Written Testimony of Marc Bendick, Jr., Ph.D.1 Economist, Bendick and Egan Economic Consultants, Inc.

Meeting of June 22, 2011 - Disparate Treatment in Hiring

Madam Chair and Distinguished Commissioners:

Thank you for this invitation to testify about research on disparate treatment in hiring. I am Dr. Marc Bendick Jr., an employment economist who has been involved in these issues as a researcher and expert witness for more than 30 years.

Employers in America's private sector decide who to hire some 60 million times a year — more than 250,000 times each work day.² For successful job candidates, the hiring process does more than provide employment. It also determines initial job titles, work assignments, and wages -- decisions that often influence new employees' careers for years thereafter. In addition, for both successful and unsuccessful job applicants, the hiring process provides job-seeking experience, career information, and encouragement or discouragement. Few human resource management processes rival hiring in terms of impact on the distribution of employment opportunities and rewards.

Unfortunately, research indicates that this vital employment process is particularly vulnerable to employers' tendencies to make biased decisions. While post-hiring decisions such as raises and promotions can be based on months or years of observation of an employee's on-the-job performance, hiring decisions are typically guided by only limited information obtained primarily from a short application form and brief interviews. Hiring decisions are also often made under time pressure by managers with many other responsibilities and little or no training on unbiased selection techniques. And, unlike post-hiring raise and promotion decisions where errors in one round can be corrected in subsequent rounds, once a hiring selection is made, alternative job applicants are typically no longer available, and errors cannot be reversed. In such circumstances, biased employment outcomes, especially those based on stereotypes, are particularly likely to arise.³

Economists, sociologists, psychologists, and other researchers have been analyzing employment discrimination in the nation's labor market since at least the famous Myrdal report on racial discrimination in the 1940s,⁴ and literally thousands of studies have accumulated.⁵

At the risk of over-simplifying the many nuanced and complex findings emerging from this large body of knowledge, this testimony briefly sketches answers which, I believe, command general consensus among researchers to three questions:

1. What is the prevalence of disparate treatment in hiring in the U.S. labor market today?
2. Where are such problems concentrated?
3. What are the implications of these findings for the Commission's enforcement efforts?

First Question: What is the Prevalence Today?

Taking the long historical view, there is no clearer point of consensus in research than that the nation has come a long way in terms of changing employers' hiring practices. In 1960 -- before broad federal anti-discrimination laws and the EEOC existed -- it was common for employers to place newspaper ads specifying "Help Wanted–Male," to consider minority college graduates only for menial jobs, or to base differing starting pay explicitly on job seekers' personal characteristics such as their marital status. Since that time, EEO laws and their enforcement, in combination with evolving social norms and individual attitudes, have sharply diminished the prevalence of such practices. Through its efforts in enforcement, public education, and employer assistance, the EEOC has made major contributions to these developments.

Researchers use a variety of metrics to document the nation's progress toward equality of employment opportunity. For example, they report that women now constitute 51% of managerial and professional workers in the American labor force, and race/ethnic minorities more than 22%,⁶ a very different situation from the early 1960s, when their numbers in most such occupations were so small that every individual was a highly visible exception. Women's earnings, which averaged about 60% of men's until the 1970s, rose to nearly 80% by the 1990s.⁷ Over the same period, African Americans' average earnings rose from 57% of Whites' to more than 73%.⁸

Yet, such measures document remaining problems as much as progress. Earnings ratios of 73% or 80% are still well below the 100% that would signal simple equality. Worse, in recent years, upward movement of race and gender wage ratios has slowed or stopped.⁹ Concurrently, the number of women and minorities remains limited in many occupations, especially more prestigious, influential, well-paid ones; these patterns of occupational segregation are often referred to as "glass walls" and "glass ceilings."¹⁰

Research documents many instances in which racial and ethnic minorities, women, older workers, persons with disabilities and other "out-groups" continue to experience substantial differences in employment outcomes compared to their equally-qualified white, male, prime-age non-disabled counterparts. The following are examples of findings from a variety of social science disciplines all demonstrating the same pattern -- namely, substantially different employment outcomes among demographic groups not readily explained by differences in education, experience, other job-related qualifications, employment aspirations, or work effort:

