Unequal Opportunity: Losing Ground on the Employment Front

In Latest Recession, Only Blacks Suffered Net Employment Loss; Firms Added Whites, Asians And Hispanics Overall, But They Deny Any Bias — Effects of Seniority, Location

The Wall Street Journal



The last recession seriously eroded equal opportunity for America’s black workers.

Blacks were the only racial group to suffer a net job loss during the 1990-91 economic downturn, at the companies reporting to the Equal Employment Opportunity Commission. Whites, Hispanics and Asians, meanwhile, gained thousands of jobs, according to a Wall Street Journal analysis of EEOC records.

The computer-aided study shows that some of the nation’s largest corporations shed black employees at the most disproportionate rate. At Dial Corp., for instance, blacks lost 43.6% of the jobs cut, even though they represented 26.3% of Dial’s work force going into the recession. At W.R. Grace & Co., they held 32.2% of the jobs cut, while they accounted for 13.1% of the company’s pre-recession payroll. At BankAmerica Corp. and ITT Corp., blacks lost jobs at more than twice the rate of their companies’ overall work-force reductions.

Companies say the sudden demographic shift is a statistical fluke, the unintentional fallout of corporate cutbacks and reorganizations. But some civil-rights advocates argue that something more insidious is going on.
“This is subconscious, deep-seated racism,” says George Fraser, who publishes directories of black professionals. “People don’t even know these patterns and behaviors are being initiated until you begin to see the pieces of the puzzle together and look at the numbers.”

In an analysis of the 35,242 companies that filed EEOC reports for more than 40 million workers in both 1990 and 1991, the Journal found:

— Blacks lost a net 59,479 jobs at these businesses during the recession, which officially began in July 1990 and ended in March 1991. Overall, blacks’ share of jobs at the companies dropped for the first time in nine years, wiping out three years of gains. Black employment at the companies fell in 36 states and in six of nine major industry groups.

— By contrast, Asians and Hispanics, who in recent years have become more vocal about getting their share of jobs, both made gains. Asians gained a net 55,104 jobs during the recession and Hispanics a net 60,040 jobs. Whites, who outnumber blacks nearly eight to one at these companies, gained 71,144 jobs.

— Black workers were especially hard hit in blue-collar jobs, losing nearly onethird of the net 180,210 such slots lost. They were the only group to lose service-worker positions, dropping 16,630 such jobs while businesses added 53,548 new ones. They were the only group to lose sales jobs.

— Blacks did show some progress in several highly prized white-collar job categories. They gained a disproportionately high number of managerial, professional and technical jobs. But they held such a small percentage of these jobs before the recession began that their actual gains were meager. Companies added a net 2,719 black managers during the recession, bringing the 1991 number to 248,915, which is just 5.2% of the total for all races.

Even with the job losses, black workers represent a higher share of the staffs of EEOC companies than of the U.S. population (11.8%) or of the overall U.S. work force (10.4%). Considering the size and locations of the EEOC companies, they could be expected to have more than the nationwide proportion of black workers.

Yet blacks, who accounted for 12.5% of the work force of companies filing with the EEOC, not only lost a disproportionately high share of jobs in companies that cut staff, but also gained a disproportionately low share of positions added during the recession. They lost 15% of the jobs at the roughly half of EEOC firms that had net employment cuts, and gained just 11.4% of new jobs at firms that added staff.

“The recession in America means depression in the black community,” says Carol Massey, president of the Los Angeles chapter of the National Black MBA Association.

The losses can be partially explained by blacks’ relatively low seniority in companies and their heavy concentration in the types of jobs eliminated. Corporations’ continuing decisions to abandon inner-city offices, factories or franchise outlets didn’t help blacks, either.

But the demographic change suggests something more fundamental has occurred, a pronounced shift in the way affirmative action operates. Several companies with poor records of retaining blacks say they were mostly concerned with their aggregate minority employment rates and never calculated whether blacks bore a disproportionate share of cutbacks. Thus, they could claim to the government continued progress by minorities as a whole even as blacks were suffering reversals — in some cases dramatic ones.

Black workers had their biggest setbacks at retailers. About half of their losses were in retailing, where blacks lost jobs at a 50% higher rate than the overall work force.

At Sears, Roebuck & Co., for example, blacks lost 54.3% of jobs cut, according to the company’s original filing with the EEOC.

