ByNatalia A. Kolesnikova , Yang Liu
How significant was the economic progress of African-American men in the U.S. between 1970 and 2000? The common perception is that inequality between races decreased. In 1954, the Supreme Court's decision in the famous Brown v. Board of Education case proclaimed racial segregation of public schools unconstitutional. The ruling eventually paved the way for the Civil Rights Act of 1964, which outlawed racial segregation in schools and in the workplace, among other provisions. The act opened doors to better education, including higher education, for black children. Because it made racial discrimination illegal, the new law offered greater opportunities to African-Americans in the labor markets.
Did these societal changes translate into economic changes, as well, for blacks? Did earnings of blacks increase relative to earnings of whites? Did the position of black men in the labor force become more secure? How much did educational attainment and skill acquisition improve?
Most of the research on these topics is done on a national level.1 Such studies, at most, "control for" a region (such as the South, Northeast, Midwest, etc.) and/or whether a person resides in an urban/rural area. This article examines and compares various aspects of African-American progress in labor markets between 1970 and 2000 across 14 large metropolitan areas of the country.2 There are several reasons for performing such analysis at the city level rather than at the national level. First, cities in the U.S. vary widely in their characteristics, including labor market conditions and industrial structure. Second, and more important, the history of black population is very different in different regions of the country. Finally, a recent study demonstrates that it is important to take into consideration geographic location when studying racial differences.3
It seems reasonable, therefore, to study economic progress of African-Americans in a context of a specific labor market and then compare it across cities.4 To be more precise, by "city" we mean a Metropolitan Statistical Area (MSA) as defined by the Census Bureau.5 In our analysis, we concentrated on black men who are 25 to 55 years old and compared them to non-Hispanic white men. We plan to perform a similar analysis for women in our future research.
Many studies concentrate on wages as a measure of earnings. It is a logical approach because the wage is the price that labor markets put on a unit of skilled labor. In this case, a decrease in the black-white wage gap would mean that labor markets' valuations of black and white labor were converging.
It also would indicate the convergence of skill levels of black and white workers. The left panel in Table 1 compares the average weekly wages of black and white men for each of the 14 cities.6 There was an increase in relative weekly wages of black men between 1970 and 2000 in all but three cities.
|Weekly Wages: Percent of White Men's Wages Earned
By Black Men
|Annual Income: Percent of White Men's Income Earned
By Black Men
Atlanta experienced the largest increase in relative wages of black men. In 1970, black men in Atlanta were making about 62 percent of white men's weekly wages. By 2000, the ratio had increased by 16 percentage points, to 78 percent. Philadelphia, Chicago and Detroit saw relative wages of black men decrease between 1970 and 2000 but only slightly: from 79 to 77 percent in Philadelphia, from 75 to 74 percent in Chicago and from 81 to 78 percent in Detroit.
A major part of black-white wage convergence is attributed to a significant increase in educational attainment levels of blacks over the last century. Table 2 reports the proportion of black and white men in each of the five main education categories (less than high school, high school diploma or GED, some college but no bachelor's degree, bachelor's degree, above a bachelor's degree) in the United States. National data are good estimates for all 14 cities as educational attainment progress of blacks and whites in each city is consistent with the national trend.
|Black Percent||White Percent|
|Less Than High School||63||38||22||16||35||20||10||8|
|High School or GED||25||34||39||41||34||35||32||31|
|Some College, but
No Bachelor's Degree
Several points are worth noting. First, in 1970 black men had extremely low levels of educational attainment. Sixty-three percent of blacks had less than a high school degree, and only 13 percent of them attended college. What is more, only 6 percent of black males had a bachelor's degree or higher in 1970.
Second, there was significant progress in educational attainment of black men between 1970 and 2000. In 2000, only 16 percent of black men aged 25 to 55 lacked a high school diploma, down from 63 percent in 1970. The fraction of blacks who went to college significantly rose to 44 percent, although less than a third of those who pursued their education beyond high school received a bachelor's degree or higher.
Third, despite the progress made by black men in terms of improving educational attainment, they still lagged far behind white men. Although the proportion of black men without a high school diploma decreased considerably between 1970 and 2000, the rate in 2000 was still twice as high as that of white men. Given the sharp rise in the demand for educated labor over the past several decades, it is particularly alarming that only 14 percent of black men had a bachelor's or higher degree by the year 2000, while 31 percent of white men achieved that level of education. An additional concern is with the quality of education that black men receive, especially in inner city schools in major urban areas.
The difference in wages is one of the labor market characteristics that can potentially contribute to racial economic disparity. Other factors are important, such as labor force participation, unemployment and underemployment. To better assess the economic progress of blacks, it is important to consider a different measure—annual earnings, which take into consideration both wages and labor force participation. Analyzing annual earnings instead of weekly wages allows a better assessment of overall economic well-being of an individual.
