Economic Issues & Policy
- Jacqueline Murray Brux
Discrimination
19
Our nation is moving toward two societies, one black, one white—separate and
unequal.
—Report of the President’s National Advisory Commission on civil disorders
(The Kerner Commission), March 1, 1968
PowerPoint slides prepared by:
Andreea Chiritescu
Eastern Illinois University
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
1
Discrimintion
• Dr. Martin Luther King, Jr.
• “I Have a Dream” speech
• August 1963 March on Washington for Civil
Rights
• President Lyndon Johnson’ Kerner Commission
• Shocking 1968 report
• Blaming racism and discrimination, poverty, and
unemployment for the riots that had besieged the
nation’s central cities during the 1960s
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2
Table 5-1: Resident population, percent of total population,
by race and Hispanic origin, July 2000 & July 2008
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3
The Diversity of the U.S. Population
• Hispanics
• Nearly tie with African-Americans as the
largest minority group
• 2008, 15.4% of population (47 million):
• 62% of Mexican origin; 9% Puerto Rican;
• 3% Cuban; Central and South America
• High concentrations of Hispanic people:
• Texas, California, New Mexico, Arizona,
• New York, Florida
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4
The Diversity of the U.S. Population
• African-Americans
• Largest racial minority
• 13% of population, 39 million
• High concentrations of African-Americans:
• District of Columbia (57%)
• Mississippi (37%), Louisiana (33%)
• Georgia (29%), Maryland (29%)
• South Carolina (29%)
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
5
The Diversity of the U.S. Population
• Asian-Americans
• 4.6% of population; 14 million
• Chinese (23%), Asian-Indian (19% of all Asians),
• Filipino (Philippines, 18%), Vietnamese (11%)
• Korean (10%), Japanese (7%)
• High concentrations of Asian-Americans
• Hawaii (42%), California (12%)
• New Jersey (7%), New York (7%)
• Washington (7%), Nevada (6%)
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6
The Diversity of the U.S. Population
• Native Americans
• 1% of population; 3 million
• Tribal groupings
• The Cherokees (13% of Native Americans),
• The Navajos (12%), The Chippewas (5%)
• The Sioux (5%)
• Hi concentrations of Native Americans
• Alaska (14%), New Mexico (10%)
• South Dakota (8%), Oklahoma (7%)
• Montana (6%), North Dakota (5%), Arizona (5%)
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7
What Is a Minority?
• Minority
• Group with less access to positions of power,
prestige, and status in society
• Prejudice
• Prejudgment on the basis of stereotypes and
hearsay, plus the refusal to consider evidence
that conflicts with the prejudgment
• Discrimination
• Action that treats individuals differently on
the basis of some arbitrary characteristic
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8
Figure 5-1:Population of Racial Groups as a Share of the
Total Population, 2008a
aHispanics
are not a racial group
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9
Earnings Differentials and Discrimination
• Earnings
• Money received from labor market activities
• Income
• Money received from all sources
• Earnings differentials
• Full-time working women
• Earn less than full-time working men
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10
Earnings Differentials and Discrimination
• Earnings differentials
• Fulltime working African-Americans and
Hispanics
• Earn less than full-time working white
Caucasians
• Labor market discrimination
• When like workers are treated unequally
• Based on some arbitrary characteristic
• Like means “equally productive”
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11
Table 5-2: Median weekly earnings of full-time workers by,
age 16 or over, by race, Hispanic origin, and gender, 2008
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12
Earnings Differentials and Discrimination
• Wage discrimination
• Paying equally productive workers different
wages on the basis of some arbitrary
characteristic
• Employment discrimination
• Not hiring certain workers on the basis of
some arbitrary characteristic
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13
Earnings Differentials and Discrimination
• Occupational discrimination
• Not hiring some groups of workers for
particular jobs, resulting, for example, in
men’s jobs and women’s jobs or minority jobs
and white jobs
• Human capital discrimination
• Anything that prevents certain groups from
acquiring the level or quality of education or
training to which other groups have access
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14
Earnings and Education
• Women with a bachelor’s degree
• Earn on average only 74% of what men with a
bachelor’s degree
• Women with a master’s degree
• Earn only 73% of the earnings of men with a
master’s degree
• Women’s earnings
• From 70% to 75% of men’s earnings
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15
Table 5-3: Median annual earnings by highest educational attainment
of full-time, year-round workers, age 25 and over, by gender, 2007
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
16
Earnings and Education
• African-Americans, Asian-Americans, and
