For the first time in the country\u27s history, the level of skills and education of the African-American labor force is a critical determinant of the potential for growth of the economy itself. The integration of black labor into the economy now means that the development of one is dependent upon the development of the other. To investigate this relationship we first examine the recent performance of the economy and the consequences of that performance for the black standard of living, and then the role the African-American labor force can play in overcoming the economic deficiencies that have plagued the economy

Ferleger, Lou

Mandle, Jay R.

English

University of Massachusetts Boston: ScholarWorks at UMass

Trotter ReviewVolume 5Issue 1 Trotter Institute Review Article 21-1-1991African Americans and the Future of the U.S.EconomyLou FerlegerUniversity of Massachusetts BostonJay R. MandleColgate UniversityFollow this and additional works at: http://scholarworks.umb.edu/trotter_reviewPart of the African American Studies Commons, Growth and Development Commons, and theLabor Economics CommonsThis Article is brought to you for free and open access by the William Monroe Trotter Institute at ScholarWorks at UMass Boston. It has been acceptedfor inclusion in Trotter Review by an authorized administrator of ScholarWorks at UMass Boston. For more information, please contactlibrary.uasc@umb.edu.Recommended CitationFerleger, Lou and Mandle, Jay R. (1991) "African Americans and the Future of the U.S. Economy," Trotter Review: Vol. 5: Iss. 1, Article2.Available at: http://scholarworks.umb.edu/trotter_review/vol5/iss1/2African Americansand the Future of theU.S. EconomybyLou Ferleger and Jay R. MandleFor the first time in the country's history, the levelof skills and education of the African-Americanlabor force is a critical determinant of the potentialfor growth of the economy itself. The integration ofblack labor into the economy now means that thedevelopment of one is dependent upon the develop-ment of the other. To investigate this relationship wefirst examine the recent performance of the econ-omy and the consequences of that performance forthe black standard of living, and then the role theAfrican-American labor force can play in overcom-ing the economic deficiencies that have plagued theeconomy.In 1973 the median family income in the UnitedStates was $32,190. Median family income in 1988,after adjusting for price changes, was $32,191. Dur-ing this 15-year period, then, this fundamental mea-sure of welfare went nowhere. Income levels in theUnited States have stagnated since the early 1970s. 1At one level the source of this stagnation is nothard to discover. As is indicated in table 1, economicgrowth during the 1980s was only about 65% of therate of growth experienced during the 1960s. In thecontext of a growing population and a tendency forthe wealthy to claim a disproportionate share of thenational income, this slowing of growth meant thatinsufficient income was generated in the economy toraise the income of typical families in the UnitedStates population. There has, in other words, been adramatic slowdown in the rate of growth of theUnited States economy.Table 1Average Annual Percentage Increase in Real GrossNational Product, 1950/1960 to 1980/901950-60 1960-70 1970-80 1980-90Growth Rate 4.0 4.1 2.8 2.7Source: Office of the President. (1990). Economic Report of the Presi-dent. Washington, DC: U.S. Government Printing Office. TableC-5.The reason for this slowdown, however, is a com-plex one that does not lend itself to single-factor ex-planations. At its root is the fact that the rate ofgrowth in labor productivity during the 1970s and1980s was considerably lower than it was during theLou Ferleger Jay R. Mandle1950s and 1960s. The source of this decline has givenrise to a lively controversy in the economics profes-sion, but to date no consensus has emerged. Al-though conventional wisdom has it that decliningproductivity growth rates are associated with fallingrates of investment, this was not the case during thepast two decades. In fact, gross investment rates dur-ing the 1970s and 1980s decades were actually higherthan they had been in the 1960s. 2Americans with the least education (less than ahigh school diploma) experienced the mostsignificant decline in laborforce participationbetween 1970 and 1988.A more likely explanation for the slowdown in therate of growth of our economy is that the improve-ment in the quality of the United States labor forcehas not kept pace with the requirements associatedwith modern technology. It is significant, for in-stance, that only about 20% of the people in theUnited States have been exposed to at least one yearof college education. 