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For release at 9:00 a.m.
Eastern Standard Time
Friday, April 1, 1966

Remarks of Andrew F. Brimmer
Member, Board of Governors of the Federal Reserve System
Opening a Symposium on
The Negro in the American Economy
at the
Memorial Dedication Festival
of the
North Carolina Mutual Life Insurance Company
Durham, North Carolina
April 1, 1966

The Negro in the American Economy in 1975

In a symposium organized partly to appraise the outlook
for the Negro in American society, it may be helpful at the
outset to chart the main contours of the economic environment
on which the Negro's future so heavily depends.

In trying to

look ahead, however, I wish to emphasize that I fully recognize
the hazards of attempting to forecast economic activity.


make such a forecast is not the principal objective of this

Rather, my chief purpose is to appraise the implications

for Negroes of a number of strategic developments which are
already clearly visible on the horizon.

We can sketch the

principal areas of expanding economic opportunities for the
Negro as well as the areas of insufficient opportunity.
For example, we have a good indication of the most likely
trends in population and labor force participation over the
next decade.

Moreover, given a few reasonable assumptions about

the overall rate of economic growth, we can be fairly certain
of the trends in the level and occupational distribution of
employment, and the distribution of output between goods and

This paper is devoted to that task.

- 2 Population Trends
Our " firmest estimates are for the population.

The Negro

will continue to be a larger proportion of the population,
reaching a total of approximately 27 million in the United
States in 1975.

This would represent an increase of 6 million,

or 28 per cent, from 1965.

The total population has been pro-

jected by the Bureau of the Census at about 223 million in
1975, a gain of 28 million, or 15 per cent.

Thus, the Negro

population is expected to account for more than one-fifth of
the net increase in the Nation's population during the next
10 years, lifting the Negro proportion from 10.9 per cent of
the total in 1965 to 12.2 per cent in 1975.
These projections assume lower fertility than currently.
However, the rate of decrease in fertility is expected to occur
mainly among the white population.

The result is a divergence

in the rates of population growth for the two groups.


example, during the decade 1955-1965, the white population
grew by 16 per cent, but -the rate is expected to decline to
13 per cent during 1965-1975.

In contrast, the Negro popula-

tion rose by 25 per cent in the last decade, and is expected
to expand by 28 per cent in the decade ahead.
Outlook for the Labor Force
For the present discussion, the proportion of the population
which is working or seeking work holds the most interest.
During the next decade, the labor force participation rate
for non-whites is expected to remain essentially unchanged
at approximately 60 per cent.

On this assumption, about 10.7

million non-whites would be in the labor force in 1975 compared
with 8.5 million in 1965.

This represents an expansion of

- 3 -

roughly 27 per cent, compared with about 20 per cent between
1955 and 1965.

Since the total labor force in 1975 might be

in the neighborhood of 91 million, non-whites would constitute
almost 12 per cent of the work force by the end of the next
decade compared with 11.2 per cent in 1965 and 10.7 per cent
in 1955.
This large growth in the total labor force and the even
faster increase for Negroes will be accompanied by several
dramatic changes in composition.

For instance, over 22.5

million members of the labor force are expected to be under
25 years of age in 1975, 6.5 million or one-third more than
in 1965.

Thus, althoughitnore and more young people will

undoubtedly want to work in order to continue in school in
the next decade, the influx into the full-time work force
of teen-agers clearly will be substantial.

Moreover, an

increaseng proportion of these teen-agers will be non-whites.
This prospect will pose a continuous challenge to the Nation
to provide appropriate employment opportunities at decent wages.
As we know, the impact of unemployment among teen-agers -- and
especially among non-white teen-agers -- has been particularly

For example, while the unemployment rate of the total labor

was down to 3.7 per cent in February of this year, it
was still 9.0 per cent for all teen-agers and 25.2 per cent
for non-white youth.

There will also be sharp increases in

the number of adult women in the labor force.

By 1975, it

is estimated that there will be 4.5 million more women looking
for work, a large proportion of whom will be searching for
full-time work.

- 4 -

Trends tn Output and Income, 1965-1975
By 1975 the United States will have a trillion-dollar
economy if it grows in real terms at an average annual rate
of 4 per cent.

On the basis of this assumption, this would

represent an increase of 50 per cent in the real output of
goods and services.

