Written Testimony of William E. Spriggs Chief Economist, AFL-CIO

Meeting of April 15, 2015 - EEOC at 50: Confronting Racial and Ethnic Discrimination In the 21st Century Workplace

Chairwoman Yang and Commissioners, thank you for this opportunity to congratulate you on your commitment to extending the legacy of the Equal Employment Opportunity Commission which turns 50 years old. While it can be shown that the EEOC has made great dents in discriminatory employment practices, it is also clear that the need for the Commission continues.

History and accomplishment

The major demand of the 1963 March for Jobs and Freedom on the Civil Rights Act as proposed by President John Kennedy was the addition of a title to end discrimination in employment and the creation of a meaningful agency to enforce that part of the law. (Jackson, 2013) The force behind this demand, A. Philip Randolph, had used a threatened march on Washington in 1941 to bring about Executive Orders 8842 and 9346 from President Franklin Roosevelt and the creation of the Fair Employment Practices Commission to integrate defense industry workforces during World War II. (Kersten, 2007).

The FEPC ended with World War II.¹ While it made no discernable impact in the South, the activity of the FEPC in response to complaints did improve the representation of African Americans in defense related industries that had a lasting impact beyond the War's end outside the South. (Collins, 2001) Further, the FEPC launched activism in several states to create state anti-discrimination employment laws or commissions; which had more mixed outcomes for African American men-helping them modestly increase their presence in manufacturing and as craftsmen and operatives-than African American women who made substantial gains in employment in manufacturing, gaining in occupations like craftsmen and operatives, and a general advance in occupational status out of personal services. (Collins, 2003)

The immediate impact of the Civil Rights Act of 1964 was to finally extend a lowering of discriminatory barriers against African Americans into the South; where substantial gains were made in manufacturing. (Donohue & Heckman, 1991) Because of the disproportionate share of African Americans living in the South, the increased returns to education for African Americans in the South, helped to explain a marked closing of the earnings gap between whites and African Americans that lasted through 1975, but then eroded. (Bound & Freeman, 1992) There is some evidence that the stagnation in progress was spurred by very slack labor markets in 1974-1975 and the great downturn in 1981-1983. (Mason, 2000) Still, a lasting effect is found in the distribution of workers by firm size. Because of heavier reporting and monitoring of large firms for violations of Title VII, this has had the result in significantly improving the representation of African Americans, in particular, in larger firms; firms, which tend to pay higher wages. (Carrington, McCue, & Pierce, 2000)

This chart shows the rapid transformation of occupational opportunities:

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From 1964 to 1967, the share of non-white workers in service (mostly personal service jobs) and farm work fell from 41% to 35%, with a dramatic increase of those in operative jobs and clerical work.

Prior to 1965, major newspaper want ads explicitly advertised many jobs showing clear racial preference. This occurred even in some states that had passed anti-discrimination employment laws. Past 1965 the practice ended, though several ads continued in 1965 to appear, especially for domestic and personal services, with preferences for national origins like "European." (Darity Jr. & Mason, 1998)

Despite the law, enforcement continues against even large corporations. The U.S. Department of Labor's Office of Federal Contract Compliance Programs that enforces Executive Order 11246, which implements Title VII enforcement among federal contractors, won a $2.2 million settlement for discrimination against African American job seekers with the Bank of America in 2013, (OFCCP v. Bank of America, 2013) and in 2014 the Equal Employment Opportunity Commission reached a $1.2 million racial harassment suit for the hostile work environment faced by African American, Latino and Native American workers involving well servicing companies, Dart Energy Corporation, Beckman Production Services, Inc. and J & R Well Service, LLC. (U.S. Equal Employment Opportunity Commission, 2014).

Current Research

Persistent gaps remain. On the verge of the Great Recession, African Americans and Latino workers were highly concentrated in certain industries, and under-represented in others. African Americans were under-represented in construction and manufacturing, while Latino workers were under-represented in finance, information and education and health services. And, in some industries where Latino's were crowded, like construction, they were highly concentrated at lower wages, explaining why the wages of the under-represented share of African Americans in construction were higher than for Latinos in that industry. (Allegretto & Pitts, 2010) And, by occupation, African Americans were crowded in occupations with lower pay, relative to the occupations where they were under-represented. This concentration in low wage occupations persists even when looking within broad occupational groupings, such as managers and professionals or production and transportation. (Hamilton, Austin, & Darity Jr., 2011) At the firm level, data from 1990 suggests that African American and Latino workers are equally segregated from white workers at the metropolitan level. While differences in educational attainment do not explain very much about workplace segregation for African Americans, English language proficiency does appear to explain a lot about Latino segregation among firms. (Hellerstein & Neumark, 2008)

The high level of segregation at the level of firms' would be consistent with several studies of audits involving job applicants and resumes; first well documented by a comprehensive examination of audits conducted by the Urban Institute in several metropolitan job markets. (Fix & Struyk, 1993) Subsequent audit and resume studies provide ample evidence from field experiments that differences persist in employer responses to job applications from African Americans. Critiques of methods used in the Urban Institute seminal work have led to improvements and modifications, but with equally devastating results of huge disparities in the job interviewing process between similar white and African American job applicants. (Pager, 2007). The studies, for instance uncover such anomalies as higher response rates for white resumes with higher levels of skills shown, but not such improvement for African American resumes as skills increase. (Neumark, 2012)