3 And, there is now widespreadrecognition that the level of skills and education re-ceived by the remaining 80% of the population is in-adequate to allow effective participation in a tech-nologically modern and internationally competitiveeconomy. If this is so, it follows that unless some-thing is done to upgrade the competence of this largefraction of the labor force, the productivity lag thathas plagued us will continue or even intensify. Onthe other hand, if we were to educationally equip alarger fraction of the United States labor force towork effectively with modern technology, it is highlylikely that the rate of productivity— and thereforeeconomic growth — would accelerate.Nowhere is the problem of incomplete educationmore pronounced than among the African-Ameri-can population. It is true that in recent years sub-stantial gains in this regard have been achieved.Nonetheless it is striking that, as indicated in table 2,even in 1988 36.6% of the black population had notTable 2Years of School Completed by Race, 1970, 1980, 1988High School CollegeLess thanFour Years Four YearsLess thanFour Years Four YearsBlacks19701980198868.6 21.248.8 29.336.6 37.15.913.515.04.48.411.3Whites19701980198845.4 32.231.2 35.722.3 39.511.116.017.211.317.120.9Table 3Unemployment Rate among African Americans byYears of Educational Attainment, 1977/80-1984/88Source: U.S. Bureau of the Census. (1990). Statistical Abstract of theUnited States, 1990. Washington, DC: U.S. Government Print-ing Office. Table 216, p. 133.graduated from high school. In that year there werenearly three times as many non-high school gradu-ates as there were college graduates among theAfrican-American population.The significance of the lag in educational attain-ment among blacks lies in two dimensions. On theone hand, it has an obvious and direct effect on Afri-can American economic well-being. Failure to keeppace with the advancing educational requirementsof employment renders a population increasinglyvulnerable to setbacks in the labor market. This vul-nerability may show up in the form of unemploy-ment. But unemployment is not the only measurethat would register a decline in the ability to success-fully compete in the labor market because of an in-adequate education. Labor force participation rates,the percentage of the population that seeks works,also decline as individuals become frustrated withtheir market prospects. Similarly, individuals with alow level of skills and/or education may remain inthe market and find work, but be compelled to ac-cept reduced relative wages. The latter would be theconsequence of a decreased demand for poorly edu-cated workers.While the relatively low level of educationalattainment experienced by African Americanshurts that population's economic well-being itshould also be recognized that this lag ineducation harms the economy generally.There is evidence that in recent years the relativeposition of poorly educated African-Americanworkers in the United States has declined in all threeof these measures (unemployment rate, the laborforce participation rate, and the mean incomeearned). For instance, table 3 indicates that when wecompare the periods 1977-1980 and 1984-1988 —two periods of relative prosperity— the unemploy-1-3 4 1-3 4 or moreHigh School High School College College1977-80 11.2 9.6 8.2 3.71984-88 15.7 12.4 8.8 4.4PercentChange + 40.2 + 29.2 + 7.3 + 18.9Source: U.S. Bureau of the Census. (1990). Statistical Abstract of theUnited States, 1990. Washington, DC: U.S. Government Print-ing Office. Table 654, p. 397.ment rate for black high school nongraduates in-creased more than the unemployment rate for Afri-can Americans with higher levels of educationalattainment. In addition, as is indicated in table 4,Americans with the least education (less than a highschool diploma) experienced the most significantdecline in labor force participation between 1970and 1988. What seems to have happened is thatamong blacks having the least exposure to school,discouragement with job prospects grew so intensethat large numbers of individuals actually gave upthe search for work. Finally, as is indicated in table5, the weekly earnings of African Americans withlimited education also suffered compared to thosewho have been more exposed to formal education.Between the years 1969 and 1984, mean yearly earn-ings declined for African-American men at eachlevel of education, and they declined as well in threeout of five educational categories for women. Nota-bly, the experience was the worst for poorly edu-cated men, for whom the declines ranged between16% and 29%. College educated men and all blackwomen did better than that, though even in thesecases reduced yearly incomes sometimes occurred.The mean yearly income for African Americansgenerally fell during this period, but the decline wasmost dramatic for men who possessed either a highschool education or less.Table 4African-American Labor Force Participation Rate byLevel of Educational Attainment, 1970-19881-3 4 1-3 4 or moreHigh School High School College College1970 67.1 76.8 81.0 87.41975 60.9 75.1 79.7 85.11980 58.1 79.2 82.0 90.11985 57.0 77.2 85.6 89.91988 56.2 77.9 85.5 90.6Source: U.S. Bureau of the Census. (1990). Statistical