Full text of Statements and Speeches of Andrew F. Brimmer : Employment and Income in the Black Community: Trends and Outlook : Lecture Presented Under the Joint Sponsorship of the Committee on Public Lectures, the Department of Economics, and the Institute of Government and Public Affairs at the University of California, Los Angeles, Los Angeles, California

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For Release on DeliveryFriday, March 2, 1973
3:00 Tp.nu P.S.T* (6 p.m. E.S.T.)

EMPLOYMENT AND INCOME IN THE BLACK COMMUNITY
Trends and Outlook

Lecture By
And rew F. Brimmer
Member
Board of Governors of the
Federal Reserve System
I*
V

|
H

Presented Under the Joint Sponsorship
of the
Committee on Public Lectures
the
Department of Economics
and the
Institute of Government and Public Affairs
At the
University of California, Los Angeles
Los Angeles, California

March 2, 1973

TABLE OF CONTENTS
Page
I.

Introduction

II.

Trends in Labor Force, Employment and Unemployment

III.

Impact of the Recent Recession and Recovery

IV.

Changing Structure of Black Employment

The Minimum Wage and Youth Unemployment

VI.

Federal Manpower Programs and Black Employment

VII.

Income Trends in the Black Community

VIII. Summary and Conclusions

Table 1-10
Appendix Table I
Appendix Table II

EMPLOYMENT AND INCOME IN THE BLACK COMMUNITY
Trends and Outlook
By
Andrew F. Brimmer*

I. Introduction
During the last few years, I have attempted to make at least
an annual assessment of the economic progress of blacks in the United
States.

The last such examination on my part was undertaken about a

year ago.

The results of that inquiry suggested that blacks were

lagging considerably in the recovery from the 1969-70 recession and
that the outlook for the ensuing year was rather mixed
I have just completed another assessment of the recent
economic trends among blacks, and the picture which emerges is again
a mosaic of progress and stagnation.

In general, blacks are moving

^Member, Board of Governors of the Federal Reserve System.
I am grateful to the following persons on the Board's staff
for assistance in the preparation of this paper: Ms. Diane Sower was
particularly helpful. She organized and helped to analyze the statistics
on employment and the Federal Government's manpower programs, and she
also undertook the survey of the economic literature relating to the
effects of minimum wages on youth unemployment. Mr. John Austin and
Mrs. Ruth Robinson (my regular assistants) also helped in the preparation
of the paper. In particular, Mr. Austin was helpful in the task of
estimating personal income by race for 1972.
However, while I am grateful for the staff's assistance, the
views expressed here are my own. Neither should they be attributed to
my colleagues on the Board.
1/

See "The Economic Situation of Blacks in the United States,11
presented before the Joint Economic Committee of Congress,
February 23, 1972. Reprinted in the Federal Reserve Bulletin,
March, 1972, pp. 257-73.

-2ahead on the economic front, but a number of divergent trends are
evident.

The implications of some of these developments (particularly

the persistence of high unemployment among youths) for the economic
future of blacks—and for the economy generally—are potentially serious*
Consequently, I am personally convinced that the time has come for this
nation to assign a much higher priority to efforts to open up genuine
opportunities for those groups that have failed to share equitably in the
benefits of economic growth.
The evidence on which this conclusion is based is presented in
some detail in the following sections.

In Section II, overall trends

in the black labor force, employment, and unemployment in recent years
are analyzed.

In Section III, the disproportionate impact of the 1969-

1970 recession on blacks and their lag in participation in the subsequent
recovery are assessed.

The changing occupational and industry structure

of black employment is examined in Section IV.

The problem of youth un-

employment and the possibly adverse effects of minimum wage legislation
on the employment opportunities of young people are discussed in Section
V.

The current situation and outlook for Federal Government manpower

programs (some of which have been of especial importance to blacks) are
appraised in Section VI.

In Section VII, trends in personal income in

the black community are analyzed.

In particular, it is shown that blacks

(far from depending excessively on public welfare) earn their spending
money to about the same extent as whites.

A summary of the main results

and conclusions of the analysis is presented in Section VIII.

- 3II.

Trends in Labor Force, Employment, and Unemployment
2/
In 1972, there were 9.6 million blacks"

in the labor force.

They held 8.6 million jobs, and 956 thousands were unemployed.
the same year, the civilian labor force totaled 86.6 million;

In
total

employment amounted to 81.7 million, and 4.8 million workers were
idle.

Thus, last year, blacks made up 11.1 per cent of the civilian

labor force, 10.6 per cent of total employment, and 19.8 per cent
of total unemployment.

(See Appendix Tables I and II, attached).

Behind these figures, however, is a picture of black participation in
the labor market which is far

from comforting.

The dimensions of

the situation among blacks are generally known, but it might be helpful
to sketch the highlights in broad outline.
Trends in the Black Labor Force.

During 1972, as a whole, the

civilian labor force expanded by 2.1 million, and the black component
rose by 217 thousand.

This meant that black workers represented 10.2

per cent of the labor force growth last year.

However, the black

3/
participation rate™

continued to decline during the year, dropping from

an average of 60.9 per cent in 1971 to 60.0 per cent in 1972.

This

decline was more pronounced than long-run trends in participation would
warrant, and much of the decrease continued to be among adult men.
Among men aged 20-24 years, the sharp drop experienced over the last
YJ Most of the statistics relating to blacks as used in this paper
refer to "Negroes and other races11; Negroes constitute about
92 per cent of the persons in this statistical category.
3/ Total labor force as a per cent of noninstitutional population.

- 4-

five years appeared to have been arrested as their participation rate
remained unchanged at 81.5 per cent.

In contrast, white men of the

same age group increased their labor force participation during the
year from 83.2 per cent to 84.3 per cent—probably in response to
4/
improved employment conditions.

Black workers in the experienced age

group (25-54) continued to show declines in participation.

Moreover,

although decreases were not as sharp as during the 1970-71 period,
the drops were greater than during the expansion period of the mid-1960fs
and sharper than among their white counterparts.

It seems reasonable

that the recession combined with the rapid growth in the number of
better educated young workers may have produced an economic climate
discouraging to adult black males, particularly those who lost jobs.
In general, participation rates for older black workers have declined
in line with white rates.

However, 1972 saw a sharp drop in participation

among black men and women 55-64 years of age which was not experienced
among their white counterparts.

The decline may be a delayed response

to slack economic conditions prevailing in 1971 as well as continued
high unemployment levels in 1972 as these workers became discouraged in
their job search and left the labor force.

Also, these older workers

may have been replaced by younger workers during this recovery phase
of the business cycle.
4/

U.S. Department of Labor, Bureau of Labor Statistics.

- 5Adult black women aged 20-34 increased their participation
during 1972—although not as fast as white women—and declines were
experienced in the age group

35-54,

Black youth participation

recovered from the slump experienced in 1971, but remained below
the rates of the mid-1960fs.

At 39.0 per cent of the civilian labor

force in 1972, black teenage participation was significantly less than
the white teenagers rate of 54.3 per cent.
The rapid expansion in the black civilian labor force last
year was due primarily to a substantial increase in the working age
population.

However, it also partly reflected the re-entry of black

youths who had left the labor market during the 1969-70 recession.
The principal dimensions of labor force expansion during the last few
years (as well as during the decade of the 1960's) are presented in
Tables 1 and 2.

Table 1 shows changes in the civilian labor force,

employment and unemployment, by color, sex, and age.

Table 2 shows

blacks1 share of each of these labor market measures for the same time
periods.
Several characteristics of the changing black labor force stand
out in these data.

During the substained expansion of the national

economy from 1961 through 1969, the black labor force rose in line with
the total civilian labor force.

So, blacks as a fraction of the total

remained unchanged at 11.1 per cent.