The right panel of Table 1 provides a summary of changes of black-white annual earnings ratios in the 14 cities from 1970 to 2000. This picture of economic progress of black men is much less bright. In contrast to weekly wages, relative annual earnings declined in most cities. In Southern cities that did experience an increase in relative annual earnings of black men, most of the progress happened between 1970 and 1980 with no significant changes after that. In Chicago, where relative annual earnings fell the most (14 percentage points), black men were earning 69 percent of white men's annual income in 1970 but only 55 percent by 2000. Most of the Midwestern and Eastern cities in the sample experienced a similar decline.
Interestingly, the magnitude and timing of the decrease in relative annual earnings of black men varied across cities. In New York, for example, the overall decrease of 10 percentage points was spread somewhat equally over these three decades. In Philadelphia, a drop of almost 10 percentage points between 1970 and 1980 was followed by virtually no change after 1980. In Cleveland, the largest decrease occurred between 1980 and 1990. In Detroit and St. Louis, two decades of regress were followed by an increase of three percentage points between 1990 and 2000. In Baltimore and Los Angeles, in contrast, the black-white annual earnings ratio remained nearly stable over the three decades.
The main reason for the discrepancy between the two measures of economic progress of black men in 1970-2000 in Table 1 is the labor force attachment of black men.
A significant decline occurred in the average number of weeks that black men worked per year between 1970 and 2000.7 The number decreased in every city, in some of them by as much as 25 percent. In 2000, black men on average worked only 33 weeks a year in San Francisco (down from 42 weeks in 1970), 34 weeks in Los Angeles and Chicago (down from 43 and 45 weeks in 1970), and 35 weeks in Detroit (down from 45 weeks in 1970). Atlanta is the city with the highest average number of weeks worked in 2000, 41 weeks. But even this number is not higher than the average number of weeks worked by black men in any of the 14 cities in 1970. In contrast, the weekly hours of work stayed remarkably stable between 1970 and 2000 with relatively small increases in some cities and decreases in others.
The low number of weeks that black men worked on average in 2000 not only implied underemployment for many of them, but also that many black men did not work at all, which drove the average numbers down.
To better assess changes in labor force participation of black men between 1970 and 2000, Table 3 shows the proportion of black men who had a job, were unemployed or were out of the labor force. The table illustrates two main changes between 1970 and 2000: a decrease in the proportion of black men who had a job and an increase in the proportion of black men who reported themselves as being out of the labor force.
|Has a job||92||89||79||77||Has a job||83||74||71||72|
|Not in Labor Force||6||8||11||17||Not in Labor Force||10||13||16||21|
|Has a job||85||79||79||74||Has a job||85||75||68||72|
|Not in Labor Force||11||13||14||20||Not in Labor Force||9||14||18||20|
|Has a job||87||82||84||81||Has a job||88||75||71||69|
|Not in Labor Force||10||11||9||15||Not in Labor Force||8||14||16||22|
|Has a job||84||80||71||71||Has a job||86||65||66||69|
|Not in Labor Force||12||14||18||23||Not in Labor Force||7||16||19||23|
|Has a job||92||85||87||81||New York|
|Unemployed||1||5||5||5||Has a job||86||77||76||71|
|Not in Labor Force||7||9||8||14||Unemployed||3||8||9||7|
|WESTERN||Not in Labor Force||10||15||15||22|
|Has a job||83||78||76||70||Has a job||86||74||76||72|
|Not in Labor Force||10||14||15||21||Not in Labor Force||9||16||14||21|
|Has a job||83||76||73||71||Has a job||87||78||78||74|
|Not in Labor Force||11||15||21||22||Not in Labor Force||9||14||14||19|
The table also demonstrates that in a number of cities there was a rise in the unemployment rate in 1980 and 1990 followed in 2000 by a decrease in the unemployment rate together with an increase in the proportion of black men who were out of the labor force. The observed trend seems to be consistent with a "discouraged workers" explanation: When the unemployment rate is high for a prolonged period of time, workers who are looking for jobs give up and opt out of the labor force and, thus, are not counted as unemployed.
Consider Chicago, for example. In 1970, 88 percent of black men there had jobs, the unemployment rate was 4 percent and 8 percent of black men were not in the labor force. By 1980, the number of employed black men dropped to 75 percent, the unemployment rate was 10 percent and 14 percent of black men were out of the labor force. Things kept getting worse, and by 1990, 71 percent were employed, 13 percent were unemployed and 16 percent were not in the labor force. In 2000, the rate of employment for black men decreased further, to 69 percent. The unemployment rate actually decreased from 13 percent to 9 percent. The proportion of black men who were out of the labor force, however, rose to a staggering 22 percent.8
A similar pattern of changes in the labor force can be observed in many other cities, including Houston, New Orleans, St. Louis, Cleveland, Detroit and Philadelphia. In 2000, in 10 out of 14 cities, the proportion of black men out of the labor force was at least 20 percent. This high level of black men opting out of the labor force was observed even in cities where the unemployment rate was relatively stable at 7-9 percent, such as Los Angeles and San Francisco.
