Specifying Racial Inequality in Employment Earnings:

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Specifying Racial Inequality in Employment Earnings:
Has the Process Changed Since 1976?
Richard Hogan (hoganr@purdue.edu)
Tyrell Connor
Sarah A. Mustillo
Paper submitted to Social Problems
July 2009
Comments and suggestions by Carolyn C. Perrucci were particularly helpful.
Abstract
Data for household heads in the 1976, 1985, and 2005 panels of the Panel Study of
Income Dynamics indicate that racial inequality in employment income has not diminished to
any appreciable extent, but neither did it increase appreciably between 1976 and 1985 (as
suggested by Cancio et al. 1996). We find little change over time in either our ability to explain
income inequality or in the robust effect of race. Access to class or occupational privilege
changed fairly dramatically over the three decades of this analysis, but the long term pattern is
fairly stable and durable racial inequality, which we view as the product of class, race, and
gender relations, producing and reproducing inequality (Hogan and Perrucci 1998; Tilly 1998)
within an institutional context of declining real wages, unionization rates, and secure
employment opportunities, particularly for black men (Perrucci and Perrucci 2009).
Specifying Racial Inequality in Employment Earnings:
Has the Process Changed Since 1976?
Status attainment scholars believed that racial inequality was essentially about the
inheritance of status, which is why racial inequality in employment earnings could be specified
by the inherited advantages of education and occupation, with a residual or unexplained degree
of inequality, attributed to discrimination (Duncan 1969, p. 100; Sowell 1981, pp. 290-294).
Duncan (1969) reported both intercept and slope differences in black and white status attainment
models, indicating the double disadvantage of race: both inherited status and the inability to
translate education into occupation and income. Then Wright and Perrone (1977) found that
black male managers gained comparable earnings advantages from increased education.
Stoltzenberg (1975a) found similar results within occupational and industrial segments. The
problem, of course, was that most blacks lacked the education, the managerial/professional
positions, and the access to employment opportunities in the core industrial sector. Thus Wilson
(1978, p. 1) concluded that blacks no longer suffered "racial oppression" so much as "economic
class subordination."
Since then, Tomaskovic-Devey et al. (2006) have documented the racial desegregation of
occupations, 1966-1980, indicating that progress has been stalled since 1980. Cancio et al.
(1996) argue, in a similar vein, that between 1975 and 1984 racial discrimination increased, due
to declining federal support for racial justice. Both Tomaskovic-Devey et al. and Cancio et al.
argue, against Wilson (1978) and others who would reduce to race to class (e.g., Stolzenberg
1975a; Wright and Perrone 1977), that racial discrimination increased as the threat of the Civil
Rights Movement and the opportunity of divided elites (particularly economic versus political
elites) subsided (see Tarrow 1998, p. 76, on political opportunities; see Tilly 1978, pp. 133-138,
on opportunity/threat). Tomaskovic-Devey et al. (2006) acknowledge that there are, in addition,
effects of the shift to a service economy, but the thrust of their conclusions is that progress
toward racial equality has stalled for what are, essentially, political reasons.
We are more inclined to support the class theorists, while conceding that race cannot be
reduced to class (Hogan 2005a). Still we are inclined to argue that better measures of class and
more attention to how race and class are reproduced through gender relations will illuminate
efforts to disaggregate the components of racial inequality. We propose to begin this task by
considering three panels from the Panel Study of Income Dynamics (PSID). First, we will look
at the Reagan years (as Cancio et al. [1996] have done) and consider the possibility that racial
inequality in employment earnings (in these data) increased between 1976 and 1985. Then we
will look at more recent data (2005) to consider the extent to which what Cancio et al. (1996)
consider to be the effect of the Reagan years was really a secular trend in the postmodern
capitalist era (Harvey 1990), in which the decline of manufacturing and of traditional New Deal
union benefits (Hogan 2005b) has resulted in increasing racial inequality that cannot be specified
by the effects of education, marital status, occupation, or class. Simply stated, the most
important changes are changes in the occupational or class structure (Hauser et al. 1975).
In conclusion, we will claim that a better specification of class relations illuminates the
nature of these changes. Specifically, as we document here, the concomitant growth of the black
professionals, managers, and self-employed or supervisorial classes with the even more
spectacular growth of the black non-union working class, between 1976 and 2005, explains the
paradox of increasing employment opportunities for black men and increasing racial inequality
in earning.
2
As a first step toward specifying racial inequality in employment earnings, we compare
data for household heads in the PSID, using the 1976, 1985, and 2005 panels, to indicate, first,
that racial inequality in employment income has not diminished to any appreciable extent, but
neither had it increased appreciably between 1976 and 1985. In fact, the gap between black and
white male household head earnings increased between 1976 and 2005, while the gap between
white male and black female heads declined modestly, but in both cases the change was most
dramatic between 1985 and 2005. Second, we find that even before Reagan took office, our best
model of class, race, and gender inequality still does not specify (or explain away) significant
racial inequality. Third, we find little change over time in either our ability to explain income
inequality or in the robust effect of race. It is clear that access to class or occupational privilege
changed fairly dramatically over the three decades of this analysis, but the earnings advantages
have not always been comparable. Ultimately, then, we conclude that the civil rights and equal
opportunity efforts of the Sixties did bear fruit in providing access to "middle class" employment
opportunities, but the long term pattern is fairly stable and durable racial inequality, which we
view as the product of race, class, and gender relations, producing and reproducing inequality
(Hogan and Perrucci 1998; Tilly 1998) within an institutional context of declining real wages,
unionization, and secure employment, particularly for black men (Perrucci and Perrucci 2009).