Abstract of theUnited States, 1990. Washington, DC: U.S. Government Print-ing Office. Table 627, p. 379.While the relatively low level of educational at-tainment experienced by African Americans hurtsthat population's economic well-being, it shouldTable 5Mean Yearly Earnings of African Americans by Sexand Level of Educational Attainment, 1969-1984PercentChange1969 1979 1984 1969-1984Males8 or less $ 11,900 $ 13,017 $ 9,957 -16.39-11 12,809 11,988 9,127 -28.712 15,950 15,313 12,382 -22.413-15 17,067 16,648 14,960 -12.316 + 26,977 25,187 24,175 - 6.6Females8 or less $ 5,440 $ 7,209 $ 6,283 + 15.59-11 6,694 7,782 6,135 - 8.412 9,307 10,401 9,521 + 2.313-15 11,296 11,566 11,094 - 1.816+ 19,090 17,805 18,592 - 2.6Source: Jaynes, G. D. (1990, Fall). The Labor Market Status ofBlack Americans: 1939-1985. Journal of Economic Perspec-tives, 4(A). Tables 1 and 2.also be recognized that this lag in education harmsthe economy generally. A June 1990 report issued bythe National Center on Education and the Economyreports that "women, minorities and immigrantswill make up the vast majority of new entrants to theworkforce in the 1990s and jobs requiring higherskills will grow faster than low skill jobs."4In most cases, individuals who have not attainedat least a high school diploma cannot be expected toperform well in an increasingly technically sophisti-cated economy. Yet, as we see in table 6, almost halfof all Hispanics and over one-third of all AfricanAmericans have not achieved that level of educa-tion. To the extent that the productivity of the Amer-ican economy of the future depends upon the educa-tion and training of the minority population it isclear that the nation is in big trouble. Put anotherway, unless the educational attainment of theminority population in the United States improves,the country's hopes for resuming high rates ofgrowth and an increasing standard of living look in-creasingly dubious.Table 6Percent of Population with Less than Twelve Yearsof School, 1988All RacesWhiteBlackHispanic23.822.336.749.0Source: U.S. Bureau of the Census. (1990). Statistical Abstract of theUnited States, 1990. Washington, DC: U.S. Government Print-ing Office. Table 218, p. 134.That this is so represents a major discontinuity inthe needs of the United States economy and the roleplayed by the black population in our economy.Throughout most of the history of this country, theAfrican-American population was entrapped in theSouthern plantation economy. As such, it was pur-posefully denied education in order to constrain itsoptions to that of providing low-level labor to theregion's cotton plantations. 5 Technological changeand productivity growth occurred at a much fasterrate in the rest of the country than was the case in theSouth, a pattern that closely paralleled regionaldifferences in educational attainment. Low levels ofblack education were functional for the low-productivity Southern economy, but did not impedetechnological progressivity elsewhere.Unless the educational attainment of the minoritypopulation in the United States improves, thecountry's hopesfor resuming high rates ofgrowthand an increasing standard of living lookincreasingly dubious.With the massive black migration of the 1940sand 1950s, the confinement of African-American la-bor to low-productivity agricultural work came toan end. A halting and uneven process of occupa-tional integration then occurred in which, over time,black labor came to occupy a significant share of oc-cupations to which in the past it had all but been ex-cluded. Tables 7 and 8 reveal the concentration ofblack workers in low-income occupations at the timeof their massive first entry into the northern indus-trial economy. Of African-American men who wereworking in 1950, almost one-half were employed inthe low-income occupations of service, laborers, andprivate household work. 6 By contrast, only 13.6%of nonfarm white laborers were employed in suchlow-income jobs. A similar pattern was true forwomen. Almost half of all black women who wereworking in 1950 were employed in private householdwork, and the next largest concentration was in ser-vices. In contrast, again, white working women weremuch more evenly distributed over the entire rangeof occupations. Obviously, although the movementto the cities of the North represented occupationaladvancement, jobs that were available to AfricanAmericans were still the least attractive ones gener-ated by the economy. A substantial degree of addi-tional occupational mobility was required if povertywas to be escaped.Though parity with the white labor force still hadnot been achieved by 1990, a substantial degree ofoccupational integration had been achieved by theAfrican-American labor force. The pattern of up-ward mobility is particularly obvious among blackmen in the professional category, where the share ofthe labor force grew from 2.2% in 1950 to 9.0% in1990. Subtantial increases among black men wereTable 7Occupational Distribution of Male Labor Force by Race:1950, 1970, 1990Occupation 1950 1970 1990Black White Black White Black WhiteProfessional, Technical and Kindred 2.2 7.9 7.8 14.6 9.0 15.4Managers, Officials and Proprietors 2.0 11.6 4.7 14.3 6.9 14.5Clerical 3.4 6.8 7.4 7.1 8.4 5.7Sales 1.5 6.6 1.8 6.1 5.1 11.9Craftsmen, Foremen and Kindred 7.6 19.3 13.8 20.8 15.5 20.2Operatives 20.8 20.0 28.3 18.7 21.8 13.3Service except Private Household 12.5 4.9 12.8 6.0 17.9 8.9Laborers 23.1 6.6 17.5 6.2 12.7 5.6Private Household 0.8 0.1 0.1 0.3 0.1 —Farm Related 24.8 14.9 5.3 5.6 2.6 4.5Not Stated 1.3 1.2 0.5 0.3 — —Source: U.S. Bureau of the Census. 