The Declining Importance of Race and Gender in the Labor Market: The Role of Employment Discrimination Policies.

• Author: Vedder, Richard
• Position: Book review

* The Declining Importance of Race and Gender in the Labor Market: The Role of Employment Discrimination Policies

By June E. O'Neill, and Dave M. O'Neill

Washington, D.C.: AEI Press, 2012.

Pp. xiv, 294. $70 cloth.

President Barack Obama declared April 9, 2013, National Equal Pay Day, observing that "women ... face a pay gap that means they earn 23 percent less on average than men do.... On National Equal Pay Day, we recognize this injustice." To Barack Obama, differential pay between men and women is conclusive evidence that women have been unfairly treated in a discriminatory fashion. The president is not alone in believing that differences in pay by race or gender are proof of discriminatory practices that need elimination by governmental laws and regulatory actions.

June O'Neill and David O'Neill spend more than 240 pages demonstrating, often in elaborate detail, why this belief is wrong. Differences in pay might reflect discriminatory treatment, and no doubt once did so considerably--for example, in significant racially based occupational discrimination in the South. In the past decade or two, however, the reality is that the pay differences between men and women or between races are largely and often entirely explained by group characteristics other than prejudicial attitudes concerning race or gender. For example, the O'Neills demonstrate that men have more on-the-job experience than women, whites have more formal education than blacks, women take relatively low-paying jobs disproportionately (often because such jobs have more amenities and fewer risks than higher-paying jobs), and racial differences in earnings are often powerfully impacted by differences in cognitive skills. Moreover, they also demonstrate that the federal government's affirmative-action policies have for the most part done little to eliminate discrimination and, indeed, that the narrowing of race and gender differentials in earnings was more pronounced in the pre-civil rights era, from 1940 to 1960, than in the period of rigorous enforcement of the Civil Rights Act of 1964 and related legislation, particularly since 1980.

In the O'Neills' view, which I think is absolutely correct, market forces, such as massive movement of blacks from the relatively low-wage South to the more remunerative North after 1940, contributed vastly more to reducing racial differences than the plethora of legislative, judicial, and regulatory diktats we have witnessed. Similarly, the rise...