Among blacks as well as among whites,

adult women and youths of both sexes accounted for a larger share of the

- 6rise in the labor force during the 1960!s than they represented at
the beginning of the decade.

But, in the last few years (as shown

more fully below), the labor market experience of black workers has
been substantially less favorable than that of their white counterparts.
Trends in Employment.

Blacks got a moderately larger share

of the increase in employment during the 1960fs than they had at the
beginning of the decade.

In 1961, they held 10.4 per cent of the total,

but they accounted for 12.7 per cent of the expansion in jobs between
1961 and 1969.

Within the black group, adult females got a relatively

larger share of the expanded jobs than was true of black men.
pattern paralleled that evident among whites.

This

On the other hand,

black youths made virtually no progress toward improving their relative
employment position during the decade.
the situation among white youths.

This was in sharp contrast to

In 1961, black youths had 0.6 per

cent of the total jobs, and in 1969 they held 0.8 per cent.

White youths

expanded their share of total employment from 5.6 per cent to 7.0 per
cent over these years.
These broad shifts in employment should be kept in mind.
Other major changes in the trend and composition of black employment
are examined further in a subsequent
Trends in Unemployment.

section of this paper.

Between 1961 and 1969, the total number

of workers without jobs dropped by 1,883 thousand.

This reflected thfc

recovery from the 1960-61 recession as well as the substantial growth

- 7of the economy during the decade.

Over these same years, unemployment

among blacks declined by 400 thousand.

This reduction was about in

line with the decrease in joblessness in the economy generally, and
blacks1 share of total unemployment was roughly the same in 1969
(20.2 per cent) as it was in 1961 (20.6 per cent).
On the other hand, the distribution of unemployment within
the black community changed significantly.

Among black adult males

and black adult females, the level of unemployment decreased over the
decade--as did unemployment among all components of the white group.
But among black youths, the level of unemployment was 34 thousand
higher in 1969 than it was in 1961.

Joblessness among black youths

rose during the 1969-70 recession—along with unemployment among
other groups.

However, unlike the situation among all other groups

in the labor force, unemployment among black youths has continued to
worsen—even during the last two years of substantial economy expansion.
The problem of unemployment among black youths—and some of the factors
which seem to have a bearing on its persistency—are discussed further
below.

- 8III.

Impact of the Recent Recession and Recovery
As indicated above, the 1969-70 recession had a disproportionately
adverse impact on blacks.

The extent to which this was true can be

traced in Tables 3 and 4.

Table 3 shows annual variations in the civilian

labor force, employment, and unemployment, by race, age, and sex from
the fourth quarter of 1969 through the fourth quarter of 1970.

Table 4

shows the same data in terms of percentage distributions.
It will be recalled that economic activity reached a peak in
the fourth quarter of 1969, and the recession lasted through the fourth
quarter of 1970.

By historical standards, this was a mild recession.

For example, from peak to trough, real gross national product (GNP) declined
by less than 1.0 per cent (from $725.1 billion to $718.0 billion in 1958
dollars) at a seasonally adjusted annual rate.

During the same period, the

number of employees on nonfarm payrolls decreased by 771 thousand. This was
the net result of a decline of 1,612 thousand jobs in goods producing industries.

which was partly offset by expansion of 841 thousand jobs in service

producing industries.

The declines were concentrated in manufacturing

(1,514 thousand, of which durable goods accounted for 1,258 thousand).
The gains were mainly in State and local government payrolls (419 thousand),
services (297 thousand), wholesale and retail trade (103 thousand), and
5/

in finance,

insurance, and real estate (94 thousand).

Economic Report of the President» January, 1973, Table 5
p.

27.

- 9Daring the first year of recovery (measured from the fourth
quarter of 1970 through the fourth quarter of 1971), real GNP rose
by 4 per cent at a seasonally adjusted annual rate (from $725.1 billion
to $754.5 billion).

Simultaneously, the number of workers on nonfarm

payrolls climbed by 983 thousand.

Employment in goods producing

industries continued to decline on balance (by 53 thousand), with the
manufacturing sector registering a

further cutback of 103 thousand.

In contrast, service producing industries expanded their employment
by 1,036 thousand, and the gains were broadly based.
Over the second year of recovery (from the fourth quarter
of 1971 through the fourth quarter of 1972), the economy as a whole
registered outstanding gains.

Real GNP expanded by nearly 8 per cent

at a seasonally adjusted annual rate (from $754.5 billion to $812.4
billion).

Paralleling this overall economic performance, the number

of workers on nonfarm payrolls rose dramatically—by 2.7 million.

significant part of this increase (865 million) centered in goods
producing industries--where employment had decreased in the first year
of recovery.

Manufacturing industries saw a rise of 783 thousand,

among which durable goods accounted for 633 thousand.

But the service

producing industries also expanded employment appreciably—by 1,833
thousand*

Again, these increases were widely distributed among service

sectors--except the Federal Government where employment shrank by 28
thousand.

- 10 Impact of the Recession.

The racial composition of these

cyclical variations in payroll employment during the last few years
cannot be traced since these data do not include a racial identification
of persons employed.

However, statistics collected monthly by the

Bureau of the Census in its Current Population Survey and published
by the Bureau of Labor Statistics do enable one to obtain a rough
idea of the way in which blacks were affected by the recent recession
and recovery.
An analysis of these data demonstrated clearly that blacks
bore a major share of the increased burden of unemployment during the
recession—while they have shared to a lesser extent in the gains
made during the recovery.

During the recession, the growth of the

black labor force was dampened considerably.

While blacks represented

11 per cent of the civilian labor force as recession began, they accounted
for only 6 per cent of the rise in the number of workers employed or
seeking jobs.

The recession's Adverse effects were especially noticeable

among black youths.

Among the latter, the number in the labor force

actually shrank by 37 thousand.
women were also evident.

But the dampening effects on black

In the final quarter of 1969, black females

aged 20 and over made up 4.5 per cent of the civilian labor force;

yet,

they represented only 1.7 per cent of labor force expansion in the
ensuing year.

In contrast to these trends, both white youth and adult

- 11 white women increased their labor force participation during the
recession.

The trends among adult men were mixed.

Adult black men

accounted for a slightly larger than average share of the labor force
rise during the recession, while their white counterparts accounted
for a noticeably smaller fraction.
The adverse effects of the recession on black employment
are registered even more sharply.

In fact, between blacks as a

group and whites as a group, blacks suffered all of the recession-induced
decline in jobs—while whites made further net job gains.

From the fourth

quarter of 1969 through the fourth quarter of 1970, total employment
decreased by 66 thousand.

This was the net result of a drop of 174

thousand in the number of jobs held by blacks which was partly offset
by an increase of 108 thousand jobs held by whites.
black-held jobs occurred across the board:

The cutback in

adult men, 22 thousand;

adult women, 55 thousand, and youths, 97 thousand.

Among whites, adult

men and youths experienced a net decline in jobs (of 60 thousand and
139 thousand, respectively), but the number of adult white women employed
rose by 307 thousand.

Expressed differently, while blacks held 10.8

per cent of the total jobs at the onset of the recession, they absorbed
all of the net decrease—and then some—in total employment which
occurred during the period of declining economic activity.
In the case of unemployment, the pattern of black-white employment
changes sketched during the recession was more complex.

Yet, the adverse

- 12 -

effects on blacks were still clearly evident.
566 thousand black workers were unemployed.

As the recession began,
Thus, they represented

one-fifth of the total number of unemployed workers—roughly double
their share of the labor force.

Their unemployment rate was 6.2 per

cent, or 1.88 times the 3.3 per cent unemployment rate for whites
during the fourth quarter of 1969.

During the following year, the

total number of workers without jobs rose by 1,915 thousand.

Among

blacks, joblessness rose by 285 thousand.
This represented one-sixth of the total increase, so blacks
as a proportion of the unemployment rolls declined slightly.