Disentangling Disadvantage
"Among blacks in the twentieth century, the initial success of the nonviolent civil rights
movement slowed perceptibly as more militant, direct action stiffened the resistance of the larger
society ... The point here is not to definitively solve the question as to how much of intergroup
differences ... have been due to the behavior and attitudes of the particular ethnic groups [versus]
3
the behavior and attitudes of the larger society. The point is that this is a complex question, not a
simple axiom." (Sowell 1981, p. 294).
One of the challenges of disentangling disadvantage is to avoid partitioning blame
between the victims of discrimination and the discriminators. What Duncan (1969) calls the
"vicious cycle of poverty" is frequently used by left leaning social critics (e.g., Michael
Harrington 1963, quoted in Duncan 1969, p. 85) to blame the system or by conservatives to
blame the victim, or their parents (Gallaway 1966, cited in Duncan 1969, p. 87). Although the
liberal proponents of equal opportunity and affirmative action were relying on the best available
social science data it was not clear to Duncan that they understood the difference between
intercept and slope differences, or, in lay terms, between the initial disadvantage of being black
(inherited status of parents) and the barriers to achievement that are associated with being black
(blocked or unavailable mobility paths). Duncan (1969) found that black men fail to capitalize
on their achievements and on the achievements of their parents. Not only do they start out at a
disadvantage, but the disadvantage is compounded by the inability to translate father's
occupation into occupational mobility (or even simple inheritance) or to translate occupation and
education into income.
Featherman and Hauser (1978) later reproduced the racial difference in inheritance of
occupation, both in the original Blau and Duncan (1967) data from 1962 and in their 1973
replication. In 1962, only 13.3% of black sons of upper non-manual fathers achieved upper nonmanual status, but this increased to 43.9% in 1973. Among white men, however, 57% (in 1962)
and 59% (in 1973) inherited upper non-manual occupational status (Kerbo 2009, pp. 391, 400).
Thus we might argue that there has been progress but there continues to be racial inequality, both
4
in the inheritance of status and in the status attainment process. That much of the story seems
noncontroversial. Obviously, Civil Rights and Great Society legislation had a tremendous effect
on poverty and on racial inequality. It seems equally clear that there has been little change in
patterns of racial inequality since 1973, particularly in the earnings gap between white and black
males. Although the gender gap has declined markedly since 1970 it appears that the racial gap
has remained relatively stable, as has the pattern of unemployment. Black males earn about 60%
of what white males earn, and they suffer unemployment rates of double the white figure (Hogan
and Perrucci 2007; Kerbo 2009, p. 349).
Sociologists who focus on the segmentation of labor and industrial markets, most notably
Stolzenberg (1975a), challenge the idea that blacks earn less as a function of their education and
occupation, insisting that status attainment has failed to appreciate the extent to which the returns
on education and experience vary across occupation and industry (Stolzenberg 1975a;
Stolzenberg 1975b). Wright and Perrone (1977) similarly argue that class relations specify the
previously observed differences in return on education. Black male managers, although they
earn less than their white counterparts, receive comparable return on education. Wright (1997,
pp. 67-68) explains that a large component of racial inequality can be specified by class. As he
explains, "[J]ust under 30% of white men occupy privileged class locations, compared to 12.5%
of white women, 8.4% of black men and 3% of black women." (Wright 1997, p. 69). At the
opposite pole, "87% of black women, 77% of black men and 67% of white women are in the
extended working class, compared to only about 51% of white men." (Wright 1997, p. 69).
Wright (1997) intends to subsume all forms of inequality under the rubric of
"exploitation," but Tilly (1998) and Hogan (2001) argue that organizations (including unions,
firms, and even extended families) create categorical inequality through either "exploitation" or
5
"opportunity hoarding." Specifically, they effect inequality by including subordinates (or
instituting subordination) to facilitate super-ordinate pursuit of profit (exploitation) or by
excluding others from the pursuit of profitable enterprise (opportunity hoarding). As Hogan
(2001) explains, racial inequality is rooted in endogamy rules that exclude blacks from the
opportunities to capitalize on the resources that whites inherit or marry. This exclusion
(opportunity hoarding) from the family is combined with exploitation at work and reproduced or
institutionalized in various forms of patronage networks that exclude blacks from employment or
business opportunities. In addition, the exclusion of blacks from the white family is reproduced
in racially segregated housing, which becomes institutionalized into real estate and lending
practices that further reduce the ability of blacks to accumulate wealth in the form of housing
equity (Oliver and Shapiro 1997, pp. 19-23, 86).
Ultimately, we seem to have specified distributional components of racial inequality that
we might associate with "opportunity hoarding" in racial and ethnic patronage, denying blacks
access to managerial and professional positions in the core industrial sector, or to union jobs in
manufacturing and construction industries. At the same time, the exploitation of labor, through
employment and the lack of capital required for self-employment, and the opportunities for
mobility from employee to supervisor (if not employer) are also critical components of the
enduring racial inequality in employment earnings. In the analysis that follows we will include
measures of occupation, industry, and class, along with the standard (often considered human
capital) measures of education, hours/weeks worked and years of work experience, along with
age, marital status, and region (since wage rates and employment opportunities vary across
regions).
6
We are not particularly interested in contrasting "human capital" with class analysis or in
arguing about how to measure class (Grusky and Sørensen 1998; Hogan 2005a; Robinson and
Kelley 1979; Wright 1997). Similarly, we are inclined to include whatever information is
available about unions and firm size (Kalleberg and Van Buren 1996), as well as the correlated
measure of industrial core and periphery (Beck et al. 1978). Our intention is to specify the most
efficient model for explaining income inequality by race, class and gender in 1976, 1985, and
2005 panels of the PSID, so that we can consider the extent to which the specification has
changed or anything else has changed across three cohorts of household heads. Although we
shall offer separate specification for black and white males and females we are particularly
interested here in racial differences, which is why we are limiting our attention to heads of
households (not including wives). Although this limits our ability to examine gender inequality
(since the vast majority of household heads, following the 1968 convention for the first wave of
the PSID, are married men) it gives us a better estimate of changes in racial inequality across
cohorts, since households tend to reproduce race and class through gender relations, most
notably marriage and child rearing. Here we shall ignore the details of this reproduction and
look only at the outcomes, which reflect unequal life chances and business opportunities.
