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! e Racial Rules of"Income

I N T R O D U C T I O N

In recent decades, major shi# s in the structure of the economy have taken a signi$ cant toll on all U.S."workers, but given the way these structural shi# s have intersected with a host of other racial rules , they have had a unique impact on black workers. As noted in Chapter" 1 , the predominant trends that characterize the twenty- $ rst- century economy have been deindustrial- ization ; declines in unionization ; the $ ssuring of the workplace; and the growth of the caring economy and the rise of the service economy. ! e contemporary postindustrial economy is highly strati$ ed, with the prepon- derance of job growth in low- wage retail and food service sectors and con- tinued job loss in the public sector (especially at the state and local levels). ! ere is also a signi$ cant lack of diversity in the highest- paying sectors, which include technology, $ nance, and banking. As David Weil describes, these shi# s have resulted in declining wages, eroding bene$ ts, a weaken- ing of safety and health protections, and an overall growth in economic inequality . 1

One result of these changes is that black workers now face a dual crisis of high unemployment rates and low wages, which intersect and reinforce one another. 2 ! e black American unemployment rate is twice that of white workers at nearly every level of education , and as of 2011 black households earn only 59 cents for every dollar of white median household income . 3 Between 1967 and 2014, the black– white income gap expanded from $19,000 to approximately $25,000. 4 White Americans of lower edu- cational attainment are better positioned for higher- paying jobs than black Americans with higher educational status.

History teaches us that this cycle of inequality is neither intractable nor inevitable. In the mid- twentieth century, the racial wage gap improved.

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! e Hidden Rules of"Race78

! rough mobilization and civil disobedience, thousands of ordinary people in the Civil Rights Movement challenged explicit racial inequality in American economic, social, and political institutions and demanded a rewriting of our economic rules to make them racially inclusive , ushering in black participation in both the public and private sectors. Local, state, and national political decisions and policies" – changes in the rules" – that led to better labor market outcomes o# en focused on explicit racial inclu- sion:" a% rmative action policies that increased black representation in public- sector and union jobs, enforcement of antidiscrimination policy, and desegregation of education , to name"a"few.

In this light, it is clear that our stalled progress on addressing the racial income gap has been a choice. Only by recalibrating employment and wage growth strategies for our changed and changing economy" – with a spe- ci$ c focus on black American workers and other workers of color"– will we be able to make progress again, for the good of all Americans and for the greater economy.

! is chapter builds on the argument we set forth in Chapter"1 "– namely, that racial rules and the racial implications of the very institutions that undergird our economy exclude black Americans from full participation in the labor market. Moreover, these rules interact with the changing economy in ways that are detrimental to black Americans. We begin by describing the vast income gaps between black and white workers, and describe the push- pull nature of progress for black Americans over the last 150" years. We explain some of the o# - cited explanations for these gaps, but argue that the real drivers of current earnings disparities are neoliberal rules" – from “colorblind ” approaches to employment policy to economic deregulation"– in addition to a complex web of variables, including education , gender dis- crimination , and racial bias , that interact with and are shaped by those"rules.

E M P L O Y M E N T A N D I N C O M E D I S PA R I T I E S A N D I N E Q U I T I E S

By some measures, the income gap between rich and poor at the beginning of the twenty- $ rst century is the highest it has been in the United States since 1928. 5 As with the wealth gap and so many other economic inequi- ties, this disparity is not colorblind . At every level of education , earnings for black men and women lag behind those of their similarly skilled white counterparts (see Figure"5.1 ).