1950 Census of the Population. Washington, DC: U.S. Government Printing Office; U.S. Department of Labor. (1971).Handbook ofLabor Statistics. Washington, DC: U.S. Government Printing Office; Department of Labor. (1990, May). Employment and Earn-ings, 37(5) Washington, DC: U.S. Government Printing Office. Table A-23.Table 8Occupational Distribution of Female Labor Force by Race:1950, 1970, 1990Occupation 1950 1970 1990Black White Black White Black WhiteProfessional, Technical and KindredManagers, Officials and ProprietorsClericalSalesCraftsmen, Foremen and KindredOperativesService except Private HouseholdLaborersPrivate HouseholdFarm RelatedNot Stated6.2 13.40.5 4.84.0 29.81.3 8.91.0 1.714.6 19.817.8 11.41.1 0.742.0 4.410.8 3.00.7 2.710.8 15.01.9 4.820.8 36.42.5 7.70.8 1.217.6 14.125.6 15.30.7 0.417.5 3.40.8 0.71.0 1.014.4 19.37.3 11.627.4 28.59.0 13.42.4 2.09.6 6.524.1 15.11.9 1.53.5 1.00.4 1.1Source: See table 7.also achieved in other white-collar occupations,whereas the low-income occupations that had domi-nated the 1950 pattern all saw marked declines.The pattern among African-American women ismuch the same. Most dramatically the concentra-tion of these workers in private household labor hasalmost completely dispersed. By 1990 more thanone-fifth of all black women workers were eitherprofessionals or managers, while the largest concen-tration of black women workers occurred in the cler-ical category. Despite these gains, however, blackwomen in 1990, like their male counterparts, tendedto be relatively more concentrated in low-income oc-cupations than white women in the labor market.In conclusion, the unintended consequence of theprocess of occupational integration was to tie moreclosely together the interests of the black labor forceand the ability of the American economy to growand, more specifically, to compete in the interna-tional economy. In the past, the South's plantationeconomy required poorly educated and low-incomeworkers. The low level of educational attainment ofthese mostly African-American workers came at nocost to northern productivity growth. However, nowthat the black labor force has been substantially in-tegrated into the work force as a whole, the com-petencies possessed by black workers are of in-creased importance in determining the pace of thecountry's technological growth and economicpotential. The education of the black population in-creasingly looms as a critical determinant of thecountry's economic well-being. The rejuvenation ofUnited States productivity growth may be helpedby— indeed, may actually depend upon— a substan-tial advance in the level of education, and thereforeeconomic well-being, secured by African Ameri-cans. In short, for the first time in United States his-tory, what would be good for the African-Americanpopulation economically is also what the economygenerally requires.References'U.S. Bureau of the Census. (1990). Statistical Abstract of the UnitedStates: 1990. Washington, DC: U.S. Government Printing Office. Table727, p. 450.2Ferleger, L. & Mandle, J.R. (1990, July/August). Reverse the Drain onProductivity with Mass Education and Retraining. Challenge, 33, (4),pp. 17-21.3U.S. Bureau of the Census. (1990). Statistical Abstract of the UnitedStates: 1990. Washington, DC: U.S. Government Printing Office. Table42, p. 37.4National Center on Education and the Economy. (1990, June).America's Choice: High Skills or Low Wages! The Report of the Com-mission on the Skills of the American Workforce. Washington, DC:Author. P. 24.5For the most recent analysis of African-American educational depri-vation in the South see Margo, R.A. (1990). Race and Schooling in theSouth, 1880-1950: An Economic History. Chicago: The University ofChicago Press.This and the following complementary estimates were obtained bysubtracting the percentage of the labor force in agriculture from 100 andthen dividing the share of the labor force in a specific sector by the re-sult.Lou Ferleger is associate dean of the College of Arts andSciences at the University of Massachusetts/Boston. Jay R.Mandle is the W. Bradford Wiley Professor of Economics at Col-gate University.

African Americans and the Future of the U.S. Economy

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African Americans and the Future of the U.S. Economy

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