Data and Methods
The PSID offers forty years of fairly detailed information about employment, assets, and
family finances. Here we are limiting our attention to three waves of data. The data from 1976
and 1985 were used by Cancio et al. (1996) to support their claim that racial discrimination
(which had declined between 1962 and 1972: Featherman and Hauser 1978; Hout 1984) actually
increased between 1976 and 1985 due to "the government's retreat from anti-discrimination
7
initiatives in the 1980s" (Cancio et al. 1996, p. 541). We add data from the 2005 panel and
estimate Ordinary Least Squares (OLS) Regression Models predicting head of household logged
annual earnings from employment (including self-employment: called "head's labor income" in
PSID). We do not include wives' earnings, capital gain/losses, government or private pensions
or entitlements and we limit our sample to black and white heads of households who reported
that they were currently working at the time of the interview.
In order to compare the results across waves we use weights (provided by PSID) to
approximate population parameters in comparing means and in OLS models for all household
heads. This also corrects for the over-sampling of black households. In the OLS models we use
a series of dummy variables to distinguish white, male, married, core (industrial sector),
manager, professional (occupational titles), supervisor (with authority for pay and promotions),
proprietor (self-employed with less than five employees), employer (five or more employees),
union (member) and region (North East [NE], Mid West [MW], West and South
[excluded/reference category in OLS models]). We also use continuous measures of age (in
years) and education (scaled 1-9 by PSID in 1976 and 1985; scaled 0-6, following Wright and
Perrone 1977, in 2005), experience (years worked fulltime since age 18), hours/week and
weeks/year worked during previous year.
The class and occupational measures (following Hogan 2005a) exclude managers,
professionals, and the self-employed from "union workers" and excludes the self-employed from
managerial but not professional classifications. In other words, respondents might be selfemployed professionals but not self-employed managers. The same is true for supervisors.
There are no self-employed supervisors, only employers and proprietors. Thus we might
consider employer, proprietor, supervisor, and worker to be the mutually exclusive and
8
exhaustive class categories, with worker as the reference (excluded) category. Similarly, we
might consider professional, manager, union worker, and non-union worker as mutually
exclusive and exhaustive occupational categories, with non-union worker as the reference
(excluded) category.
Supervisor could not be coded for 2005, nor could experience. Similarly, firm size (more
than fifty workers) was not available for the earlier panels. Within these limits we estimated the
same models for all three years—identical models for 1976 and 1985, for all black and white,
male and female heads of households, combined and analyzed separately. We also estimated the
mean income (weighted) for all and separately for white and black men and women and used
these to calculate racial and gender earnings gaps (percent of average earnings for black men and
for white and black women/average white male earnings). These means (and gaps) provide the
most direct evidence of increasing or declining racial and gender inequality, while the OLS
models provide evidence of changes in the specification of race, class, and gender inequality.
Results
Table 1 reports weighted mean (and standard deviation) annual earnings for white and
black male and female household heads in the PSID in 1976, 1985, and 2005. For each year, the
percent of white male income is presented for white females and for black males and females.
Also reported ("Total") are means (and standard deviations) for all heads of households (along
with N for total sample and subsamples).
(table 1 about here)
9
Clearly white men claimed the highest income (labor income from head) and black
women claimed the lowest. Also, the income (in nonstandard or "real" dollars) rises
dramatically over time. Average total income more than doubles between 1975 and 1984, and it
more than doubles again between 1984 and 2004. As seen in the "% of white male" figures,
white female household heads claim a relatively stable 54-57% of white male income, rising
slightly to indicate a modest decline in the gender gap during the Carter-Reagan years and a
return to the baseline in 2004. Black males also experience a modest increase in relative income
in 1984 but a much more substantial decline by 2004, averaging around 68% but exhibiting more
variation over time than we see for white females. In fact, for black men, the 1975-2004
decrease in relative earnings, from 68% to 63% of white male earnings, is significant (z=2.16,
p<.05 [two tailed]). Black females actually lose their relative standing between 1975 and 1984
but achieve substantial progress in reducing the compounded race and gender gap from 39% in
1984 to 46% of white male earnings in 2004. The declining racial gap for Black female heads,
1975-2004, is not significant (z=-1.48), although the short-term decline from 1984 to 2004 is
significant (z=-2.14, p<.05 [two tailed]).
The distributional component of racial inequality is evident in Table 2, which reports
means and standard deviations of the predictors of income from the data of 1976. As seen in the
first panel of Table 2, 1976 household heads are 90% white, 82% male, and 71% married. Of
course, virtually none (~2%) of the female heads are married, in contrast to 88% of white and
73% of black male heads. The racial gap in education is greater, as is the gender gap in years of
work experience and in hours/week and weeks/year worked. Most heads, particularly white
female heads, worked in the core, but there is a substantial racial gap in class and occupation.
Nearly 14% of white men and 6% of white women are managers, compared to nearly 5% of
10
black men and women. Fully 18% of white males and 22% percent of white females hold
professional positions, compared to 6% of black men and 11% of black women. Nearly 23% of
white men are supervisors, compared to 12% of black men and less than 10% of white and black
women. The race and gender gaps are even greater among proprietors and employers, where
there are no black women and few black men, none of whom employ more than 4 workers.
Black men are distinguished among union workers—40% of black male heads, but most blacks
and most white women are non-union, non-professional, non-managerial workers (42% of black
male heads, 54% of white women, and 64% of black women, but only 28% of white male
heads).1 Finally, blacks heads are distinguished in 1975 as residing primarily in the South (56%
of black men and 47% of black women. Thus region as well as education, occupation and class
are major components of racial inequality.