After extensive interviews with the Journal, the company said it had discovered a gargantuan addition error in the numbers it gave the government and printed in its annual reports for three years — a mistake that exaggerated blacks’ proportion of job losses. The revised records, which the EEOC is now investigating for accuracy, still show blacks losing a disproportionate 20% of the jobs cut by Sears. The company’s work force was 15.8% black in 1990.

Sears says its black work force wasn’t hurt because of inattention to diversity, but by the need to eliminate expensive distribution centers in the inner cities. The giant retailer closed two major urban distribution centers in 1991, relocating part of the operations to suburbs largely inaccessible to blacks without cars.

“It’s not like we set out to eliminate black jobs,” says a Sears spokesman. “We set out to streamline our catalog and distribution centers to make them more competitive.” The centers, built in the early 1900s, had been designed to house relatively small merchandise and be accessible to railroads, the spokesman says. The new ones, he says, are built in the suburbs to be more convenient to trucks.

But several former black managers at Sears believe that corporate indifference toward affirmative action caused them problems during the recession and that this attitude grew throughout the 1980s as federal enforcement declined. “It appeared the company discontinued its emphasis on having a diversified work force,” says Bob Johnson, Sears’s first black vice president, who retired in 1991.
Like Sears, most companies say blacks’ job losses were completely unrelated to affirmative action. At W.R. Grace, for instance, where blacks lost jobs at more than twice the rate of overall work-force cuts, officials say the drop was due entirely to Grace’s extensive restructuring.

“This issue has nothing to do with diversity,” says Fred Bona, a company spokesman. “The restructuring has to do with a world-wide business strategy, involving which businesses we should be in.” The company sold several businesses unrelated to its basic chemical manufacturing work, such as restaurants, he says. He argues that blacks’ share of Grace’s work force rose if one excludes a Mexican fast-food business that was partially divested.

But some black employees complain of persistent racial bias. “They are very, very prejudiced,” Frank Bellow, a machinist, says of Grace’s management at its Lake Charles, La., catalyst manufacturing plant. When the company makes personnel decisions, he asserts, they revert “to the old Jim Crow ways.”

Mr. Bona says Grace has addressed the black employees’ complaints.

Critics consider many companies’ explanations about black job losses hollow excuses, designed to hide unspoken bias. Charges Wesley Poriotis, who heads Wesley, Brown & Bartle, one of the nation’s oldest minority search firms: “There’s a deep sourness in corporate America that they had to hire minority professionals. Downsizing has been their first opportunity to strike back.”

For many firms that cut a high percentage of blacks in the recession, the reasons are the same: They closed or sold operations in inner cities. But whether the cutbacks reflect bias isn’t easily clear.

McDonald’s Corp., for instance, says the statistic that blacks accounted for 36.5% of its job losses in the 1990-91 period merely reflects the sale of 270 companyowned restaurants to franchisees. While most of these blacks probably now have jobs with the new franchisees, the corporate switch could indicate McDonald’s was unloading many of its inner-city restaurants to blacks; the fast-food chain declines to say where the stores are located, but contends the changes reflect nothing about its inner-city policies.

Yet what looks like abandoning the inner city may really be giving economic opportunity to an underprivileged group. Even attorneys who sued McDonald’s on behalf of black franchisees credit the company with giving blacks liberal franchising terms, making it possible for some to own a business for the first time in their lives.

Geography plays a major role in blackemployment patterns. At BankAmerica, blacks did poorly during the recession because of attrition combined with the fact that the company expanded in states that have low black populations, such as Arizona and New Mexico, says spokesman Russ Yarrow. Blacks accounted for 28.1% of the lost jobs, even though they made up just 7.9% of the company’s work force before the recession.

Companies say they didn’t deliberately reduce their black work forces. A high percentage of blacks got laid off, though, because they held more of the jobs companies decided to eliminate. ITT says its black work force was hurt when it stopped managing the Sheraton hotels in Dallas, St. Louis and West Palm Beach, Fla. Blacks accounted for 27.4% of the jobs lost at ITT during the economic slump, despite constituting 11.8% of the company’s pre-recession work force, primarily because of these hotel losses, says Jim Gallagher, an ITT spokesman. Blacks held 402 of the 1,109 jobs at these hotels, mainly as waitresses and room attendants, he says.

In most companies, blacks were concentrated in the most expendable jobs. More than half of all black workers held positions in the four job categories where companies made net employment cuts: office and clerical, skilled, semi-skilled and laborers, according to EEOC records.

Many companies may not even realize how their black employment shifted during the recession. Personnel executives often focus primarily on minorities’ overall progress, in part because that is what the federal government focuses on when it evaluates affirmative-action efforts.