In 2008, among workers with a bachelor’s degree or a high school degree, black men earned 74"percent of what white men earned, and among workers

! e Racial Rules of"Income 79

with less than a high school degree, black men earned only 61" percent of what white men earned. 6 For younger black men, ages twenty- $ ve to thirty- four, the pay gap o# en widens at higher levels of education . 7 While white women earn an average of 78" percent of what white men earn, black and Latina women earn an average of just 63"percent and 54"percent of white male wages, respectively. 8

Women of color are o# en segregated into jobs that traditionally pay low wages, do not guarantee reliable schedules, and do not o& er bene$ ts such as paid sick leave or paid family leave, o# en making women choose between a paycheck or their family’s health . 9 Black workers, especially black women, are disproportionately represented among minimum- wage earners. While the vast majority (76.3"percent) of the nearly 3"million hourly workers earning minimum wage or below are white, 3.5"percent of all black men and 5"percent of all black women earn at this level, compared to only 2.8"percent of white men. 10 Not only do women of color earn lower wages, but the wages they do earn do not go as far as they would for white workers, because a host of other racial rules that collide and drain resources out of black communities.

Occupational segregation refers to the trends that have pushed women and people of color into jobs and industries characterized by low wages and poor working conditions. ! e e& ects of occupational segregation became especially apparent during the Great Recession beginning in 2007. During the Great Recession, the unemployment rate for black Americans peaked at 16.7"percent, almost twice the peak 9.3"percent unemployment rate for white Americans. ! e e& ects of the recession hit black Americans particu- larly hard because black Americans"– particularly black women"– represent a disproportionate share of public- sector workers.

Median weekly income for whites

Median weekly income for blacks

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lla rs

Education

Figure"5.1. Median weekly income by race and education level,"2014. Source :"Data courtesy of the Bureau of Labor Statistics (2015).

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Existing Explanations for the Persistence of the Racial Income!Gap

Social scientists have o& ered a variety of alternative explanations for the persistence of the racial wage gap. Most o# en, researchers attribute di& er- ences in compensation to human capital di& erences in education , skills, and personal attributes, among other factors. While unequal educational out- comes and unequal access to educational opportunities certainly account for some share of the wage disparity, they do not fully explain the gap. 11 In terms of wages, even black college graduates fare little better than whites with two- year associate degrees, and they face unemployment rates similar to white high school dropouts. 12

A second common explanation for the racial gap in household income is family structure. As of 2014, 67" percent of black children were born into single- parent households, compared to 25"percent of white children, 42"percent of Hispanic children, and 53"percent of Native American chil- dren. * , 13 For decades, black mothers"– particularly black single mothers"– have been blamed for high rates of poverty , for poor economic outcomes among black families, and for being a drag on the economy. Moreover, they have been used as scapegoats for ostensibly colorblind cuts to social and economic programs that disproportionately hurt people of color. But the focus on female- headed households ignores how economic forces" – along with other dynamics such as the increasing incarceration of men of color, the hollowing out of the middle class , and decreasing invest- ments in communities of color"– have shaped family structure rather than the other way around. As Linda Harris of the Center for Law and Social Policy has written:

! e over criminalization and disproportionate incarceration of young black men early in their adult life result in a sizable segment of the young male population in low- income , minority communities being marginalized in the labor force, with lit- tle prospect of earning a family- sustaining wage. ! is ultimately poses considerable barriers to successful family formation and positive civic engagement. 14

! ese narratives about black single mothers ignore the stark discrimination that black women face in the labor market, which contributes to yawning gaps in income , wealth , and a broad range of socioeconomic opportunities between black and white female- headed households. Even putting aside these growing gaps, the rate of female- headed households has risen at the

* ! ese data describe children under the age of eighteen who live with their own single par- ent and includes cohabitating couples that are not married.

! e Racial Rules of"Income 81

same pace for all communities across race and ethnicity lines. 15 As such, the prevalence of black single mothers cannot explain away the household income gap between white and black communities.

How did we get here? To understand contemporary racial disparities in the labor market, we must consider how the historic racial rules of our economy have disadvantaged black workers from the earliest days of our country.