(table 2 about here)
As seen in Table 3, however, the racial gap in education has diminished considerably by
1984, particularly for black men. In fact, in contrast to 1976, black male heads report higher
education than their black female counterparts. The other obvious changes for black men are the
growth of self-employment (proprietors and employers) and the decline of union workers, from
40 to 32%. On balance, black male heads increased their representation among the professionals
and the self-employed, even among employers, but did not reduce the racial gap in occupational
or class composition, since 45% of black male heads are non-managerial, non-professional nonunion workers in 1985, as opposed to 27% of white male heads.
11
(table 3 about here)
Table 4 reports means and standard deviations from 2004, which indicate further uneven
progress in narrowing the racial gaps in the distributional component of racial inequality. Black
women reduced the 1985 educational gap with black men and substantially increased their
representation in professional occupations. As professional employment declines modestly for
white females, between 1975 and 1984, black females increase their professional employment
from 11% to 18% (1975-2004 change is significant: z=-3.17, p<.003) and more than double their
managerial employment, from .048 to .099 (z=-2.77, p<.01). Black men report similar increases
in professional employment, from .059 in 1975 to .13 in 2004, (z=-5.0, p<.0001) and in selfemployment, with nearly 4% employers of 5 or more workers (approximating the population
rate). The increase in self-employment for black men, from .018 in 1975 to .082 in 2004, is
highly significant (z=-6.09, p<.0001). At the same time, however, there is a dramatic decline in
union workers, falling to 22% of black male heads. The relative decline in union workers among
black male heads, from .404 in 1975 to .216 in 2004, is highly significant (z=8.17, p<.0001)
Thus, despite increasing representation in self-employment and professional occupations, 53% of
black male heads are classified as non-union (non-managerial, nonprofessional) workers,
compared to only 40% of white men.2
(table 4 about here)
12
Table 5 reports the results of OLS regressions predicting logged employment earnings for
all heads and for white and black male and female household heads in the 1976 PSID. As seen
in the first panel of Table 1 (coefficients and s.e. for "All" heads), this model fits the data fairly
well. The explained variance (R2) is almost 55%. Virtually all of the effects are significant in
what the literature suggests as the expected direction. Not surprisingly, white, married men earn
more, even after we control for class, occupation, etc. Older heads earn less because we are
controlling for years of work experience. In other words, compared to younger workers with the
same education and experience, older heads earn less.
(table 5 about here)
Also, heads earn more as education, years of work experience, hours/week, and
weeks/year increase. Work in the core industrial sector, managerial and professional titles and
supervisorial (pay and promotion) authority all predict higher income. Proprietors (with less
than 5 employees) earn no more than non-union workers, but employers (with five or more
employees) earn significantly more, as do union workers. Finally, heads residing in the
Northeast claim higher incomes (compared to the South), but Midwest and West heads do not.
The second panel of Table 5 reports the results of the same model in predicting logged
earnings of white male household heads. The model still fits the data very well, although the R2
drops to .43, and the same pattern of effects obtain. The only differences, in fact, are that age is
no longer significant and that Midwest and West are modestly (p<.05) significant. In other
words, old white men don't suffer in comparison to younger white men with comparable
13
experience and, for white men, residence outside the South predicts higher earnings, even in the
Midwest and the West.
White female heads (panel 3) seem to offer the best fit for this model (R2=.65), but there
are only 350 white female heads of household in the 1976 data, and these are, of course, mostly
single women. In any case, marital status does not predict income, but the negative effect of age
(net of experience) is highly significant, while the effect of education is barely significant (p<.05
but >.04). These white female heads also lack significant income boosts associated with
managerial titles and supervisorial (pay and promotion) authority. They do, however, claim
higher earnings as employers, and claim the benefits of professional occupation, and union
membership but not region.
Black male heads, on the other hand (see panel 4) present a somewhat different picture.
The model fits well (R2=.50) but, as was the case for white female heads, some of the effects are
small or insignificant. Like white men, marriage predicts higher earnings, and older heads do not
earn significantly less (compared to younger heads with same experience). Similarly, education
is a particularly large and significant effect, but black heads do not claim significant benefits
from professional titles, while the benefit of managerial title is only marginally significant
(p<.05). Like white men (and unlike white women), black male heads claim a substantial,
significant earnings boost from supervisorial authority. There are, however, too few black
employers to count and no significant effects of proprietorship. Union membership predicts
higher wages but Northeast residence does not, although there is a modestly significant effect of
residence in the Midwest.
For black females (panel 5) the model fits very well (R2=.62), and there are many large
and highly significant effects, even though there are only 345 black female heads in this sample.
14
Neither age nor marriage produces significant effects on income, and experience is only
modestly significant. Unlike white females, education yields substantial and significant earnings
advantages. Also significant are the effects of hours and weeks worked and core industrial sector
(which are significant for everyone) and of professional title, supervisorial authority, and union
protection. Managerial title has a modestly (p<.05) significant effect, and there are too few selfemployed to count. Like white males, there is a significant earnings boost for Northeast
residence, and like black male heads, there is a modest effect of Midwest residence (as opposed
to South), which predicts higher income.
Table 6 reports results from the same model for the 1985 PSID. In the first two panels
(All and White Males) the results are virtually identical to the 1976 data. We see the same
general pattern as in Table 5, although our R2 has dropped to .49 (All) and .39 (White Males). It
is, perhaps, worth noting that age remains insignificant for white men and, among regional
effects, only Northeast residence predicts higher earnings.
(table 6 about here)
White females heads offer some consistency but also more striking change. In contrast to
white men, marriage is still insignificant, while age is a major liability, and education a modestly
significant asset. At the same time, managerial (as well as professional) title is significant in
1985, although supervisorial authority, as in 1975, has no significant effect on 1984 earnings.