Never-

theless, in the fourth quarter of 1970, there were 851 thousand blacks
without jobs, and their unemployment rate was 9.2 per cent.

In the

same quarter, the unemployment rate for white workers was 5.4 per cent,
so the black-white ratio was 1.70 to 1.
Among blacks as among whites, adult men experienced a relatively
sharper increase in the incidence of unemployment than that recorded
for adult women and youths.

Yet, while both white men and white youths

experienced some decline in employment during the recession, for whites
as a group the net rise in unemployment was primarily a reflection of
the growth of the white labor force at a pace in excess of what could
be absorbed by a sluggish economy.

Thus, the rise of 1,630 thousand

in the number of unemployed whites was the net result of an increase
of 1,740 thousand in the white labor force and an increase of 108 thousand

- 13 in employment.

In contrast, the rise of 285 thousand in the number

of unemployed black workers reflected an expansion of 109 thousand
in the black labor force and a drop of 174 thousand in black held
jobs.
Experience During the Recovery.

The experience of black

workers during the recovery from the 1969-70 recession has been equally
adverse.

In the first year of recovery, blacks accounted for 11.2 per cent

of the increase in the labor force--about in line with the long-run trend.
However, the rate of expansion was especially rapid for black women, below
average for black men, and the participation of black youths in the labor
force continued to decline.

Among whites, adult men contributed

proportionately much less, adult women contributed slightly more,
and youths contributed much more, to the growth of the white labor
force than their long-run shares would have suggested.
With respect to employment, blacks1 share of the gains during
the first year of recovery fell well below average.

As a group, they

accounted for only 5.8 per cent of the rise in jobs—against 11.2 per
cent of the rise in the civilian labor force.

In fact, adult black

men and black youths experienced further net job losses--thus offsetting
part of the gains made by black women.

In contrast, whites registered

gains across the board.
As a result of these mixed trends, during the first year of
recovery, the level of unemployment among blacks rose substantially-while joblessness among whites registered only a slight increase.
the fourth quarter of 1971, there were 950 thousand blacks without

- 14 jobs—about 100 thousand more than in the same quarter a year earlier.
Among whites, the level of unemployment in the fourth quarter of 1971
amounted to 4,105 thousand compared with 4,005 thousand a year earlier.
During the same period, total unemployment rose by 199 thousand.

This meant

that half the rise in joblessness was focused on blacks—in contrast
to their sharing in less than 6 per cent of the job gains.

Reflecting

these changes, the black unemployment rate rose further from 9.2 per
cent in the last quarter of 1970 to 10.1 per cent in the final quarter
of 1971.

Over the same period, the white rate remained unchanged at

5.4 per cent.
During the second year of recovery (from the last quarter of
1971 through the last quarter of 1972), blacks shared somewhat more in
the gains from economic expansion than they did in the previous year.
The black labor force expanded at a pace above its long-run trend,
however, the rate of expansion in jobs was about in line with the
long-run average.

Consequently, the level of unemployment among blacks

rose somewhat further.

In contrast, although the white labor force

expanded rapidly, employment among whites rose even more rapidly, and
the level of unemployment declined moderately.

Over this period, the

total civilian labor force rose by 1,880 thousand, and the black
component rose by 257 thousand—representing 13.7 per cent of the total.
The proportion of the increase accounted for by adult black men was
roughly in line with the long-run trend, and the share of adult black

- 15 women was somewhat above the long-run average.

Also during this period,

the two-year decline in labor force participation by black youths
was reversed.

Among whites, the most important change in the labor

force was the dramatic climb in the proportion of the growth attributed
to youths.
Between the fourth quarter of 1971 and the final quarter
of last year, total employment expanded by 2,349 thousand.
got 247 thousand (or 10.5 per cent) of these jobs.

Blacks

About 183 thousand

of the gains were made by adult black men, and adult black women got
the remaining 64 thousand.

Black youths did not share in the gains at

all—although the number of black youths in the labor force rose by
52 thousand.

Among whites, the number of jobs rose 2,102 thousand—with

989 thousand going to adult men, 540 thousand to white youths.

the latter got almost one-quarter of the net increase in jobs last
year—although they represented only 8.1 per cent of the civilian labor
force in the final quarter of 1971.
The level of unemployment declined by 468 thousand during the
second year of recovery (to 4,618 in the final quarter of 1972),
balance, this decrease was not shared among blacks.

Instead, in the fourth

quarter of last year, black unemployment amounted to 960 thousand—10
thousand higher than a year earlier.

At this level, joblessness among

blacks represented 20.8 per cent of total unemployment—a fraction slightly
higher than that recorded at the peak of economic activity in the closing

- 16 months of 1969.

While unemployment among adult black men dropped

by 73 thousand, it rose among adult black women (32 thousand) and
among black youths (51 thousand).
declined by 478 thousand.

In the case of whites, unemployment

Of this amount, 148 thousand occurred

among adult white women, and 79 thousand among white youths.

Reflecting

these contrasting changes, the black unemployment rate was 9.9 per
cent in the fourth quarter of 1972—compared with 4.7 per cent among
whites, for a ratio of 2.11 to -1.
In summary, after two years of recovery, unemployment among
the total civilian labor force was 269 thousand below what it was when
the turning point in economic activity occurred in the final quarter
of 1970.

Among whites, unemployment was 378 thousand lower.

blacks, unemployment was 109 thousand higher.
inescapable:

But among

So, the conclusion is

blacks bore a disproportionate share of the recession-

induced decline in economic activity in 1969-70, and they have failed
to share equally in the gains from economic recovery during the last
two years.

- 17 Changing Structure of Black Employment
At this juncture, we can take a closer look at the principal
changes in the composition of black employment in recent years.

These

changes can be seen in both the occupational and industry distribution
of black workers.
Occupational Distribution.

The extent of the occupational

changes among blacks can be traced in Table 5.

Advancement in the

range of jobs held by blacks in the decade of the 1960's is quite
noticeable.

This is particularly true of the improvements in the

highest paying occupations.

Between 1960 and 1970, the number of blacks

in professional and technical positions increased by 131 per cent (to
766 thousand) while the increase in the total was only 49 per cent (to
11.1 million).

Blacks had progressed to the point where they accounted

for 6.9 per cent of the total employment in these top categories in the
occupational structure in 1970, compared with 4.4 per cent in 1960.
They got about 12 per cent of the net increase in such jobs over the
decade.

During this same period, the number of black managers, officials

and proprietors (the second highest paying category) rose two-thirds
(to 297 thousand) compared to an expansion of 17 per cent (to 8.3 million)
for all employees in this category.
In the 1960's, black workers left low-paying jobs in agriculture
and household service at a rate one and one half times faster than did white
workers.

The number of black farmers and farm workers dropped by 61 per

cent (to 328 thousand) in contrast to a decline of about 40 per cent

- 18 (to 3.1 million) for all persons in the same category.

Therefore, in

1970, blacks accounted for about 11 per cent of employment in agriculture,
less than their share in 1960 when the proportion was 16 per cent.

The

exit of blacks from private household employment was even more striking.
During the last decade, the number of blacks so employed fell by about
34 per cent (to 652 thousand);

the corresponding drop for all workers

was only 21 per cent (to 1.6 million).

Although roughly half of all

household workers were black in 1960, the ratio had declined to just
over two-fifths by 1970.

The number of black nonfarm laborers declined

(by 9 per cent to 866 thousand) over the last decade, but the total
number of laborers rose somewhat.
Nevertheless, as already indicated, the accelerated movement
of blacks out of the positions at the bottom of the occupational
structure did not flow evenly through the entire occupational structure.
For example, blacks in 1970 still held about 1.5 million of the service
jobs outside private households--most of which require only modest skills.
This represented almost one-fifth of the total--about the same as the
proportion in 1960.

