This file was prepared for electronic distribution by the inforM staff. Questions or comments should be directed to inform-editor@umail.umd.edu. The Economic Status of Black Women: An Exploratory Investigation Staff Report United States Commission on Civil Rights October 1990 U.S. COMMISSION ON CIVIL RIGHTS The U.S. Commission on Civil Rights is an independent, bipartisan agency first established by Congress in 1957 and reestablished in 1983. It is directed to: * Investigate complaints alleging that citizens are being deprived of their right to vote by reason of their race, color, religion, sex, age, handicap, or national origin, or by reason of fraudulent practices; Study and collect information concerning legal developments constituting discrimination or a denial of equal protection of the laws under the Constitution because of race, color, religion, sex, age, handicap, or national origin, or in the administration of Justice; * Appraise Federal laws and policies with respect to discrimination or denial of equal protection of the laws because of race, color, religion, sex, age, handicap, or national origin, or in the administration of justice; * Serve as a national clearinghouse for information in respect to discrimination or denial of equal protection of the laws because of race, color, religion, sex, age, handicap, or national origin; * Submit reports, findings. and recommendations to the President and Congress. MEMBERS OF THE COMMISSION Arthur A. Fletcher, Chairman Charles Pei Wang, Vice Chairman William B. Allen Carl A. Anderson Mary Frances Berry Esther G. Buckley Blandina Cardenas Ramirez Russell G. Redenbaugh Wilfredo J. Gonzalez, Staff Director ACKNOWLEDGMENTS This report was prepared by Nadja Zalokar. Research support was provided by Mark Regets, Valeo Schultz, and Mike Brien. Audrey H. Wright provided invaluable secretarial assistance for this report. Secretarial support was also provided by Clarence Gray. The report was prepared under the overall supervision of James S. Cunningham, Director, Office of Programs, Policy and Research. The Commission is grateful to the following outside experts for valuable comments on the report: Cecilia Conrad, Barnard College; Claudia Goldin, University of Pennsylvania; Harriett Harper, Division of Statistical and Economic Analysis, Women's Bureau, U.S. Department of Labor; Barbara Jones, Prairie View A&M University; Samuel Myers, Afro-American Studies Program, University of Maryland; Dorothy Pennington, University of Kansas; Margaret Simms, Joint Center for Political Studies; and Rosalyn Terborg-Penn, Morgan State University. The report also benefitted from discussions with Harriet Duleep. CONTENTS Executive Summary Trends in Black Women's Wages and Occupations: 1940-80 The Current Status of Black Women's Wages and Occupations Regional Differences in Black Women's Wages and Occupations Age Differences in Black Women's Wages and Occupations Labor Market Discrimination and Trends in Wages and Occupations Racial Differences in Labor Force Participation and Unemployment Black Women's Relative Economic Status in the 1980s Importance of Using Data Sources Besides the Census Recommendations PART I. INTRODUCTION 1. Overview Background Black Women in Broader Perspective: A Comparison of Black Women with Women from Other Racial and Ethnic Groups Black Women's Economic Status: Issues and Outline 2. Determinants of Black Women's Economic Status: 1940 to the Present Black Women's Wages: 1939-86 The Labor Force Participation of Black Women: 1940-87 The Family Status of Black Women: 1940 87 PART II. THE BLACK-WHITE FEMALE WAGE DIFFERENTIAL: REASONS FOR THE BLACK-WHITE WAGE GAP AND SOURCES OF THE INCREASE IN BLACK WOMEN'S RELATIVE WAGES: 3. Determinants of Black-White Female Wage Differentials: Conceptual Framework Human Capital Theory: Productivity and Wages Becker's Theory of Discrimination Alternative Theories of Discrimination: Statistical Discrimination and Efficiency Wages Interactions Between Discrimination and Human Capital Investment Measuring the Effect of Discrimination on Black Women's Wages 4. Determinants of Black-White Female Wage Differentials: Education and Geographic Location Education Region and Urban or Rural Location Summary 5. Determinants of Black-White Female Wage Differentials: Occupations Occupational Distributions of Black and White Women: 1940-80 Occupational Distributions of Black and White Women by Education: 1940-80 Occupational Distributions of Black and White Women by Region-1940-80 Occupational Distributions of Black and White Women Controlling for Characteristics: 1940-80 Changes in Black Women's Occupational Distribution 1940-80: Discrimination or Characteristics Summary 6. Accounting for Black-White Female Wage Differentials 1940-80: A Multivariate Analysis Accounting for Black-White Wage Differentials: 1940, 1960, and 1980 The Effect of Racial Differences in Characteristics and Pay The Effect of Selected Characteristics on Black-White Wage Differentials The Role of Occupation and Industry Pay Differences by Age, Education, and Region Accounting for the Convergence in the Black-White Female Wage Ratio: 1940 to 1980 Summary and Conclusions 7. Accounting for the Black-White Female Wage Differential in the 1980s: A Multivariate Analysis Accounting for Black-White Wage Differentials in the 1980s Pay Differences by Age, Region, and Education Trends in Black-White Female Wage Differentials over the 1980s PART III. EMPLOYMENT, UNEMPLOYMENT, AND THE ECONOMIC STATUS OF BLACK WOMEN 8. The Economic Status of Black Women: Overview Overview Employment and the Economic Status of Black and White Women 9. Employment and Unemployment Patterns of Black Women