must in fact, either pay or forfeit income for this privilege [sic].” In short, the practice of discrimination incurs opportunity costs. This article forces the reader to look beyond the emotional implications of discrimination. True, discrimination within the labor market is bad because it hurts people’s feelings, but also because it weakens the economy. By an employer overlooking an applicant or laborer due to ethnicity, they ultimately forgo the benefit of having that worker and therefore incur a cost.

2. Conrad, Cecilia. “Black-Owned Businesses: Trends and Prospects” in Conrad,

Cecilia, Mason, Patrick, Stewart, James, Whitehead, John, African Americans in the

U.S. Economy. USA: Rowman and Littlefield Publishers, Inc, 2005, 237-245.

This article focuses on the growth, diversification and accomplishments of black entrepreneurship. Briefly, near the closing of the article, the writer mentions some of the obstacles blacks will have to overcome. Of those obstacles are: a lack of financial capital and lingering discrimination among lenders.

This article gives a very positive view of the state of black-owned businesses.

Although, there are still hurdles that need to be crossed, a thriving market is not out of the question. If the increased numbers of black Americans who are pursuing higher education invest their skills into new and existing firms, this will result in incredible expansion.

Upon that expansion, these firms can employ other blacks, thus decreasing black unemployment and increasing the black participation rate in the labor market. Thriving black-owned businesses are not only beneficial to the black community, but also to the entire economy. 3. Cotton, Jeremiah. “On the Permanence or Impermanence of Black-White

Economic Inequality.” in Boston, Thomas D., Leading Issues in Black Political

Economy. New Brunswick, New Jersey: Transaction Publishers, 2002, 211-220.

This article gives quite a pessimistic view of discrimination against Black

Americans in the labor force. Although, the writer states the views of those who are more optimistic, it is evident that the writer sides with the more pessimistic. However, although the writer believes racism/discrimination is just something that will always exist, he calls for an economic movement: a movement which would rebuild the infrastructure of the inner cities and provide employment for all. The writer gives the acts and the results of the Civil Rights Movement as the basis to his solution. Through drastic acts such as the bus boycotts and counter sit-ins blacks finally had a voice and the masses had no choice but to listen. It is through that kind of proactive behavior that black Americans would be able to close the gap between themselves and black immigrants.

4. Darity, William, Goldsmith, Arthur H., Veum, Jonathan. “Race, Cognitive Skills,

Psychological Capital and Wages.” in Boston, Thomas D., Leading Issues in Black

Political Economy. New Brunswick, New Jersey: Transaction Publishers, 2002, 173-

This article addresses those who claim that blacks do not suffer from discrimination in the labor market and it is due to psychological capital and cognitive ability, not race that blacks earn significantly lower wages. In this article psychological capital is defined as “those aspects of personality that influence productivity”. It has been argued that it is impossible to measure or observe a person’s personality. However, a person’s psychological capital and self esteem are reflections of one another. So the writers used a series of survey questions developed by

Morris Rosenberg and other psychologists and Rosenberg’s 0-6 scale of self esteem to measure psychological capital. To measure cognitive ability the writers utilized the results of The Armed Forces Qualifications Tests (AFQT). Empirically, the writers conclude that even when taking these factors into account discrimination is still prevalent.

This is an interesting article, in that it empirically proves the presence of wage discrimination based on race. It also gives specific reasons why certain studies were used to support the conclusion while others, which in the past were widely used, were now rejected. This paper is also useful because it gives a valid explanation for why a disparity would exist between black Americans and back immigrants.

5. Kanazawa, Satoshi. “The Myth of Racial Discrimination in Pay in the United

States.” Managerial and Decision Economics, 2005, 26: 285-294.

The purpose of this article is to prove that there is a difference in wages among whites and blacks but it is not due to discrimination in the labor market. Kanazawa believes it is due to differences in cognitive ability that whites receive significantly higher wages. This article strives to prove that there has not been discrimination within the labor market regarding wage differentials since the 1970s. Kanazawa utilizes results from the GSS, a test which measures verbal intelligence and is administered by the

National Opinion Research Center at the University of Chicago, to mathematically prove the initial hypothesis.

This paper is just an interesting addition because it provides a rebuttal for any type of racial or ethnic discrimination in the labor market.

6. Kenty-Drane, Jessica, Shapiro, Thomas M. “The Racial Wealth Gap.” in Conrad,

Cecilia, Mason, Patrick, Stewart, James, Whitehead, John, African Americans in the

U.S. Economy. USA: Rowman and Littlefield Publishers, Inc, 2005, 175-181.

This article emphasizes the gap in wealth between White Americans and Black

Americans. The authors attribute much of this difference all the way back to slavery and the free labor blacks were forced to provide. According to Kenty-Drane and Shapiro, this period gave whites an immense advantage, and left blacks drowning economically. By being forced to work for such a long period of time without compensation, blacks didn’t have the opportunity to accumulate wealth to improve the economic welfare for the following generations. This article also relates the large difference in wealth to the amount of net worth accumulated per dollar of income: “For each dollar of income a family earns, white families gain $3.25 in net worth…black families [earn] just under $2 of net worth for each dollar of income.” The writers conclude that this not only means blacks are earning less income than whites, but also that blacks are earning less wealth per dollar. This article is an interesting addition to the analysis because not only are black

Americans facing competition from black immigrants, but also they continue to suffer from disparities in comparison to the white population.

