Understanding Employment Inequality: Whites vs

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Determinants of Employment Inequality between Whites and Non-whites Student Name Student ID Course Name Lecturer

Introduction Unemployment inequality in the United States between white and non-white populations is a critical issue. Racial inequality remains to be a salient phenomenon in the United States that remains to be addressed (Lee, Robertson, & Kim, 2020) . This disparity has been a persistent and a defining feature of the United States labor market. The Current Population Survey (2023) shows that non-whites (African Americans and Hispanics) are more likely to be unemployed compared to whites see the figure 1 below. The wages as well lag for the non-white population (U.S. Bureau of Labor Statistics, 2023) . With a long history of this inequality dating back to the nineteenth century, the economic disparities that ensued after abolition of slavery continued to contribute to the labor market disparities that we still see today (Parsons & Turner, 2014) . To achieve equality among all, unemployment inequality must be addressed. It is therefore important to pinpoint the determinants that contribute to this situation to understand mitigative measures. This paper will look at the determinants that contribute to employment inequality between the whites and non-whites and how these determinants affect the labor market. Research Question What are the key determinants contributing to unemployment inequality between white and non-white populations in the United States, and how do these determinants influence the labor market outcomes for different racial groups?

Quantity of Labour Wages Supply of skilled workers Supply of unskilled workers Figure 1 - Unemployment trends of races from 1972 to 2019 Theoretical Framework This paper will use system literature review and research to expound on the core determinants of racial inequality between the whites and non-whites. There are two theories that will aid the understanding of the existence of racial inequality – Human Capital Theory and Structural Inequality Theory. Human Capital Theory explains that human capital is made up of the skills, education, knowledge, and experience of an individual. Humancapital ∝ Education + Skills + Training + Experience Figure 2 - Labour market curve

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It is assumed from Figure 2 - Labour market curve that skilled workers will receive a positive return on the investments that they make in their human capital (Jacoby, 2020) . One can improve any of these factors through training and education and improve their employability, productivity, and earning potential in the labor market (Fleischhauer, 2007) . The human capital theory ties up with racial inequality in that this theory posits that human capital accumulated among racial groups contribute to the economic outcomes. The education, skills, and training that is received contribute to the racial differences. The white community has had access to resources, skills, and education for them to be equipped for the labor market compared to the non-white counterparts. On the other hand, Structural Inequality Theory looks at the societal and institution structures in place that support racial disparities (Naylor & Mifsud, 2020) . Instead of just a technical check box of skills, training, and experience of the human capital theory, the structural inequality theory looks at systemic discrimination, history of racial inequalities, and institutional practices that provide unequal opportunities for different races (Sullivan & Artiles, 2011) . The biases beyond the human capital are a big contributing factor in the difference in racial employment ratios. They both offer complementary perspective to understanding racial inequality in employment. While structural inequality theory offers a broader societal and institutional context, human capital theory helps in an individual-level factor understanding. Determinants Education: Educational attainment influences the existing racial inequality among the whites and non-whites. Chetty et al. (2014) in the Quarterly Journal of Economics shows that areas with non-whites and that are segregated economically have lower rates of upward mobility. This shows that they do not have enough educational opportunities and thus shows that

educational availability is not the same for all races. Education being a key factor in addition of skills in the labor market, denoted by Employment attainment + skills ∝ Employabilty , the population that do not get an opportunity to further their education, are disadvantaged in the labor market. The population of non-whites – African Americans and Hispanics – will have lower opportunities to their counterparts. Educational achievement has long been shown to correlate with employment opportunities in the labor market as well as income level once employed. Due to the differing opportunities, racial minorities, particularly the African American and the Hispanic population have faced barriers in accessing quality education and subsequently their opportunities of getting a job are reduced and when they do get a job, their income level is lower compared to their white counterparts who had ease access to education. The figure 2 below shows that the African American population has long been on the trailing hand when compared to the whites. Their education level of a bigger percentage has not attained a school diploma or higher. This has considerably improved over the last three decades. However, this has not changed the employment outcomes, meaning that there are other root determinants that have not been dealt with. The affirmative action that has been in place from 1972 has played a key role in reduction of the attainment of education between the different races.