Racial Differences in Employment and Unemployment Patterns Accounting for Racial Differences in the Employment and Unemployment Patterns Conclusion PART IV. CONCLUSION 10. Conclusion Black Women's Economic Status: A Summary of Results Trends in Wages and Occupations Accounting for Trends in Wages and Occupations Differences Across Age, Region, and Education Levels Labor Market Discrimination and Trends in Wages and Occupations Employment and Unemployment Patterns Labor Market Discrimination and Black Women's Economic Status Recommendations Bibliography Appendices A. A Comparison of the Wage and Salary Income Data from the 1980 Census of Population and the March 1980 Current Population Survey B. Occupations--Appendix to Chapter 5 C. An Attempt to Measure Differences in the Quality of Education by Race, Region, and Educational Level D. Census Wage Regressions: Supplementary Tables for Chapter 6 E. Notes on the Construction of Wage Variables for the Census of Population, Current Population Survey, and Survey of Income and Program Participation Data F. SIPP and CPS Wage Regressions: Supplementary Tables for Chapter 7 TABLES [all tables will be adjusted to fit electronic format] 1.1: Hourly Wages of Minority Women as a Percentage of White Women's Hourly Wage: 1980 1.2: Labor Force Status and Social Characteristics of Women by Minority Group: 1980 2.1: Decennial Growth Rates in Real Hourly Wages 1939-86 2.2: Hourly Wages of Black Women, White Women, and Black Men as a Percentage of the Hourly Wage of White Men: 1939-86 2.3: Black-White Female Wage Ratios: 1939-86 2.4: Hourly Wages of Black Women, White Women, and Black Men as a Percentage of the Hourly Wage of White Men: 1939-86 (Full-Time, Year-Round Workers Ages 25-64) 2.5: Black-White Female Wage Ratios: 1939-86 (Full-Time, Year-Round Workers Ages 25-64) 2.6: Black-White Female Hourly Wage Ratio by Age: 1939-86 2.7: Black-White Female Hourly Wage Ratios by Age: 1939-86 (Full-Time, Year-Round Workers Ages 25-64) 2.8: Labor Force Participation Rates for Black and White Women: 1940-87 2.9: Hours Worked Per Week, Weeks Worked Per Year, and Percentage Working Full Time: 1940-87 (Employed Black and White Women) 2.10: Employment and Unemployment Rates for Black and White Women: 1940-87 2.11: Labor Force Participation Rates for Black and White Women by Age: 1940-87 2.12: Labor Force Participation Rates of Black and White Women by Marital Status: 1940-87 2.13: Distribution of Black and White Women by Marital Status: 1940-87 2.14: Distribution of Black and White Women by Marital Status and Presence of Children: 1950-80 4.1: Average Years of Schooling Completed by Race: 1940-80 4.2: Distribution of Black and White Women by Years of Schooling Completed: 1940-80 4.3: Average Years of Schooling Completed by Black and White Women Between the Ages of 25 and 34: 1940-80 4.4: Average Years of Schooling Completed by Black and White by Age: 1940-80 4.5: Labor Force Participation Rates of Black and White Women by Years of School Completed: 1940-80 4.6: Hourly Wages of Black and White Women by Years of Schooling Completed: 1940-80 4.7: Geographic Location of Black and White Women: 1940-80 4.8: Hourly Wages of Black and White Women by Region: 1940-80 4.9: Hourly Wages of Black and White Women by Urban/Rural Residence and Region: 1940-80 4.10: Average Years of Schooling Completed by Black and White Women by Region: 1940-80 5.1: Occupational Distributions of Black and White Women: 1940, 1960, and 1980 5.2: Indices of Occupational Dissimilarity: 1940, 1940, and 1980 5.3: Occupational Distributions of Black and White Women by Education: 1940 5.4: Occupational Distributions of Black and White Women by Education: 1960 5.5: Occupational Distributions of Black and White Women by Education: 1980 5.6: Indices of Occupational Dissimilarity for Black and White Women by Education: 1940, 1960, and 1980 5.7: Occupational Distributions of Black and White Women by Region: 1940 5.8: Occupational Distributions of Black and White Women by Region: 1960 5.9: Occupational Distributions of Black and White Women by Region: 1980 5.10: Indices of Occupational Dissimilarity for Black and White Women by Region: 1940, 1960, and 1980 5.11: Occupational Distributions of Black and White Women Controlling for Characteristics: 1940 5.12: Occupational Distributions of Black and White Women Controlling for Characteristics: 1960 5.13: Occupational Distributions of Black and White Controlling for Characteristics: 1980 5.14 Indices of Occupational Dissimilarity for Black and White Women Controlling for Characteristics: 1940, 1960, and 1980 5.15: Hypothetical Occupational Distributions of Black Women in 1940 and 1980 Assuming that They Had the Other Year's Characteristics 5.16: Indices of Occupational Dissimilarity: Black Women in 1940 and Black Women in 1980 6.1: Predicted Hourly Wages and Black-White Wage Ratios: 1940, 1960, and 1980 6.2: The Effects of Selected Characteristics on the Black-White Female Hourly Wage Ratio: 1940, 1960, and 1980 6.3: Predicted Hourly Wages and Black-White Wage Ratios: 1940, 1960, and 1980 (Regressions including Occupation and Industry) 6.4: The Effects of Selected Characteristics on the Black-White Female Hourly Wage Ratio: 1940, 1960, and 1980 (Regressions Including Occupation and Industry) 6.5: Predicted Hourly Wages and Black-White Wage Ratios by Age: 1940, 1960, and 1980 6.6: Predicted Hourly Wages and Black-White Wage Ratios by Education: 1940, 1960, and 1980 6.7: Predicted Hourly Wages and Black-White Wage Ratios by Region: 1940, 1960, and 1980 6.8: Accounting for the Convergence in the Black-White Female Wage Ratio Between 1940 and 1980 6.9: Accounting for the Convergence in the Black-White