The Wage Gains of African-American Women in the 1940s

The 1940s marked a turning point in the labor market history of AfricanAmerican women, characterized by sharp declines in agricultural and domestic service employment, a significant rise in formal sector employment, and large wage gains compared to white women. Using a semi-parametric technique, this paper examines the wage gains associated with changes in workers’ productive and personal characteristics, in their distribution across occupations and industries, and in the structure of their compensation. The most important contributing factors were an increase in the wages of domestic service workers relative to other occupational categories and large wage gains for blacks relative to whites within occupational categories. In the 1940s the average real weekly wages of black women nearly doubled, thereby narrowing the racial wage gap among non-farm working women by a full 15 percentage points. At the same time, the proportion of employed black women holding formal sector jobs increased from 27 to 50 percent. According to our best estimates of the racial wage gap, the 1940s marked a dramatic departure from 1 The figures are calculated using the wage income variable of Ruggles, et al., Integrated, and using the consumer price index for deflation. Sample restrictions are described in the notes to figure 1. The average weekly wage for black women rose from $13 to $24 (1950 dollars). The black-white ratio increased from 0.44 to 0.59. See figure 1 notes for sample restrictions. Cunningham and Zalokar, “Economic Progress,” report results of a similar magnitude (0.44 to 0.64) for estimates of hourly wages. Ad hoc adjustments for cost of living differences between metropolitan areas and non-metropolitans areas (discounting metro area income by 20 percent) have little effect on the magnitude of the wage gains. And, as discussed later, the bulk of the absolute and the relative gains were not driven by selection into the labor force. 2 For the sake of brevity, we use the term “formal sector” to denote all occupations outside agriculture and private household service. 2 African-American women's experiences earlier in the twentieth century, as they took a large first step towards greater economic equality. Previous research has focused on the decade’s significance in spurring the labor-force participation of white women and wage growth among black men. But black women’s labor market outcomes evolved quite differently from those of other groups. Consequently, their economic history cannot be understood as a mere combination of the existing stories for white women and black men. By developing a detailed ecology of black women’s labor market experiences in the 1940s and setting it in contrast to previous and subsequent decades, this paper contributes to a central theme in American economic history: the story of how race, gender, and labor markets interacted over the course of the turbulent twentieth century. Our argument is twofold. First, we claim that the 1940s were a watershed decade for African-American women's integration into formal sector employment and marked a turning point in the growth path of their wages relative to those of white women. The labor market gains during the 1940s were not continuations of pre-existing trends, and the relative wage gains in the 1940s are comparable to those achieved during the 1960s and commonly associated with the Civil Rights Movement. Moreover, the 1940s advances were sustained. Over the 1950s, black women’s wages and occupations did not revert back toward their pre-World War II distributions, nor did the wage gap between black and white women widen. Second, using a semi-parametric decomposition methodology pioneered by John DiNardo, Nicole 3 Goldin, “Role”; Maloney, “Wage”; Margo, “Explaining”. 4 See Blau and Beller, “Black-White Earnings,” and Neal, “Measured” for examinations of more recent trends in the racial wage gap among women. 5 Changes in black women’s wages were larger in absolute terms during the 1940s than the 1960s, but the gains relative to white women were approximately the same in each decade. We offer a detailed comparison later in the paper. The black-white wage gap continued to narrow in the 1970s, which we do not capture in our comparison. But because the 1940s gains were almost certainly concentrated in the 1941 to 1945 period, we think it is useful to compare them with the gains achieved in a similar five-year period following the 1964 Civil Rights Act. 3 Fortin and Thomas Lemieux, we quantify the importance of changes in the wage structure after accounting for changes in black and white women’s productive and personal characteristics and in their representation across jobs and locations. We find that large wage gains in domestic service jobs (where black women were concentrated) relative to clerical jobs (where white women were concentrated) made significant contributions to racial wage convergence. But even within job categories and after accounting for observable characteristics, black women’s wage gains outpaced those of whites. The results suggest that such black-specific wage gains account for approximately 38 percent of the decade's total convergence in mean weekly wages. The large net flow of black women into formal sector jobs (which is not explained by changes in their observable characteristics) coupled with pervasive increases in black women’s wages relative to those of white women (even in the occupations black women were leaving) is consistent with a substantial increase in the relative demand for their labor in the formal sector. Previous work has shown that wartime labor demand, complemented by institutional and policy changes, permitted many black workers to attain better-paying jobs and compressed the American wage structure. Although we cannot directly measure the prevalence of discriminatory practices, it appears that black women took advantage of new employment opportunities, generating a pattern of wage and occupational gains that lasted well beyond the extraordinary years of World War II. In subsequent decades, African-Americans built upon their wartime economic advances. They increased their presence in jobs that were in urban areas and covered by formal contracts and benefits, minimum wage legislation, and collective bargaining. This better positioned them to organize and advocate for Civil Rights, to take advantage of formal-sector networks of employment and information, 6 DiNardo, Fortin, and Lemieux, “Labor Market”. 