Moreover, the number of blacks holding semi-skilled

operative jobs (mainly in factories) rose by 42 per cent (to about 2.0
million) during the decade, compared with an expansion of only 16-1/2
per cent (13.9 million) for all workers.

The result was that blacks1

share of the total climbed from 12 per cent to over 14 per cent.

Taken

together, these two categories of lower-skilled jobs (chiefly in factories
or in nonhousehold services) accounted for a somewhat larger share (42 per

- 19 cent) of total black employment in 1970 than they did in 1960--when
their share was about 38 per cent.

In contrast, among all employees

the proportion was virtually unchanged—27 per cent at the beginning
of the decade and 28 per cent at its close.
While blacks made substantial progress during the 1960fs
in obtaining clerical and sales jobs—and also registered noticeable
gains as craftsmen—their occupational center of gravity remained
anchored in those positions requiring little skill and offering few
opportunities for further advancement.

At the same time, it is also

clear from the above analysis that blacks who are well prepared to
compete for the higher-paying positions in the upper reaches of the
occupation structure have made measurable gains.

Nevertheless, compared

with their overall participation in the economy (11 per cent of total
employment), the occupational deficit in white collar employment—
averaging 40 per cent—remains large.
Data on occupational distribution of total employment by color
in 1972 are also shown in Table 5.

In general, these figures show the

mixed job experience of blacks in the last two years.

Black employment

rose moderately, but blacks1 share of the total jobs remained essentially
unchanged.

However, between 1970 and 1972, they raised their share

of professional and technical jobs.

The number of blacks employed in

white collar jobs rose by 218 thousand, but the number holding blue
collar jobs in 1972 was still 121 thousand below the 1970 level.

Within

the blue collar group, the attrition was most noticeable in the case

- 20 -

of operatives.

This situation was mainly a reflection of the fact

that total employment in the manufacturing sector (in which a sizable
proportion of blacks is employed) at the end of 1972 was still 658
thousand below the level recorded in December 1969.
Industry Structure of Black Employment.

The industry

distribution of black employment can be traced in Table 6.

In 1968,

about 24.2 per cent of black jobholders were employed in manufacturing.
The corresponding proportion for total employment was 27.2 per cent.
By 1972, the corresponding figures were 24.1 per cent for the total, and
22.6 per cent for blacks.

Over the same four years, however, blacks1

share of total jobs in manufacturing climbed slightly (from 9.6 per
cent to 9.9 per cent).

The extent to which blacks—compared to all

workers—have found jobs in other industries is also shown in Table 6.
For example, the proportion of the black work force employed in
transportation and public utilities rose somewhat between 1968 and
1972—from 4.3 per cent to 5.0 per cent.

The proportion for all workers

was essentially unchanged—at about 5.8 per cent.

However, a sizable

divergence is evident in the trade field, in which 13.8 per cent of
blacks--in contrast to 20.0 per cent of the total—had found jobs in
1972.

These fractions were essentially the same in 1968.

A smaller

(but still noticeable) divergence can be seen in the case of finance,
insurance and real estate—which accounted for 5.2 per cent of total
employment compared with 3.2 per cent of black employment last year.

-21Yet, these industries did become a somewhat more important source of
black jobs in the last four years.

On the other hand, blacks were

overly represented in services (23.9 per cent of employed blacks vs.
17.9 per cent of the total) in 1972.
Within manufacturing, blacks were found employed particularly
in heavy industry.

They were found especially in industries producing

transportation equipment (mainly automobiles);
(particularly steel);

in electrical equipment;

products, and in apparel.

in primary metals
in food and related

While blacks held about 9.9

per cent of the total jobs in manufacturing as a whole in 1972, in
several industries, their share of the jobs was considerably higher.
For example, as shown in Table 6, in 1972, their shares were:
33.8 per cent;

lumber and wood products, 19.4 per cent;

13.9 per cent;

apparel, 12.9 per cent;

cent;

tobacco,

primary metals,

food processing, 11.2 per

stone, clay and glass, 11 per cent;

transportation equipment,

11.6 per cent; furniture, 10.2 per cent, and textiles 13.4.
In weighing these figures on black employment in manufacturing,
however, one should not conclude that blacks have found an equal chance
for advancement in the nationfs factories.

This is far from the case.

To a considerabl extent, the industries with large numbers of black
employees are those in which numerous jobs are unpleasant and routine
or which require much physical strength or long endurance.

Moreover,

blacks are typically found in the lower paid blue collar occupations
requiring only limited skills.

- 22 -

Still another a&pect of the industry distribution of black
employment can be seen in Table 7.

This table shows average weekly

earnings and blacks' share of industry employment in 1968 and 1972.
These actual figures are also expressed in terms of index numbers.
The average weekly earnings in all private industry and blacks1 share
of total employment are taken as the base (that is, equal to 100).
Weekly earnings and blacks1 share of employment in specific industries
are then expressed as a percentage of the base.
Several conclusions are suggested by these data.

In general,

blacks tend to have a disproportionate share of the jobs in low-wage
industries, and they tend to be under-represented in high-wage industries.
For example, among the low-wage manufacturing industries are lumber,
tobacco, textiles, and apparel.

In all of these, blacks1 share of

the total jobs in 1972 is well above their share of all jobs in the private
sector.

In contrast, among the high-wage industries, only in primary

metals, stone, clay and glass, and transportation equipment (particularly
automobile manufacturing) do blacks have an above average share of the
total jobs.

Among the high-wage manufacturing industries in which blacks

are noticeably under-represented are fabricated metals, machinery (both
electrical equipment and non-electrical varieties), instruments, p«>er,
printing and publishing, and rubber.

They are similarly under-represented

in transportation and public utilities, wholesale trade, constrution, and
mining •

- 23 Between 1968 and 1972, blacks made some progress in migrating
from low-wage to high-wage industries, but in several cases they became
even more heavily represented in low-wage sectors.

For example,

blacks1 share of total jobs declined somewhat in lumber and furniture
manufacturing, food processing and in services—all low-wage industries.
They also expanded their share of employment in a number of high-wage
sectors:

electrical machinery, transportation equipment, paper,

chemicals, and petroleum manufacturing;
utilities.

in transportation and public

On the other hand, blacks1 share of total employment

rose in tobacco, textiles, and apparel in which wages are below
average.

Their share eased off somewhat in printing and publishing

and in wholesale trade in which wages are above average.

In general, blacks have been making modest progress in recent
years in finding job opportunities in the better paying sectors of the
economy.

At the same time, however, they have also been becoming more

heavily concentrated in some of those industries in which earnings
remain well below the national average.

- 24 -

The Minimum Wage and Youth Unemployment
As I mentioned above, the persistence of high levels of
unemployment among youths—both black and white--is a widely-noted
and troublesome problem.

In fact, the situation among black youths

is particularly distressing.

In the fourth quarter of last year,

the unemployment rate among workers 16-19 years of age was 15.6
per cent—compared with an overall rate of 5.3 per cent, and rates
of 3.6 per cent and 5.2 per cent, respectively, for adult males and
adult females.
9.9 per cent;

Among blacks, the overall rate in the same period was
it was 5.9 per cent for black men and 9.3 per cent

for black women.
35.9 per cent.
per cent.

But for black youths, the unemployment rate was
In contrast, among whites the overall rate was 4.7

It was 3.4 per cent for white men, 4.6 per cent for white

women and 13.2 per cent for white youths.
As I also mentioned above, the youth unemployment rate has
risen significantly in the last decade.

Before the early 1960's,

joblessness among youth was about two to three times the level of that
of adults.
greater.

However, since 1963, the rate has been four or five times

Moreover, the incidence of unemployment has fallen more

heavily on black youth:

the ratio of the black youth unemployment rate

to the white youth jobless rate rose from 1.80 in 1963 to 2.90 at the
end of 1972.