Female Wage Ratio Between 1940 and 1980 (Regressions including Occupation and Industry) 7.1: Means of Work Experience Variables by Race: Results from the Survey of Income and Program Participation 7.2: Predicted Hourly Wages and Black-White Wage Ratios: Results from the Survey of Income and Program Participation 7.3: Predicted Hourly Wages and Black-White Wage Ratios: Results from the Survey of Income and Program Participation (Regressions Including Occupation and Industry) 7.4: Predicted Hourly Wages and Black-White Wage Ratios by Age: Results from the Survey of Income and Program Participation 7.5: Predicted Hourly Wages and Black-White Wage Ratios by Region: Results from the Survey of Income and Program Participation 7.6: Predicted Hourly Wages and Black-White Wage Ratios by Education: Results from the Survey of Income and Program Participation 7.7: Black-White Differentials during the 1980s: Results from the 1980, 1985, and 1987 Current Population Surveys 7.8: Black-White Differentials during the 1980s: Results from the 1980, 1985, and 1987 Current Population Surveys (Regressions Including Occupation and Industry) 8.1: Family Income of Black and White Women by Marital Status 8.2: Annual Earnings of Black and White Women by Marital Status 8.3: Family Assets of Black and White Women by Marital Status 8.4: Labor Force Participatlon, Unemployment, Welfare, and Poverty Rates of Black and White Women by Marital Status 8.5: Family Income of Black and White Women by Employment Status 8.6: Annual Earnings of Black and White Working Women 8.7: Family Assets of Black and White Women by Employment Status 8.8: Welfare and Poverty Rates of Black and White Women by Employment Status 9.1: Labor Force Participation, Employment, and Unemployment Rates and Percentage Working Full Time for Black and White Women by Marital Status and Age 9.2: Characteristics of Black and White Married Women 9.3: Labor Force Participation, Employment, and Unemployment Rates and Percentage Working Full Time for Married Black and White Women 9.4: Hypothetical Labor Force Participation, Employment, and Unemployment Rates and Percentage Working Full Time for Married Black and White Women Assuming Each Group Had the Other Group's Characteristics 9.5: Characteristics of Black and White Unmarried Women 9.6: Labor Force Participation, Employment, and Unemployment Rates and Percentage Working Full Time for Never-Married Black and White Women 9.7: Labor Force Participation, Employment, and Unemployment Rates and Percentage Working Full Time for Previously Married Black and White Women 9.8: Hypothetical Labor Force Participation, Employment and Unemployment Rates and Percentage Working Full Time for Unmarried Black and White Women Assuming Each Group Had the Other Group's Characteristics A.1: Average Annual, Weekly, and Hourly Wage Rates for Different Demographic Groups Calculated from 1980 Census and March 1980 Current Population Survey Data A.2: Average Annual, Weekly, and Hourly Wage Rates for Full-Time Year-Round Workers by Demographic Group Calculated from 1980 Census and March 1980 Current Population Survey Data A.3: Average Annual, Weekly, and Hourly Wage Rates for Non-Full-Time Year-Round Workers by Demographic Group Calculated from 1980 Census and March 1980 Current Population Survey Data A.4: Annual, Weekly and Hourly Wage Ratios for All Workers and for Full-Time, Year-Round Workers Calculated from 1980 Census and March 1980 Current Population Survey Data B.1: Occupational Distributions of Black and White Women by Age: 1940 B.2: Occupational Distributions of Black and White Women by Age: 1960 B.3: Occupational Distributions of Black and White Women by Age: 1980 B.4: Hypothetical Occupational Distributions of White Women in 1940 and 1980 Assuming that They Had The Other Year's Characteristics B.5: Indices of Occupational Dissimilarity: White Women in 1940 and White Women in 1980 B.6: Occupational Distributions of Black and White Women Controlling for Characteristics: South, 1940 B.7: Occupational Distributions of Black and White Women Controlling for Characteristics: Non-South, 1940 B.8: Occupational Distributions of Black and White Women Controlling for Characteristics: South, 1960 B.9: Occupational Distributions of Black and White Women Controlling for Characteristics Non-South 1960 B.10: Occupational Distributions of Black and White Women Controlling for Characteristics: South, 1980 B.11: Occupational Distributions of Black and White Women Controlling for Characteristics: Non-South, 1980 B.12: Indices of Occupational Dissimilarity for Black and White Women by Region Controlling for Characteristics: 1940, 1960, and 1980 C.1: Age-Adjusted AFQT Percentiles for Black and White Women by Region and Education C.2: Regressions of Age-Adjusted AFQT Percentiles on Race, Education, and Region D.1: Wage Regressions for Black and White Women: 1940, 1960, and 1980 Censuses D.2: Wage Regressions for Black and White Women: 1940, 1960, and 1980 Censuses (Including Occupation and Industry) D.3: The Effects of Selected Characteristics on the Black-White Female Hourly Wage Ratio: 1940, 1960, and 1980 (Evaluated Using the Black Pay Scale) D.4: The Effects of Selected Characteristics on the Black-White Female Hourly Wage Ratio Derived from Regressions Including Occupation and Industry: 1940, 1960, and 1980 (Evaluated Using the Black Pay Scale) D.5: Predicted Hourly Wages and Black-White Wage Ratios by Age: 1940, 1960, and 1980 (Regressions Including Occupation and Industry) D.6: Predicted Hourly Wages and Black-White Wage Ratios by Education: 1940, 1960, and 1980 (Regressions Including Occupation and Industry) D.7: Predicted Hourly Wages and Black-White Wage