Figure 3 - Share of population with a high school diploma or higher Economic factor Economic factors such as wealth and income are another additional determinant in the labor market. These have been unequally distributed in the United States. Historically, after the abolition of slavery in the United States, the African Americans were segregated with no resources such as housing and land. This continues to be a big influence in the labor market. The economic disparities between these two populations translated to the labor market with the racial minorities that experience economic disadvantages having fewer financial resources and having lower than mean household incomes. The individuals from these marginalized backgrounds have greater difficulty securing well-paying employment. A report by the Economic Policy Institute (EPI) shows that there are wage gaps that exist in between races. (Economic Policy Institute, 2023) This wage gap is an indication of broader economic inequality that impacts employment outcome. The white population have been the predominant custodians of wealth and thus have been able to appropriate this to their children and their fellow population. The other races

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have had a shorthand in this. To combat this, proper policies that would necessitate organizations and institutions to have diverse employees would be a good mitigating factor. Social and cultural determinants One of the key determinants that plays a role in the labor market is social and cultural factors. These factors include cultural biases, discrimination, and social networks that all shape the landscape of inequality in the labor market. These factors can be denoted as , Bias + Discrimination + Limited socialnetworks ∝ Hiring ∧ promot ion disparities Bias and discrimination affect hiring decisions and promotions. The experience in the workplace as well is influenced by these cultural and social differences (Park, Chang, & Davidson, 2020) . Social networks across the world play an important role in job opportunities and referrals. The racial minorities who do not have people trailing well-paying jobs trailing paths in their social circles will face challenges in accessing these networks. In a study, Pager (2009) in the American Journal of Sociology states that racial minorities, particularly the African American usually are discriminated against when it comes to employment opportunities. In this study, African American sounding names received fewer callbacks when compared to those with White-sounding names. Using the data in Pager’s research (2009) we can deduce the discrimination index that is given by: Discriminationindex =( Number of discriminationinstances / Total Jobapplications )∗ 100 . The value is more than 80%. To further show the difference in discrimination an experiment was done pitting a felon white person compared to non-whites with a clean record. The white felon had a higher percentage probability of getting hired than both Latino and African American individuals. This further went to show that there are racial biases that influence hiring of African American and Latinos in the job market.

Figure 4 - Positive responses by Race, Ethnicity, and Criminal record( (Pager, Bonikowski, & Western, 2009) ) Social and cultural practices are deeply rooted, and this explains one of the key reasons why equality has never been met. Even though there has been affirmative actions to combat other determinants that affect these minority races from the labor market, the gap is still to be closed due to cultural and social norms. A multifaceted approach is needed to get any traction on this that is mainly on education and socialization of the white population to accept the other minority races. (Valerie Wilson, 2022) Political determinants Politics as well plays a key role in determining the disparity in races within the labor market. This is denoted by Government policies + Institutional Interventions ∝ Alleviationof racial disparities . Bertrand and Mullaunathan (2004) in the American Economic review show the evidence of bias due to race in job interviews, call back rates that differ significantly based on the race of the applicant or even the perception of the race of a particular person. This then necessitates that the government should come up with ways of combating this problem. The government policies and institutional policies that are in place can assist in a big wat to reshape the inequality that is already there, or it can enhance the inequality if the right policies are not in

place. Political influences through policies, affirmative action and anti-discrimination laws can assist to alleviate the difference that is there between individuals and put a plain working field where individuals can get jobs and opportunities regardless of their race. Lack of political goodwill can increase the inequality that is already existent between the different race groups especially the non-whites being in a disadvantage point compared to the whites. Through government policies and interventions, education opportunities and employment can be provided to these other diverse groups. The government of the United States has put in place several policies and interventions that will assist in alleviating the racial disparities that are in play. There is the Equal Employment Opportunity Act that is in play from 1972. African American male employment increased by 0.5 to 1.1 percent per year for the first 25 years that it was implemented. Additionally, the ratio of earnings of the white to black narrowed by 10 percent to 17 (Chay, 1998) . This has led to improvements especially for non-whites who have gotten incentives and affirmative actions taken towards them that have improved their place in the job market. Affirmative action has mainly been used in the United States in giving priority to minority groups to get better education that they wouldn’t have otherwise gotten. There are multitude of students in minority that have gone through these programs and have gone on to get better wage employments. By looking at Figure 1 the unemployment rates have dropped for both non-white and white populations, but the goal is yet to be attained, there is still a gap to be closed. The act should be reviewed to meet the challenges that have been observed over the years and re-gear the mitigations towards a winning strategy. Conclusion Non-whites have historically been disenfranchised in the labor market with most of the determinants that would favor them being against them. The key determinants, education,