Several developments over the past decade have contributed

to the teenage unemployment problem:

the substantial growth in the

youth population, an increased proportion of school enrollees competing
for part-time jobs, the movement of families from farms to the city

- 25 where teenagers must compete in the urban labor market, and the effect
of the draft with its attendant uncertainties.
In addition, the minimum wage laws have increasingly been
a subject of scrunity by economists attempting to analyze the youth
unemployment problem^Last year amendments to the Fair Labor Standards
Act (FLSA) were introduced in Congress which provided for a youth
"subminimum11 wage.

The Administration had proposed a 20 per cent

differential for workers under 18 years old and for full time students.
In addition, it recommended this 20 per cent differential for all
18 and 19 year olds for the first six months of their first job.
This proposal was an attempt to "... recognize that during the early
phases of a first job, the young person is in need of familiarization
7/
and orientation with the world of work....11""
A bill introduced early
8

this year incorporates substantially the same features.—

These

proposals are based on the assumptions that increases in the level of
minimum wages and broadening of the coverage have had an adverse impact
on teenage employment opportunities.
A number of empirical studies have been conducted in an attempt
to determine the relationship between the minimum wage and teenage
employment.

These studies, unfortunately, provide no concensus.

number purported to find disemployment effects among teenagers from
o/ In passing, it may be noted that the prevailing minimum wage is $1 60
an hour for nonagricultural workers in covered employment. In the last
session of Congress proposals were made to raise the legal minimum to
$2.00 an hour (House-passed bill) or to $2.20 an hour (Senate-passed
" $ h o an r houi y> P r ° P O S e d l e S i s l a t i o n
the House provides an increase
2j
£/

Testimony of Secretary of Labor Hodgson before the Subcommittee
on Labor, Senate Labor and Public Welfare Committee, May 26, 1971.
Introduced by Congressman John N. Erlenborn of Illinois. Notably
the bill provides for youth minimum for full time students and for
nonstudents 16-17 years old for the first six months on the job.
Eighteen and nineteen year olds would be covered by the full standard.

- 26 rising minimum wages; others concluded these effects were not evident.
While time

does not permit an assessment of all of the studies,

several major research efforts are reviewed below.
The Bureau of Labor Statistics conducted a series of
9/
studies,™

and reported that increases in the level and coverage of

the Fair Labor Standards Act (FLSA) may have contributed to the
employment problem of young people.

Yet, BLS concluded that, in

general, it was difficult to disentangle such effects from numerous
other influences—such as growth in the youth population, the military
draft and other factors.

This conclusion was based in part on

results of statistical analysis (using regression techniques) in which
teenage unemployment ratios by age, race, and sex were related to the
armed forces participation of teenagers, agricultural employment
ratios, the unemployment rate of adult males (a proxy for the business
cycle), the proportion of teenagers in the population, a minimum wage
variable, and a variable (dummy) representing manpower programs.

From

the results obtained, some highly tentative conclusions emerged.
Extensions of coverage of minimum wages may have more of an effect
on teenage employment than the level of minimum wages;

Federal

manpower programs may have offset the disemployment effect of minimum
wage changes;
5?

and FLSA seemed to have had a larger effect on 16-17 year

"Youth Unemployment and Minimum Wages," Bureau of Labor Statistics,
Bulletin 1657, 1970.

- 27 olds than on 18-19 year olds.

In a related study, the BLS found

that employer attitudes (as reflected in a BLS survey) suggested
that a substantial youth wage differential (at least 20 per cent)
might provide an incentive to overcome the apprehension of employers
about the quality of teenage job seekers—especially 16 and 17 year
olds.
Other researchers have reached different conclusions.

One

of these^^ found that increases in either the level or coverage of
FLSA led to an increase in teenage joblessness.

The author of this

study employed a statistical technique in which he regressed unemployment
rates by age, sex, and race against the jobless rate for males 25 and
olderi the minimum wage as a proportion of average hourly earnings,
and the proportion of black teenagers in the population.

He observed

that the increases in unemployment among teenagers corresponding to
an increase in either the level of coverage of minimum wage were higher
for black youth than for white and for females than for males.

When

the same analysis was applied to men 20-24, FLSA changes did not appear
to have a noticeable impact.
all the relevant variables.

However, this study aay not have included
Notably the author did not account for

the increased proportion of all teenagers in the labor force, and
13L
/
another study— which took into account the sharp rise in the teenage

10/ Thomas Gale Moore, "The Effects of Minimum Wages on Teenage Unemployment Rates,11 Journal of Political Economy (Jtaly/August, 1971).

Masanore Hashimoto and Jacob Mincer, "Employment and Unemployment
Effects of Minimum Wages," The NBER Survey of Research into Poverty
Markets, National Bureau of Economic Research (forthcoming).

- 28 population reported no statistically significant unemployment
effects.

12/
above.-

Another study reached conclusions similar to those described
13/
Using statistical techniques— which related the employment

rates of teenagers to "normal11 employment (trend growth), transitional
employment (the difference between normal and actual employment) and
the minimum wage as a percentage of average hourly earnings times
the estimated coverage, the authors concluded that increases in the
minimum wage sharpened the vulnerability of teenage employment to
cyclical fluctuations and also decreased the teenage share of total
employment.

Moreover, the authors found that black youth bore a

disproportionate share of the disemployment effects.

However, a

criticism may be leveled at this study too, on the grounds that the
authors excluded from their analysis other factors—such as population
growth, school enrollments, etc.--which would presumably have had an
effect on the teenage share of employment.
It is difficult to draw firm conclusions from these empirical
studies unless one is willing to play one methodology off against
another.

On balance, however, I think the evidence tentatively suggests

that changes in the FLSA may have had some adverse impact on teenage
employment—especially through the extension of FLSA coverage to service
and trade establishments with amendments in 1961 and 1966.
12/ Marvin Kosters and Finis Welch, "The effects of Minimum Wages by
Race, Sex, and Age" in Racial Discrimination in Economic Life,
edited by Anthony Pascal, 1972.
13/ In this study, nonlinear regressions were used.

- 29 In the light of this tentative conclusion—and given the
extremely serious problem of youth unemployment (particularly among
black teenagers)--I think a youth differential may, to some extent,
alleviate the burden of youth unemployment.

But I would not expect

the establishment of a below-minimum entry wage to result in an
expansion of the teenage share of employment.

Instead, a differential

might maintain the employment status quo in that it might preserve jobs
which may otherwise disappear with increases in the minimum wage.

And,

judging from the evidence presented in some of the research studies,
I would expect a youth differential to have the greatest impact on
16-17 year olds--the majority of whom are currently earning less than
the minimum wage.

- 30

Federal Manpower Programs and Black Employment
At this point in the discussion, I would like to explore
briefly participation by blacks in the principal manpower programs
sponsored by the Federal Government—especially in the decade of the
1960's.

These programs are currently undergoing a reassessment,

and--depending on the final outcome of the review—the implications
for black employment may be particularly serious.
Blacks have been well represented in Federal manpower
training programs.

In fact, their participation in all major programs

has been well above their proportion in the work force.

However,

this parallels to some extent the proportion of the low income
population that is black.
are shown in Table 8.

Black participation rates by program

A trend is clearly evident:

expenditures on

programs increased quite rapidly from the introduction in fiscal 1965
of the War on Poverty programs to a peak in 1968, and expenditures
tended to taper off in each subsequent year until the introduction of
the Emergency Employment Act in 1971.
Prior to 1968, blacks increased their participation in most
programs each year as special efforts were made to increase their
enrollment.

As funding levels eased off in 1969 and 1970, black

proportions declined somewhat—in spite of increases in the total number
of enrollees in the programs--and black participation continued to
edge down in 1971 and 1972.

More than likely this result was due

- 31 to the lower level of program expenditures in combination with the
1970-71 recession.