Ratios by Region: 1940, 1960, and 1980 (Regressions Including Occupation and Industry) F.1: Wage Regressions for Black and White Women: Survey of Income and Program Participation F.2: Wage Regressions for Black and White Women: Survey of Income and Program Participation (Including Occupation and Industry) F.3: Wage Regressions for Black and White Women: March 1980 Current Population Survey F.4: Wage Regressions for Black and White Women: March 1980 Current Population Survey (Including Occupation and Industry) F.5: Wage Regressions for Black and White Women: March 1985 Current Population Survey F.6: Wage Regressions for Black and White Women: March 1985 Current Population Survey (Including Occupation and Industry) F.7: Wage Regressions for Black and White Women: 1987 Current Population Survey F.8: Wage Regressions for Black and White Women: 1987 Current Population Survey (Including Occupation and Industry) F.9: Predicted Wage Ratios by Region and Age: Survey of Income and Program Participation F.10: Predicted Wage Ratios by Education and Age: Survey of Income and Program Participation F.11: Occupational Distributions of Black and White Women by Region and Age: Survey of Income and Program Participation FIGURES 1.1: Hourly Earnings of Women: 1980 2.1: Labor Force Participation by Age for Black and White Women: 1940, 1960, and 1970 Executive Summary This report contains both heartening and disheartening findings with respect to black women's economic status. On the one hand, the pay of black women has increased substantially, both relatively and absolutely, over the past half-century. A primary cause of black women's increased relative pay appears to have been a substantial decline in the effects of racial discrimination in the labor market. In 1940 black women's hourly wages were barely one-half those earned by comparable non-Hispanic white women.(1) Today, black women earn roughly 90 percent as much as comparable white women. The occupational distributions of black and white women with similar characteristics have undergone an equally large convergence between 1940 and the present. On the other hand, despite these increases in relative pay and occupational status, black women still earn less than white women, and black women's economic status continues to be far below white women's. Black women's average family income is less than two-thirds that of white women. Black women are three times more likely to have family incomes of less than $10,000, and seven times less likely to have family incomes of more than $60,000. Black women's median family net worth is $8,335, less than one-fifth as high as white women's, which is $45,659. Black women are five times more likely to be in poverty, five times more likely to be on welfare, and three times more likely to be unemployed than white women. The report has three major components. First, the report traces the history of black women's labor force status, especially their wages and occupations, from 1940 to the present. Second, the report looks in detail at the current status of black women's wages and occupations in comparison to white women's. Finally, the report considers other factors that affect black women's current economic status, including their labor force participation and unemployment rates, their family structure, and the incomes of other family members. The statistical analysis in this report is based on data on individuals between the ages of 18 and 64 taken from a variety of data sources, primarily the *1940-80 Public Use Samples of the Censuses of Population, *the 1970-87 March Current Population Surveys (CPS), and * the 1984 Panel of the Survey of Income and Program Participation (SIPP). The population censuses provide a consistent series of data from 1940 to 1980 for the historical analysis, and the CPS and SIPP data provide more detailed information about the situation of black women in the 1980s. All three data sets permit comparisons of women with similar background characteristics. The report compares the labor market outcomes (e.g., wages, occupations, labor force participation rates, and unemployment rates) of black women with those of white women with similar background characteristics (e.g., education, age, work experience. region of residence, marital status, and number of children). The results of these comparisons offer information about whether and to what extent black women have worse labor market outcomes than white women with similar background characteristics and provide insight into the possible effects of racial discrimination in the labor market on black women's economic status. Thus, this study is limited to uncovering the effects of current racial discrimination in the labor market on black women's economic status. The reader should bear in mind that in addition to racial discrimination, black women also face gender discrimination. Moreover, many black women continue to experience discrimination that occurs outside of the labor market; in the provision of education, in the housing market, and in other areas. Also, discrimination that occurred in the past continues to depress the economic status of many black women. Thus, although this report provides essential information on one important aspect of discrimination against black women, racial discrimination In today's labor market, It does not constitute a comprehensive evaluation of all forms of discrimination against black women. The report's major findings are summarized below. Trends In Black Women's Wages and Occupations: 1940-80 Using census data, the report examines trends in black women's wages and occupations over the 1940-80 period. At the beginning of the period there were large differences between the wages and occupations of black and white women. In 1940 black women earned only 40 percent as much per hour as white women. Black women were concentrated in low-status occupations (roughly 70 percent worked as servants and farm laborers) and were almost completely absent from middle-status occupations, such as clerical work, and high-status occupations other than teaching. Very little of the black-white differences in wages and occupations in 1940 could be accounted for by racial differences in background characteristics, such as age, educational attainment, region of residence (South or not South), and urban or rural location. Black women's hourly wages were barely one-half of those earned by comparable white women.