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social and cultural practices, politics, and economical status are some of the key factors that have led to the current situation where there is inequality in the labor market. Even though, there has been several steps taken to alleviate the differences that exist, more needs to be done to ensure that the gains gotten are preserved and more is done to improve and get to a real equality among all the races. By mitigating the identified determinants in this paper, the gap that exist can be closed. Through affirmative actions some improvements have been made over the years. It is important that this continues, and proper metrics are put in place to measure the success of these measures and how they can be kept sustainable. For example, the target should be to get to a place where affirmative actions are needed. The actions that are taken now should be seeds that will aid the assisted communities and their upcoming generations. This will be ensured if these programs get to these minority groups in large numbers and that a big percentage of them can utilize these opportunities to improve themselves. There are big improvements that can be made on the social and cultural practices of those that hold the power to hire. More education is needed and proper controls that work to ensure that there is no prejudice by race when it comes to employment. This paper has been successful in looking at the effects of the determinants of racial inequality in the workplace. We looked at four key determinants that can be the focus in in the quest to reduce the gap in races in terms of employment. The labor market has long been influenced by the discrimination both conscious and unconscious on the no-white populations. To get to an equitable place, affirmative actions need to be in place and education of the white population that has predominantly been the custodians of the education and job opportunities are in place. Through this, there is a roadmap to get to full equity with time.

References Bertrand, M., & Mullainathan, S. (2004). Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American economic review , 991-1013. Borjas, G. J. (2013). Labour Economics (6 ed.). New York: McGraw Hill-Irwin. Chay, K. (1998). The impact of federal civil rights policy on black economic progress: Evidence from the Equal Employment Opportunity Act of 1972. Industrial and Labor Relations Review, 51 (4), 608-632. Chetty, R., Hendren, N., Kline, P., & Saez, E. (2014). “Where is the Land of Opportunity: The Geography of Intergenerational Mobility in the United States.” . Quarterly Journal of Economics, 129 (4), 1553-1623. Economic Policy Institute. (2023). Retrieved from https://www.epi.org/ Fleischhauer, K. J. (2007). A review of human capital theory: Microeconomics. Department of Economics Discussion Paper, 1 . Jacoby. (2020). Tutorial on Human Capital Theory . Retrieved from University of Washington: http://faculty.washington.edu/jacoby/BLS345/%20HCtutorial.html Lee, H. W., Robertson, P. J., & Kim, K. (2020). Determinants of job satisfaction among US federal employees: An investigation of racial and gender differences. Public Personnel Management , 661-682. Naylor, R., & Mifsud, N. (2020). Towards a structural framework for student retention and success, . Higher Education Research & Development, 39 (2), 259-272. doi:10.1080/07294360.2019.1670143 Pager, D., Bonikowski, B., & Western, B. (2009). Discrimination in a low-wage labor market: A field experiment. American sociological review , 777-799. Park, J. Z., Chang, J. C., & Davidson, J. C. (2020). Equal Opportunity Beliefs beyond Black and White American Christianity. Religions. 11 (7), 348. Parsons, E. C., & Turner, K. (2014). The Importance of History in the Racial Inequality and Racial Inequity in Education. The Negro Review, 65 , 99-113. Sullivan, A. L., & Artiles, A. J. (2011). Theorizing racial inequity in special education: Applying structural inequity theory to disproportionality. Urban Education, 6 , 1526- 1552. U.S. Bureau of Labor Statistics. (2023). Labor Force Statistics from the Current Population Survey . Retrieved from Current Population Survey: https://www.bls.gov/cps/data.htm

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Valerie Wilson, W. D. (2022). Understanding black-white disparities in labor market outcomes requires models that account for persistent discrimination and unequal bargaining power. Economic Policy Institute .

Understanding Employment Inequality: Whites vs

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