P R E ' C I V I L R I G H T S E X C L U S I O N A RY " R U L E S

Explicit Exclusion!– Slavery and the Deprivation of Earnings As noted in earlier chapters, from the earliest days of our nation, an ideol- ogy of white supremacy shaped notions of “race” and racial groups and was inextricably tied to the economic rules. 16 Relying on the exploitation of black indentured and slave labor, the American economy was de facto racially inclusive, but in the most pernicious way. In many ways, slavery was a “full employment” economy, although one de$ ned by “unfreedom” for black slaves and their children. 17

For a brief time following the Civil War , in the wake of the ! irteenth Amendment’s abolition of slavery , blacks saw a short period of freedom and a shi# toward racial equality. But, as early as 1865, the southern states’ “Black Codes” gave rise to “slavery by another name,” whereby the southern economy relied on the continued exploitation and control of black labor. 18 New racially explicit rules around vagrancy and contract labor criminalized blacks’ physical movements and their lack of employment. ! e low wages of the post- Emancipation labor market evolved directly from the slave econ- omy that deprived blacks of any earnings. ! e origins of tipped labor"– work that today is highly racialized and gendered"– can also be traced back to the late 1800s, when emancipated slaves were funneled into restaurant work and given no wages for their labor. ! is historic deprivation of earnings laid the foundation for the race and gender income and wealth gaps that are all too characteristic of the twenty- $ rst- century American economy.

Implicit Exclusion from New Deal Protections Emerging from the economic collapse of the Great Depression, the rules and reforms of the New Deal created our uniquely “exceptional” American welfare state. 19 In addition, the postwar “labor accord” created a private welfare state of employer- provided health insurance, retirement security,

! e Hidden Rules of"Race82

and paid vacations for a newly emergent middle class . But, as noted in Chapter"4 , scholarship shows that the New Deal also institutionalized race and gender exclusions in labor market and social policy rules, with long- term consequences for racial equity and wealth building. 20

Ostensibly race- neutral rules excluding domestic and agricultural work- ers from New Deal provisions were far from colorblind in intent or outcome; rather, they were the result of southern political elites in the Democratic Party wielding their power to perpetuate white privilege and black subjuga- tion. 21 In 1930, the legacy of slavery had perpetuated employment channels such that 41"percent of black workers were employed in agriculture (versus 26"percent of white men) and 63"percent of black women worked as domes- tics (versus 20"percent of white women). 22

! e New Deal ’s exclusionary rules were replicated in a number of crit- ical policies such as the National Industrial Recovery Act of 1933, the 1935 Social Security Act and the National Labor Relations Act, and the Fair Labor Standards Act of 1938. All of these policies excluded domestic and/ or agri- cultural workers from the important provisions guaranteed to other workers, ranging from unemployment bene$ ts to a wide variety of labor protections such as a forty- hour work week and a national minimum wage . As a result of these critical pieces of legislation, racial exclusion was baked into the very building blocks of the white middle class that emerged in the 1940s and 1950s. Even today, domestic workers" – nannies, housekeepers, and home health aides, who are disproportionately women of color"– remain overwhelmingly unprotected thanks to exclusions that began with the New Deal. 23

C I V I L R I G H T S A N D E X P L I C I T I N C L U S I O N ( 1 9 5 5 ' 1 9 8 0 )

! e decades following the Civil Rights Act saw a steep decline in de jure labor market discrimination and led to a signi$ cant decrease in the wage gap between white and black men in the late 1960s and 1970s. Yet while the Civil Rights Act removed many rules that speci$ cally excluded or segregated black Americans, an additional set of statues promoted expli- citly racialized rules of inclusion. ! e range of policies and programs promoted in the post– Civil Rights Act era focused on increasing human capital through education and greater skill development and emphasized two key paths to the middle class for black Americans:"unionized manu- facturing jobs and public- sector employment . 24 ! e policy advance of this era had a positive impact on black workers. For example, the disparity in average weekly earnings fell to 25"percent in 1980, down from 40"percent in 1960 for men born in eighteen previously segregated southern states. 25

