The impact of equal employment opportunity commission enforcement on the wages of black and white women, 1988–1996

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  The impact of equal employment opportunity commission enforcement on the wages of black and white women, 1988–1996
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  THE IMPACT OF EQUAL EMPLOYMENT OPPORTUNITY COMMISSION ENFORCEMENT ON THE WAGES OF BLACK AND WHITE WOMEN, 1988 1996 Sarah A. Wilhelm Ph.D. INTRODUCTION Equal employment opportunity (EEO) laws have been a topic of pub- lic debate for some time. Speculation abounds about the need for such laws and the beneficiaries of such laws. However, little research is avail- able to inform this debate. Several authors have touched upon this issue. However, timely and consistent results are unavailable, specifically with regard to the laws impact on black and white women. This article con- tributes to understanding the Equal Employment Opportunity Commission s (EEOC) role in enforcing equal employment opportunity laws and how this enforcement affects black and white women. Public opinion holds that the EEOC is unable to enforce effectively such broad legislation as Title VII because it lacks the resources to do so. Public opinion also holds that EEO laws only benefit middle-class white fe- males and therefore do not benefit those truly in need, those for which the legislation was intended. Does enforcement of EEO laws increase women s wages? Are wages for black women and white women affected differently? This analysis, using data from the Current Population Survey and the Equal Employment Opportunity Commission, has shown public opinion to be somewhat accurate. White women do earn higher wages with stronger enforcement. Black women also earn higher wages with enforcement. Black women seem to benefit only from anti-sexism en- forcement and not from anti-racism enforcement. In fact, black women benefit more from anti-sexism enforcement than white women. These results are consistent with studies done in the late 1970s. This analysis is unique in two ways. First, this is the only recent analysis to look at the different impacts for black women and white women. This separation is essential because of the differences in labor  26 The Review of Black Political Economy Fall 2002 market experiences by race. In addition, we would expect black women to be affected by enforcement against both race and sex discrimination, while white women should only be affected by enforcement against sex discrimination. The success of black women is not linked to the success of white women, black women are disproportionately represented in what is called the secondary job market, where wages are low, jobs menial, and benefits nonexistent. In 1980, three-fourths of black women's paid labor was in the secondary labor market; almost one third were in low- status, low-paid jobs at the bottom tier of the secondary labor market. ~ Even in jobs that are traditionally female, white women hold the higher- status jobs within that occupation, whereas black women hold the lowest. The classic example is nursing. White women are generally registered nurses and black women are generally nurses' aides. Black women are also unemployed at twice the rate of white women. 2 Occupational segre- gation seems to be a major limiting factor in preventing black women from making real gains in the labor market. This analysis recognizes the different experiences black and white women face in the labor market. The second reason this analysis is unique is that data about discrimina- tion charges are used in detail not previously available. Using measures of industry enforcement, this analysis captures decisions based on indus- try climate that were not previously available. In addition, measures of enforcement outcomes are included to control for success in enforcement. BACKGROUND Title VII of the Civil Rights Act of 19643 made it illegal to discrimi- nate in employment based on a person's race, color, religion, sex, or national origin. The EEOC was created to enforce Title VII. Since 1964, several other anti-discrimination laws have been passed that are also overseen by the EEOC .4 The EEOC is charged with resolving individual claims of discrimina- tion and discovering areas in which systemic discrimination occurs. Sys- temic discrimination occurs on a large scale and usually takes the form of a hiring or promotion practice that systematically disadvantages mem- bers of a protected group. 5 The EEOC can have a wide-sweeping impact on the employment conditions of protected groups by winning systemic discrimination cases. The Texaco case is a recent example of the power the EEOC has to remedy discrimination on a wide scale. The EEOC found a class-wide pattern and practice of discrimination against Afri- can-American employees with regard to the company's promotion prac-  Wilhelm 7 tices and performance appraisal process. '6 This was the largest racial bias settlement in U.S. history, with a 176 million settlement for more than 1,300 employees. 7 However, the EEOC's limited resources also are committed to resolve individual cases. This analysis looks at the resolu- tion of individual cases to determine if these resolutions also have wide- sweeping effects on the wages of protected groups, particularly black and white women. LITERATURE REVIEW That women in the labor market face discrimination is fairly widely accepted. 8 The fact that blacks in the labor market face discrimination is less widely accepted. 9 The literature on Affirmative Action (AA) and Equal Employment Opportunity (EEO) is vast. Much of the research has focused on the impact of these programs on black men. Typically, this literature evaluates the changes in black males' employment variables relative to white males' employment variables. Most studies have found these policies to have some positive effect on the wages, employment, and occupational status of black men. 1~ One study has shown negative or negligible effects. I 1 Only a small portion of the literature deals with the impact of these policies on women. Even fewer studies address the different experiences of black women and white women. The majority of empirical work fo- cuses on comparing all women to white men. The evidence in the major- ity of these studies shows that EEO and AA policies have had at least some positive impact on women's employment and wages. 12 Articles showing negative or negligible effects are those of Goldstein & Smith, Heckman & Wolpin, and Leonard. 13 Beller studied the correlation between EEOC enforcement and women's wages, with separate analysis for black and white women. 14 Beller con- cluded that the effect of enforcement based on sex discrimination on the earnings of all females is more significant than the effect of enforcement based on race discrimination on the earnings of black females. Beller's results regarding the impact of a positive resolution for the employee of a discrimination charge were inconclusive. Beller's analysis is now more than twenty years old. The current analysis updated Beller by including similar proxies for enforcement, but supplements them with data from the EEOC that have not been used previously.  28 The Review of Black Political Economy Fall 2002 DISCRIMINATION AND THE EEOC The EEOC's ultimate goal is to eliminate discrimination in employ- ment decisions by investigating individual charges and pursuing cases of systemic discrimination. Figure 1 shows the flow of individual charges through the EEOC and the possible outcomes of charges. The EEOC's effect on discrimination can be manifest in two ways: directly and indi- rectly. Direct effects are the changes in employment conditions experi- enced by individuals who are directly involved in discrimination cases. A woman wins a sexual discrimination case against her employer with the help of the EEOC and her wages are increased. If a competitor of her employer observes this event, she or he may raise the Wages of female employees to avoid having to face discrimination charges in the future. This action is an example of an indirect effect of EEOC enforcement activities. DIRECT EFFECTS OF THE EEOC ACTIVITIES The effectiveness of the EEOC is closely tied with its record of enforc- ing anti-discrimination laws. The EEOC has been accused of not fully investigating charges that it dismisses as no cause; that is, no evidence of discrimination was found. The General Accounting Office found that in six EEOC district offices that were investigated, 41 to 82 of the charges closed with no-cause determinations that were not fully investi- gated. 15 The EEOC also has been accused of issuing right-to-sue letters without investigating or attempting to reach a settlement. If the EEOC does not finish investigating a charge after 180 days, or if it anticipates not being able to do so, it must issue a right-to-sue letter. The EEOC has had a large backlog of charges; in 1992, cases were taking an average of 292 days to resolve. 16 This practice increases the uncertainty of both the outcome and the costs to the individual. INDIRECT EFFECTS OF THE EEOC ACTIVITIES The EEOC was created to combat wage discrimination and to create employment opportunities for women and minorities. The indirect effects of EEOC are those changes that occur in the employment status of pro- tected groups through employers changing their behavior to avoid pun- ishment for noncompliance. With the understanding that enforcement is  Wilhelm 9 v ~ r~ e~ e~ .~>_ t = c~ 1 Lf~ O O 9169 ~cr
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