Proprietorship is significantly less remunerative than non-union labor while the effect of
employing five or more persons is smaller, but remains as significant as it was in 1976 (p<.05).
15
The effect of union membership increases in size and significance, and there is a modestly
significant (p<.05) income boost for Western (compared to Southern) residence.
Black male heads also seem to have experienced both positive and negative changes in
earnings opportunities. Although marriage is still a significant effect, it has diminished in size
and significance. Age is still insignificant, while managerial title (which was modestly
significant in 1976) and professional title (not significant in 1976) are both significant predictors
of higher earnings for black male heads in 1985. Union and supervisorial authority continue to
yield large and significant effects, plus there is a substantial and highly significant effect of
employing five or more persons, which was totally lacking in 1975. At the same time, the effect
of Midwest residence is no longer significant.
The changes for black female heads are less evident. They continue to report significant
effects of education, particularly compared to white women, along with substantial and modestly
significant effects of managerial and, more significant, professional title, as well as union
membership. There is some increase in self employment but no apparent income benefits and
too few black female employers to count. Similarly, as is the case for black males, there are no
region effects. Most striking, in contrast to black males, the effect of supervisorial authority,
which was substantial and significant in 1975, is insignificant in 1984.
Table 7 reports the results of a virtually identical set of OLS regressions predicting the
logged annual income of household heads in the PSID of 2005. Here we are lacking data on
work experience and supervisorial authority, but we have firm size (which was lacking in 1976
and 1985). In this case, "Large" is a dummy variable that indicates more than 50 employees at
head's place of employment (or business). Because we lack a work experience measure the
effect of age is positive. Older heads (who tend to have more work experience) earn more.
16
Other than that the pattern of effects for the first two panels (All and White Males) is virtually
the same as in Tables 5-6. Large firm predicts higher earnings. Also, the regional effect of
Northeast residence predicts highest earnings, but only for white men and black women.
(table 7 about here)
For white women and blacks the 2005 data suggest a general but uneven improvement in
opportunities. It is difficult to disentangle the age/experience puzzle, but older white women
(like black men and women) earn a little more. Education, however, offers large, significant
effects for all, including white women, for whom the effect was only modestly significant in
earlier panels. The advantages of professional employment seem small and less significant for
black women, but the advantages of managerial title are uniformly large and highly significant.
Women, black and white, lack the substantial and significant benefits of employment in large
firms, while the benefits of self-employment are complex. White female heads claim a modest
and modestly significant earnings boost from proprietorship and a more substantial and
significant boost from employing five or more workers. Blacks, male and female, report lower
earnings from proprietorship, but the earnings loss is smaller and less significant for black male
heads. Black male heads claim a modest and modestly significant earnings boost from
employing five or more workers, but black female heads report substantially and significantly (if
only modestly) lower earnings as employers. The hitherto substantial and significant effects of
union membership, particularly for black women, are, in 2004, limited to men, white and black.
Discussion
17
First and foremost, we see very little evidence of a decline in racial inequality between
1975 and 2004. The earning gap separating black and white men actually increases, as black
men claim 68% in 1975 and only 63% in 2004 (z=2.16, p<.05). The relative earnings of black
women do increase, however, from 41% to 46% (z=-1.48, n.s.). Second, there is some evidence
that both race and gender gaps are decreasing between 1975 and 1984 (except for black women)
but this is followed by a comparable decline for white women and an even greater decline for
black men between 1984 and 2004. Here we see some evidence of the effect of government
policy, which Cancio et al. (1996) associate with the eighties, although it seems to extend far
beyond the limits of the Reagan years. Clearly, we will need to look more closely at more panels
to approximate the pattern of rising and falling racial inequality.
Although we are not focusing on white women here we should explain why the much
publicized decline in the gender gap is not evidenced in these data. The fact that we do not see
the precipitous decline in the gender gap that has been evidenced elsewhere is due to the fact that
we are excluding wives from our analysis. It is, in fact, the substantial increase in married
women working fulltime outside the home that is responsible for this decline, together with the
shift to a post-industrial economy in which the employment opportunities for middle class
women are increasing at the expense of working class men (Hogan and Perrucci 2007, pp. 228229; Tomaskovic-Devey et al. 2006, p. 585). In these data we see some evidence of the latter in
the relative decline in black male earnings and the relative increase for black females, but we
would need to add wives to the sample to see the effects of the former.
Nevertheless, we see some evidence of a reduction in the distributional component of
racial inequality in comparing mean education and proportions in professional occupations or
managerial, supervisorial, or self-employed/employing classes. Black household heads are
18
reducing the education gap and are increasing their representation in professional occupations.
Black women are increasing their representation in managerial positions and are claiming
substantial and significant earnings boosts on that basis. Black men are experiencing increasing
access to and benefits from professional titles and even employer class relations. The racial gap
in privileged class relations declined for men. At the same time, however, the racial gap at the
bottom of the occupational structure increased. Black men continued to be over-represented
among union workers and to claim substantial earnings advantages on that basis. Consequently,
they suffered the most from the decline in union jobs, associated with both the turn from
manufacturing to sales and service and the general lack of government support for unions.
Without an estimate of the prevalence of supervisorial authority it is difficult to trace this pattern
into the 21st century, but it does seem that self-employment opportunities continued to grow for
black men, even as union jobs declined.
