Race and the shifting burden of job displacement: 1982-93

Monthly Labor Review

Volumn 119, Issue 9, 1996, Pages 13-23

  Fairlie, Robert W ^a   Kletzer, Lori G ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

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EID: 0002514562     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (47)

1. See Robert W. Fairlie and Lori G. Kletzer, "Why Did So Many African- American Men Lose Their Jobs in the 1980's? An Analysis of Black/White Differences in Job Displacement," working paper no. 330, University of California, Santa Cruz, CA, March 1995; Lori G. Kletzer, "Job displacement, 1979-86: how blacks fared relative to whites," Monthly Labor Review, July 1991, pp. 17-25; Equal Employment Opportunity: Displacement Rates, Unemployment Spells, and Reemployment Wages by Race, GAO/HEHS-94-229FS (General Accounting Office, September 1994); and Jennifer M. Gardner, "Worker displacement: a decade of change," Monthly Labor Review, April 1995, pp. 45-57.
2. See Robert W. Fairlie and Lori G. Kletzer, "Why Did So Many African- American Men Lose Their Jobs in the 1980's? An Analysis of Black/White Differences in Job Displacement," working paper no. 330, University of California, Santa Cruz, CA, March 1995; Lori G. Kletzer, "Job displacement, 1979-86: how blacks fared relative to whites," Monthly Labor Review, July 1991, pp. 17-25; Equal Employment Opportunity: Displacement Rates, Unemployment Spells, and Reemployment Wages by Race, GAO/HEHS-94-229FS (General Accounting Office, September 1994); and Jennifer M. Gardner, "Worker displacement: a decade of change," Monthly Labor Review, April 1995, pp. 45-57.
3. See Robert W. Fairlie and Lori G. Kletzer, "Why Did So Many African- American Men Lose Their Jobs in the 1980's? An Analysis of Black/White Differences in Job Displacement," working paper no. 330, University of California, Santa Cruz, CA, March 1995; Lori G. Kletzer, "Job displacement, 1979-86: how blacks fared relative to whites," Monthly Labor Review, July 1991, pp. 17-25; Equal Employment Opportunity: Displacement Rates, Unemployment Spells, and Reemployment Wages by Race, GAO/HEHS-94-229FS (General Accounting Office, September 1994); and Jennifer M. Gardner, "Worker displacement: a decade of change," Monthly Labor Review, April 1995, pp. 45-57.
4. See Robert W. Fairlie and Lori G. Kletzer, "Why Did So Many African- American Men Lose Their Jobs in the 1980's? An Analysis of Black/White Differences in Job Displacement," working paper no. 330, University of California, Santa Cruz, CA, March 1995; Lori G. Kletzer, "Job displacement, 1979-86: how blacks fared relative to whites," Monthly Labor Review, July 1991, pp. 17-25; Equal Employment Opportunity: Displacement Rates, Unemployment Spells, and Reemployment Wages by Race, GAO/HEHS-94-229FS (General Accounting Office, September 1994); and Jennifer M. Gardner, "Worker displacement: a decade of change," Monthly Labor Review, April 1995, pp. 45-57.
5. We focus our analysis on men, following the emphasis on the same in the recent literature on the economic status of black Americans.
6. In the 1994 survey, the recall period was shortened to 3 years.
7. For further details on the Displaced Worker Survey, see the following articles in the Monthly Labor Review: Paul O. Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" June 1985, pp. 3-16; Francis W. Horvath, "The pulse of economic change: displaced workers of 1981-85," June 1987, pp. 3-12 ; Diane E. Herz, "Worker displacement in a period of rapid job expansion: 1983-87," May 1990, pp. 21-33, and "Worker displacement still common in the late 1980's," May 1991, pp. 3-9; and Jennifer M. Gardner, "Recession swells count of displaced workers," June 1993, pp. 14-23, and "Worker displacement."
8. For further details on the Displaced Worker Survey, see the following articles in the Monthly Labor Review: Paul O. Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" June 1985, pp. 3-16; Francis W. Horvath, "The pulse of economic change: displaced workers of 1981-85," June 1987, pp. 3-12 ; Diane E. Herz, "Worker displacement in a period of rapid job expansion: 1983-87," May 1990, pp. 21-33, and "Worker displacement still common in the late 1980's," May 1991, pp. 3-9; and Jennifer M. Gardner, "Recession swells count of displaced workers," June 1993, pp. 14-23, and "Worker displacement."