• After controlling for education, age, work experience, residence, and criminal records, dark-skinned black males had a 52% lower chance of being employed than lighter-skinned black males.¹¹
• Although surgery did not alter their job qualifications, when transgender individuals who were men transformed into women, their earnings fell 12%, while women who transformed into men had their earnings rise 8%.¹²
• Among American professionals and managers working in international business, an additional year of work experience raised men's annual earnings $2,500 but women's only $1,300; working an additional eight hours a week increased men's annual earnings $7,300 but women's only $4,300.¹³
• In Georgia, 28% of large employers employed statistically-significantly fewer minority workers than peer companies in the same industry hiring workers with the same occupational qualifications in the same local labor market and time period.¹⁴

Notably, such findings are consistent with estimates of the prevalence of discrimination from surveys of individuals from adversely-affected demographic groups. For example:

• In one typical survey with a nationally-representative sample, 81% of African Americans, 60% of Hispanics, and 53% of Asian respondents felt that they would have a lower chance of promotion to a managerial position than an equally-qualified White.¹⁵
• In another national survey, 31% of Asians, 26% of African Americans, 18% of Hispanics, and 22% of women reported having been discriminated against in their workplace during the previous year.¹⁶
• In still another national survey, 53% of workers of all backgrounds recalled hearing hostile jokes at work about women, 44% about sexual orientation, 38% about older people, 37% about African Americans, 32% about Hispanics, 29% about Jews, 29% about Muslims, 26% about people with disabilities, and 25% about Asians.¹⁷
• In a survey of self-identified transgender adults in San Francisco, 40% of respondents reported having been discriminated against in applying for jobs, and 24% reported having been sexually harassed at work.¹⁸

Many of these studies stop short of directly linking such differences in employment outcomes to disparate treatment in hiring. However, that causal link is clearly established in other research.

The clearest demonstrations of employers' disparate treatment of job applicants come from research using "employment testing" (also called employment auditing, paired-comparison testing, or situation testing). Here, research assistants working in two-person teams are assigned to apply simultaneously for the same real job vacancies. The testers in each pair are matched in terms of general appearance and self-presentation style; carry resumes reporting equivalent education, experience, and job-related skills; and have been coached to answer job interview questions similarly. However, the testers in each pair differ on one visible demographic characteristic, such as gender, race, or age. When these carefully-matched job applicants experience markedly different treatment by employers, little analysis is required to attribute that difference directly to employers' reaction to that demographic characteristic.

The following are typical examples of disparate treatment in hiring documented through employment testing:¹⁹

• A major newspaper carried an advertisement for a restaurant supervisor in an affluent neighborhood. An African American tester who presented himself at the restaurant was told that he would be called if the restaurant wished to pursue his application. Minutes later, a White tester whose resume showed the same level of education and restaurant experience followed the same procedure. He was called later that day to schedule an interview, interviewed the day after that, and subsequently offered the position. The African American tester made four follow-up calls to reiterate his interest, including shortly after the White tester declined the job offer, with no response.
• A vacancy for a receptionist in an optometrist's office was advertised in a local newspaper in an affluent neighborhood. When a tester with a Latina name and slight accent telephoned the following day, she was put on hold, called Carmen when she had given her name as Juanita, and told that the office was not taking any further applications. When her testing partner with an Anglo name and no accent called 13 minutes later, she received an interview appointment for the following morning.
• An employment agency advertised for an executive recruiter. Two White males whose resumes and appearance portrayed ages 32 and 57, respectively, responded by telephone and both were granted interviews. The older tester's interview lasted 48 minutes, during which he was cautioned against making a precipitous career change and instructed to call back if he was still interested after reading books on sales techniques. The younger tester's interview lasted 85 minutes, with the interviewer discussing work and non-work topics in a friendly manner and commenting enthusiastically on the tester's responses. This tester was invited back for a second interview, after which he was offered a job.
• An automobile service shop advertised in a newspaper for a technician to lubricate and repair automobiles. When a female applicant whose resume showed experience in physically demanding jobs applied for the position, the manager told her that "the auto lube job is hard for a woman," said that he liked her smile, and offered her a lower-paying position serving in the on-premise coffee kiosk. When her male testing partner applied several hours later, he was immediately interviewed for the advertised auto technician position.