(2) Black women and comparable white women worked in very different occupations. For instance, 58.4 percent of black women were domestic servants compared with 11.5 percent of comparable white women. Thus, although racial differences in unmeasured characteristics such as schooling quality may have been partially responsible, racial discrimination in the labor market was probably the major cause of the disparities between black and white women's wages and occupations in 1940. Black women made substantial progress relative to white women between 1940 and 1980, particularly after 1960. Census data show that by 1980 black women had reached near wage parity with white women. Similarly, black women's occupational status had improved considerably. By 1980 fewer than 8 percent of black women worked as farm laborers or domestic servants, and black women had made substantial inroads into middle- and high-status occupations. For instance, 29 percent of black women worked in the clerical sector, up from 1 percent in 1940, and 16 percent of black women were professionals, up from 5 percent in 1940. The economic progress made by black women over the 1940-80 period cannot be accounted for by changes in measured characteristics. Even if all that had changed between 1940 and 1980 were black and white women's characteristics, black women still would have earned only half as much as white women and would have been only slightly less likely to work in low-status occupations. Black women's increased relative wage and occupational status between 1940 and 1980 were most likely the result of declining racial discrimination in the labor market, especially declining occupational discrimination, combined with changes in unmeasured characteristics, such as the quality of schooling received by black women. The Current Status of Black Women's Wages and Occupations Despite the progress of the 1940-80 period, this report finds that the wages of black women continue to lag behind those of white women. Black women today earn roughly 90 percent as much per hour as white women. In addition, black women continue to be somewhat less likely than white women to work in middle- and high-status occupations such as clerical jobs, and more likely to work in low-status occupations such as factory and service jobs. Racial differences in background characteristics can account for only part of the remaining wage and occupational disparities between black and white women. Using data from the Survey of Income and Program Participation, this report found that black women earn 9 percent less than comparable white women. Furthermore, relative to comparable white women, black women were found to be under- represented in middle- and high-status occupations, and overrepresented in low-status occupations. Some evidence was found of a small decline in the ratio of black women's to white women's wages after 1985, indicating that black women have not shared equally in the recent economic progress made by women in general. Changes in measurable characteristics cannot account for this decline. Regional Differences in Black Women's Wages and Occupations Southern black women have historically fared much worse than black women in the rest of the country. In 1940 southern black women earned less than 60 percent as much as black women elsewhere, whereas southern white women earned 90 percent as much as white women in the rest of the country. Similar disparities exist today: in 1980 southern black women earned 80 percent and southern white women earned 92 percent as much as their counterparts elsewhere. The occupational status of black women has also been worse in the South than in the rest of the country. In the past black women's lower relative economic status in the South occurred because labor market discrimination was more severe in the South. Whereas black women outside of the South earned 71 percent as much as comparable white women in 1940, southern black women only earned 50 percent as much as comparable southern white women. Southern black women also faced more restricted job opportunities than black women outside of the South. For instance, up through 1960, black women in the South were almost completely excluded from jobs as operatives in the textile industry. Despite considerable improvements after 1960, in the 1980s southern black women continue to earn less relative to comparable white women than black women elsewhere. Southern black women earn 87 percent as much per hour as comparable southern white women, whereas black women outside of the South earn 96 percent as much as comparable white women. Southern black women are also in less skilled occupations relative to comparable white women than black women elsewhere. For instance, southern black women today are strikingly underrepresented among clerical workers. Only 23 percent of southern black women are clerical workers, compared with 36 percent of comparable white