9. For further details on the Displaced Worker Survey, see the following articles in the Monthly Labor Review: Paul O. Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" June 1985, pp. 3-16; Francis W. Horvath, "The pulse of economic change: displaced workers of 1981-85," June 1987, pp. 3-12 ; Diane E. Herz, "Worker displacement in a period of rapid job expansion: 1983-87," May 1990, pp. 21-33, and "Worker displacement still common in the late 1980's," May 1991, pp. 3-9; and Jennifer M. Gardner, "Recession swells count of displaced workers," June 1993, pp. 14-23, and "Worker displacement."
10. For further details on the Displaced Worker Survey, see the following articles in the Monthly Labor Review: Paul O. Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" June 1985, pp. 3-16; Francis W. Horvath, "The pulse of economic change: displaced workers of 1981-85," June 1987, pp. 3-12 ; Diane E. Herz, "Worker displacement in a period of rapid job expansion: 1983-87," May 1990, pp. 21-33, and "Worker displacement still common in the late 1980's," May 1991, pp. 3-9; and Jennifer M. Gardner, "Recession swells count of displaced workers," June 1993, pp. 14-23, and "Worker displacement."
11. For further details on the Displaced Worker Survey, see the following articles in the Monthly Labor Review: Paul O. Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" June 1985, pp. 3-16; Francis W. Horvath, "The pulse of economic change: displaced workers of 1981-85," June 1987, pp. 3-12 ; Diane E. Herz, "Worker displacement in a period of rapid job expansion: 1983-87," May 1990, pp. 21-33, and "Worker displacement still common in the late 1980's," May 1991, pp. 3-9; and Jennifer M. Gardner, "Recession swells count of displaced workers," June 1993, pp. 14-23, and "Worker displacement."
12. For further details on the Displaced Worker Survey, see the following articles in the Monthly Labor Review: Paul O. Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" June 1985, pp. 3-16; Francis W. Horvath, "The pulse of economic change: displaced workers of 1981-85," June 1987, pp. 3-12 ; Diane E. Herz, "Worker displacement in a period of rapid job expansion: 1983-87," May 1990, pp. 21-33, and "Worker displacement still common in the late 1980's," May 1991, pp. 3-9; and Jennifer M. Gardner, "Recession swells count of displaced workers," June 1993, pp. 14-23, and "Worker displacement."
13. We limit the analysis to full-time workers in order to study job displacement among workers who are strongly attached to the labor force. The criteria for eligibility for the sample are similar to those used by the Bureau of Labor Statistics in various articles reporting on job displacement. One major difference, however, is that we do not exclude workers who have less than 3 years of tenure on their predisplacement job. Because of small sample sizes of black displaced workers in each year, we use the full distribution of predisplacement job tenure. This approach is common among recent empirical studies of job displacement. (See, for example, Henry S. Farber, "The Incidence and Costs of Job Loss: 1982-91," Brookings Papers: Microeconomics 1993, vol. 1 (Washington, The Brookings Institution, 1993), pp. 73-132; and Michael Podgursky, "The industrial structure of job displacement: 1979-89," Monthly Labor Review, September 1992, pp. 17-25.)
14. We limit the analysis to full-time workers in order to study job displacement among workers who are strongly attached to the labor force. The criteria for eligibility for the sample are similar to those used by the Bureau of Labor Statistics in various articles reporting on job displacement. One major difference, however, is that we do not exclude workers who have less than 3 years of tenure on their predisplacement job. Because of small sample sizes of black displaced workers in each year, we use the full distribution of predisplacement job tenure. This approach is common among recent empirical studies of job displacement. (See, for example, Henry S. Farber, "The Incidence and Costs of Job Loss: 1982-91," Brookings Papers: Microeconomics 1993, vol. 1 (Washington, The Brookings Institution, 1993), pp. 73-132; and Michael Podgursky, "The industrial structure of job displacement: 1979-89," Monthly Labor Review, September 1992, pp. 17-25.)
15. The overlapping coverage of years of displacement by the survey, with some years covered two or three times, poses an additional problem.