Testing studies continue to document such instances of disparate treatment in hiring today. Within the past year alone, testing studies were released that examined hiring practices in two different sectors in New York City. One study found that, when upscale restaurants were hiring for well-paid server positions, 31% of employers treated job applicants of color significantly worse than equally-qualified White applicants.²⁰ The other study found that, in hiring sales employees, 42% of retailers tested discriminated against transgender job applicants.²¹

While testing studies often provide the most direct and vivid illustrations of disparate treatment in hiring, research employing a variety of other research methodologies provides additional evidence. The following are examples:

• In selecting managers for its neighborhood stores, one nation-wide retail chain hired African American job candidates primarily to fill vacancies in minority-dominated neighborhoods. Because they were not considered for all vacant positions, the African American applicants had a lower chance of being hired than equally-qualified White job seekers. In addition, because of the stores to which they were assigned, those African Americans who were hired earned less, were promoted more slowly, and experienced greater on-the-job stress than their White counterparts hired at the same time.²²
• When physical abilities tests are administered to applicants for firefighter jobs, women job applicants have sometimes been tested in ways that deliberately handicap their performance compared to that of men. In timed tests involving moving fire hoses, for instance, women have been required to drag wet hoses over wet pavement while men were required to drag dry hoses over dry pavement. In addition, prior to the test, men have sometimes been coached on "tricks of the trade" for performing test tasks efficiently, while no-one offered the same information to women.²³

• Rather than publicly advertise the availability of job vacancies, many employers "spread the word" about employment opportunities only in limited circles, especially among current employees and trusted referral sources. Because women and minorities typically have more limited personal contacts in such circles, the effect is to limit those groups' opportunity to apply for positions for which they would be qualified and interested.²⁴

• Surveys of employer attitudes document that many employers continue to harbor strong stereotypes about the employment strengths and weaknesses of demographic groups and, consciously or unconsciously, allow those stereotypes to shape their decisions concerning whether or not to hire individual job applicants.²⁵
• When employers adopt "best practices" to minimize the influence of decision-makers' conscious or unconscious bias on hiring decisions, the selection rates for women, minorities, and other traditionally-excluded groups often increase dramatically. For example, when leading symphony orchestras audition musicians behind screens so that judges cannot see the applicants as they perform, more women are hired than when players audition within the judge's sight. ²⁶

Second Question: Where are Problems Concentrated?

To be clear, disparate treatment in hiring such as is illustrated in the previous section does not characterize all hiring decisions in the U.S. labor market today, or even the majority of them. This minority status reflects the sharp reduction in employers' discriminatory behavior -- particularly conscious behavior -- over the past 40 years, discussed at the beginning of the previous section. According to research, disparate treatment in hiring is now more the exception than the rule.

Research also suggests that, although disparate treatment that distorts hiring outcomes has not been completely eliminated in any large segment of the American labor market, it is increasingly concentrated in a subset of industries and employers. These subsets represent "holdouts" against the nation's general progress in reducing discrimination. Some exemplary employers have led the labor market's cultural change toward equal employment opportunity. A larger number of employers have followed these leaders, quietly conforming to the new approaches and complying with legal mandates. But a subset of employers stubbornly continues to resist and seriously lags the new norms.

A number of research studies have highlighted specific industries where, in contrast to the majority of industries, disparate treatment continues to be blatantly prevalent. This pattern is illustrated by two recent studies by my colleague Dr. Mary Lou Egan and me.

The first example involves the advertising industry. In 2010, our study brought to the nation's attention once again employment issues which multiple previous studies had documented periodically over previous decades. These issues concern the under-representation and under-utilization of African Americans in professional and managerial positions within the highly-influential industry that creates and disseminates the nation's advertising. According to this study:²⁷

• On average, African American managerial and professional advertising employees would need to be paid 25% more to earn what Whites earn with the same qualifications. This racial pay gap is more than twice as large in advertising as in the overall labor market.
• African Americans are employed in professional and managerial positions in this industry at only 55% of their expected numbers. Eliminating this shortfall would require hiring or promoting 7,200 additional Black advertising professionals and managers.
• Stereotype-based perceptions by industry managers of African Americans' capabilities and expertise underlie their widespread segregation into work targeting Black consumers. About 16% of large establishments in the industry employ zero Black managers or professionals, a rate 60% higher than in the overall labor market.
• African Americans are only 62% as likely as their White counterparts to work in advertising agencies' powerful "creative" and "client contact" functions and only 10% as likely to hold a position paying $100,000 or more per year.

