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Using establishment size to measure the impact of Title VII and affirmative action (Carrington et al. 2000)

Citation

Carrington, W.J., McCue, K., & Pierce, B. (2000). Using establishment size to measure the impact of Title VII and affirmative action. Journal of Human Resources, 35(3): 503-523.

Highlights

  • This study’s objective was to assess the impact of the Civil Rights Act of 1964 (the Civil Rights Act) and subsequent affirmative action executive orders on the employment share of African American employees at larger employers (which were subject to those laws) and the African American–white wage gap.
  • The authors examined trends in the annual employment shares of African American men, African American women, white men, and white women at employers in different size classes. They also assessed the contributions of individual- and firm-level factors to the gaps in wages earned by African American and white workers over time. Analyses used March Current Population Survey Annual Demographic Survey (1964–1988) linked with County Business Pattern data.
  • The authors estimated that the Civil Rights Act and affirmative action increased the share of African American men and women employed by large firms. In addition, the authors found that a substantial proportion of African American–white wage convergence during the study period was attributable to African American employees’ growing employment share at large firms.
  • The quality of causal evidence presented in this report is low. This means that we are not confident that the observed changes in employment are attributable to the Civil Rights Act and affirmative action; other factors are likely to have contributed.

Intervention Examined

The Civil Rights Act of 1964 and Affirmative Action Executive Orders

Features of the Intervention

Under Title VII of the Civil Rights Act, employers are forbidden from discriminating against their employees on the basis of race, sex, color, religion, or national origin. The law prohibits discrimination in terms, compensation, working conditions, and other aspects of employment, mandates enforcement by courts, rather than juries, and provides civil penalties for violations, including mandatory remedial hiring policies for employers and reinstatement with back pay awards to victims. It also created the Equal Employment Opportunity Commission to bring class action litigation against employers for discrimination. The Civil Rights Act initially applied to private sector employers with more than 25 employees; since 1972, it has applied to those with more than 15 employees.

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

This study estimated the impact of the Civil Rights Act and affirmative action executive orders, which apply disproportionately to larger employers, on the growing representation of African American and female employees at large firms during the post-civil rights period of 1964–1988. In addition, because large employers typically pay more than small employers, the authors attempted to identify the share of African American–white wage convergence during this period that was attributable to the shifting share of African American employment at large firms.

The authors matched characteristics and counts of private sector, full-time, full-year workers ages 18 to 64, obtained from the March Current Population Survey, to employers by state, industry, and year, as identified from the 1963–1987 County Business Patterns data. They first compared the percentage of employment at small employers (defined as less than a certain threshold, the level of which varied from 20 to 100) relative to large employers, for African American and white men, African American and white women, and white women and men. Analyses estimated employment shares overall and after controlling for differences in employee characteristics, including education and North/South geographic location. They then computed the proporations of the change in wage gaps that were attributable to changes in wage disparities between African American and white workers over time into components explained by changes in human capital, employment at large versus small firms, and other factors.

Findings

  • The study found that, following the Civil Rights Act and affirmative action executive orders, the employment distribution of African American men and women relative to their white counterparts reversed dramatically, from 13 to 16 percent over-representation at small firms in the early 1960s to 10 percent under-representation at small firms by 1975. The reversal was apparent even after controlling for education and potential work experience. This trend was particularly apparent in the South, where pre-1964 employment discrimination was known to be higher. However, the authors did not indicate whether these findings were statistically significant.
  • In addition, a substantial proportion of African American–white wage convergence during the period could be explained by African American employees’ growing employment share at large firms. For example, an estimated 15 percent of the wage convergence between African American and white men in the South and an estimated 20 percent of the wage convergence between African American and white women in the South were attributable to African American employees’ growing representation at large employers. However, the authors did not indicate whether these findings were statistically significant.

Considerations for Interpreting the Findings

The authors identified the effect of the policies by comparing workers at large employers, which were affected by the policies being examined, to workers at small employers, which were not affected. However, the analysis did not establish that small employers were comparable to large employers before the passage of these laws. Although the authors controlled for worker and firm characteristics, African American and female employment trends at small and large employers may not have been comparable before 1964, so subsequent changes in employment may not have been due solely to the implementation of the policies. The authors also did not address the fact that establishment size was under employers’ control. Some employers (for example, those that found it desirable to have a relatively small share of African American employment) might have kept their establishment size low to avoid being subject to the policies.

Causal Evidence Rating

The quality of causal evidence presented in this report is low. This means that we are not confident that the observed changes in employment were attributable to the Civil Rights Act and affirmative action; other factors are likely to have contributed.

Reviewed by CLEAR

August 2015

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