5-1 COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.

5-2 The Diversity of the U.S. Population 5-2

5-3 The Racial Makeup of the United States 5-3

5-4 What Is a Minority? Minority –A group with lesser access to higher positions in society Has little to do with numbers and everything to do with power –Example: Females, who outnumbered males by almost six million in 2005, are a minority because they do not have equal access to positions of power 5-4

5-5 Prejudice and Discrimination Prejudice –Prejudgment on basis of stereotypes and hearsay, plus refusal to consider evidence that conflicts with prejudgment Discrimination –Action that treats individuals differently on basis of some arbitrary characteristic 5-5

5-6 Earnings and Income Earnings –Money received from labor market activities Income –Money received from all sources Includes: –Earnings –Interest on savings accounts –Dividends received on stock shares –Rents received from ownership of property and land –Welfare cash benefits 5-6

5-7 Median Weekly Earnings of Full-Time Workers 5-7

5-8 Types of Earnings Discrimination Wage discrimination –Paying equally productive workers different wages on basis of some arbitrary characteristic Employment discrimination –Not hiring certain workers on basis of some arbitrary characteristic Occupational discrimination –Not hiring some groups of workers for particular jobs, resulting, for example, in men’s jobs and women’s jobs or minority jobs and white jobs Human capital discrimination –Anything that prevents certain groups from acquiring level or quality of education or training to which other groups have access 5-8

5-9 Earnings and Education: Male vs. Female 5-9

5-10 Earnings and Education: Race and Ethnicity 5-10

5-11 Unemployment Rates 5-11

5-12 Statistical Discrimination Judging an individual on the average characteristics of his or her group –Examples: Employers believing that married women with children are absent more often than men because they will be the ones to stay home with sick children Auto insurance companies charging higher premiums to students with lower GPAs 5-12

5-13 Occupational Crowding Crowding some groups of workers into a limited number of jobs –Women are crowded into relatively few occupations, whereas men have more occupational choices 5-13

5-14 The Effects of Occupational Overcrowding 5-14

5-15 Effects of Labor Market Discrimination on the Economy 5-15

5-16 Effects of Labor Market Discrimination on Individuals Higher poverty rates Restricted home ownership housing segregation Less access to adequate health care –Higher infant and maternal death rates –Lower life expectancies Fewer opportunities for quality education 5-16

5-17 Rational Individual Choice Some economists argue that many differences are result of rational choice, not discrimination –Women choosing to work less hours than men –Women choosing the so-called women’s occupations because these are complementary to their primary roles as mothers and wives 5-17

5-18 The Equal Pay Act of 1963 Made it illegal for an employer to pay men and women different wage rates for doing same job Was an important policy against gender discrimination, but did not end all occupational segregation –If nurses are poorly paid in comparison to automobile mechanics, Equal Pay Act will not address that issue 5-18

5-19 The Civil Rights Act of 1964 Most important antidiscrimination statute Not only makes discriminatory compensation illegal, but also forbids discrimination in hiring, promoting, and firing Broader in coverage than Equal Pay Act Forbids discrimination on basis of race, gender, color, religion, or national origin Applies to all employers with 15 or more workers engaged in interstate commerce, to all labor unions with 15 or more members, and to all workers employed by educational institutions and by state, local, and federal governments Created Equal Employment Commission (EEOC), which administers it 5-19

5-20 Affirmative Action Efforts to provide equal opportunities in terms of employment and education to underrepresented groups of people Controversial since its inception –Resulted in quotas (rigid numerical requirements in hiring) –Resulted in tokenism (hiring minorities to comply with law, not for abilities) System of preferences that results in reverse discrimination against white males –Only way to end historical patterns of discrimination Affirmative action is necessary to narrow disparities in earnings of various ethnic, racial, and gender groups over time Diversity in workforce is positive in and of itself 5-20

5-21 Indirect Labor Market Policies Government can work in less direct ways to reduce labor market discrimination –Improving educational opportunities for racial and ethnic minorities and women –Many low-income workers with families have child- care problems, which can be alleviated by subsidized day care programs –Many families also lack reliable transportation, and mass transit is often inconvenient or unavailable –Maintaining a healthy economy through appropriate fiscal and monetary policies also can be construed as an antidiscrimination policy 5-21

5-22 Residential and Educational Segregation Low-income residential areas often end up with poorer-quality schools People living in segregated neighborhoods are likely to attend segregated neighborhood schools –In turn, students who attend poor-quality segregated schools are more likely to eventually receive lower wages and experience higher unemployment rates, and are more likely to live in poverty 5-22

5-23 Affirmative Action in Education University of Michigan cases –Graduate admissions Supreme Court stated that race can be used as a factor in university admissions decisions and that “a diverse student body has its own benefits” –Undergraduate admissions Supreme Court ruled that more rigid system relying on specific points given to students based on race and ethnicity is not constitutional 5-23

5-24 The Economic Left and the Economic Right THE ECONOMIC RIGHT (Conservative) –Argue that remaining disparities between earnings of minorities and whites and between those of women and men are result of rational choice, not discrimination –Oppose government intervention in markets, including labor markets –See affirmative action as misguided and source of great inefficiency –Believe that changing social values and passage of antidiscrimination laws have alleviated problem of discrimination and that affirmative action is no longer needed THE ECONOMIC LEFT (Liberal) –Believe that government programs have done some good but that they have not completely solved problem of discrimination –See a need to continue affirmative action programs –See great value in diversity of workplace and educational institutions, and are committed to overcoming results of decades of unequal treatment of minorities –Often propose alternatives to property-tax financing of public education 5-24