Comparing the OLS models for these three periods clarifies how the process of
generating racial inequality changes between 1975 and 2004. In 1975 the benefits of class,
particularly self-employment, were all but denied to black men and women. By 1984 black men
were employers and claimed significant earnings advantages on that basis, while black women,
still scarce among the self-employed, claimed advantages of education, managerial and
professional occupations and supervisorial authority. Although the 2005 data do not allow us
evaluate supervisorial authority, black men and women enjoyed a substantial and significant
income boost from managerial and professional positions. Black men (but not women)
continued to enjoy the benefits of employing others. In fact, it appears that self-employment for
black female heads of household was a stop-gap measure for balancing the demands of home and
19
work, but this possibility will require further investigation, comparing wives to female heads and
controlling for number of children.
Conclusion
There is an apparent disjuncture between the comparison of mean earnings and the OLS
models that predict earnings. While the OLS models indicate a general improvement since 1975
in access to the benefits of occupation and class, particularly for black men, their relative
earnings (in comparison to white men) have declined. If we focus on the distributional aspects
of racial inequality it seems that there was a dramatic increase in the percent of black male heads
with professional occupations, from 6% in 1975 to 10% in 1984, with a more modest increase, to
13% in 2004. During the same period, black female heads in professional positions increased
from 11% (1975) to 13% (1984) to 18% in 2004. Black women also reported significant gains in
managerial titles and claimed significant earnings advantages on that basis. These distributional
effects seem important in explaining how black female heads did not enjoy the same advantages,
associated with education and occupation/class, in the early years but did claim considerable
advantage as educated, professional and managerial women in the post-industrial service
economy.
More important in explaining the relative decline of black male head income was the
declining number of union members, associated with the long-term trend of shifting from
manufacturing to service, combined with Reagan's tough anti-union policy, illustrated in his
evisceration of the Air Traffic Controllers (PATCO) union (Hogan 2005b). Forty percent of
black male heads were union workers in 1975, but that figure declined to 32% in 1984 and 22%
in 2004. For all heads, the percent union workers declined from 20% in 1975 to 16% in 1984,
20
falling to 11% in 2004. Clearly, unionization rates were declining in general, but the effects on
black male heads of households was most dramatic, first, because they were over-represented
among union workers (at twice the percentage for all heads) and, second, because the effect of
union membership was among the most substantial, significant, and enduring for black male
heads, 1975-2004. Thus the shift to the service economy and the decline of union jobs seem to
be critical factors in explaining increasing equality of opportunity and increasing earnings
inequality.
This is not to say that federal, State, and even local policy does not matter. Instead, we
should conclude that racial inequality is reproduced through patronage and family relations from
which blacks have been historically excluded and through class relations, which have historically
included black men and women in unpaid and underpaid employment. We invite others to join
us in specifying when and where the processes and mechanisms that engender inequality have
converged or diverged in various ways, historically and through the life course. Perhaps other
panels (e.g., 2000—just before the election of G. W. Bush) and other datasets might be used,
together with various temporal (e.g., GDP growth statistics) and life course (e.g., year of
marriage or childbirth) indicators to specify the complex interweaving of short-term and longterm economic, political, and social patterns that engender or exacerbate, or in some cases
diminish inequality in one form or another.
21
Notes
1. The "worker" variable is a dummy, coded "1" when professional, managerial, supervisorial,
self-employment, and union membership are all coded "0". This represents the lowest class and
occupational status.
2. Since we don't have a supervisor category, this is considerable over-estimation of
proletarianization, especially for white male household heads, at least 20% of whom are
probably supervisors (based figures for 1976 and 1985 panels).
22
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25
Table 1
Weighted Mean (and Standard Deviation) Annual Earnings for White and Black Male and Female Household Heads in 1975, 1985,
and 2004, with Percent of White Male Earnings for White Females, Black Males, and Black Females
1975
mean
s.d.
1984
N
% white
male
2004
Mean
s.d.
N
$29,490
(752.86)
2374
White
Males
$14,394
(242.96) 2125
White
Females
$7,780
(275.58)
350
54%
$16,915
(610.74)
338
(375.46)
896
68%
$20,865
(774.46)
$5,950
(317.12)
345
41%
$11,613
$12,780
(197.12)
3716
$26,274
% white
male
mean
s.d.
N
% white
male
$64,297
(2242.25) 2442
57%
$34,989
(1341.17)
477
54%
880
71%
$40,214
(1955.74)
786
63%
(544.73)
374
39%
$29,670
(1368.42)
584
46%
(582.41)
3966
$55,005
(1581.74) 4289
Black
Males
$9,744
Black
Females
Total
source: Panel Study of Income Dynamics 1976, 1985, and 2005 panels (annual income reported for previous year)
26
Table 2
Weighted Means and Standard Deviations of Independent Variables for All Heads and for White and Black, Male and Female Heads
in Panel Study of Income Dynamics 1976 Households
All
Effect
White
Male
Married
Age
Educ
Exper
Hours
Weeks
Core
Mgr
Prof
Supervisor
Proprtr
Emplyr
Union
Worker
NE
MW
South
West
Number of Cases
Means
.899
.815
.707
39.70
4.89
18.51
43.95
45.72
.608
.117
.175
.192
.049
.023
.204
.343
.224
.308
.295
.169
S.E.
.005
.008
.009
.265
.036
.259
.201
.157
.009
.006
.007
.008
.005
.003
.008
.009
.009
.009
.009
.008
3716
White Males
Means
S.E.
.877
39.65
5.00
19.64
45.43
46.36
.591
.138
.179
.225
.065
.030
.208
.283
.237
.320
.273
.164
.008
.295
.043
.300
.227
.161
.012
.008
.009
.010
.006
.004
.010
.010
.010
.011
.010
009
White Females
Means
S.E.
.018
41.08
4.98
14.14
38.99
43.63
.686
.059
.224
.093
.003
.006
.106
.540
.211
.300
.242
.246
2125
.007
.849
.093
.643
.539
.541
.025
.013
.023
.017
.003
.005
.018
.028
.023
.026
.023
.024
350
27
Black Males
Means
S.E.
