Left to its own devices, competitive markets will really find it difficult to eliminate racial discrimination. In an era called the Nadir, which spanned from 1877 until World War I, racial inequality in occupational status rose although racial inequality in literacy has already declined. Through the years, racial inequality in labor conditions, wages and access to employment expanded, even as racial inequality in the quantity and the quality of education declined. In both instances racial discrimination in the labor market more than offset the gains African Americans made in reducing the skills gap.
Racial discrimination in the labor market exists when there is differential treatment of workers because of nonessential differences in characteristics; that is, economically identical persons are treated differently within the market because of their race. Racial discrimination has indeed affected all elements of the labor market process, from establishment of employment pools, hiring practices, and requirements to wages and salaries, training opportunities, employment segregation, etc. (Mason, 145).
However, racial inequality in the labor market does not necessarily mean racial discrimination in the labor market. Accordingly, there is disagreement that there are large and persistent racial differences in compensation, hours and working conditions, but there is considerable disagreement among economists regarding how much--if any--of this inequality is duie to racial discrimination within the labor market. Consider the fact that African-Americans earn only 70 percent of what its White male counterpart earns. The issue in this instance is how much of the average difference in pay can be attributed to the average difference in skill, and therefore productivity, and how much of the difference in pay can be attributed to the racially different treatment among equally skilled persons in the labor market (Dubofsky 10).
Accordingly, racial inequality in labor market may have occur for four reasons:
1. racial discrimination within the labor market;
2. racial discrimination in non-labor-market activities that affect skill development and access to information and capital;
3. differences in the behaviors and values of individuals and families that affect skill accumulations; and
4. differences in the innate abilities of individuals.
Slavery and the Early Formation of Black Market Labor
The discovery of America added an entirely new dimension to the demand of slaves. By 16th century, the demand for cheap labor to exploit the new continent's resources had created an enormous market for slaves, and the slave traffic in Africa changed from an accessory to the older trades to a major economic enterprise, providing enormous profits for the rising European capitalists. Thus, what European merchants really wanted from Africa was human beings for slaves and the demand did not slacken for 200 years (Taylor & Hills, eds., 179).
Plantation owners, especially, needed cheap and stable labor supply, and slavery met this need. Slavery was a lifetime status; moreover, it was passed on to the slaves' children. The owner was not limited by the expiration of the indenture or by the inconvenience of hiring a new worker. Men and women with black skins could be held for a lifetime of service. Even if they run away, because of their colors, Negro slaves could be more easily recognized and captured. Even when they had attained freedom, they were viewed with suspicion when seeking work and were sometimes thrown back into slavery. As blacks, they were held to be descended from Ham, the accursed son of Noah; as pagans, their "savagery" and "barbarism" placed them beyond the pale of civilization, and the usual rites of Christian conduct did not apply to them. As Eric Williams points out, the owners of plantations "would have gone to the moon, if necessary, for labor." But they had Africa, with its seemingly unlimited cheap labor supply. In 1764, an essay titled “On the Populousness of Africa,” a British official on the Gold coast wrote that African not only can continue supplying the West Indies in the quantities she has hitherto, but, if necessity required it, could spare thousands, nay, millions more, and go on doing the same to the end of time." It was to Africa that the European colonists turned.
African-Americans in the Pre-Civil War Economy
W.E.B. DuBois, the most respected figure among African-American scholars, asserts that the slave trade provided the foundations of European development for over 400 years. "From 1442 to 1860, nearly half a millennium," DuBois writes, "the Christian world fattened on the stealing of human souls (DuBois in Conrad, et al, eds. 15). There is no doubt that the exploitation of enslaved Africans was especially vital to the development and performance of the U.S. economy in the latter decades of the 18th century. Lorenzo Greene (in Conrad et al, ed.,16 ) declares that on the eve of American Revolution the slave trade formed the very basis of the economic life of New England. According to Greene, "The vast sugar, molasses and rum trade, shipbuilding, the distilleries, a great many of the fisheries, the employment of artisans and seamen, even agriculture4-all were dependent on the slave traffic."