Hispanics
• Earn a smaller share than white Caucasians
• Asian-Americans with an advanced degree
• Earn 107% of the earnings of whites
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17
Table 5-4: Median annual earnings of full-time workers, age 25 and over for racial and
ethnic minorities as a share of white Caucasians, by highest educational attainment, 2007a
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
18
Earnings and Unemployment
• Lower earnings
• Frequent periods of involuntary unemployment
• Unemployed
• Actively looking for work
• Unemployment rate
• Number of unemployed people as a percentage
of the number of people who are either
working or actively seeking employment
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19
Earnings and Unemployment
• Unemployment rates for men
• Higher than for women
• Asian-Americans
• Lowest unemployment rates among all races
• Hispanics
• Higher rates of unemployment
• African-Americans
• Higher rates of unemployment than do whites
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20
Table 5-5: Unemployment rates by gender, race, and
Hispanic origin, 2008
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21
Earnings and Experience
• Earnings of
• Full-time year-round working women and
men
• With identical levels of education
• Likely that women will on average have less
experience in the labor market
• Take time off from work to care for infants and
young children
• May receive lower earnings than men
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22
Some Explanations of Discrimination
• Statistical discrimination
• Judging an individual on the average
characteristics of his or her group
• Employment discrimination
• Belief: women are more likely
• To stay home with sick children
• To quit their jobs because their spouses are
being transferred
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23
Some Explanations of Discrimination
• Occupational crowding
• Crowding some groups of workers into a
limited number of jobs
• Some occupations
• Dominated by men – more highly paid
• Dominated by women
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24
Figure 5-2: Labor markets with and without occupational
crowding
If the 12 million female workers are crowded into Occupation 3, while the 12 million male
workers share Occupations 1 and 2, women will earn lower wages ($7) than men ($10).
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
25
Figure 5-2: Labor markets with and without occupational
crowding
If occupational segregation is eliminated, the 24 million workers will be randomly
distributed among the three occupations and they will earn the same wage ($9).
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
26
Effects of Labor Market Discrimination
• Effects on the Economy
• National output will be reduced by
discrimination
• Because we are not using our labor force in
the most efficient way possible
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Figure 5-3: Production possibilities curve with
discrimination
With discrimination, labor is not utilized as efficiently as possible, and the nation’s output
of bread and roses is at point X, below the production possibilities curve
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
28
Effects of Labor Market Discrimination
• Effects on Individuals
• Inferior position with respect to other aspects
of their lives
• Higher poverty rates
• Restricted home ownership housing
• Segregation
• Less access to adequate health care
• Fewer opportunities for quality education
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
29
Problems in Measuring Labor Market Discrimination
• Rational Individual Choice
• Women choosing to work fewer hours than
men
• Primary caregivers of children
• Chief housekeepers
• Women choose the so-called women’s
occupations
• Complementary to their primary roles as
mothers and wives
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30
Problems in Measuring Labor Market Discrimination
• Rational Individual Choice
• Women may choose to take the “mommy
track”
• Avoiding the high level promotions that take
too much time away from family
• Decision not to finish high school
• Low-wage, dead-end jobs
• Unfortunate past choices
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31
Policies to Eliminate Labor Market Discrimination
• The Equal Pay Act of 1963
• Illegal for an employer to pay men and women
different wage rates for doing the same job
• The Civil Rights Act of 1964
• Discriminatory compensation – illegal
• Forbids discrimination
• Hiring, promoting, and firing
• Race, gender, color, religion, national origin
• Equal Employment Opportunity Commission
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32
Affirmative Action in Employment
• Affirmative action
• Efforts to provide equal opportunities in terms
of employment and education to
underrepresented groups of people
• Quotas
• Rigid numerical requirements in hiring
• Tokenism
• Hiring minorities to comply with law, not for
their abilities
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
33
Affirmative Action in Employment
• Reverse discrimination
• Discrimination against white males
• Some economists argue:
• Discriminating employers