As workers were laid off during this period, they

may have displaced the more disadvantaged—mostly blacks — as enrollees
in training programs.
In 1965, blacks constituted about 30 per cent of MDTA
institutional training-- one of the largest manpower programs in terms of
expenditures.

By 1968, they accounted for more than 45 per cent,

but their share eased off in each subsequent year so that in 1972
only one-third of MDTA enrollees were black.
evident in other major manpower programs:

Similar trends are

the MDTA on-the-job

training program served about 12,000 individuals in 1965, one-fifth
of whom were black.

By 1968 the black proportion had risen to

over one-third, but in 1972 their share had declined to about onefourth.

The Job Opportunities in the Business Sector Program, designed

to provide jobs to the hard-core disadvantaged, was introduced in
fiscal 1969 with enrollees who were about 80 per cent black.

However,

the proportion dropped off sharply to about 45 per cent as the impact
of the recession was felt.

The same pattern can be observed for the

Concentrated Employment Program.
Only in two of the major manpower programs did blacks
maintain their peak participation:
the Job Corps.

Neighborhood Youth Corps and

Both of these programs were tailored to serve inner

city youth and, as such, were somewhat insulated from the change in
clientele brought about by the economic slump.

- 32 -

Current Status and Future of Manpower Programs,

Outlays

on manpower programs are expected to be reduced about 10.0 per cent
to $4.8 billion in fiscal 1974.

The decline is mainly attributable

to the phaseout of the Emergency Employment Assistance (EEA) program
which had funded transitional public service jobs for States and
localities.

New federal spending is primarily confined to veterans

and rehabilitation programs and the Work Incentive Program.
The WIN program apparently will be emphasized by the
Administration.

It was revamped in 1972 by amendments to the Social

Security Act of 1967 and the Revenue Act of 1971 after little success
with the institutional training approach.

Under the first of these

amendments all "able-bodied" welfare recipients are required (as of
July 1, 1972) to register for jobs or job training under WIN except
those who clearly cannot work—the aged, children under 16 years, etc.
The Federal Government funds up to 90 per cent of the cost of manpower,
childcare, and other supportive services with the remainder picked
up by the States.

At least one-third of WIN expenditures must be

used for on-the-job training and public service employment--reflecting
a clear preference for jobs rather than classroom training.

After six

months of registering eligible persons on welfare (about 566,000 AFDC
recipients), the Manpower Administration in the U.S. Department of
Labor reported that 39,450 had been placed in unsubsidized jobs, and
an additional 9,718 had been placed in job training or public service

33 jobs with wages paid by the WIN program.

The Administration estimates

that in fiscal 1973, a total of 150,000 welfare recipients will be
placed in jobs while a total of 120,000 will be referred to training.
The comparable fiscal 1974 figures are 165,000 placed in jobs and
132,000 referred to training.
The amendment to the Revenue Act of 1971 provides
employers with a tax credit for wages and salaries of WIN graduates—
20 per cent provided the employee remains on the payroll for 12
months.

The tax credit may not exceed $25,000 plus 50 per cent of

taxpayer's income tax liability in excess of $25,000 in any one year,
but the credit may be carried back three taxable years and/or forward
seven taxable years.

Since July 1972, about 6,232 persons have been

claimed by employers under the Job Development Tax Credit.

This

part of the program may be expected to expand in fiscal 1973 and
1974 if more private employment opportunities become available.
The traditional manpower programs under the Manpower
Training and Development Act (MDTA) and Economic Opportunity Act
(EOA) will be-

replaced by Manpower Revenue Sharing.

Although

Manpower Revenue Sharing legislation was not passed by Congress in
the last session, the budget for fiscal 1974 established revenue
sharing de facto by decategorizing existing manpower programs under
MDTA and EOA (including MDTA institutional and on-the-job training,
Neighborhood Youth Corps, Operation Mainstream, and Concentrated

- 34 -

Employment Program) and making available black grants to State and
local governments to choose program mixes which they believe are
best suited to local conditions.

The critical factor here is that

decision making will be transferred to State and local governments.
The Administration feels the shift will increase the efficiency of
program design and implementation.

However, it is impossible to

predict the results of this change at this time.
In fiscal 1974 and 1975, about 75 per cent of the program
funds under MDTA and EOA will be made available to States and localities.
The remaining 25 per cent will be retained at the Federal level for
national supervision, research, and demonstration.

The transfer of

policy making will build on CAMPS (Co-operative Area Manpower
Planning Systems) committees which are advisory councils appointed
by State and local elected officials and responsible to them.

The

councils will advise State governors and mayors on manpower needs
and programs and assist in the development of comprehensive manpower
plans for their areas.
The funding of programs under Manpower Revenue Sharing
was cut back in fiscal 1973 by some $250 million, and further across
the board cuts are expected in fiscal 1974.

Major programs affected

by reduced outlays are MDTA institutional, Concentrated Employment
Program, and the Neighborhood Youth Corps (where funding will be
reduced by about $150 million from the fiscal 1972 levels).

The

- 35 Job Corps will continue to be run on the federal level, but spending
will be reduced, and it is anticipated that a number of the Job
Corps centers will be closed.

The Job Opportunities in the Business

Sector (JOBS), run by NAB will continue to be federally funded.
Since its August, 1971, inception, the Public Employment
14/
Program has employed a total of 283,147 people.~ As of the end of
November,

1972, 143,561 were employed in PEP slots.

per cent were black;

Of these, 22

about 40 per cent were disadvantaged.

Jobs

under PEP were temporary employment, and the Manpower Administration
reports that 56 per cent of the enrollees had found permanent employment
either with the program agent, other public agencies of the private
sector.

The Administration plans to phaseout PEP primarily because

the number of private sector jobs has increased substantially,
unemployment has declined, and the financial ability of State and
local governments to meet the demands for public services has improved.
However, although Federal funding will terminate at the end of fiscal
1973, mayors and governors are anticipated to continue to support
some public work opportunities under Manpower revenue sharing.
But whatever course the Federal Government manpower program
finally takes—and in whatever form they may be continued at the
State and local level--it is clear that blacks have a major stake in
the outcome.

Without some continued—and substantially broadened—

training and skill-upgrading efforts, there appears to be little likelihood
that blacks will greatly improve their employment position in the years
ahead.
157" Latest available data were through November, 1972.

- 36 VII.

Income Trends in the Black Community
Another way of assessing the economic situation among
blacks is to examine trends in their income.

Census Bureau data for

1971 (the most current year available) presented in Table 9 indicate
that total money income of black families and unrelated individuals
was $46 billion in that year.

This was 6.6 per cent of the total—

which amounted to $695.2 billion.

This share for blacks should

be weighed against the fact that blacks compose about 11.3 per cent
of the total population.

If they had received the same fraction of

total income, their cash receipts in 1971 would have amounted to
$78.6 billion—or $32.6 billion more than they actually received.
The explanation for this short-fall is. widely known:

a legacy

of racial discrimination and deprivation has limited blacks1 ability
to acquire marketable skills while barring them from better-paying
jobs.
It will be close to the end of the current year before
Census Bureau figures on personal income in 1972 are available.
However, from a comparative analysis of the personal income figures
published by the Bureau of Economic Analysis (BEA) in the U.S. Department
of Commerce, and those published by the Census Bureau each year, one
can make an estimate of the racial distribution of total money income
15/
in 1972.

On the basis of such an analysis, it is estimated that

total money income last year was in the neighborhood of $755 billion.
It is also estimated that blacks received about $51 billion of this
15/ The BEA personal income data do not contain a racial breakdown-in contrast to the Census Bureau figures.

- 37 amount—representing 6.7 per cent of the total.

These estimates

suggest that total money income of blacks rose by about 10 per cent
in 1972"Compared with about 8-1/2 per cent for the total.