Expressed in per capita terms, GUP

be about $4500 in 1975 against $3470 last year —


thus, rise

about 30 per cent during the next decade.
For our purpose we would like to know what the growth
of output implies for non-whites.
way to identify their share of GNP.

However, we have no direct
On the other hand, we do

have a fairly good measure of aggregate money income earned
by Negroes as defined by the Bureau of the Census.

This series

does distinguish between income recipients according to color.
In 1964, aggregate money income as measured by this series
amounted to $396 billion.

This is estimated to have risen

further to $424 billion last year.

Of this amount, $395 billion

was earned by the white population, and $29 billion was received
by nonwhites, representing 6.9 per cent of the total.

In 1955

the income of the non-white population amounted to $13 billion
or 5.6 per cent of the total.

During recent years the share

of aggregate money income received by nonwhites has been

If we assume that the same annual increase in

the proportion received by nonwhites during the period 19551965 continues during the next decade, nonwhites would receive
about 8.2 per cent of aggregate money income in 1975.


present overall trends continue, aggregate money income might
amount to $628 billion in 1975, expressed in 1965 prices.

The division might be $576 billion accruing to the white
population and $52 billion accruing to nonwhites.
Thus, during the next ten years, sizeable gains will
undoubtedly be registered in the aggregate money income of
nonwhites as well as for whites.

But the relative improve-

ment for nonwhites would probably be substantially greater.
This can be seen most clearly when the income figures are
expressed in per capita terms.

In 1965 aggregate money income

per head was $2,180; it was $2,300 for whites and $1,250 for

By 1975 the total may rise to $2,810 per capita.

The corresponding figures for whites and nonwhites would be
about $2,980 and $1,750, respectively.

Consequently, for

whites aggregate money income should increase by just under
30 per cent, but for nonwhites, the gain in per capita terms
might be as much as 40 per cent.
The impact of this improvement in real income on the
markets for goods and services will clearly be substantial.
The effects on the Negro market of the future will be
particularly striking.
Occupational Changes and Employment Opportunities
During the next decade nonwhites -- like Alice in
Wonderland -- will have to run "faster and faster" just to
stand still, as far as their unemployment rates are concerned.
The Bureau of Labor Statistics estimates that during the next
decade the occupations in which the largest proportion of
nonwhites have usually found employment will experience belowaverage growth rates.

As we know, nonwhites are found far

more frequently than whites in low skilled occupations -such as service workers and laborers in factories and on farms

- 6 and less frequently in the rapidly growing professional,
white-collar and craftsman jobs.

Today nonwhites make up

just over 10 per cent of the total labor force, but about
one in four of the non-farm laborers and service workers are

At the opposite extreme, nonwhites constitute

about 2.5 per cent of managers, officials and proprietors
and about 5.8 per cent of those engaged in professional and
technical occupations.

They also hold roughly the same low

proportion of clerical and craftsman jobs.
According to projections made by the Bureau of Labor
Statistics, if nonwhites in 1975 were to hold the same proportion of each occupation which they held in 1964, the
unemployment rate among nonwhites might be as high as 17
per cent.

The BLS projection assumes a non-white civilian

labor force of roughly 10.8 million in 1975 and a level of
employment of approximately 9 million.

Thus, 1.8 million

nonwhites -- or 17 per cent of the labor force —

might be

This unemployment rate would be roughly five

times that for the total labor force.
However, BLS concludes that this pessimistic projection
is not likely to materialize.

Instead, it seems more reason-

able to assume that nonwhites will continue to gain access
to the highly skilled occupations during the next decade at
roughly the same rate registered during the past 10 years.
For example, from the mid-19501s to the mid-19601s, nonwhites
increased their share of total white-collar jobs from 3.1 per
cent to 4.5 per cent.

Among blue-collar occupations, the gain

was from 10.9 per cent to 11.8 per cent.

During the same

- 7 -

period, their share of laborers and service jobs declined

Within the white-collar occupations, the improve-

ment in clerical employment were steadily upward over the
entire decade.

However, it was only after 1958 that nonwhites

in professional, sales and managerial positions began to
register significant gains relative to total employment in
these fields.
But even assuming that the rate of progress for nonwhites
during the next decade is roughly the same as that recorded
in the last ten years, the rate of unemployment among nonwhites
in 1975 would still be in the neighborhood of 1\ per cent.
This would continue to be about 2\ times the unemployment rate
projected by BLS for the total labor force —

but far below

that implied by the pessimistic projection described above.
However, I am certain you will agree with me that -- at 1\
per cent —

such an unemployment rate for nonwhites would

still represent a dreadful waste of resources.