7 See Goldin and Margo, “Great Compression,” for a thorough discussion of the wage structure’s compression. See Reed, Seedtime, and Collins, “Race,” and “Labor Market,” on government antidiscrimination policies during the war. See Moreno, Black Americans, on unions. 4 and to gain employment in previously racially exclusive firms. Moreover, with higher household income and increasing urbanization, their children faced, on average, better educational opportunities and labor market options than were available in the rural South. In this sense, the rapidly changing employment pattern of African Americans in the 1940s – particularly when viewed in contrast to the pace of occupational and wage convergence before World War II – laid the foundation for later economic, political, and social progress. BLACK WOMEN’S WAGES AND JOB MOBILITY: THE 1940S IN HISTORICAL CONTEXT The importance of the 1940s in the economic history of racial disparities is highlighted by abrupt and pervasive changes in African-American women's labor market outcomes. First, our estimates of the black-white ratio of mean nonfarm wages among women from 1909 to 1969 indicate that the 1940s marked a turning point. As we discuss below, accounting for potential sample selection or measurement error does not greatly alter the magnitude of mean wage convergence in the 1940s. Second, the wage gains were widespread. Black women's wages increased throughout the wage distribution and throughout the country, both in absolute terms and relative to white women’s wages. Part of this was due to their movement into higher paying occupations, yet even within occupational groups, black women’s wages increased faster than white women’s. Third, the timing of the wage gains for black women corresponds 8 Membership in the National Association for the Advancement of Colored People (NAACP) skyrocketed during World War II (Tushnet, NAACP’s Legal Strategy, p. 135). Reed characterizes the period as Seedtime for the Civil Rights Movement. See Whatley, “Getting a Foot,” on the importance of employers’ changing hiring practices during World War I. 9 For example, in the 1950 microdata sample (Ruggles et al., Integrated), school enrollment rates were significantly higher for blacks residing in metropolitan areas than for those in non-metro areas, particularly at relatively young (under 7) and old (over 14) ages. Despite the Supreme Court decision in Brown v. Board of Education in 1954, most southern schools remained segregated until the mid 1960s (Clotfelter, After Brown), and the South historically lagged the non-South in its commitment to public education (Nicholls, Southern Tradition; Wright, Old South). 5 to sharp changes in their occupational distribution. Later in the paper, we argue that this combination of findings is consistent with strong demand-side shifts that signaled the start of a long-run, though episodic, decline in labor market discrimination against black women. Due to data constraints, we focus our examination of wages on samples of wage and salary workers employed in non-farm occupations (as described in appendix 1), but our examination of the occupational redistribution of women incorporates farm sector employees. Changes in Mean Wages, 1909-1969 Prior to 1940, the census did not collect information on workers’ wages, and other sources of wage information are either unrepresentative of the national labor force or not race-specific (or both). Nonetheless, one can estimate the black-white nonfarm wage gap for earlier years using three sources of wage and labor force data: (1) the 1940 sample of the Integrated Public Use Microdata Series (henceforth IPUMS) allows the calculation of mean wages for women by race-industry-region cells in the previous year; (2) the IPUMS samples for earlier years (1910, 1920, and 1930) reveal the distribution of female workers across race-industry-region cells in each census year; and (3) the industry-level average wage series from Historical Statistics of the United States indicate how the inter-industry wage structure changed over time. 10 Ruggles, et al. For simplicity, we often refer to the census year when discussing wage gains, though the census income question always pertains to the previous calendar year. 11 U.S. Department of Commerce, Historical Statistics, pp. 166-167. To maintain a reasonable number of observations per race-industry-region cell in 1940, we used two-digit industry categories (rather than the more detailed three-digit codes). We distinguish workers by industry categories (rather than occupations), because the long-run wage series reported in Historical Statistics are industry-based. See the notes to figure 1 for more information. This approach is similar in spirit to that taken in Smith, “Race”. We extend his idea, however, by allowing geographic redistribution and industry-level wage fluctuations to affect the estimated black-white wage gap for women. 6 Specifically, we calculate the average black-white wage gap in a given year as ∑ ∑ ⋅ ⋅ ⋅ ⋅ = = i r W W W i r W t i r N i r W W B i r B t i r N W t B t t i t i W t i t i B t W N W N W W G , 1939 , , , , 1 , 1939 , , , , 1