Indeed, African slaves were connected to almost every aspect of the New England economy, from working as house servants, in agriculture production and in industries." In 1760, about 2/3 of the enslaved Africans in the North American colonies were used in the cultivation of tobacco, rice and indigo. Because many of the Africans who were imported into the low country of colonial South Carolina had knowledge of rice-growing techniques, rice cultivation exploited the human capital--of enslaved Africans in addition to their labor. Studies examining the political economy of slavery between 1820 and 1860 have been marked by controversies that cloud recognition of the important contributions by blacks to the Southern and the national economic development.
The economic impact of the massive exploitation of black labor on output was remarkable. Cotton production increased dramatically: 300,000 bales in 1820; 700,000 in 1830; 2 million in 1850; 4.5 million in 1860. In general, exploitation of black labor involved coercing artificially high levels of productivity per hour compared to free workers rather than requiring more hours of work per year. Planters used a combination of violence and positive incentives to extract high levels of work effort, although they would regularly use incentives to complement physical punishment. These incentives included prizes for the most cotton picked for the day, year-end bonuses, occupations involving greater prestige and responsibility, time off and plots of land. Black labor was also exploited outside of plantation agriculture as well. Industries employing slave labor were more profitable than were similar industries employing either integrated slave-free workforces or free workforces.
African-Americans in the Labor Market After the Civil War Through the 1900s
With the success of the North in the Civil War and the emancipation of the slaves, the exploitation of black labor almost got eliminated. Likewise, with their freedom, African-Americans had to the chance to great boost the portion of income actually received from agricultural pursuits. Likewise, African-Americans reduced their labor force participation and the number of hours spent at work, following the work-leisure pattern so observed by free Americans. Hours spent at work significantly declined for all age-gender cohorts and the cumulative effect was quite spectacular. By 1880, however, labor force participation rate of African-Americans almost matched the pre-Civil War levels. Likewise, Black and White farmers, with the same capital and land, have been found to be equally productive.
However, African-Americans were not given the chance to join in the postwar economic development solely on their own terms. Businesses and commercial establishments during the prewar years were actually trying to keep the black population as landless agricultural tenants with outdated and unprogressive technology. Likewise, opportunities to acquire human capital and pursue economic ventures outside agriculture remained restricted. Likewise, Blacks were also restricted from acquiring human capital and pursue economic ventures outside agriculture. Also, the absence of profound funding for education of black children perpetuated high illiteracy rates among adults. In fact, as much as 75 percent of all Black children in 1880 were illiterate. Moreover, not much progress was made in reducing the nutritional deficits that characterized the slavery experience. Illiteracy was also a barrier to black artisans who attempted to take advantage of skills acquired during slavery. Despite the barriers, black artisans fought to attain literacy, given that the literacy rates among artisans were actually 4 times higher when compared to farmers.
Despite the traditional restrictions imposed among Black workers, on a lighter note, it is inspiring to see that there were actually former slaves who demonstrated entrepreneurship and innovativeness. Because they were granted citizenships, Black inventors also asserted the rights to intellectual property and patent for inventions. But with limited access to capital, a lot of them had a hard time turning their ingenuity into an enterprising venture. Also worth noting in the huge gap between the wealth holdings of the Blacks and Whites, which to this day, remains as the most enduring legacy of the exploitation they experienced.
American Labor: A Documentary Collection, edited by Dubofsky and McCartin. Palgrave Macmillan, 2004.
Historical Roots of the Urban Crisis: African Americans in the Industrial City, 1900-1950, edited by Taylor and Hill. Garland Publishing, 2000.
Mason, Patrick L. "Persistent Racial Discrimination in the Labor Market." African Americans in the U.S. Economy, edited by edited by Cecilia Conrad et al. Rowman & Littlefield, 2005.
Stewart, James B. "The Critical Role of African Americans in the Development of the Pre-Civil War U.S. Economy." African Americans in the U.S. Economy, edited by Cecilia Conrad et al. Rowman & Littlefield, 2005.