Black Females
Means
S.E.
.727
38.24
3.82
18.27
42.09
44.75
.613
.048
.059
.117
.009
.031
.855
.116
.882
.589
.609
.031
.015
.016
.023
.003
.022
37.30
4.27
13.74
37.49
42.99
.621
.048
.106
.072
.019
1.10
.126
1.00
.742
1.03
.046
.024
.029
.032
.033
.031
.023
.031
.033
.016
.130
.642
.219
.202
.466
.113
.029
.046
.042
.036
.047
.032
.
404
.418
.121
.242
.562
.072
896
345
Table 3
Weighted Means and Standard Deviations of Independent Variables for All Heads and for White and Black, Male and Female Heads
in Panel Study of Income Dynamics 1985 Households
All
Effect
White
Male
Married
Age
Educ
Exper
Hours
Weeks
Core
Mgr
Prof
Supervisor
Proprtr
Emplyr
Union
Worker
NE
MW
South
West
Number of Cases
Means
.899
.803
.672
40.55
5.22
19.48
43.71
46.70
.711
.126
.210
.202
.045
.040
.160
.320
.221
.278
.316
.181
S.E.
.005
.009
.010
.244
.035
.244
.212
.125
.009
.007
.008
.008
.004
.004
.007
.009
.009
.009
.009
.008
3966
White Males
Means
S.E.
.840
40.54
5.29
20.54
45.06
47.01
.718
.143
.214
.227
.056
.050
.162
.266
.226
.291
.293
.185
.009
.276
.041
.283
.239
.135
.010
.008
.009
.010
.005
.005
.009
.010
.010
.010
.010
.009
White Females
Means
S.E.
.013
41.29
5.28
15.05
39.70
45.68
.701
.100
.257
.158
.011
.010
.083
.454
.229
.286
.261
.225
2374
.006
.740
.091
.530
.608
.410
.026
.017
.025
.021
.006
.006
.016
.028
.025
.026
.025
.023
338
28
Black Males
Means
S.E.
.759
39.53
4.62
19.57
41.91
46.37
.678
.044
.104
.105
.018
.009
.
322
.452
.160
.182
.566
.084
.028
.776
.105
.795
.574
.480
.031
.012
.022
.020
.005
.005
.034
.032
.030
.028
.034
.016
880
Black Females
Means
S.E.
.011
39.43
4.44
17.17
37.01
45.31
.666
.036
.125
.062
.004
.006
1.03
.153
1.26
.664
.571
.044
.013
.034
.020
.003
.182
.609
.177
.165
.579
.079
.037
.046
.044
.033
.048
.024
374
Table 4
Weighted Means and Standard Deviations of Independent Variables for All Heads and for White and Black, Male and Female Heads
in Panel Study of Income Dynamics 2005 Households
All
Effect
White
Male
Married
Age
Educ
Hours
Weeks
Core
Mgr
Prof
Large
Proprtr
Emplyr
Union
Worker
NE
MW
South
West
Number of Cases
Means
.869
.749
.544
44.12
4.34
43.24
47.87
.734
.150
.205
.550
.079
.040
.110
.438
.186
.272
.325
.201
S.E.
.006
.009
.010
.246
.032
.231
.112
.009
.007
.008
.010
.005
.004
.006
.010
.008
.008
.009
.008
4289
White Males
Means
S.E.
.746
44.25
4.48
44.75
48.03
.745
.164
.212
.516
.092
.050
.106
.402
.191
.283
.290
.219
White Females
Means
S.E.
.011
.281
.039
.275
.133
.010
.008
.009
.011
.007
.005
.007
.011
.009
.010
.010
.009
.001
44.97
4.24
39.09
47.23
.702
.154
.210
.579
.052
.013
.074
.504
.174
.302
.296
.214
2442
.001
.696
.078
.571
.295
.024
.018
.021
.025
.012
.005
.014
.026
.020
.024
.023
.022
477
29
Black Males
Means
S.E.
.489
41.05
3.79
43.74
48.45
.744
.049
.130
.700
.047
.035
.
216
.532
.202
.146
.586
.058
.034
.731
.087
.805
.324
.026
.011
024
.029
.012
.018
.031
.034
.033
.021
.034
.013
786
Black Females
Means
S.E.
.021
43.54
3.76
38.68
47.38
.707
.099
.184
.674
.057
.008
.141
.530
.160
.200
.520
.116
.008
.959
.096
.650
.423
.035
.024
.030
.036
.018
.005
.030
.039
.032
.028
.039
.030
584
Table 5
Ordinary Least Squares Regression Model (Unstandardized Coefficients and Standard Errors Reported) Predicting 1975 Annual
Income for All Heads (Weighted) and for White and Black, Male and Female Heads (Unweighted) in Panel Study of Income
Dynamics 1976 Households
Effect
White
Male
Married
Age
Educ
Exper
Hours
Weeks
Core
Mgr
Prof
Super
Proprtr
Emplyr
Union
NE
MW
West
Constant
All
Coef.
.107***
.182***
.173***
-.009***
.087***
.016***
.011***
.031***
.216***
.307***
.294***
.204***
.047
.642***
.365***
.089**
.014
.040
6.21***
S.E.
.028
.043
.037
.002
.008
.002
.002
.002
.023
.039
.032
.031
.068
.101
.024
.029
.026
.032
.118
F=142.12***
R2=.545
N=3716
* p<.05
**p<.01
White Males
Coef.
S.E.
.162***
-.003
.089***
.012**
.006***
.029***
.163***
.282***
.269***
.214***
.038
.587***
.365***
.095**
.058*
.085**
6.66***
.037
.004
.008
.004
.001
.001
.023
.039
.036
.030
.047
.069
.030
.031
.027
.032
.119
F=99.42***
R2=.430
N=2125
White Females
Coef.
S.E.