Even at companies with aggressive diversity programs, such as Dial, black workers can lose ground. Dial says its attorneys carefully reviewed layoff plans for adverse impact before any downsizing took place. But company officials say they assessed the effect on overall minority and female employment rather than on blacks, Hispanics or Asians separately.

Blacks at Dial lost jobs at a rate two-thirds higher than did its work force as a whole. Dial’s overall record for minorities, however, looks exemplary, especially if white females are included, because Dial added Asians and American Indians and laid off a disproportionately small percentage of white women.

“I feel confident that the process we established ensures equitable treatment,” says Joan Ingalls, Dial’s vice president of human resources. “It’s not appropriate to offer preferential treatment.”

Like Dial, Sears boasts of inroads made by its minority staff, which occurred because Asians and Hispanics fared better during the recession than Sears’s overall work force. Comparing blacks’ achievements to other minorities is “a skewed point of view,” says William Giffin, Sears’s director of human resources. What matters, he says, is Sears’s overall minority employment record. “What we hold our managers accountable for is work-force diversity.”

Civil-rights attorneys are skeptical of such explanations. “The first thing that makes me suspicious is if companies are aggregating all the minorities together,” says Barry Goldstein, a prominent civil-rights lawyer.

But the Office of Federal Contract Compliance Programs, which investigates discrimination at businesses that receive government money, decides which companies to audit by analyzing their records on overall minority employment. Only after companies are selected for an audit will investigators consider examining records on individual ethnic or racial groups, says Annie Blackwell, the program’s policy director. And they will do the individual ethnic analysis, she says, only “if there’s a reason to do it.”

Civil-rights advocates argue that under the guise of fairness for all, employers can hide differential treatment of blacks. “Affirmative action has gotten so diluted that companies can trade one minority against the other,” says Aileen Hernandez, who was an EEOC commissioner under President Johnson.

For years, advocates such as Ms. Hernandez have considered the federal government inept as a watchdog. They complain that agencies such as the EEOC began being trimmed during the Reagan administration, and officials started promoting the notion of lumping all minorities together to treat them as one big disadvantaged group. The EEOC also shifted its enforcement efforts away from class-action suits against companies, focusing instead on individual cases of discrimination.
Affirmative action was weakened even more during the recession because of a series of Supreme Court decisions that made it harder for individuals to sue companies for discrimination. By the late 1980s, companies were much more fearful of private litigators than the government, says Jonathan Leonard, a professor at the University of California at Berkeley, who studies workplace discrimination. With the court’s Wards Cove decision in 1989, which made it tougher for minorities to use statistics to prove racial bias, companies suddenly became nearly immune to job discrimination challenges until the Civil Rights Act was passed in 1991, he argues.

At Sears, Mr. Johnson, the former vice president, and other black employees say they felt the impact of Reagan and Bush administration policies almost immediately. They saw the government’s broad-based race and gender discrimination investigation into Sears during the late 1970s transformed into a weak sex-discrimination case in the 1980s that the company ultimately won. And in the middle of the EEOC’s lawsuit against Sears, they watched then-Sears Chairman Edward Telling stop doing business with the federal government to protest what he perceived as the Labor Department’s “campaign of harassment.”

What resulted, says Mr. Johnson, was a gradual, steady erosion of black workers that occurred quietly and with little discussion. The number of blacks who held the key buyers’ jobs dwindled from 25 in 1981 to 14 in 1985 to seven or eight in 1990, he says. Sears won’t release the numbers, but says the drop of blacks was proportional.

The reduction wasn’t due to any deliberate campaign to eliminate blacks, Mr. Johnson and others say. It was a combination of the old-boy network playing a stronger role during layoff decisions, they say, plus black workers getting so discouraged by the atmosphere that they became eager to take early retirement buyouts.

Barbara Samuels, who joined Sears in 1963, says she took early retirement at age 54 in 1991 because “I felt the place was being detrimental to my mental and physical health.” One month after she was named the company’s buyer of the year in 1987, she says, her boss gave her a performance evaluation of only “meets expectations.” Another supervisor delighted in telling ethnic and sexist jokes around her, she says.

Sears declines to comment on Ms. Samuels’s experience, but a spokesman says it has strived to create a work environment that “is sensitive to employees.” Although blacks bore a disproportionate share of job losses at Sears in the recession, their share of the Sears work force — 15.85% — was notably higher than blacks’ representation in the overall U.S. work force.