! e Racial Rules of"Income 83

A" rmative Action and Unionization New policies focused on not only access to education but also on dir- ect intervention to promote the inclusion of black workers in public and private enterprises. Title VII of the 1964 Civil Rights Act provided legal tools to combat racism in employment and in labor unions , and the years following the passage of the Civil Rights Act saw an increase in private- sector employment. 26 Numerous studies of Fortune 500 $ rms during this period clearly illustrate that a% rmative action worked in both hiring and promotion . 27

! e existing industrial economy transformed the cities of the Northeast and Midwest into bases for industrial capitalism during World War II and the postwar era and catalyzed the second Great Migration of southern black Americans to northern industrial cities. 28 Unionization of transport and manufacturing industries, in many cases led by black workers, produced stable employment, decent working conditions, greater racial equality in the workplace, and a path to the middle class for many black Americans. 29

Indeed, while the Civil Rights era provided welcome inclusion for some, it did not deliver progress for all, as black Americans were never fully inte- grated into northern cities in the years a# er the Great Migration. 30 ! e “tra- gic irony of postwar African American history,” writes Josh Sides, is that the “decline in industrial employment began just as the civil rights movement was $ nally making headway in America’s largest industries.” 31 ! e aim was to reduce racial and gender exclusion by focusing on changing the com- position of employment rather than its underlying structure. ! e economic and political developments of the Civil Rights era took for granted the per- manence of our postwar, middle- class industrial economy. ! at is, most policy makers and activists assumed that an industrial America was here to stay and would continue providing good jobs for working- and middle- class Americans. 32 ! e nation’s nascent era of racial inclusion collided with dramatic changes in the economic rules:"deindustrialization , the rise of the service sector economy, the $ ssuring of the workplace, and the rise of neoliberal economic policies all led to increasing numbers of low- wage jobs with greater insecurity, volatility, and reduced bene$ ts and workplace standards. 33

Public- Sector Employment ! e expansion of public- sector employment " – and also public- sector unions " – that emerged in the 1950s and exploded in the 1960s and 1970s enabled blacks to create an ethnic niche in local, state, and federal

! e Hidden Rules of"Race84

employment. 34 Executive Order 11246, signed by Lyndon Johnson, extended inclusion to the public sector by banning discrimination in federal govern- ment and among federal contractors and by requiring a% rmative action policies. Government, in its role as a direct employer, has the ability to hire directly, advance inclusive racial and gender goals such as a% rmative action more e& ectively than the private sector, and remain more accountable to pressure from constituents, especially insofar as voters can replace their “bosses” every two or four"years.

Further, between 1965 and 1980, the O% ce of Federal Contract Compliance successfully drove a large increase in black employment by requiring a% rmative action policies. 35 In one example, from 1969 to 1980, the percentage of federal procurement dollars going to minority- owned business rose from 0.03" percent to 3.20" percent. 36 As a causal mechan- ism and pathway for black economic mobility and security, public- sector employment was arguably as important in the late- twentieth century as manufacturing was from the 1940s through the"1970s.

Changes driven by the Civil Rights Movement ushered in the election of black o% cials at all levels of government. Black communities in large metropolitan areas were even able to elect black mayors (Atlanta, Cleveland, Gary, Chicago, Los Angeles, New"York, Detroit, Newark, etc.). In the spe- ci$ c case of Chicago, Virginia Parks argues that “government, more so than manufacturing, served as black Chicagoans’ most persistent and dispropor- tionate sector of employment throughout the second half of the twentieth century"– a singularly African American employment trend.” 37

! e increased representation of black Americans in elected o% ce and in other public- sector positions had a positive e& ect on black employment outcomes and fueled a new and expanded black middle class . ! e pub- lic sector’s role as the sole remaining “ethnic niche” for upwardly mobile black workers became even more pronounced against the backdrop of the ravaging e& ects of deindustrialization on black communities that William Julius Wilson and others have long identi$ ed. 38 Unfortunately, as Adolph Reed and J." Phillip ! ompson have shown in their work on the struc- tural constraints and policy consequences of black urban regimes, black working- class and poor populations outside of the growing public- sector niche o# en saw little bene$ t. 39

To make matters worse, the rise of neoliberal discourses and policies and the privatization of public goods and services, as well as conservative attacks on public- sector collective bargaining rights, have put this import- ant ethnic niche at"risk.

