Markets and Minorities
Have the government’s attempts to stop discrimination through “affirmative action” been a help or a hindrance to blacks? What is in question here is Title VII of the 1964 Civil Rights Act, which outlawed all forms of employer discrimination against blacks and other minorities, and Executive Orders 11246 and 11375, which required federal contractors to establish “affirmative action” plans for complying with Title VII. Since most large American firms do some business with the government, most now have affirmative action plans monitored by the federal government.
One of the Reagan administration’s avowed objectives over the past two years has been to make these programs less “burdensome.” In practice this has meant exempting many firms from their requirements, loosening the standards a firm must meet for its program to be acceptable, and failing to investigate or punish firms that fail to make good on their initial promises.
Thomas Sowell, the black laissez-faire economist, has long been a critic of affirmative action—in both the narrow and the broad senses. (Narrowly construed, affirmative action refers only to federal programs designed to increase minority employment among federal contractors. Broadly construed, it embraces all federal efforts to close the economic and social distance between blacks and whites.) In the last issue I dealt with Sowell’s historical and economic reasons for thinking affirmative action unnecessary.1 In this article I turn to Sowell’s claim that affirmative action is not just unnecessary but actually harmful.
According to Sowell, affirmative action plans have “produced little overall pay or employment changes for blacks relative to whites, as measured empirically by a number of economists.” In fact, four studies have tried to estimate affirmative action’s impact on minority employment among federal contractors. One concluded that affirmative action had had no effect, while the other three concluded that it had increased minority employment by 6 to 13 percent. Whether this change is large or small is obviously a matter of opinion, but if all firms were to increase their black employment by 6 to 13 percent, black unemployment would fall to about the same level as white unemployment.
The effect of Title VII on minority wages is less clearcut. The ratio of black to white wages in 1969 was higher in industries that did a lot of business with the federal government than it was elsewhere in the private sector. But the black-white wage ratio in industries that did a lot of business with the government was lower in 1969 than it had been in 1959, before affirmative action.2 This suggests that high-level jobs with federal contractors went mainly to whites during the 1960s, and that when federal contractors created new jobs for blacks, these jobs were not as well paid as those for whites.
While the ratio of black to white wages fell in industries doing a lot of business with the federal government, it rose elsewhere in the private sector. This is not as surprising as it might seem. Title VII outlawed discrimination even in firms that…
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