All cities, except Atlanta, experienced a decrease in employment rates of black men between 1970 and 2000 by 11-19 percentage points. Atlanta had a much smaller drop of only six percentage points. In 2000, Atlanta and Washington tied for the highest employment rate of black men, and Atlanta had the lowest unemployment rate.
To sum up, between 1970 and 2000 in 14 major urban areas black men experienced a significant decrease in their rates of employment while unemployment and rates of opting out of the labor force increased. As a result, their average numbers of annual weeks of work and annual earnings relative to white men decreased dramatically.
Why did this happen? What were the contributing factors? To answer these important questions, take a closer look at changes in the labor markets.
Industrial composition changed considerably from 1970 to 2000, especially in manufacturing cities.9 The main story of the three decades is a decline in manufacturing employment and a rise in the number of people working in the service industry. With the exception of Washington, where government jobs historically dominate, employment of men in manufacturing in the cities studied dropped by at least eight percentage points. In cities that were predominantly industrial, such as St. Louis, Cleveland, Chicago, Detroit and Baltimore, manufacturing employment fell by 17-19 percentage points.
Deindustrialization hurt both blacks and whites, but blacks were more affected. One reason is that black men were more likely to be employed in manufacturing in 1970.10 In Detroit, for example, the proportion of black men in manufacturing decreased from 56 percent in 1970 to 26 percent in 2000. More generally, in 10 out of 14 cities, manufacturing employed the largest proportion of black workers in 1970; by 2000, manufacturing lost its leading role in all cities except Detroit.
Another reason black men suffered more than white from deindustrialization is that black men, on average, had a lower level of educational attainment, making it harder for them to adapt to new labor market conditions and to find new jobs in a different industry. Also, as more and more jobs required training beyond high school, black men were in a worse position than white men because of the relatively low levels
Not surprisingly, labor market conditions deteriorated more significantly in cities with a high manufacturing concentration. In cities that were more diverse in terms of an industrial mix, the results of deindustrialization were less dire. For example, labor force participation of black men did not decrease nearly as dramatically in Atlanta and Washington as in Chicago and Detroit.
More than 35 years after the Civil Rights Act, the economic status of black men remained much worse than that of white men. What is more, there appeared to be virtually no progress of black men in the labor markets between 1970 and 2000. Some important indicators, such as the rate of those no longer in the labor force and relative annual earnings, actually became worse.
While the overall picture was rather bleak, there were clear differences among cities. Industrial cities in the Midwest (Chicago, Detroit, Cleveland and St. Louis) experienced more serious deterioration of the labor markets precisely because they had been predominantly manufacturing cities. With the decline of the importance of manufacturing and a move to high-tech and service industries, the low-educated labor force of these cities faced tougher labor market conditions. This resulted in high levels of unemployment. More people became discouraged about their prospects for finding a job and dropped out of the labor force completely.
Most Eastern and Western cities in the study showed a decline similar to that of Midwestern cities but to a somewhat lesser degree.
Southern cities, on the other hand, saw some economic progress of black men, mostly between 1970 and 1980. These improvements, together with the reversal of economic progress in the Midwest, resulted in more uniform conditions across locations of black men in 2000 than in 1970.
Despite changes in racial acceptance and equality, the evidence reveals that significant racial disparities remained in education and labor market outcomes through 2000.
Altonji, Joseph G.; and Blank, Rebecca. "Race and Gender in the Labor Market," in Orley Ashenfelter and David Card, eds., Handbook of Labor Economics, Vol. 3, Part 3, pp. 3143-3259, Amsterdam: Elsevier, 1999.
Black, Dan; Kolesnikova, Natalia; Sanders, Seth; and Taylor, Lowell. "The Role of
Location in Evaluating Racial Disparity." Working Paper 2009-043A, Federal Reserve Bank of St. Louis, September 2009.
Black, Dan; Kolesnikova, Natalia; and Taylor, Lowell. "African-American Economic Progress in Urban Areas: A Tale of 14 American Cities." Working Paper 2010-015A, Federal Reserve Bank of St. Louis, June 2010.
Ruggles, Steven; Sobek, Matthew; Alexander, Trent; Fitch, Catherine A.; Goeken, Ronald; Hall, Patricia Kelly; King, Miriam; and Ronnander, Chad. 2009. Integrated Public Use Microdata Series: Version 4.0. Minneapolis, Minn: Minnesota Population Center. See http://usa.ipums.org/usa/