16. See David S. Evans and Linda S. Leighton, "Retrospective Bias in the Displaced Worker Surveys," Journal of Human Resources, vol. 30 (1995), pp. 386-96. Robert Topel, "Specific Capital and Unemployment: Measuring the Costs and Consequences of Job Loss," Carnegie-Rochester Conference Series on Public Policy, vol. 33 (1990), pp. 181-214, and Farber, "Job Loss: 1982- 91," also provide discussions of retrospective bias in the Displaced Worker Survey.
17. See David S. Evans and Linda S. Leighton, "Retrospective Bias in the Displaced Worker Surveys," Journal of Human Resources, vol. 30 (1995), pp. 386-96. Robert Topel, "Specific Capital and Unemployment: Measuring the Costs and Consequences of Job Loss," Carnegie-Rochester Conference Series on Public Policy, vol. 33 (1990), pp. 181-214, and Farber, "Job Loss: 1982- 91," also provide discussions of retrospective bias in the Displaced Worker Survey.
18. See David S. Evans and Linda S. Leighton, "Retrospective Bias in the Displaced Worker Surveys," Journal of Human Resources, vol. 30 (1995), pp. 386-96. Robert Topel, "Specific Capital and Unemployment: Measuring the Costs and Consequences of Job Loss," Carnegie-Rochester Conference Series on Public Policy, vol. 33 (1990), pp. 181-214, and Farber, "Job Loss: 1982- 91," also provide discussions of retrospective bias in the Displaced Worker Survey.
19. See Gardner, "Worker displacement," for a discussion of this issue.
20. These studies exclude workers displaced during the survey month.
21. These files, available from the National Bureau of Economic Research, provide an estimate of total annual employment that is based on average monthly employment over the entire year. Using data on employment from all 12 months of the calendar year provides the best estimate of the actual number of individuals who are at risk of displacement during any given year.
22. Evans and Leighton estimate that 61.6 percent of actual displacements which occurred in the third year prior to the survey date are reported in the Displaced Worker Survey.
23. See Evans and Leighton, "Retrospective Bias," for estimates of the size of this understatement.
24. Our labeling of 1982-83 as a slack period relies on those years having high unemployment compared with later years. (The unemployment rate was 9.7 percent in 1982 and 9.6 percent in 1983.) The National Bureau of Economic Research dates the recession of the early 1980s differently, with the peak in economic activity in mid-1981 and the trough in mid-1982. Throughout our analysis, we label slack and strong labor markets as periods of relatively high and low unemployment, respectively.
25. The two differences are not statistically different from each other at the α = .05 level.
26. The two alternative methods of calculating displacement rates also demonstrate that the racial gap was large in the early 1980s and vanished in the early 1990s (although the convergence was less steady).
27. See Erica Groshen and Donald R. Williams, "White- and Blue-Collar Jobs in the Recent Recession and Recovery: Who's Singing the Blues?" Economic Review, vol. 28, no. 4 (1992), pp. 2-12; Farber, "Incidence and Costs of Job Loss"; and Lori G. Kletzer, "White Collar Job Displacement, 1983-91," Proceedings of the 47th Annual Meeting of the Industrial Relations Research Association (Madison, WI, Industrial Relations Research Association, January 1995).
28. See Erica Groshen and Donald R. Williams, "White- and Blue-Collar Jobs in the Recent Recession and Recovery: Who's Singing the Blues?" Economic Review, vol. 28, no. 4 (1992), pp. 2-12; Farber, "Incidence and Costs of Job Loss"; and Lori G. Kletzer, "White Collar Job Displacement, 1983-91," Proceedings of the 47th Annual Meeting of the Industrial Relations Research Association (Madison, WI, Industrial Relations Research Association, January 1995).
29. See Erica Groshen and Donald R. Williams, "White- and Blue-Collar Jobs in the Recent Recession and Recovery: Who's Singing the Blues?" Economic Review, vol. 28, no. 4 (1992), pp. 2-12; Farber, "Incidence and Costs of Job Loss"; and Lori G. Kletzer, "White Collar Job Displacement, 1983-91," Proceedings of the 47th Annual Meeting of the Industrial Relations Research Association (Madison, WI, Industrial Relations Research Association, January 1995).
30. i sum to 1.
31. James P. Smith and Finis Welch, Closing the Gap (Santa Monica, CA, Rand Corporation, 1986), and John J. Donohue, III, and James Heckman, "Continuous Versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," Journal of Economic Literature, December 1991, pp. 1603-43, use the technique to estimate the effect of education on the rate of racial convergence in wages. In their studies, the decomposition uses mean levels of characteristics and ordinary least squares coefficient estimates. Our translation views employment shares (ES's) as the mean levels of characteristics (X's) and displacement rates (DR's) as the coefficients (β's).