women. Outside of the South, 35 percent of black women are clerical workers, compared with 37 percent of comparable white women. Age Differences in Black Women's Wages and Occupations Younger black women generally have fared better relative to similarly qualified white women than have older black women. In the 1980s black women over 40 earn only 88 percent as much as comparable white women, whereas black women under 40 earn 94 percent as much as comparable white women. Older black women's lower relative earnings appear to be because they are in lower status occupations relative to their white counter-parts. This result suggests that older black women have not overcome the effects of past labor market discrimination. They grew up at a time when educational and occupational opportunities for black women were severely restricted. Thus, past discrimination reduces older black women's economic status today, because it has a lasting impact on their educational attainment and occupational status. Labor Market Discrimination and Trends in Wages and Occupations Racial discrimination against black women exists in the labor market if employers, co-workers, or customers treat black women differently from white women with identical labor market skills solely on the basis of their race. Thus, if a black woman is paid less, promoted less quickly, denied access to the same job or occupation, or avoided or harassed more by her co-workers than an identical white woman simply because she is black, then she has suffered from labor market discrimination. A central concern of this report is to ascertain the extent to which labor market discrimination against black women has lowered their relative wages and limited their occupational opportunities, both now and in the past. The extent to which black women earn less and are in different occupations than white women with the same characteristics measures the possible effect of labor market discrimination on the basis of race on black women's wages and occupations. This report has found that differences in the measured characteristics of black and white women were able to account for only a small portion of the differences in their wages and occupations. Although differences in unmeasured characteristics, such as the quality of education undoubtedly contributed to the gap in black and white women's wages and occupations, this result suggests that labor market discrimination has played an important part in depressing the wages and occupational status of black women throughout the period from 1940 to the present. Similarly, the report's finding that southern black women had and continue to have lower wages and occupational attainment relative to comparable white women than black women in the rest of the country supports the view that labor market discrimination against black women has been and may continue to be worse in the South than elsewhere. The evidence concerning the present day is less conclusive, because contemporary differences in the wages, occupations, and measured characteristics of black and white women are small by historical standards. There remain, however, portions of the wage and occupational gaps that cannot be explained by differences in the measured characteristics of black and white women, suggesting that current racial discrimination in the labor market may continue to reduce black women's wages and occupational attainment today. This report has focused on uncovering the effects of current racial discrimination on black women's economic status. It should be remembered that, like all women, black women are also subject to gender discrimination, which also lowers their economic status. Furthermore, in addition to current discrimination, the legacy of past discrimination also limits black women's economic status. Whereas, as discussed above, past discrimination certainly continues to restrict opportunities for older black women, younger black women as well may suffer from its legacy. Since social and economic status are generally influenced by upbringing, hardships visited upon their parents and upon the black community by discrimination in the past continue to hinder the progress of young black women today. Racial Differences in Labor Force Participation and Unemployment Rates In addition to a persistent wage gap, black and white women have very different employment and unemployment patterns. Black women of all ages and marital statuses experience much higher unemployment rates than white women. Overall, 11 percent of black women who desire to work are unemployed, compared with 4 percent of white women. Young and unmarried black women have particularly high unemployment rates. For instance, the unemployment rate for unmarried black women between the ages of 18 and 24 is more than 25 percent. Controlling for differences in characteristics (age, education, presence and age of children, and, for married women, husband's income) only slightly narrowed the black-white unemployment gap: the report found that black women had substantially higher unemployment rates than white women with the same characteristics. Thus, black women's high unemployment rates cannot be explained simply by differences in background characteristics between them and white women. Although black and white women's average labor force participation rates are very close (68 percent and 69 percent, respectively), black and white women have very different labor force participation patterns by marital status. Married black women have much higher labor force participation rates than their white counterparts (73 percent versus 64 percent). Unmarried black women, on the other hand, have much lower labor force