This

relative improvement in the income position of blacks is a reflection
of their greater (although still unsatisfactory) participation in
the continued recovery of the economy in 1972 compared with their
experience in the preceding year.
The median family income of blacks in 1971 was $6,440, a
rise of 2.6 per cent over 1970.

The rise in the median income of

white families during 1971 amounted to 4.3 per cent.

This slower

expansion in black income was another indication of the failure of
blacks to participate equally in the recovery of the economy in 1971.
In contrast, blacks actually experienced a slightly faster rise in
their median income in 1970 than that recorded for whites (4.7 per
cent and 4.5 per cent, respectively).
As a group, black families made great strides over the
decade of the 1960fs in increasing their income.

The median

family income of blacks in 1971 was about double the level in 1960
which appears to compare favorably with a rise of roughly 83 per cent
for white families over the same period;

However, in absolute terms,

black families received an average of $4,232 less than white families
in 1971—whereas they received $2,602 less in 1960.

This difference

in 1971 was equal to two-thirds of black families1 median income.
Thus, although blacks have been gaining relative to whites over the

- 38 decade, this progress was dampened somewhat by the recession in
1969-70.

But aside from this factor, they still lag far behind the

average American white family—since blacks 1 median family income

was only 60 per cent of the latter!s in 1971.
Another way of comparing income differences is to look at
how income is distributed among the respective black and white
populations.

The most common way of doing this is to use a statistical

16;
measure showing how

equally income is distributed within a population.""

If a given percentage of the population receives an equal percentage
of the total income and this holds true for all groups in the
population, then the degree of income inequality would be zero.
Calculations of this measure by the Bureau of the Census for black
and white families indicate that black income has historically been
less equally distributed than white family income even though the
differences between the two have narrowed slightly over the last decade.
However, in recent periods of declining or slow economic growth,
the difference in the income distribution for black and white families
have increased.

This was true during the brief period of declining

economic activity in 1967 and also in 1970.
In general, this pattern of income distribution implies
that lower income black families receive an even smaller proportion
of total money income than do lower income white families in periods
16/

Economists will recognize this measure as the

Ginil! coefficient.

- 39 -

of reduced economic growth.

Some of the greater sensitivity of the

income of black families to cyclical slowdowns may be explained
partially by the fact that a rapidly increasing proportion of black
families is headed by females (3-1/4 times as many as white families
in 1970 compared with 2-1/2 times as many in 1960).

The fact that

the average number of earners in black families has actually been
declining in the last few years (in contrast to a rise in the
average number of earners of white families) may also contribute
to the observed results.

Thus, although income of blacks appears

to have held up quite well in the recent period, it still lags far
behind white income.

In addition, average for blacks as a whole may

disguise a deteriorating situation for lower income black families.
Sources of Black Income.

Still other insights into the

income situation among blacks can be observed from the figures in
Table 10, showing sources of personal income by race in 1971.
Several features can be highlighted.

In the first place, it will

be noted that blacks work for their income to about the same extent
as do whites.

Roughly 84 cents of each dollar of black income was

derived from earnings in 1971 compared with 86 cents for whites.
Yet, significant differences do exist and can be traced when earnings
are broken down into specific receipts.

About four-fifths of blacks1

earnings consisted of wage and salaries—compared with just over
three-fourths for whites.

Only 3 per cent of blacks1 income was

- 40 obtained from nonfarm self-employment—against 7-1/2 per cent for
whites.

This difference is clearly a reflection of the much smaller

incidence of business ownership among blacks.
Income sources other than earnings provided about 16 per
cent of total receipts for blacks and about 14 per cent of white
receipts.
instances.

However, the detailed sources differed markedly in several
Two sources were virtually identical:

Social Security

and Railroad Retirement receipts represented 4.8 per cent of the
total for blacks and 4.5 per cent for whites.

Unemployment and

workmen's compensation represented 2.4 per cent of the total for
both groups.

On the other hand, private pension funds were a slightly

less important source of income for blacks than for whites—1.4 per
cent vs. 1.8 per cent of the total, respectively.
But the major divergence among blacks and whites with respect
to a specific income source is found in the case of public assistance
and welfare.

In 1971, this source provided $2.8 billion (or 6.2 per

cent) of the total income of blacks.

The figures for whites were

$4.2 billion (or only 0.6 per cent of the total).

So, in 1971, blacks

received almost two-fifths of the total welfare payments--compared
with their 11 per cent of the nation's total population.
The explanation of this heavier reliance on public assistance
by blacks is widely known, but it might be helpful to r#iteriate

- 41 the reasons:

the incidence of poverty in the black community is

roughly double that among whites, and--obviously--welfare payments
are made to the poor and not to the rich.

Moreover, the principal

component of welfare outlays is aid to families with dependent
children (AFDC).

The typical AFDC family is headed by a female,

and the proportion of such families is greater among blacks than
among whites.

In recent years, black families have made up about

half of all AFDC families, but they have accounted for less than
their proportionate share of those receiving aid to the blind, aged,
and disabled.
In turning away from these income figures, several points
should be kept in mind:
same degree as whites.

blacks work for their income to roughly the
At the same time, the legacy of discrimination

and deprivation have limited their accumulation of property and
restricted their income for the ownership of investments.

These

same adverse factors have kept blacks disproportionately poor and
have increased their reliance on public assistance.

Yet, welfare

receipts amount to only a minimal fraction of the total income of
blacks.

Instead, wages and salaries are the principal source of

their spending money--the same as for whites.

- 42 VIII.

Summary and Conclusions
The principal conclusions reached in this study have been
presented in each of the foregoing sections.

However, it might be

helpful to summarize them here.

—Blacks improved their relative economic position
during the 1960's. But their pace of advance
compared with whites has slackened somewhat in the
last few years. The lag can been seen in several
measures—including a slower growth in the black
labor force, the smaller share of new jobs obtained
by blacks, and the continued climb in black unemployment.
— I n particular, the 1969-70 recession had a disproportionately
adverse impact on blacks. They experienced a relatively
greater increase in unemployment (and they got a smaller
share of new jobs) during the recession and first year of
recovery than was true of whites. While blacks shared
more equitably in economic gains last year, they were
still carrying a disproportionate share of the lingering
effects of the recent recession.
—Blacks are continuing to make some progress in occupational
upgrading. Yet, their occupational center of gravity
remains rooted in jobs requiring little skill and which
offer little hope of advancement. Moreover, blacks are
also still generally concentrated in low-wage industries.
Here, too, they were able to make some headway in expanding
their share of the jobs in better-paying industries; but
simultaneously they became somewhat more heavily concentrated
in several industries with the lowest wage scales.
— I t appears that the difficult problem of persistently high
unemployment of youths (particularly of young blacks) is
being aggravated by Federally imposed minimum wage
legislation. While the analytical evidence presented by
economists on the relationship between statutory minimum
wages and youth unemployment is mixed, on balance, it
seems to suggest that the impact of such measures has been
adverse. Given this evidence, I have concluded that it
would be desirable for Congress to amend the existing fair
labor standards to permit employers to offer entry rates to
youths below the regular minimum wage level.

-43—Blacks have been among the principal beneficiaries
of the Federally supported manpower programs introduced
in the 1960rs. However, their participation in such
programs—compared with other groups in the societyappears to. have declined in the last few years. Yet,
given the large number of blacks (especially black
youths) who still have few—if any—skills, the continuing
need for programs to improve our human resources seems
to be obvious. In the meantime, existing programs are
being reassessed. Some are being phased-out while
others are expected to be taken over by States and
localities and financed through revenue sharing. But, whatever
new arrangements finally do come into being, the future
of these manpower programs clearly is of major importance
to blacks—as well as to the rest of the country.
— T h e money income of blacks apparently reached $51 billion
last year—representing 6.7 per cent of the total. In
1971, reflecting the continued greater impact of the
1969-70 recession on blacks than on whites, the income
of blacks expanded much more slowly than was the case for
whites. Last year—as blacks shared more equitably in
the gains from further economic growth--the rise in black
income was relatively greater than that recorded for
their white counterparts. Nevertheless, the gap between
the median incomes of black and white families continued
to widen in recent years. Finally, when one examines the
sources of black income, it is clear that blacks—far from
depending excessively on public welfare—work for their
spending money to about the same extent as do whites.
Instead, the higher incidence of welfare receipts among blacks
is a reflection of the greater impact of poverty and
deprivation in the black community.