Certainly, many whites lost their jobs during corporate downsizings, too. But blacks say they began to notice that at least some of their white counterparts would eventually be hired back to take jobs in the newly restructured divisions, something that rarely happened to them. “It’s the old FBI syndrome: friends, brothers and in-laws,” says Bill Hawkins, who runs a search firm in Los Angeles. “If you don’t have an FBI, you’re in a good position to lose your position.”

Blacks who held jobs involving public contact had an especially rough time during the recession, EEOC records show.
They lost 5,823 sales jobs overall in 1991, for instance, even though companies added a net total of more than 63,000 white, Asian and Hispanic sales workers. “There’s a continuing problem that white companies will not buy from a black salesman,” says John Work, a career consultant and author of “Race, Economics and Corporate America.”

At least one recent study suggests that racism still plays a role in some personnel decisions. In 1990, the Urban Institute sent out teams of black and white job applicants with equal credentials. The men applied for the same entry-level jobs in Chicago and Washington, D.C., within hours of each other. They were the same age and physical size, had identical education and work experience, and shared similar personalities. Yet in almost 20% of the 476 audits, whites advanced farther in the hiring process, researchers found.

“The simple answer is prejudice,” says Margery Turner, a senior researcher at the Urban Institute involved in the study. “Clearly, blacks still suffer from unfavorable treatment.”

Of course, not all job applicants have similar credentials. Most blacks can’t even be considered for highly skilled jobs because they don’t have enough education. Only 13.1% of blacks in the work force have college degrees, compared with 24.6% of whites and 38.6% of Asians, according to the 1990 Census.

The better-educated Asians managed to gain jobs even in states that cut tens of thousands of workers. Overall, Asians gained jobs in midsize and big businesses in 39 states, while blacks lost ground in 36 states.

Blacks were hit particularly hard in Florida, losing jobs at EEOC corporations at a rate more than five times that of the overall work-force reductions. They were the only racial group to lose jobs there as well as in Illinois, where 43.4% of jobs lost were held by blacks; in 1990 they represented 13.4% of all workers in the state. Their work force was devastated in New York, where they lost more than 21,000 of the 91,746 jobs cut in businesses. And they also got slammed in California, losing more than 11,000 of the 72,230 jobs eliminated while Asians were gaining more than 9,000 positions.

Only in three Southern states — Alabama, Arkansas, and Louisiana — did blacks add a substantial number of jobs.
With comparably little education, blacks often get stuck in lower skilled, blue collar jobs. And only seniority saves many blue collar workers from the unemployment line these days.

Since blacks were often among the last hired for these jobs, they were frequently the first to go. At USX Corp., which lost nearly a tenth of its already decimated work force in 1991, employees at some plants had to have almost 20 years’ experience to keep their jobs. Blacks lost nearly 20% of those jobs lost at the company, even though they made up just 12.6% of the work force going into the recession.

Discrimination problems in the steel industry were supposed to have been solved in the 1970s, when the EEOC required companies to change their rules on promotions and transfers. Until then, openings weren’t posted throughout plants, and people who wanted to change departments lost their seniority.

Initially, the changes helped blacks get better jobs. Even if they had been hired into a dirty, dangerous unit, they had the chance to learn about and accept better positions, knowing their seniority was secure.

But at USX, the new rules that allowed blacks’ advancement in the 1970s ended up accelerating their job losses in the 1980s, when the company had massive layoffs. That’s because of USX’s plantwide labor pool, which allowed blue-collar workers who were laid off to bump people out of jobs in other departments, if they met qualifications and had seniority.

Blacks who could overcome the seniority hurdles often stumbled when faced with the company’s new testing requirements, says Billy Hawkins, chairman of a union grievance committee at USX’s plant in Gary, Ind. Suddenly, blacks with 25 years’ seniority were being rejected for jobs because they couldn’t read rulers — even though rulers weren’t even used on the jobs. USX says the stiffer tests are all job related and needed since the steel industry is more technology-driven than before.

Blacks could no longer get training to qualify for skilled jobs either, as USX eliminated its craft-training programs in the mid-1980s because of the availability of unemployed craftsmen. As a result, parts of the plant that were traditionally black have started turning white, Mr. Hawkins says.

“It’s really ironic,” adds Frank Webster, another union representative. “Blacks were caught by the very thing that was supposed to protect them. We’re seeing the end results of discrimination. We’re right back to square one.”
—
Asra Q. Nomani and Gregory N. Racz contributed to this article.

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