participation rates than their white counterparts (56 percent versus 73 percent). Unmarried black women under 24 are especially unlikely to participate. Moreover, among whites, married women are less likely than unmarried women to participate in the labor force, but among blacks, the reverse is true. Racial differences in characteristics, especially education, presence and age of children, and percentage never married (as opposed to widowed, separated or divorced), account for almost three-quarters of the gap between the labor force participation rates of black and white unmarried women. For married women, however, none of the gap in labor force participation rates can be explained by differences in characteristics. Black Women's Relative Economic Status in the 1980s Despite the improvements over the past half-century, in the late 1980s, black women continue to have much lower economic status than comparable white women. Black women's average family income is less than two-thirds and median family net worth less than one-fifth as high as white women's. Black women are five times more likely to be in poverty, five times more likely to be on welfare, and three times more likely to be unemployed than white women. Black women's labor market earnings constitute a higher fraction of their families' incomes than white women's. On average, black women contribute one-third of their family's income, whereas white women contribute one-fourth. Many factors, some the result of past discrimination, combine to lower black women's economic status. One factor that is partly responsible for black women's lower economic status is the large differences between the family structures of black and white women. Whereas roughly two-thirds of white women are married, roughly two-thirds of black women are not married. Unmarried black women are considerably more likely to have children than their white counterparts. For instance, 44 percent of black women who have never been married have at least one child under 18, compared with 6 percent of white women. These differences in family structure mean that a black woman is more likely than a white woman to be the only adult earner in her family, and if so, to be responsible for children. A second important factor lowering black women's economic status is the relatively lower incomes of other family members especially the lower labor market earnings of their husbands. On average, black husbands earn only two-thirds as much as white husbands. It should be remembered in this regard that current racial discrimination in the labor market likely contributes to black men's lower labor market earnings. A third factor contributing to black women's low economic status today may be current racial discrimination in the labor market. Racial discrimination in the labor market may depress black women's wages and occupational status, increase their unemployment rates, and indirectly lower their labor force participation rates. In all these ways, racial discrimination may lower black women's labor market earnings. Since black women's labor market earnings make up a substantially larger fraction of their family income than white women's, and since black family incomes are comparatively low, any negative effect of labor market discrimination on their labor market earnings has a particularly harmful effect on black women's economic status and on that of their families. Importance of Using Data Sources Besides the Census This research highlights the importance of using other data sources besides the census when studying discrimination against black women. Census data yield significantly different estimates of black women's relative wages than other data sources examined for the contemporary period. Research using census data alone suggests that black women earn at least as much, probably more than white women. By contrast, other data sources, such as the March Current Population Surveys and the Survey of Income and Program Participation (SIPP). Indicate that black women continue to earn less than white women. When studying black-white female wage differentials, it is important to have as much information as possible about women's labor market skills. In particular, it is essential to use data sources that provide measures of women's past work experience, since individuals with more work experience generally have acquired more labor market skills. The analysis here using the SIPP, which does provide information on women's past work experience, shows that when black women's greater work experience is taken into account, less of the black-white wage gap can be explained: When women's work experience is not taken into account. black women appear to earn 5 percent less than comparable white women, and when it is taken into account, they are found to earn 9 percent less. Since the census data do not provide information on women's work experience, it is essential to draw upon other data sources as well. Recommendations This report investigates the effect of racial discrimination in the labor market on black women's economic status. A comprehensive assessment of the effect of all forms of discrimination on black women's economic status requires further research. An especially important topic for future research is the effect of gender discrimination on black women's economic status. Also, to complement the statistical analysis contained in this report, new, more refined data sources and research methodologies need to be developed. Statistical studies based on large national data sets are valuable in providing thorough information about the likely effects of discrimination and pinpointing problem areas. They have inherent