Before ending this paper, let me make a few additional
observations with respect to the conclusions reached above regarding
the introduction of an entry wage for youth below the statutory minimum.
I appreciate the fact that a number of economists, public officials,
and other observers (as well as officials of trade unions) have long

- 44 -

held the view that such a provision would undercut the hard-won
gains made by the labor movement over many years.

I admit that, if

employers could pay wages below the statutory minimum, they most
likely would use the option to attract employees whom they otherwise
might not be willing to put on their payroll.
point:

That is precisely the

the willingness of employers to bring in teenagers as well

as any other employees presupposes that the productivity of the
newly-hired worker would at least equal the wage--after some reasonable
allowance for learning time.

On the record, it appears that a

substantial number of employers have concluded that a considerable
proportion of young people simply cannot meet that test.

An entry

wage below the statutory minimum would help to reduce this employment
disincentive.
At the same time, I also realize that safeguards would
have to be built into any amendment to the Fair Labor Standards
legislation.

Undoubtedly, some employers would attempt to replace

some of their high-wage employees with workers to whom they could pay
less.

But the extent of that risk is uncertain.

Against it must be

offset the present certainty of persistent high unemployment among
young people.

I know that any substitution of lower paid youth workers for

higher paid, more mature employees would involve some cost;
some benefits would also result.
trade-offs.

but

Thus, it becomes a question of

Under the circumstances which are already prevailing,

- 45 a disproportionate share of the burden of unemployment is borne
by teenagers.

This is especially true in the case of black teenagers.

So, I have concluded that the appropriate course for
public policy at this juncture is to shift some of that burden to
the shoulders of those better able to bear it.

If this requires

the use of public funds to provide modest subsidies to private
employers to induce them to hire more teenagers while limiting
the replacement of more skilled workers, I personally believe that
would be a good use of the public's tax money.

- 0 -

Table 1. Changes in the Civilian Labor Force, Employment, and
Unemployment, By Color, Sex and Age, 1960-72
(Thousands)

Period

Total

Male
20 & over

Total
Female
20 & over

Both Sexes
16-19

Total

Male
20 & over

Black 1/
Female
20 & over

Both Sexes
16-19

Total

White
Female
Male
20 6 over
c
20 6 over
c

Both Sexes
16-19

CIVILIAN LABOR FORCE
829
1960-61
1961-69
10,273
1,985
1969-70
1,395
1970-71
1971-72 2/ 2,127

480
5,747
868
519
744

257
2,491
839
671
838

92
2,035
278
205
545

88
1,151
243
125
217

20
266
147
47
87

63
656
90
105
71

5
229
6
- 20
59

741
9,122
1,742
1,270
1,910

237
2,225
692
624
751

417
5,091
778
414
673

87
1,806
272
232
486

EMPLOYMENT
- 38
1960-61
12,156
1961-69
1969-70
727
490
1970-71
1971-72 2/ 2,290

- 201
4,046
166
221
1,006

192
6,100
536
216
791

- 29
2,010
25
53
492

- 101
1,551
62
- 43
174

71
601
51
- 33
97

8
755
47
30
57

22
195
- 36
- 40
19

63
10,605
665
553
2,116

- 130
3,445
115
254
909

200
5,345
489
186
734

7
1,815
61
93
473

71
99
43
74
15

21
34
42
13
39

678
-1,483
1,077
737
- 206

367
-1,220
577
371
158

217
- 254
289
229
- 62

94
9
211
138
13

UNEMPLOYMENT
861
1960-61
-1,883
1961-69
1969-70
1,258
904
1970-71
1971-72 2/ - 163

If
2/

458
-1,555
673
450
- 168

288
353
332
303
47

115
25
253
151
52

183
- 400
181
167
43

91
- 335
96
80
- 10

Negro and other races, of which Negroes constitute about 92 per cent,
The changes shown here for 1971-72 cannot be derived directly from the statistics presented in Appendix Table I.
The changes indicated for these years have been adjusted to reflect the change in population controls made by the
Bureau of Labor Statistics and introduced in January, 1972. For an explanation of the adjustments, see Employment
and Earnings, February, 1972.

Source:

Calculated from Appendix Table I.

Table 2. Percentage Distribution of Changes in Civilian Labor Force,
Employment, and Unemployment, By Color, Sex and Age, 1960-1972

Period

Total

Hale
20 & over

Total
Female
20 & over

Both Sexes
16-19

Total

Male
20 & over

Black 1/
Female
20 & over

White

Both Sexes
16-19

Total

Male
20 & over

Female
20 & over

Both Sexes
16-19

CIVILIAN LABOR FORCE
1960-61
1961-69
1969-70
1970-71
1971-72 2/

100.0
100.0
100.0
100.0
100.0

31.0
24.2
42.2
48.1
39.4

57.9
55.9
43.7
37.2
35.0

11.1
19.8
14.0
14.7
25.6

10.6
11.2
12.2
9.0
10.2

2.4
2.6
7.4
3.4
4.1

7.6
6.4
4.5
7.5
3.3

0.6
2.2
0.3
1.9
2.8

89.4
88.8
87.8
91.0
89.8

28.6
21.7
34.9
44.7
35.3

50.3
49.6
39.2
29.7
31.6

10.5
17.6
13.7
16.6
22.8

21.1
6.2
6.5
6.1
2.5

57.9
1.6
- 5.0
- 8.2
0.8

-165.8
87.3
91.5
108.8
92.4

342.1
28.4
15.8
51.8
40.0

-526.3
44.0
67.3
38.0
32.1

18.4
14.9
8.4
19.0
20.7

8.3
5.2
3.4
8.2
- 9.2

2.4
- 1.8
3.4
1.4
-23.9

78.7
78.8
85.6
81.5
126.4

42.6
64.8
45.9
40.9
96.9

25.2
13.5
22.9
25.3
38.0

10.9
0.5
16.8
15.4
- 8.0

EMPLOYMENT
1960-61
1961-69
1969-70
1970-71
1971-72 2/

100.0
100.0
100.0
100.0
100.0

528.9
33.3
22.8
45.1
43.9

-505.2
50.2
73.8
44.1
34.5

76.3
16.5
3.4
10.8
21.5

265.8
12.7
8.5
- 8.8
7.6

186.8
4.9
7.0
- 6.7
4.2
UNEMPLOYMENT

1960-61
1961-69
1969-70
1970-71
1971-72 2/

1/
2/
""

100.0
100.0
100.0
100.0
100.0

53.2
82.6
53.5
49.8
103.1

33.5
18.7
26.4
33.5
28.8

13.3
- 1.3
20.1
16.7
-31.9

21.3
21.2
14.4
18.5
- 26.4

10.6
17.8
7.6
8.9
6.1

Negro and other races, of which Negroes constitute about 92 per cent.
The changes shown here for 1971-72 cannot be derived directly from the statistics presented in Appendix Table I.
The changes indicated for these years have been adjusted to reflect the change in population controls made by the
Bureau of Labor Statistics and introduced in January, 1972. For an explanation of the adjustments, see Employment
and Earnings, February, 1972.

Source:

Calculated from Appendix Table I.

T a b l e 3.

Time
Period

FRASER