If the loss

is to be wiped out, by bringing the unemployment rate for
nonwhites approximately in line with that of the total labor
force, it is also obvious that far greater effort must be
devoted to raising the formal educational level of nonwhites,
as \zell as to the provision of greater vocational skills and
a more rapid eradication of racial discrimination.
But even stopping short of such obviously desirable goals,
if nonwhites do continue to gain at the pace recorded during
the last decade, their occupational distribution in 1975 will
be substantially different from what it is today.

For example,

- 8 nonwhites would constitute about 11 per cent of the total
labor force a decade from now.

But under the assumptions

described above, they would hold about 9 per cent of the professional and technical jobs compared with just under 6 per
cent in 1964.

They would have also raised their share of the

managerial, official and proprietory occupations from 2.5
to about 3.2 per cent.

Sizeable gains would also have been

recorded in the clerical, sales and craftsman occupations.
They would continue to provide about the same proportion of
farm workers and laborers, while a noticeable decline would
have occurred in the proportion of service jobs held by them.
These changes would alsa have a striking impact on the
distribution of occupations within the non-white community.
For instance, professional and technical workers in 1975 might
constitute about 12 per cent of the non-white labor
compared with 7 per cent in 1964.


While this proportion is

still below the 15 per cent expected for whites in 1975,
the relative shift is unmistakable.

The managerial group

might account for about 3 per cent of the non-white labor
force compared with 2\ per cent in 1964.

In this case the

differential between nonwhites and the total labor force would
have been narrowed relatively little.

On the other hand, a

substantially higher proportion of the non-white labor force
would be employed in the clerical and sales fields.


already indicated, most of the relative shift will be away

- 9 from the blue-collar and unskilled occupations.

The decline

among laborers is especially noticeable where the proportion
of the non-white labor force so employed might shrink from 13
per cent to less than 10 per cent.
Associated with -- and partly responsible for -- these
improvements in the occupational distribution of the non-white
population is an expected substantial increase in their educational achievement. For example, the median years of school
completed by the non-white civilian labor force 18 years of
age and over were 10.5 in 1965.

This median had risen from

7.6 years in 1952 and 8.7 years in 1959.

The corresponding

figures for the white population were 11.4 years in 1952;
IX.1 in 1959; and 12.3 years in 1965.

Thus, between 1952

and 1965 the median years of schooling for nonwhites climbed
by 38 per cent.
over 10 per cent.

For the white population the gain was just
If the trend of the increase in the

median years of schooling for both whites and nonwhites

during the period 1952 to 1965 continues during

thfc next decade, the gap between the twa will have been
narrowed considerably.

On this assumption, by 1975, non-

whites on the average will have completed about 12 years
of schooling compared with 13 years for whites. This
would mean that the educational differential would have shrunk
from 1.8 years to only 1.0 years in favor of the white

-10 Relative Shift in Output and Empj^ment from Goods Production
to Services.
Over the years, the United States has increasingly become a
"service" economy.

We are the first Nation in history in which less

than half the labar force is devoted to the production of goods -such as food, clothing, shelter, automobiles and other material items,
Instead, over half of the lab«r force is currently devoting its
efforts to the provision of services -- such as wholesale and retail
trade, finance and insurance, real estate -- or are employed in nonprofit institutions, general government, households, and miscellaneous
services. While this trend toward services has been evident for a
number of years, the shift has been particularly striking in the postwar period.

The nature and implications of the emergence of the

service industries have been analyzed in considerable detail by
Victor Fuchs in a major project at the National Bureau of Economic

Fusch calculated the average annual rate of change of

employment between 1929 - 1963 for 61 industry groups as defined
by the Office of Business Economics in the U.S. Department of Coiranerc©.
Thirty-eight of the industry groups were classified in the goods
sector and the other 23 were in the service sector. Fuchs found that
all industries taken together grew at an annual rate of 1.43 per cent.
However, the median growth rate of service industries was 2.14 per cent
and that for the goods sector was 0.99 per cent.
The trend toward services stressed by Fuchs is also supported
by the changing composition of GNP.

Between 1946 and 1965, goods

- 11 -

production (measured in 1958 prices) rose by an annual average
rate of 1.7 per cent.