limitations, however. These studies cannot reach definitive conclusions about the existence and extent of labor market discrimination. Furthermore, they yield only modest insight into the nature of labor market discrimination, and, in particular, the mechanisms through which it operates. This report suggests how future research can complement statistical studies of labor market discrimination against black women. Other data sources may be able to provide more insight into the nature of labor market discrimination. For instance, the Equal Employment Opportunity Commission and State equal opportunity commissions gather information on specific instances of discrimination when complaints are filed. To improve our understanding of the nature of discrimination, it may be fruitful to assemble and analyze information in their files. One possible avenue for future research suggested by the report is to set up "experiments" to test for employment discrimination by sending black and white women to apply for jobs and monitoring employers' responses. Such experiments would allow researchers to control fully for skill differences by choosing black and white women with very similar skills. They would also have the advantage of providing additional insight into the mechanisms through which labor market discrimination operates. For instance, do employers refuse to interview black applicants? At what points in the hiring process are black women treated differently from their white counterparts? This type of question could be answered by careful monitoring of employers' responses to the black and white job applicants. Experiments could provide much new information about labor market discrimination. but they, too, are limited in their ability to capture fully all aspects of employment discrimination. Although experiments can often be set up to detect discrimination in hiring, it will seldom be practical to set up experiments to detect discrimination in promotions. Furthermore, it is unlikely that experimental evidence can be used to detect hiring discrimination for complex jobs, such as professional jobs and high-level management jobs, that require considerable specialized training and personal contacts. Yet, because of the subjective nature of promotion decisions and hiring decisions for high-level jobs, it is possible that the greatest effect of labor market discrimination today is precisely in these areas. Indeed, blacks, women, and other minorities often cite an invisible "glass ceiling" that prevents them from reaching the top of the job ladder. A second avenue of research that allows researchers to learn more about discrimination in hiring into top-level jobs and discrimination in promotions is to conduct specialized surveys of individuals or case studies of firms or industries. Specialized surveys could allow researchers to follow the careers of similarly qualified individuals over time and to obtain specific information about their qualifications, their job applications, the times when they were up for promotion, and so on. Case studies could allow researchers to look closely at employers' decisionmaking processes when choosing whom to hire or whom to promote. Both of these types of studies would add significantly to the current understanding of labor market discrimination. This report provides evidence supporting the view that racial discrimination continues to affect black women in today's labor market and pinpoints several problem areas. On the whole, the evidence presented in this report suggests that the main effect of labor market discrimination on the basis of race today is to limit black women's occupational opportunities, particularly in management and sales jobs. In the South, black women appear also to have substantially fewer employment opportunities in clerical occupations than comparable white women. Thus, a major problem facing black women today appears to be discrimination in hiring, referrals, and promotions. Since discrimination in hiring, referrals, and promotions can be extremely subtle, identifying and combatting employment discrimination in these areas is inherently difficult. Often the victims of discrimination may not even be aware that it has occurred. Consequently, new and aggressive enforcement methods may be needed to eradicate discrimination against black women. One such method, audits of firms and employment agencies, might be useful in antidiscrimination enforcement efforts: By sending carefully matched individuals of different races and genders to apply for jobs, enforcement agencies could obtain direct evidence of illegal discrimination in hiring or referrals. Such direct evidence would not only be useful in prosecuting discrimination cases, but could also provide a valuable informational basis for guiding antidiscrimination enforcement policy. As an example, the New York City Human Rights Commission is currently using evidence gathered by Commission employees posing as job applicants in prosecuting four employment agencies for discriminating against blacks, Hispanics, women, and the elderly.(3) Other agencies in charge of enforcing equal opportunity legislation, such as the Equal Employment Opportunity Commission, should consider using audits to ferret out discrimination in employment and should search actively for other innovative means of enforcing antidiscrimination laws. (1) For convenience, non-Hispanic white women are referred to as "white" throughout the remainder of the report. (2) The term "comparable white women" refers to white women with the same measured characteristics as the average black woman. (3) "New York Sues 4 Work Firms in Bias Case," New York Times, Sept. 29, 1989.