Across multiple measures of employment outcomes, the Black–White gap in the advertising industry averages 38% larger than in the overall U.S. labor market. Moreover, the divergence between this industry and the rest of the labor market is more than twice as large today as it was 30 years ago.

The second example to which I would like to draw attention involves disparate treatment of women in the construction industry. A study completed for the U.S. Department of Labor in 2011 concludes that the employment practices in this industry with respect to women well justifies its nickname of "the industry that time forgot."²⁸

This study estimates that conscious discriminatory behavior toward women practiced by or tolerated by construction employers accounts for a current under-representation of about 220,000 women in the industry. This under-representation spans the skill spectrum from entry-level laborer and helper occupations to well-paid skilled trades such as electricians and plumbers.

The study also summarizes numerous research studies directly relating these employment outcomes to disparate treatment through attitudes and employment practices prevalent in, and often uniquely intense in, the construction industry. These attitudes and practices include: negative stereotypes about women's ability to perform construction work; sexual tension injected into work contexts where it is irrelevant; intentions to reserve well-paid employment for men, "who deserve it"; and reluctance by supervisors and other officials to discipline perpetrators of discrimination. These circumstances, in turn, underlie unwillingness to hire women even when they are as qualified as men, as well as harassing, hostile, and unhelpful behavior at worksites to deter women from applying for construction work and drive away those who have been hired.

In recent years, other research studies have highlighted a number of additional industries in which disparate treatment in hiring is particularly concentrated. This testimony has already mentioned the firefighting, restaurant, and retail industries. Further examples addressed in additional research include the employment placement industry, financial services, television and film production, and high technology.

However, rather than further enumerating such problem industries, let me turn to a second category of employment circumstances in which research concludes that problems of disparate treatment are disproportionately concentrated. This category is laggard firms within industries in which the majority of other firms have made considerable progress in controlling these problems.

A decade ago, some colleagues and I developed systematic statistical procedures for identifying such firms using the Commission's own EEO-1 data. Applying these techniques, we concluded that fewer than 20% of employers filing EEO-1 reports are "hard core" discriminators, defined as firms whose: ²⁹

• current utilization of women and/or minorities is substantially below those of peer firms in their own industry hiring the same types of employees in the same local labor markets in the same time period; and
• utilization of women and/or minorities has remained substantially below that of their industry peers over many years or decades.

This research suggests that problems of disparate treatment in hiring are likely to be disproportionately concentrated in fewer than 20% of all employers. By disproportionately concentrated, I mean two things:

• First, if a detailed investigation were undertaken of a "hard core discriminator," the probability that the investigation would document significant disparate treatment of employees and/or job applicants is substantially higher than if a similar investigation were conducted on an employer selected at random; and
• Second, for employers where such disparate treatment is documented, the number of women and/or minority employees or job applicants adversely affected is likely to be substantially greater than for the average employer where comparable disparate treatment is documented. For example, on that latter point, when my colleagues and I were requested by the then-Chair of this Commission to identify several dozen particularly egregious "hard core discriminators" for the Commission to consider, the firms we identified averaged an estimated 500 adversely-affected employees per firm.³⁰

Third Question: What are Implications for Enforcement?

In closing, I would like to suggest some implications for EEOC enforcement practices of the research reviewed in this testimony.

The first, most fundamental implication is the need for continued and enhanced enforcement efforts addressing disparate treatment in hiring. Research suggests that among the charges filed with the Commission each year by aggrieved job seekers, many are likely to be well-founded indications of serious problems. Indeed, because denied job applicants often do not know who was hired instead of them, the number of charges filed with respect to hiring almost certainly substantially under-represents the prevalence of actual discriminatory treatment in hiring.