• Competitive disadvantage compared with
other employers
• Have higher costs than non-discriminators
• Driven from the market
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34
Affirmative Action in Employment
• Some economists argue:
• Direct intervention in labor markets:
• Unnecessary
• In favor of disadvantaged groups actually hurts
these groups
• Native Americans have the longest relationship
(as a ward of the state) with the federal
government
• Consistently at the very bottom of our
economic ladder
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35
Affirmative Action in Employment
• Some economists argue:
• Minorities such as Japanese- Americans
• Not favored by the government
• Succeeded far better than the recipients of the
government’s largesse
• Other economists argue:
• Labor markets
• Have not solved the problem of discrimination
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36
Affirmative Action in Employment
• Other economists argue:
• Do not believe that discriminators are at a
cost disadvantage
• Statistical discrimination probably results in
short-run cost savings
• We need programs such as affirmative action
• Programs directed at the supply side of labor
market
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37
Policies to Eliminate Labor Market Discrimination
• Indirect Labor Market Policies
• Improving educational opportunities for racial
and ethnic minorities and women
• Subsidized day care programs for low-income
workers with families
• Improve mass transit (public transportation)
• Maintain a healthy economy
• Appropriate fiscal and monetary policies
• Welfare reform
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
38
Policies to Eliminate Labor Market Discrimination
• Other Forms of Discrimination
• Residential and educational segregation
• Low-income residential areas
• Poorer-quality schools
• Racially segregated central-city neighborhoods
• Lead to
• Lower-wage-paying jobs
• Higher unemployment rates
• Unequal opportunities for minorities
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
39
Policies to Eliminate Labor Market Discrimination
• Residential segregation
• Institutionalizes discrimination
• Nonminority populations - fled to the suburbs
• Minority residents - often remain trapped in
central cities
• Metropolitan-wide desegregation plans
• Much higher levels of integration
• Blocked desegregation
• Prevented effective desegregation
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
40
Policies to Eliminate Labor Market Discrimination
• Educational Segregation
• Large-scale school desegregation
• Improve objective measures of achievement
such as test scores
• Increase the probability of college attendance
• Positively affects type of college, college major,
and types of employment as an adult
• Extremely strong pattern of continued
educational segregation for African-Americans
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
41
Policies to Eliminate Labor Market Discrimination
• Educational Segregation
• Increasing segregation for Hispanics
• Minority high schools - large numbers of lowincome students
• Strong positive correlations between:
• Predominantly minority schools
• High proportions of poor children
• Low educational achievement
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42
Affirmative Action in Education
• President George W. Bush
• University of Michigan gives unconstitutional
preferences to African-American, Hispanic,
and Native American applicants
• “At the core, the Michigan policies amount to a
quota system that unfairly rewards or
penalizes prospective students based solely on
their race”
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43
Affirmative Action in Education
• 2003, U.S. Supreme Court
• University of Michigan cases
• Graduate admissions (the law school)
• Race can be used as a factor in university
admission decisions, and that indeed “a
diverse student body has its own benefits”
• Undergraduate admissions
• A more rigid system relying on specific points
given to students based on their race and
ethnicity is not constitutional
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44
Conservative versus Liberal
Liberal economists
Conservative economists
• Government programs
• Disparities between the
earnings of minorities and
• Have done some good
whites and between those of
• Have not completely solved
women and men are the result
the problem of
of rational choice, not
discrimination
discrimination
• Continue affirmative action
• Gaps - have narrowed
programs
somewhat since the 1960s.
• Great value in diversity of the
• Oppose government
workplace and educational
intervention in markets
institutions
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45
Conservative versus Liberal
Liberal economists
Conservative economists
• Committed to overcoming the •
results of decades of unequal
treatment of minorities
• Propose alternatives to property •
tax financing of public education
Affirmative action- misguided
and a source of great
inefficiency
Changing social values and the
passage of antidiscrimination
laws have alleviated the
problem of discrimination and
that affirmative action is no
longer needed
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