7. Kunjufu, Jawanza. Black Economics: Solutions for Economic and Community

Empowerment. 1991.

In this book, only Chapter 5, Obstacles to Black Economic Development, is relevant to the subject at hand. Most important are the statistics contained within the first few pages. For example, “African American workers earn only 57 percent of White workers’ income, this creates a total loss of income equivalent to 186 billion dollars. The average wealth of a White family is $39,000 in comparison to a Black family at $3,200.

This creates a disparity in wealth of $695 billion.” The data contained in this chapter would be used as a compliment to the other collected information. For example, it might be effective to pair this data with information from source (6).

8. Mason, Patrick. “Persistent Racial Discrimination in the Labor Market.” in

Conrad, Cecilia, Mason, Patrick, Stewart, James, Whitehead, John, African

Americans in the U.S. Economy. USA: Rowman and Littlefield Publishers, Inc, 2005,

141-150. According to Mason, discrimination against blacks in the labor market can have an affect not only on wages, but also, “[on the] establishment of employment pools, hiring practices, and requirements; training opportunities; employment segregation within and between firms; evaluations; layoffs; working conditions; and work schedule.” The majority of this article offers the reader a glimpse into the labor market spanning from

1964 to 2000 and the racial inequality that has taken place. Of course, being that the most significant indicator of racial inequality is the difference in wages, that is what the writer mostly focuses on.

This article has a plethora of great statistics. Unfortunately, I want to examine the effects of discrimination on wage differences in the black community as a whole. When considering black men and women separately, there are additional factors that need to be considered including, but not limited to: women of all races initially entering the workforce and the inequality of wages between men and women that are still present today.

9. McCrate, Elaine. “Why Racial Stereotyping Doesn’t Just Go Away: The Question of Honesty and Work Ethic.” Working Paper Series Number 115. University of

Massachusetts Amherst: Political Economy Research Institute, April 2006.

This paper acknowledges the existence of racial stereotyping and the negative effect it has on Black Americans in the labor market. In addition to acknowledging it,

McCrate also identifies the shortcomings in resources and programs that have been put into practice to prevent and end such misconceptions. She discusses issues such as cultural miscommunications, both verbal and nonverbal, and the perpetuated discomfort of whites around black Americans. She also informs the reader that although there were differences in testing scores between black and whites, there was “no difference in the mean integrity test scores or pass rates of blacks and whites.

Due to racial stereotyping and flaws in the resources which are supposed to deter such misconceptions, it is evident that Black Americans have a disadvantage in the labor market. Without even being able to make it pass the initial screening process, their unemployment rate is almost double that of White Americans.

10. Shapiro, Thomas. The Hidden Cost of Being African American: How Wealth

Perpetuates Inequality. Oxford, New York: Oxford University Press, Inc, 2004.

One of the chapters in this book, The Cost of Being Black and the Advantage of

Being White examines the reason for the large difference in wealth between the races.

According to the information in this book gathered from 1999, the average net worth of a white family is $81,000 and a mere $8,000 for black families. The author does attribute this difference to unequal wages. However, unlike many, Shapiro doesn’t solely base this difference on discrimination. Instead, he focuses on the trend, which predicts the wealth gap will decrease as the younger generation begins to flourish and the opportunities become more equal and higher education is easily attainable.

Although, the difference in the figures of wealth between white and black families is significant, this book would be a stronger source if its information were more current. However, this is an important source because while it acknowledges the current gap in wealth, the author predicts it will close.

11. Iceland, John, Scopilliti, Melissa. “Immigrant Residential Segregation in U.S.

Metropolitan Areas”. Demography, 2008, 45: 79-94.

This paper takes a look at the assimilation rate of immigrants based upon self- segregation and socioeconomic status. According to the writers, black immigrants tend to segregate themselves more than immigrants of other races and ethnicities. Also, as it stands, segregation between blacks and whites in general is still higher than any other racial or ethnic group and whites.

This paper would be a valuable source for my analysis because in the event there is a significant disparity existing between black natives and black immigrants, this paper may offer some additional insight. Ultimately, it may be possible to assume that black immigrants are fairing better in the United States economy because they remain segregated and thus avoid assimilation.

12. Massey, Douglas, Mooney, Margarita, Torres, Kimberly. “Black Immigrants and Black Natives Attending Selective Colleges and Universities in the United

States”. American Journal of Education 113. The University of Chicago. Feb 2007. According to this paper, not only were black Americans excluded from pursuing higher education, but also black immigrants (mainly those of African origin). However once anti-segregation policies were implemented colleges and universities began to recruit people of color to fulfill affirmative action obligations. Interestingly, this paper finds that black immigrants are significantly outnumbering black natives in attendance of private and highly selective institutions of higher education.

This paper would be a good asset for my research because it could offer an explanation for the disparity (if there is a significant one) that exists between black

Americans and black immigrants. If black immigrants are receiving better education and in general have a higher level of education it would make sense for their wealth accumulation and incomes to be higher than that of black Americans.