! e Racial Rules of"Income 85

War on Poverty In his 1964 State of the Union Address, President Johnson proposed a “War on Poverty” as an explicit policy aimed at improving economic well- being in poor communities. Keeping in line with the fundamental ideals of the New Deal , the War on Poverty had similar negative externalities. Policies such as food stamps, Head Start, Job Corps, and Medicare and Medicaid came out of the War on Poverty. According to Sides, despite the good intentions of these approaches, “the great tragedy of the War on Poverty is not that it failed to eradicate poverty and unemployment among the black population but that it failed to recognize the new, as well as the old, causes.” 40 In other words, like many policies that have been implemented to help poor com- munities and communities of color, the policies that came out of Johnson’s War on Poverty did not recognize the explicitly and implicitly racialized backbone on which the policies were"built.

“ R A C E * N E U T R A L” R U L E S : " C O L O R B L I N D P O L I C I E S A N D T R I C K L E * D O W N ( 1 9 8 0 ' P R E S E N T )

We argue that by assuming away the rules and institutions that structure markets and shape opportunities, the neoliberal policies of the last thirty- $ ve years have reinforced historical exclusions and continued individual bias . ! e move toward “colorblind ” policies that fail to actively promote racial inclusion has furthered implicit exclusion from labor markets, per- petuating biased hiring , channeling, and more. ! e changing nature of the economy and neoliberal responses have destabilized the pathways to eco- nomic security $ rst extended to black Americans in the middle of the twen- tieth century. ! e results have devastated the white middle class and halted much of the limited progress of black Americans. We will explore these trends in greater detail in the following sections.

“Colorblind” Policies When Racial Bias Persists Federal, state, and local governments, o# en assuming that personal bias no longer operates in labor markets, have haltingly enforced and at times gutted the antidiscrimination frameworks and a% rmative action programs $ rst promoted during the Civil Rights era. Public rhetoric suggests that because we have ended de jure segregation , colorblind policies now provide the most opportunity and justice for"all.

! e Hidden Rules of"Race86

In truth, our workplaces are still highly segregated by race, ethnicity, and gender . 41 What we know from social science research is that we made some progress for about $ # een years in terms of desegregation in the workplace by race and gender. However, a# er 1980, this desegregation progress plat- eaued, and in many $ rms and occupations resegregation has occurred. 42 Racial and gender occupational segregation at the workplace is particularly problematic because it is a causal factor in systemic and persistent racial and gender wage disparities. 43 As Darity and Hamilton explain, the higher pro- portion of white workers in a sector, the higher the wage. ! ey illustrate that the average annual wages in occupations in which black men are underrep- resented is $50,533, compared to $37,005 in occupations in which they are overrepresented"– a di& erence of more than $13,000. “Indeed, a statistical analysis reveals that a $10,000 increase in the average annual wage of an occupation is associated with a seven percentage- point decrease in the pro- portion of black men in that occupation.” 44 ! e relationship between wages and racial make- up of an occupation is true across all skill levels, which tell us that wage disparities cannot be explained away by education or training di& erentials. Bias does not just play out in individual hiring decisions then, but in aggregate cultural assumptions about what kind of work is valuable"– assumptions that are informed by both racism and sexism.

