The economic impact of the 1964 Fair Employment Practices Act and subsequent executive orders on Black Americans

Abstract

The economic status of the Black Americans has lagged far behind that of non-Black Americans in the last four centuries. The major reasons are manifested in (1) discrimination in employment practices by: employers, public and private employment agencies, labor organizations, and apprenticeship agencies; and (2) discrimination in distribution of factor inputs. To bring about economic equality the Presidents of the United States have issued various Executive Orders. Eight years ago the United States Congress enacted the Civil Rights Act of 1964 (Title VII of this Act is known as the Equal Employment Opportunity Title) and made it unlawful to discriminate in employment because of race, color, religion, sex, or national origin. The objective of this study is to examine the effects of the Civil Rights Act of 1964 and other Presidential Executive Orders on the related economic status of Black Americans. To examine this question, an economic model was developed. In this model, employers are assumed to have a "taste for discrimination," which causes them to have two different market demand curves for Blacks and non-Blacks. In hiring Black workers, employers feel that they incur a cost in addition to the market wage. Therefore Black workers are paid lower wages than non-Black workers in order for employers to compensate their "psychic cost." In this imperfect market Black workers are not perfect substitutes for non-Black workers. The enactment of the Fair Employment Practices laws (FEP) was, presumably, designed to encourage employers to regard Black workers as perfect substitutes for non-Black workers. Through causing employers "taste for discrimination" to disappear, it is expected that the demand curve for Black workers will shift to the right. The increase in demand would effect an increase in employment and wages for the Black Americans. On the other hand, negative effects could cause an increase in the wage rate and an increase in the unemployment rate. It is argued that the non-Black wage would remain the same, but, in the absence of eliminating the "taste for discrimination" the laws could result in an increase in the unemployment rate of the non-Blacks. The quantitative analysis was made by use of the census data in examining variables selected to measure economic status: viz., income, unemployment rates, and occupation distribution. In order to isolate the effects of the FEP laws on these variables, other variables were included, such as growth rate of Gross National Product and a dummy variable to test the impact of the war. Three statistical techniques were employed to evaluate the general overall economic progress of Blacks and the impact of the FEP laws. The statistical techniques are: least square regression analysis, analysis of variance, and information theory analysis technique. The regression results of many coefficients were not statistically significant at the five percent level of significance. In one instance the FEP laws effect variable was significant at the ten percent level of significance, suggesting that there may exist a relationship between that variable and unemployment rates. The statistical tests do not persuade one to conclude that the FEP laws have had significant impacts on the improvement of the economic status of the Black Americans. However, finding an expected sign on the estimated coefficients the FEP law effect variable suggests that the FEP laws, if more fully implemented, might lead to a reduction in unemployment and an increase in wage rate for Black Americans as a result of a shift in the demand curve for Black labor. The analysis of variance, revealed race itself to be dominantly significant as the cause of economic inequality of the two races. The racial entropy index distribution shows that the Blacks have made some progress in some occupations and have moved to better paying jobs. The descriptive analysis of the charges filed over the four year fiscal period, indicate that over 50 percent of the charges were directed to employers; and that the factor of race was very frequently given as the basis of the discrimination.