During the same period, the production of

services increased by an average of 2.2 per cent per year. The
relative rate of increase for services was even higher during recent
Opportunities for Negro Businessmen
In summarizing his findings, Fuchs identified a number of
implications of the changing structure of employment and output
which hold considerable significance for Negro businessmen.


other conclusions, Fuchs observed that, since the shift to services
will probably continue in the future, we can foresee:
Growing importance of small firms.
Declining relative importance of physical capital.
Growing need for workers with more formal education.
Each of these emerging trends will pose an opportunity and a
challenge for Negro businessmen. In the first place, the service
industries afford a substantially greater outlet for small firms
than do industries devoted to the production of goods. For example,
in 1958 in the manufacturing sector only 7 per cent of the total
employment was in firms with fewer than 20 employees, while over
three-fifths were employed in firms with more than 500 employees.
In contrast, in wholesale and retail trade, roughly half the employees
were found in firms with fewer than 20 employees. In finance, insurance,
and real estate, the position of small firms was even more dominant.

- 12 -

As we know, Negro businessmen are engaged almost exclusively
in the provision of services rather than in the production of goods.
For instance, according to the 1960 Census of Population, there were
about 46,000 self-employed Negro businessmen in the United States.
If we take those engaged in manufacturing and construction as a rough
definition of goods producers, we would account for only 10 per cent
of the Negro businessmen.

The remaining 90 per cent were engaged

in service industries - such as wholesale and retail trade; banking,
finance, insurance and real estate; and automotive repair.


was a particularly large concentration in personal services dominated by barber and beauty shops.

At the same time, however,

a sizable number of Negro businessmen were engaged in business and
other general service activities.

The proportion so employed, grew

rapidly during the decade of the 1950Ts, and the trend has undoubtedly
continued through the 1960fs.
Thus, Negro businessmen are already strategically located in
service fields which will probably expand substantially during the
next decade.

On the other hand,

much of their activity has

centered in the provision of services - especially personal
services - which Negroes traditionally have not been able to
obtain freely in the general market.

But as public accommodations

become more open, the relatively protected market provided Negro
businessmen by racial segregation will be eroded significantly.
Consequently, the new opportunities will be found increasingly in
those service activities catering to the public as a whole.

-13 -

Negro businessmen have traditionally found it extremely
difficult to mobilize sufficient capital to launch and expand business

In fact, the high capital requirements have been a

principal obstacle to the entry of Negroes in the manufacturing
and goods producing sectors. Although some service industries (such
as public utilities and transportation) have high capital requirements per unit of output, in general the service industries are
among those for which somewhat more modest amounts of capital are
needed to get started. Therefore, it is far more likely that Negroes
can raise the entrance fee for the service trades than they can
for goods production.
On the other hand, while the opportunities in the service trades
will probably expand substantially, to take advantage of these
opportunities will require a much higher level of formal and
technical education than has been the case in the past.


creasingly, the service industries will be built around the
exploitation of technical and engineering know-how. Undoubtedly,
the most striking example is that of firms providing business
services which center on the application of computer technology.
As we know, Negroes have already found rapidly expanding
opportunities as computer programmers and systems development
specialists as employees in many o£ the nationally known firms.
Perhaps which is less widely ^nown is that a number of Negroes
have also appeared on the scene as owners and managers of
computer-based data processing firms serving the public at large.

- 14 Moreover, in even more traditional service fields, higher
levels of education will also be required.

Undoubtedly, the

typical Negro businessman will have to be far more familiar than
he is today with accounting and management procedures.

He will also

have to be more experienced in gaining access to the sources of
finance and marketing information.
Concluding Observations
In this tentative look ahead, I have tried to sketch the
general outlook for Negroes in the American economy during the next

At the same time, I have emphasized that it is nothing -v

more than a tentative look ahead; it is by no means an attempt to
forecast the actual trends in population or the level of employment, or the output of goods and services.

Nevertheless, on the

basis of a few reasonable assumptions, it is possible to chart
the general framework within which Negro citizens will probably
have to live and work alongside other Americans.
To summarize, if the rate of improvement registered during the
last decade continues, the Negro in the next ten years will
strengthen substantially his relative position in the American economy.
His employment situation will be much stronger and his real income
will be considerably higher.

The opportunities to participate as

risk-takers in business enterprise will have also expanded noticeably.
On the other hand, these possible gains are by no means assured.
Thus, a far greater effort

on the part of Negroes as well as on

the part of government and the private sector generally
required if the promises are to be fulfilled.

will be