Many workers also face signi$ cant barriers even gaining access to the labor market. One of the most signi$ cant problems of the twenty- $ rst- century labor market is the incredibly high incarceration rate in the United States, which we discuss at length in Chapter"7 . In recent decades, a spate of $ eld studies comparing similarly skilled job candidates of di& erent races and ethnicities has consistently identi$ ed barriers for nonwhite candidates. Researchers have argued that hiring in low- wage service work may, in fact, provide more room for discrimination and job channeling than hiring for manufacturing work. ! is is because positions that require “so# skills” such as customer service require a more subjective assessment of a job applicant’s abilities than “hard skill” positions. In many ways, the transformation of the U.S." economy has facilitated discrimination and created barriers for non- white American workers. 45

In a 2009 study, sociologists Devah Pager, Bruce Western, and Bart Bonikowski identify three distinct ways in which contemporary racial discrimination creates barriers to job market success for nonwhite work- ers:"categorical exclusion, shi# ing standards, and job channeling.

• Categorical exclusion refers to circumstances in which job applicants are rejected without consideration of their quali$ cations simply due

! e Racial Rules of"Income 87

to race, ethnicity, or gender . 46 It is exempli$ ed by $ eld experiments that show examples of black job candidates being told positions had been $ lled while white candidates were o& ered opportunities to pre- sent resumes or to interview. A"similar phenomenon is displayed in a much- cited experiment in which researchers submitted thousands of otherwise identical resumes that had been randomly assigned “white- sounding” names (like “Brendan”) and “black- sounding” names (like “Jamal”). ! e latter elicited 50" percent fewer interview callbacks. † , 47 Similar results were found in audit studies conducted in the 1990s, which paired white and black men who were trained to represent themselves in similar ways, and handed out equivalent credentials and correspondence tests. Young white men (ages nineteen to twenty- $ ve) were three times more likely to get jobs as were young black"men. 48

• Shi# ing standards refers to a consistent trend of employers willingly overlooking missing quali$ cations in white job applicants and weigh- ing quali$ cations di& erently depending on the applicants’ race. In their $ eld experiments, Pager et"al. found “evidence that the same de$ - ciencies of skill or experience appear to be more disqualifying for the minority job seekers.” 49 In fact, Pager’s previous research found that black applicants with no criminal record were o& ered jobs at a rate as low as white applicants who had criminal records. 50

• Channeling , which has historic roots in slavery and the Jim Crow era, refers to ways in which bias a& ects employers’ decisions to place workers in certain positions. Pager’s research showed that employers were more likely to channel white workers “up” into more skilled or more client- facing positions, while black workers, by contrast, were more likely to be channeled down into back- o% ce or assistant- level positions.

Failure to Respond to the Transitioning Economy While it is not possible to identify every factor driving the current earnings gap, we identify key sets of rules that have curbed progress. Here we focus on the twin trends of deindustrialization and declines in unionization ; low- wage work and a lack of worker bene$ ts and protections; the increasingly

† ! ese and similar studies are not “double blind,” and testers may thus act in ways that a& ect the results. ! e data generated by correspondence testing do not measure actual hiring decisions but only interview callbacks.

! e Hidden Rules of"Race88

$ ssured nature of many workplaces; the rise of trickle- down economic policies; and the erosion of public- sector"jobs.

! e e& ects of globalization and structural changes in the economy in our postindustrial transition have adversely a& ected workers, especially workers of color, over last the forty years. Deindustrialization has coincided with cuts in government regulation, services, and public investment. While the impetus of antigovernment activism is debatable, the consequences for black workers have been clear. Speci$ cally, the decline of unionization rates and"– more recently"– cuts in public- sector employment have eroded the two primary channels to middle- class incomes for black workers. It is important to recognize that these changes in the broader economy were shaped"– at least in part"– by long- standing racial rules . It is therefore not surprising that many of these seemingly unrelated changes in the economy disproportionately a& ect black Americans.

Deindustrialization and Downward Trends in Unionization ! ese structural economic changes helped drive a devastating economic decline in many of the old Rust Belt cities due to the loss of hundreds of thousands of manufacturing jobs. ! ese changes led directly to the deun- ionization of the workforce and increased unemployment , with the most pronounced impacts in black communities where the work has “disap- peared.” 51 By 1979, nearly one- quarter of black workers were in manu- facturing; by 2007, that share had fallen to 9.8" percent. 52 Similarly, black unionization rates fell from 31.7"percent in 1983 to 15.7"percent in 2007. 53 ! e ladders to the middle class eroded before many black families were able to secure a place"there.

