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The effect of federal contractor status on racial differences in establishment-level employment shares: 1979–1992 (Rodgers & Spriggs 1996)

Citation

Rodgers, W., & Spriggs, W. (1996). The effect of federal contractor status on racial differences in establishment-level employment shares: 1979–1992. The American Economic Review 86(2), 290–293.

Highlights

  • The study’s objective was to assess the effect of Executive Order 11246, a 1965 directive that subjected federal contractors to stringent antidiscrimination standards, by comparing the proportion of minority employees among federal contracting firms who were covered by such policies to the share among other private organizations that were not covered.
  • The authors analyzed the effect of federal contractor status on racial and ethnic groups’ shares of a firm’s employment while also accounting for other establishment-level differences using data from the 1979–1992 Employer Information Report EEO-1 files.
  • The study found that by 1992, the African American employment share was 1.36 percentage points higher among federal contractors than at an average EEO-1 reporting company. For Hispanics, however, federal contractor status had the opposite effect; it decreased the proportion of Hispanic employees by 0.45 percentage points in 1992.
  • The quality of causal evidence presented in this study is low. This means we are not confident that the estimated effects are attributable to Executive Order 11246; other factors are likely to have contributed.

Intervention Examined

Executive Order 11246

Features of the Intervention

Affirmative action Executive Order 11246, signed by President Lyndon B. Johnson in 1965, reinforced prohibitions in the Civil Rights Act of 1964 and earlier executive orders against discrimination based on race, color, religion, and national origin; subsequent Orders and revisions have added sex (1967) and sexual orientation and gender identity (2014) as protected classes. Order 11246 required the federal government and federal contractors with 50 or more employees or $50,000 in contracts to develop written affirmative action plans and ensure equal opportunities for all workers. The Order authorized the Secretary of Labor to establish the Office of Federal Contract Compliance Programs to enforce federal contractors’ compliance.

Features of the Study

The authors investigated the effect of federal antidiscrimination policies by examining the relationship between minority (African American, Asian, and Hispanic) employment share and federal contractor status, which subjects organizations to antidiscrimination laws that do not apply to all employers. Using Employer Information Report EEO-1 files from 1979 through 1992, the authors estimated a model to explain an establishment’s minority employment share as a function of federal contractor status, controlling for its location; city status; whether the business had one or multiple establishments,whether the establishment was a headquarters, major industry classification, segregation index, and occupational structure. EEO-1 files are establishment-level data from annual workforce surveys that employers meeting certain size requirements must submit to the Equal Employment Opportunity Commission and the Department of Labor's Office of Federal Contract Compliance Programs. Before 1982, private employers with at least 50 employees and federal contractors with at least 25 employees were required to file EEO-1 reports; since then, the size requirements have risen to 100 or 50 employees, respectively.

Findings

  • In 1982, the African American employment share was significantly higher among federal contractors than at an average EEO-1 company by 0.83 percentage points. By 1992, the African American employment share was significantly higher at federal contractors than at an average EEO-1 company by 1.36 percentage points.
  • The Hispanic employment share was significantly lower among federal contractors than on average in 1982 by 0.17 percentage points. This significant disparity increased to 0.45 percentage points in 1992.
  • By contrast, the Asian employment share was significantly higher among federal contractors in 1982, by 0.20 percentage points.

Considerations for Interpreting the Findings

Although the authors controlled for several employment establishment characteristics, such as location and industry, they did not control for highly relevant characteristics, such as size and revenue, which were likely to affect the outcomes of interest. Federal contractors in the sample were systematically smaller in terms of number of employees than other firms, because they had smaller size requirements for filing EEO-1 forms, a confound that could lead us to attribute effects of establishment size to federal contractor status. Moreover, the establishments that self-selected to be federal contractors were most likely to be those that found it least burdensome to adhere to affirmative action regulations, reducing the comparability of the treatment and comparison groups. For these reasons, the estimated effects of federal contractor status might be due in part to other factors.

In addition, the authors estimated multiple related impacts on outcomes related to employment, estimating separate regressions for each minority group for each of several years. Performing multiple statistical tests on related outcomes makes it more likely that some impacts will be found statistically significant purely by chance and not because they reflect program effectiveness. The authors did not perform statistical adjustments to account for the multiple tests, so the number of statistically significant findings in these domains is likely to be overstated.

Causal Evidence Rating

The quality of causal evidence provided in this study is low. This means we are not confident that the estimated effects are attributable to Executive Order 11246; other factors are likely to have contributed.

Reviewed by CLEAR

August 2015

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