-.119
-.009***
.042*
.012***
.029***
.039***
.412***
.105
.283**
.117
.663
.927*
.198*
.159
-.049
.017
5.43***
.192
.003
.021
.003
.003
.003
.063
.129
.082
.105
.500
.360
.094
.081
.072
.074
.207
F=38.33***
R2=.648
N=350
***p<.001
30
Black Males
Coef.
S.E.
Black Females
Coef.
S.E.
.121**
-.000
.090***
.009*
.007***
.037***
.194***
.226*
.151
.168**
.155
.040
.004
.012
.004
.002
.002
.034
.095
.089
.063
.117
-.098
-.002
.094***
.008*
.021***
.
032***
.392***
.346*
.303**
.402**
.256
.003
.020
.004
.003
.002
.052
.160
.100
.130
.366***
.102
.097*
.018
6.10***
.037
.064
.047
.065
.155
.221**
.251**
.128*
-.134
5.53***
.067
.082
.065
.083
.206
F=57.52***
R2=.495
N=896
F=37.88***
R2=.616
N=345
Table 6
Ordinary Least Squares Regression Model (Unstandardized Coefficients and Standard Errors Reported) Predicting 1984 Annual
Income for All Heads (Weighted) and for White and Black, Male and Female Heads (Unweighted) in Panel Study of Income
Dynamics 1985 Households
All
Effect
White
Male
Married
Age
Educ
Exper
Hours
Weeks
Core
Mgr
Prof
Super
Proprtr
Emplyr
Union
NE
MW
West
Constant
Coef.
.108**
.182***
.121**
-.011**
.107***
.016***
.017***
.028***
.339***
.280***
.283***
.227***
-.081
.402***
.434***
.084*
-.043
.036
6.58***
S.E.
.033
.047
.038
.004
.009
.004
.002
.003
.029
.038
.036
.028
.076
.089
.030
.034
.029
.033
.197
White Males
Coef.
S.E.
.109**
-.006
.113***
.014***
.014***
.029***
.268***
.227***
.244***
.238***
-.065
.309***
.428***
.084*
-.016
.020
6.88***
F=94.48***
R2=.485
N=3966
* p<.05
**p<.01
.036
.004
.009
.004
.001
.002
.027
.042
.036
.033
.053
.060
.036
.033
.030
.034
.140
F=92.95***
R2=.387
N=2374
White Females
Coef.
S.E.
-.108
-.016***
.052*
.022***
.025***
.033***
.509***
.280**
.346***
.156
-.745**
.633*
.334**
.133
-.061
.182*
6.44***
.239
.003
.024
.004
.003
.004
.069
.107
.086
.089
.271
.313
.115
.084
.078
.082
.273
F=30.21***
R2=.601
N=338
***p<.001
31
Black Males
Coef.
S.E.
.091*
-.000
.108***
.009*
.014***
.030***
.271***
.260**
.283***
.212**
-.167
.578**
.467***
-.003
-.064
-.098
6.65***
.043
.004
.013
.004
.002
.002
.038
.093
.073
.064
.108
.217
.043
.070
.054
.066
.186
F=42.91***
R2=.443
N=880
Black Females
Coef.
S.E.
.022
.001
.093***
-.005
.037***
.
033***
.347***
.267*
.299**
.173
-.483
.253
.004
.023
.004
.004
.003
.063
.132
.111
.110
.401
.559***
-.239
.025
-.018
5.41***
.089
.124
.079
.107
.256
F=29.81***
R2=.555
N=374
Table 7
Ordinary Least Squares Regression Model (Unstandardized Coefficients and Standard Errors Reported) Predicting 2004 Annual
Income for All Heads (Weighted) and for White and Black, Male and Female Heads (Unweighted) in Panel Study of Income
Dynamics 2005 Households
All
Effect
White
Male
Married
Age
Educ
Hours
Weeks
Core
Mgr
Prof
Large
Proprtr
Emplyr
Union
NE
MW
West
Constant
Coef.
.143***
.123**
.201***
.003*
.099***
.024***
.028***
.258***
.363***
.201***
.212***
.072
.548***
.289***
.129**
-.031
.001
6.80***
S.E.
.034
.042
.039
.012
.013
.002
.003
.030
.040
.044
.028
.070
.121
.033
.038
.030
.041
.190
F=96.20***
R2=.430
N=4289
* p<.05
**p<.01
White Males
Coef.
S.E.
.183***
.004**
.104***
.021***
.031***
.205***
.340***
.180***
.201***
.011
.484***
.283***
.150***
-.001
.028
7.06***
.035
.001
.010
.001
.002
.032
.043
.042
.030
.053
.067
.048
.041
.035
.038
.144
White Females
Coef.
S.E.
.227
.006**
.068***
.028***
.029***
.343***
.393***
.250**
.097
.275*
.591**
.061
.076
-.098
.081
6.75***
F=83.63***
R2=.341
N=2442
.537
.002
.019
.002
.004
.059
.074
.076
.053
.121
.220
.102
.075
.062
.070
.224
F=33.28***
R2=.520
N=477
***p<.001
32
Black Males
Coef.
S.E.
.174***
.007**
.115***
.014***
.029***
.173***
.286**
.258***
.161***
-.183*
.305*
.355***
.015
.006
.085
7.20***
.042
.002
.017
.002
.003
.043
.089
.068
.043
.086
.130
.052
.073
.054
.077
.185
F=35.99***
R2=.412
N=786
Black Females
Coef.
S.E.
-.152
.006*
.139***
.028***
.034***
.223***
.374***
.163*
.061
-.515***
-.637*
.103
.258**
.052
.166
6.31***
.180
.002
.022
.003
.003
.060
.096
.078
.058
.125
.280
.088
.093
.064
.106
.203
F=37.22***
R2=.496
N=584
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