32. James P. Smith and Finis Welch, Closing the Gap (Santa Monica, CA, Rand Corporation, 1986), and John J. Donohue, III, and James Heckman, "Continuous Versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," Journal of Economic Literature, December 1991, pp. 1603-43, use the technique to estimate the effect of education on the rate of racial convergence in wages. In their studies, the decomposition uses mean levels of characteristics and ordinary least squares coefficient estimates. Our translation views employment shares (ES's) as the mean levels of characteristics (X's) and displacement rates (DR's) as the coefficients (β's).
33. W in equation (4) and adjust equations (2) and (3) appropriately.
34. Both changes in the racial gap are statistically significant at the α = .05 level.
35. In this analysis, we define white-collar occupations as managerial and professional specialty occupations and technical, sales, and administrative support occupations. Semiskilled blue-collar workers include operators, fabricators, and laborers, and skilled blue-collar occupations include precision production, craft, and repair occupations.
36. Decompositions by industry would be less informative than the results for occupational, educational, and regional categories, because black men and white men did not differ substantially in their industrial distribution during the sample period. See Fairlie and Kletzer, "Why Did So Many African-American Men Lose Their Jobs."
37. The displacement rate interaction explains 18.3 percent and 23.2 percent of the total change in the racial gap from 1982-83 to 1990-91, using methods 1 and 2, respectively. For the change from 1984-89 to 1992-93, it explains 6.2 percent and 33.0 percent of the change, using the respective methods.
38. See Bruce C. Fallick, "A Review of the Recent Empirical Literature on Displaced Workers," mimeo. (Federal Reserve Board, 1994), and Industrial and Labor Relations Review, forthcoming; and Lori G. Kletzer, "What Have We Learned about Job Displacement?" working paper no. 333 (Santa Cruz, CA, University of California, April 1995), for reviews of this literature.
39. See Bruce C. Fallick, "A Review of the Recent Empirical Literature on Displaced Workers," mimeo. (Federal Reserve Board, 1994), and Industrial and Labor Relations Review, forthcoming; and Lori G. Kletzer, "What Have We Learned about Job Displacement?" working paper no. 333 (Santa Cruz, CA, University of California, April 1995), for reviews of this literature.
40. See Bruce C. Fallick, "A Review of the Recent Empirical Literature on Displaced Workers," mimeo. (Federal Reserve Board, 1994), and Industrial and Labor Relations Review, forthcoming; and Lori G. Kletzer, "What Have We Learned about Job Displacement?" working paper no. 333 (Santa Cruz, CA, University of California, April 1995), for reviews of this literature.
41. Because a person's labor market status is ascertained only on the date of the survey, our reemployment rate is technically an employment rate. Workers who were displaced, reemployed, and then unemployed again on the date of the survey were counted as unemployed. Thus, our measure of employment on the date of the survey understates the true reemployment rate.
42. See Fairlie and Kletzer, "Why Did So Many African-American Men Lose Their Jobs," for an analysis of the causes of the racial difference in reemployment rates for the period 1982-91. We do not examine causality in this article because of the small size of the sample of black men.
43. Predisplacement earnings are adjusted by the personal consumption expenditures deflator (1987 = 100) for me year in which the displacement took place, and reemployment earnings are adjusted using the deflator for the year prior to the survey year. (The Displaced Worker Survey is conducted in January.)
44. The sample we use to calculate changes in earnings following displacement is representative neither of all displaced workers nor of all reemployed displaced workers. The racial difference in changes in earnings is likely to be larger in the representative sample.
45. A control group of nondisplaced workers is needed to calculate these losses; see Louis Jacobson, Robert LaLonde, and Daniel Sullivan, The Costs of Worker Dislocation (Kalamazoo, MI, W. E. Upjohn Institute for Employment Research, 1993).
46. See Fairlie and Kletzer, "Why Did So Many African-American Men Lose Their Jobs," for an analysis of the causes of the racial difference in the mean of the changes in the logarithm of earnings for the period 1982-91. For this period, the mean of the changes in the logarithm of earnings was -0.177 for blacks and -0.143 for whites.
47. The same general conclusion is reached if we use the median of the changes in the logarithm of earnings.