1. 1 Sex and Race Discrimination Chapter 27

2. 2 You Are Here

3. 3 Economic Status of Women Men –have 61% more income than women, –make 25% more in wages for full-time employment, –are 11% (5 percentage points) more likely to be covered by pensions, –are less likely to be in poverty. Bankruptcies of single women are increasing substantially.

4. 4 Economic Differences between Men and Women MenWomen Income from all sources$32,265$20,014 Average weekly wages for full-time employment $798$635 Mean net worth (singles)$120,718$102,718 Covered by a pension51%46% Poverty rate11.0%13.6% Percentage of single-filing bankruptcies 46%54%

5. 5 Ratio of Women’s Income to Men’s

6. 6 Difference in Earnings by Occupation Occupation Women’s Earning’s as a Percent of Men’s Physicians86% Lawyers80% Managers/Executives71% Teachers (elementary)88%

7. 7 Social and Economic Conditions for African-Americans African-American family income is rising. The relative position of African-American family income to white family income has risen slowly. Rates of poverty and unemployment are much higher for African-Americans than whites. More African-American men are in prison than in college.

8. 8 Median Family Income by Race

9. 9 Black/White Median Family Income

10. 10 What is Discrimination Disparate Treatment Discrimination treating two otherwise equal people differently on the basis of race Adverse Impact Discrimination doing something that is not necessarily discriminatory on its face but that impacts some groups more negatively than others Rational or Statistical Discrimination discrimination that is based on sound statistical evidence and is consistent with profit maximization

11. 11 Disparate Treatment Discrimination Employer Discrimination Employers dislike working with one group versus another Employee Discrimination Other workers prefer some type of workers to others Customer Discrimination Customers prefer one group to another

12. 12 Labor Market Discrimination in the Past

13. 13 Economics of Discrimination Here I will not follow Guell that closely I want to present discrimination in a somewhat different way Focus on employer discrimination though others are quite similar

14. 14 vs Lets suppose there are two different types of workers and They are exactly the same type of workers but employers prefer the green stars for some reason. However employers differ in their amount of discrimination Lets think about the market for taking the market for as given In particular suppose the green stars make $10.00 per hour

15. 15 EmployerWTP Sam$10 Jenny$10 Cal$8 Lisa$6 Joe$4 This gives the demand curve

16. 16 Wage Number of Workers

17. 17 More Generally Wage Number of Workers Non discriminatory Firms Discriminatory Firms The amount of discrimination we see depends on the supply This would give no discrimination However in this case we see discrimination

18. 18 Competition and Discriminatory Pay Businesses that hired only whites at the higher wage would have higher costs than businesses that did not discriminate. Businesses that did not discriminate could lower their prices and take the market share of those firms that did discriminate. As this happened firms would see that discrimination was not consistent with maximizing profits and would stop discriminating.

19. 19 May not work In industries where there is economic profit, firm owners may continue to discriminate and consider it a price they are willing to pay so as to not employ blacks. Consumer Discrimination: In industries in which the customer chooses which business to patronize based on race, firms may be willing to discriminate because their profit maximizing interest and discrimination are consistent.

20. 20 Measuring and Detecting Discrimination Regression techniques Statistical methods which seek to determine if the differences in treatment for whites and blacks could have happened by random chance. Auditing techniques Sending paid actors into a situation to determine if people with identical economic characteristics are treated differently based on race.

21. 21 Difference bEtween Race and Gender A look at the gap between white men and white women and black men is quite similar in terms of levels Both similar to 80% However regression results are very different from the two We “control” for a number of things. For example compare men and women with the same test scores, does that account for much of the difference Over many variables the answer for Women is no. Women and men are similar in many ways However it matters a lot for the racial disparity Most important is standardized test scores. African americans have much lower scores and it accounts for a lot of the difference Suggests that for Women it is about the labor market However, suggest for african americans that is is pre-market things

22. 22 Labor Markets of Men and Women Another major difference between the gender gap and the racial gap is that the labor market behavior of african american men is similar to white men, but the labor market behavior of women is very different from men Pregnancy Loss of time in the field and intermittent absence can put women at a economic disadvantage. (Many times this difference in treatment is against the law.) Stay-at-home Moms 98% of stay-at-home parents are women leaving them out of the job market for extended periods of time.

23. 23 Different Professions Teachers (81%) Nurses (90%) Social Workers (68%) Day Care workers (94%) Secretaries (97%) Flexible Employment Women, more than men, tend to choose jobs that allow them to deal with her children’s activities and illnesses.

24. 24 Why might they Be different? Labor Market Discrimination: there is a feeling about what profession women should be in and some professions discriminate more than others (glass ceilings) Social Norms: society dictates role for womn Free Choice: men and women are just different and make different choices Second earner: If a married couple needs one parent to stay home with the kids it makes sense that it would be the lower earner-but of course this doesn’t explain why women would be lower earners to begin with

25. 25 Consumption Market Discrimination Blacks pay more for cars. Blacks are shown fewer homes and those homes are in already integrated neighborhoods. Blacks are more likely to be turned down for a mortgage loan.

26. 26 Affirmative Action Affirmative Action : any policy that is taken to speed up the process of achieving equality

27. 27 History of Affirmative Action But freedom is not enough. You do not wipe away the scars of centuries by saying: Now you are free to go where you want, do as you desire, and choose the leaders you please.You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say, “You are free to compete with all the others,” and still justly believe that you have been completely fair.Thus it is not enough to just open the gates of opportunity. All our citizens must have the ability to walk through those gates. Lyndon Johnson, 1965 at Howard University

28. 28 More History Nixon’s Executive order 11246 mandated affirmative action in contracts with the federal government. Set-asides were created so that 10% of all federal highway contracts were “set aside” for minority owned contractors. Various Supreme Court rulings have limited the scope with which affirmative action can be employed. It must now meet a high standard of “strict scrutiny.”

29. 29 The Civil Rights Act of 1964 vs. the California Civil Rights Initiative Civil Rights Act 1964 The state shall not discriminate against any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting. California Civil Rights Initiative The state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.

30. 30 Gradations of Affirmative Action An equal opportunity to apply Requires employers to advertise in minority-seen outlets. Race as a tie-breaker Race may break a tie between equally situated candidates. Acceptance of all qualified minorities Used most often in university admissions to selective schools. Guidelines Targets are set for minority hiring and promotion and, if they are not met, a justification must be given. Quotas Strict percentages of minorities must be hired. This is generally unconstitutional unless ordered by a court to remedy past discrimination.

31. 31 The University of Michigan Case Undergraduate Admission System Based on a point system that gave points for academic achievement, race, etc. Found unconstitutional Graduate Admission System Based on the desire to achieve a critical mass of minority students Found constitutional

32. 32 Myth #1: Affirmative Action Can Involve Goals and Timetables while Avoiding Quotas Myth #2: Color-Blind Policies Offer an Efficient Substitute for Color-Sighted Affirmative Action. Myth #3: Affirmative Action Undercuts the Incentive to Invest in Yourself Myth #4: Equal Opportunity is Enough to Ensure Racial Equality Myth #5: The Earlier in the Better Myth #6: Many Nonminority Citizens are Directly Affected by Affirmative Action Myth #7: Affirmative Action Always Helps its Beneficiaries Myths of Affirmative Action (Fryer and Loury)