One of the rungs on that ladder was unionized manufacturing jobs, once a concrete pathway to a middle- class life. However, the steady decline of those jobs has rapidly eroded pathways to a better future for many black Americans. Since at least the early 1970s, black workers have been unionized at higher rates than almost any other demographic group, and this had tangible e& ects:"between 2008 and 2013, black union mem- bers earned nearly 30" percent more than nonunion members and were signi$ cantly more likely to have employer- provided health insurance. 54 ! e union advantage for black workers is especially pronounced among less educated workers, those who are the most vulnerable in the labor market. However, over the last three decades, rates of unionization among all workers have fallen, with a precipitous drop among black workers. In 1983, nearly 32"percent of black workers and 22"percent of white workers

! e Racial Rules of"Income 89

were members of a union or were covered by a union contract. In 2015, rates of union representation for black workers had fallen to 14.2"percent (a 55.2" percent decline) and for white workers 12.5" percent (a 43.6" per- cent decline). 55

Research shows that the downward trends in unionization are directly linked to the decline of manufacturing jobs in the United States, which was driven by a number of causes, including the automation of labor; the manipulation of foreign currencies and, as a result, of imported goods; and the relocation of American companies spurred by international trade agreements and the lure of cheaper labor overseas. In sum, a combination of decisions by corporations about their production process"– and by gov- ernments at home and abroad" – helps explain why manufacturing is no longer the fount of job creation it once"was. 56

Low- Wage Work and Weak Worker Protections Meanwhile, in our transition to a service economy, we have failed to develop new rules or structures to expand and maintain the middle class . ! e legacy of New Deal discrimination is perpetuated through low wages and limited protections in sectors of the labor market in which women and people of color are most likely to work. At the same time that more and more workers have been funneled into low- wage work with fewer pro- tections, the United States has failed to ensure that its minimum wage is a living wage. Between 1968 and 2016, the value of the federal min- imum wage eroded from a real value of about $8.54 an hour to $7.25 an hour. 57 Cross- country comparisons would predict a U.S." minimum wage closer to $12. 58 ! e erosion of value not only hurts minimum- wage workers but also has spillover e& ects for all low- wage workers. While black workers are disproportionately represented among minimum- and low- wage workers, the vast majority of these workers are white. Fixing broken minimum- wage rules would have an outsized impact on commu- nities of color but would li# all workers and have a positive impact on all U.S."families and communities.

Fissured Workplaces Similarly, the emerging $ ssured economy" – in which large corporations outsource much of the work that was once done under one roof to small companies around the globe that compete with one another"– has proven challenging to unionization e& orts in the fast- growing retail and food

! e Hidden Rules of"Race90

service sectors. Walmart, the nation’s largest private employer and the lar- gest employer of blacks, Latinos , and women , is notorious for anti- union e& orts in its stores and subcontracted warehouses. 59 And while the Fight for 15 movement that has targeted fast food corporations and their franchisees won many legislative victories to raise the wage + oor for low- wage workers in cities around the country, successfully unionizing the thousands of fast food franchisees has proven di% cult.

# e Rise of Trickle- Down Employment and Macroeconomic Policies

Deindustrialization was not only the result of apolitical economic processes such as “capital + ight” and increased global competition. Local, state, and national political decisions and policies"– changes in the rules"– were also consequential. ! e hollowing out of the postwar industrial economy also coincided with increasing political polarization and a rightward shi# in American politics. E& orts to retrench the racially inclusive economic rules won in the Civil Rights Movement began in the 1970s and gained momen- tum with the election of Ronald Reagan in 1980. 60 ! e ideological and pol- itical shi# to the right in all branches of government chipped away at the e& ectiveness and legitimacy of these rules. 61