The second implication is the desirability of concentrating enforcement resources to match the concentration of disparate treatment in hiring.

One way this principle might be applied would be to analyze all charges coming before the Commission using EEO-1 data in the way I have described. Priority in enforcement might then be accorded to complaints that coincide with statistical indications that the employer involved is a "hard core discriminator."

A second way this principle might be applied would be to systematically review available research identifying industries where problems of disparate treatment appear to be concentrated. The Commission might then utilize enforcement mechanisms such as Commissioners' Charges to address these pockets of concentrated problems proactively.

Through such policies, the Commission might derive maximum benefit from insight-rich research such as that discussed in this testimony.

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Footnotes

¹ Bendick and Egan Economic Consultants, Inc., 4411 Westover Place, N.W., Washington, DC 20016; (202) 686-0245; bendickegan@mindspring.com; www.bendickegan.com.

² U.S. Bureau of Labor Statistics. Job Openings and Labor Turnover-August 2009, at www.bls.gov/news.release/pdf/jolts.pdf

³ M. Bendick, Jr. & A. Nunes, "Developing the Research Base for Controlling Bias in Hiring." Journal of Social Issues (in press, 2012).

⁴ Gunnar Myrdal, An American Dilemma: The Negro Problem and Modern Democracy. New York: Harper Brothers, 1944.

⁵ Obviously, this testimony cannot review this mass of work comprehensively. For other reviews, see R. Ehrenberg & R. Smith, Modern Labor Economics. Boston: Pearson Addison Wesley, 2011, chapter 12; W. Rodgers III (Ed.), Handbook on the Economics of Discrimination. Northampton, MA: Edward Elgar, 2006; R. Dipboye &A. Colella (Eds.), Discrimination at Work. Mahwah, NJ: Lawrence Erlbaum, 2005; and A. Brief (Ed.), Diversity at Work. New York: Cambridge University Press, 2008.

⁶ U.S. Bureau of Labor Statistics, Employed Persons by Detailed Occupations, Sex, Race, and Hispanic or Latino Ethnicity (2008), at www.bls.gov/cps/cpsaat11.pdf

⁷ F. Blau & L. Kahn, "The Gender Pay Gap: Have Women Gone as Far as They Can?" Academy of Management Perspectives 21 (2007), pp. 7 – 23.

⁸ J. Smith & F. Welch, "Black Economic Progress after Myrdal." Journal of Economic Literature 27 (1989), pp. 519-564.

⁹ W. Rodgers III (Ed.), Handbook on the Economics of Discrimination. Northampton, MA: Edward Elgar, 2006.

¹⁰ B. Reskin & D. Bielby, "A Sociological Perspective on Gender and Career Outcomes." Journal of Economic Perspectives 19 (2005), pp. 71-86.

¹¹ J. Johnson, E. Bienenstock & J. Stoloff, "An Empirical Test of the Cultural Capital Hypothesis." Review of Black Political Economy 23 (1995), pp. 7-27.

¹² K. Schilt, K., & M. Wiswall, "Before and After: Gender Transitions, Human Capital, and Workplace Experiences." The Bell Journal of Economic Analysis and Policy 8 (2008), pp. 1-26.

¹³ M. Egan, M. Bendick, Jr. & J. Miller, "US Firms' Evaluation of Employee Qualifications in International Business Careers." International Journal of Human Resource Management 13 (2002), pp. 76-88.

¹⁴ A. Blumrosen, M. Bendick, Jr., J. Miller & R. Blumrosen, Employment Discrimination Against Women and Minorities in Georgia. Newark, NJ: Employment Discrimination Project, Rutgers Law School, 1999.

¹⁵ T. Smith, Taking America's Pulse II, NCCJ's 2000 Survey of Intergroup Relations in the United States. New York: National Conference for Community and Justice, 2000.

¹⁶ New Gallup Poll on Employment Discrimination Shows Progress, Problems 40 Years after Founding of EEOC. Press Release, U.S. Equal Opportunity Commission, December 8, 2005.

¹⁷ Harris Interactive, Workplace Discrimination Against, and Jokes about, African Americans, Gays, Jews, Muslims, and Others. The Harris Poll 61, 2002, at https://www.greenleaf.org/winning-workplaces/workplace-resources/research-studies/diversity/workplace-discrimination-against-and.