The particular results of an audit study showing that in a test of the New York City low wage labor market that African American and Latino applicants with no criminal record did not do as well as white applicants just re-entering from the criminal justice system, suggest that beyond the potential for criminal background to have a disparate impact, it may be used by employers intent on disparate treatment. (Pager, Bonikowski, & Western, 2009) Indeed, in a study using the Multi-City Study of Urban Inequality for Atlanta, Boston, Detroit and Los Angeles, found that firms that actually conducted criminal background checks were, in the end, more likely to hire African American men, then firms that did not. (Holzer, Raphael, & Stoll, 2006)

Hearings conducted by the EEOC in 2010 explored the extent to which firms might use the status of being long-term unemployment to discriminate, and the use of consumer financial credit scores. (U.S. Equal Employment Opportunity Commission, 2011) (U.S. Equal Employment Opportunity Commission, 2010) In both cases, evidence was presented showing the potential disparate impact because African American and Asian Americans had the longest mean unemployment durations and would be disparately impacted by screening long-term unemployed; and the evidence of racial and gender disparities in credit scores that could potentially have disparate impacts if they were used as employment screens. And, in both cases, there was little presented to show that, especially during the height of the economic downturn, that current unemployment status was necessarily a powerful screen in identifying talented workers, or that there was strong evidence that credit scores reliably predicted job performance characteristics. Since 2010, economists have conducted several studies during the downturn and found convincing evidence that employers did use long-term unemployment status to screen job applicants. (Ghayad, 2013) And, evidence is mounting to suggest that the Great Recession has wreaked havoc on the proper interpretation of credit scores. (Carr, 2015) Though, since 2010, it appears the use of credit checks for all employees is edging down. (Society for Human Resource Management, 2012)

Current Disparities

Because of the link between unemployment rates and wages, the persistence of racial unemployment gaps is a very useful way to understand the persistence in racial wage gaps. African Americans and Native Americans continue to have the highest unemployment rates among racial groups. The unemployment rate for African Americans is higher than for whites, Latinos and Asian Americans even when compared within all education levels; and, driving home the point of the disparity is that the unemployment rate for whites, Latinos and Asian Americans with less than a high school education, which averaged 9.7%, 9.1% and 6.9% in 2013, were all lower than the overall African American unemployment rate average of 10.7% in 2013. And, while Asian Americans continue to have the lowest unemployment rate of any racial group, the anomaly continues that the unemployment rate for Asian Americans who are college graduates was higher (3.6% in 2013) than for white college graduates (3.5%). With the further anomaly that Asian Americans have the longest average duration of unemployment (42 weeks), while the median duration of unemployment is the longest for African Americans (21.5 weeks). (U.S. Bureau of Labor Statistics, 2014) The unemployment rate for whites, Asian Americans and Latinos have recovered to levels lower than in May 2008; only African Americans remain above their May 2008 level-which was then 9.6% compared to 10.1% in March 2014.

While overall the African American to white unemployment is close to a 2-to-1 ratio, it does vary greatly by state. Despite that, the lowest unemployment rate for African Americans, which is in Virginia (8.2%), is still higher than the highest state unemployment rate for whites in Nevada. The worse disparity for African Americans is in Washington, DC where the ratio of the unemployment rate to whites is 5.4-to-1; the ratio in Washington for Latinos is 1.1-to-1. (Wilson, 2014)

Complex Issues

Explaining the challenges facing the African American labor market is complex. In one area of high skill and high demand, African Americans took the lead at the start of the century. In 2003, 5.3% of baccalaureate degrees earned by African Americans were in computer science, compared to 3.3% for whites, making African Americans 11.5% of Americans awarded degrees in computer science. (National Science Foundation, 2015) And, African Americans were 7.1% of America's computer programmers. (U.S. Bureau of Labor Statistics, 2004) In the depth of the recession, it had dropped to 5.0% in 2009. (US. Bureau of Labor Statisitics, 2010) But, in 2014, their share of programmers inched back to 5.7%. (U.S. Bureau of Labor Statistics, 2015). During the downturn in 2008 and 2009, while the number of jobs in computer sciences was declining, almost 750,000 new H1-B visas were issued, the vast majority in computer science fields. (U.S. Department of Homeland Security, 2009) And, of course, there is the disparity between the share of African Americans in computer occupations in Silicon Valley, which is about 2% compared to in the Washington, Maryland and Virginia information technology corridor where they make up 18%. (Analysis of American Community Survey data).

Recommendations

There is now a near convergence on the accepted structure for doing proper audit studies. The EEOC should give serious consideration to doing an annual audit, large enough to be representative of the jobs that are open. This will give a benchmark going forward to gauge how successful different strategies of enforcement are. It will give a baseline as well, for how often discriminatory practices are taking place.

The use of H1-B visas as contract workers presents challenges to the EEOC, as does the use of contract workers in general. The fractured workforce splinters the employer relationship. So, getting at a lot of the displacement of African American computer programmers would require addressing those issues.

Footnote

¹ The FEPC had a counterpart during World War I, the Division of Negro Economics, of the U.S. Department of Labor, headed by George E. Haynes, a cofounder of the National Urban League. The Division worked in cooperation with the US Employment Service to increase opportunities for African Americans in defense industry work. (Guzda, 1982)

Sources

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