Not only did policy makers roll back the racially inclusive rules of the Civil Rights era, they also rolled back rules and regulations designed to shape the market and ensure shared prosperity. ! e result has been weak and unen- forced corporate regulations and the growth of “too- big- to- fail” $ nancial institutions that receive a de facto public safety net from our tax dollars. 62 ! e [ongoing] “shareholder revolution,” in which shareholders of large corpora- tions demanded that the money that used to be spent on investing in the workforce of their companies be redirected to their soaring quarterly pay- outs, is representative of these rule changes. As a result, we have an economy in which the $ nancial and corporate sector extracts “rents” from the rest of the economy where they once used to invest in and service it. 63 ! is broad web of rule changes increased the power and privilege of capital holders and CEOs"– fueling the famed rise of the 1"percent"– at the expense of median- and low- wage workers, thus disproportionately a& ecting black Americans.

One of these important rules changes relates to Federal Reserve mon- etary policy. Since the early 1980s, the Federal Reserve has focused on using monetary policy to keep in+ ation low at the expense of pursuing full employment. ! is seemingly technocratic policy is in fact a political choice to prioritize the interests of $ nancial asset holders over workers. Indeed,

! e Racial Rules of"Income 91

estimates show that rising unemployment has a disproportionate impact on families in the twentieth percentile of the income distribution (dispropor- tionately minority households), who see incomes fall 2.2"percent for each percentage increase in the unemployment rate. In comparison, median- income families see incomes fall by 1.4"percent and families in the ninety- $ # h percentile see incomes fall just 0.7"percent. Moreover, workers of color face larger increases in unemployment in response to contractionary mon- etary policy. 64

Public- Sector Layo$ s With the decline of the manufacturing sector, the public sector has become the most signi$ cant source of good jobs for black Americans, particularly black women ; between 2008 and 2010, 21.2"percent of all black workers and 23.6"percent of black women were public employees, compared to 16.3"per- cent of nonblack workers. 65 Signi$ cantly, these have been well- paying jobs, with a smaller wage di& erential between black and white workers than any other sector and a higher median wage for black workers than in any other sector. 66

In the wake of the Great Recession and austerity measures, federal, state, and local governments laid o& nearly 600,000 workers. 67 Not only were black workers disproportionately impacted simply due to higher rates of public- sector employment , but, in the wake of these layo& s, unemploy- ment rates for black public- sector workers increased signi$ cantly more than for white public- sector workers. 68 Post– Great Recession public- sector cuts were especially devastating for women of color. Between 2007 and 2011, state and local governments shed about 765,000 jobs; of those losses, 70"percent were jobs held by women and 20"percent were held by black Americans. 69 Research from the University of Washington shows that in the years a# er the recession, the black– white public- sector employ- ment gap for women increased almost sixfold, to 5.5"percentage points in 2011 from less than a percentage point in 2008. 70 By 2013, public- sector employment rates for black men had returned to prerecession levels, while rates for black women remained even lower than in 2008. 71

C O N C L U S I O N

! is brief survey of rules structuring black labor markets points to some positive directions for policy makers. It has been proven that policy has the power to greatly reduce income gaps and expand employment for

! e Hidden Rules of"Race92

black Americans. Inclusive rules that promoted unionization and full employment provided particular opportunity for black workers. Just as signi$ cantly, a combination of targeted investments in human capital, a% rmative action , and rigorous antidiscrimination laws succeeded in boosting black wages and work. We know that the recent racial rules have not only been detrimental for black workers but for all workers, and that rewriting those rules would not only advance racial equity but would also improve economic opportunities and outcomes for all work- ers. In Chapter" 10 , we will examine some potential policy solutions in more detail. But $ rst, we will turn from wealth and income, the most obvious manifestations of racialized inequality in the United States, to its less economically focused dimensions, including education , health care, experience with the criminal justice system, and access to full demo- cratic participation.