Understanding Recent Empirical Evidence on Race and Labor Market Outcomes in the USA

Racial inequality remains a substantial problem in American society. Competing explanations of African American - white inequality often overlap but they are often also quite contentious. Recent empirical studies on the role of race and labor have tended to absolve the market process of contributing to persistent racial discrimination. The most sophisticated studies that claim to show no discrimination within the labor market rely on a single test score variable (the AFQT) within one dataset. However, the AFQT over-estimates African American - white pre-labor market skill differences, its predictions have not been replicated by studies that employ different measures of cognitive skills, and it yields inconsistent and counter-intuitive results when decomposed into its component parts. After reviewing some of the most recent literature, this study concludes that the notion that competition will eliminate discrimination within the labor market is little more than conservative political ideology masquerading as science. So-called pre-labor market inequality, which may also be summarized as the class and cultural background of individuals, does have an impact on individual well-being and intergenerational mobility. However, we are unable to distinguish the manner in which class background matters. Is it because superior class position creates an advantage in skill acquisition or because is it because superior social status increases access to persons embedded into positions of power and authority? In addition, several studies present strong empirical evidence of discrimination within the labor market.