¹⁸ Guardian, Good Jobs NOW! A Snapshot of the Economic Health of San Francisco's Transgender Communities. San Francisco: The San Francisco Bay Guardian, 2006.

¹⁹ These examples are from M. Bendick, Jr., "Situation Testing for Employment Discrimination in the United States of America." Horizons Strategiques 5 (2007), pp. 17-39. See also M. Bendick, Jr., "Adding Testing to the Nation's Portfolio of Information on Employment Discrimination." In M. Fix & M. Turner (Eds.), A National Report Card on Discrimination: The Role of Testing. Washington: The Urban Institute, 1999, pp. 47-68; D. Pager, "The Use of Field Experiments for Studies of Employment Discrimination: Contributions, Critiques, and Directions for the Future." Annals of the American Academy of Political and Social Science 609 (2007), pp. 104-133; and M. Bertrand & S. Mullainathan, "Are Emily and Brendan More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination." American Economic Review 113 (2004), pp. 991-1001.

²⁰ M. Bendick, Jr., R. Rodriguez & S. Jaramayan, "Employment Discrimination in Upscale Restaurants: Evidence from Paired Comparison Testing." Social Science Journal 47 (2010), pp. 802-818.

²¹ Make the Road, Transgender Need Not Apply: Gender Identity Job Discrimination in New York City's Retail Sector. New York: Make the Road New York, 2010.

²² M. Bendick, Jr., M. Egan & L. Lanier, "The Business Case for Diversity and the Perverse Practice of Matching Employees to Customers." Personnel Review 33 (2010), pp. 468-486.

²³ D. Hulett, M. Bendick, Jr., S. Thomas & F. Moccio, "Enhancing Women's Inclusion in Firefighting in the USA." International Journal of Diversity in Organizations, Communities, and Nations 8 (2008), pp. 1-24. Overall, 85% of women firefighters responding to a nation-wide survey reported having experienced employment discrimination in forms ranging from unwanted sexual advances and "silencing" in firehouses to disrupted water flow in dangerous fire situations.

²⁴ M. Bendick, Jr., & M. Egan, The Availability of Women, Racial Minorities, and Hispanics for On-Site Construction Employment. Washington: Bendick and Egan Economic Consultants, Inc. for the U.S. Department of Labor, 2011, chapters 4 and 5.

²⁵ P. Moss & C. Tilly, Stories Employers Tell: Race, Skills, and Hiring in America. New York: Russell Sage Foundation, 2002; J. Dovidio, K. Kawakami, & S. Gaertner, "Implicit and Explicit Prejudice and Interracial Interaction." Journal of Personality and Social Psychology 82 (2002), pp. 62-68.

²⁶ C. Goldin & C. Rouse, "Orchestrating Impartiality: The Impact of 'Blind' Auditions on Female Musicians." American Economic Review, 90 (2000), pp. 715-741. See also W. Bielby, "Minimizing Workplace Gender and Racial Bias." Contemporary Sociology 29 (2000), pp. 120-129.

²⁷ M. Bendick Jr. & M. Egan, Research Perspectives on Race and Employment in Advertising. Washington : Bendick and Egan Economic Consultants, Inc., for the Madison Avenue Project, 2010.

²⁸ M. Bendick, Jr., & M. Egan, The Availability of Women, Racial Minorities, and Hispanics for On-Site Construction Employment. Washington: Bendick and Egan Economic Consultants, Inc. for the U.S. Department of Labor, 2011.

²⁹ M. Bendick, Jr., "Using EEO-1 Data to Analyze Allegations of Employment Discrimination." Presentation, American Bar Association National Conference, 2000; A. Blumrosen, M. Bendick, Jr., J. Miller & R. Blumrosen, Employment Discrimination against Women and Minorities in Georgia. Rutgers, NJ: Rutgers University Law School, 1999.

³⁰ M. Bendick, Jr., "How Can the EEOC Effectively Promote Employer Efforts to Hire the Best Employees and Avoid Discrimination?" Testimony, U.S. Equal Employment Opportunity Commission, February 28, 2007.