The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
Note: This report is available in its entirety in the Portable Document Format (PDF).
The text below is a portion of the complete document.
This paper is forthcoming in the Journal of Policy Analysis and Management.
Affirmative Action refers to a set of practices undertaken by employers, university admissions offices, and government agencies to go beyond nondiscrimination, with the goal of actively improving the economic status of minorities and women with regard to employment, education, and business ownership and growth. This additional activity can take the form of special recruitment efforts to draw more applicants in these areas from minorities and women, but might also include some additional consideration of (or preference for) these applicants, given that their credentials along certain dimensions might look weaker than those of their white male counterparts. In this paper, we will examine the research evidence on the benefits and costs of Affirmative Action, both for its intended beneficiaries and for society more broadly.
The roots of affirmative action in employment lie in a set of Executive Orders issued by U.S. Presidents since the 1960's. Executive Order 10925 (issued in 1961) introduced the phrase "Affirmative Action," encouraging employers to take action to ensure nondiscrimination. Executive Order 11246 (1965) required federal contractors and subcontractors (currently, with contracts of $50,000 or more) to identify underutilized minorities, assess availability of minorities, and if available to set goals and timetables for reducing the underutilization. Executive Order 11375 (1967) extended this to women.
Federal contractors may be sued and barred from contracts if they are judged to be
discriminating or not pursuing Affirmative Action, although this outcome is rare (Stephanopoulos
and Edley, 1995). But Affirmative Action is not just limited to contractors; it can be imposed on
non-contractor employers by courts as a remedy for past discrimination, and it can be undertaken voluntarily by employers.
While universities may be bound by affirmative action in employment in their role as federal contractors, there are no explicit federal policies regarding Affirmative Action in university admissions. Rather, universities have voluntarily implemented Affirmative Action admissions policies that give preferential treatment to women and minority candidates.1 Court decisions have shaped (and continue to shape) what public universities can and cannot do.
Preferential admissions policies initially came under attack in the Bakke v. University of California Regents (1978), in which the Supreme Court declared that policies that set aside a specific number of places for minority students violated the 14th Amendment of the U.S. Constitution, which bars states from depriving citizens of equal protection of the laws. However, while this decision is viewed as declaring strict quotas illegal, it is also interpreted as ruling that race can be used as a flexible factor in university admissions.
Most recently, the Supreme Court in 2003 struck down the undergraduate admissions practices at the University of Michigan in the case of Gratz v. Bollinger, et al., finding that the point system used by the university in its consideration of race (and other criteria) was too rigid. At the same time, in Grutter v. Bollinger, et al., it upheld the University's law school admissions procedures, finding that the more flexible treatment of race in this case satisfied the state's compelling interest in expanding the pool of minority candidates admitted to this prestigious school. Affirmative Action in state university admissions can also be limited by the actions of state courts, such as the ruling of a Texas appeals court in the case of Hopwood v. State of Texas in 1996 which eliminated racial preferences in admissions in state universities there. They can also be limited by popular referenda, as occurred under Proposition 209 in California in 1996, which barred the use of racial preferences in admissions in the University of California system (as well as in state employment and contracting).
Another major component of Affirmative Action is contracting and procurement programs. At the federal level, these have principally taken the form of preferential treatment in bidding for Small/Disadvantaged Businesses (SDBs), and Small Business Administration programs of technical assistance. These contracting and procurement programs focus more on minorities than women (Stephanopoulos and Edley, 1995, Section 9). In addition to the federal level, numerous states and localities have used programs aimed at increasing the share of contracts awarded to minority-owned businesses.
As with Affirmative Action in education, court rulings in the last decade or so have challenged the legal standing of such programs. City of Richmond v. J.A. Croson Co. (1989) established that the legal standard of "strict scrutiny" for compelling state interests must be met for state programs to be legal under the 14th Amendment to the Constitution. In Adarand Constructors, Inc. v. Pena (1995), the Supreme Court ruled that strict scrutiny could also apply to federal programs as well, invoking the 5th Amendment (which guarantees that citizens shall not "be deprived of life, liberty, or property, without due process of law"), instead of the 14th (which explicitly applies to states).
Affirmative Action remains vastly more controversial than anti-discrimination activity, where the latter is based on Equal Employment Opportunity (or EEO) laws and other legislation. But the distinctions between them are clearer in theory than in practice (Holzer and Neumark, 2000a). First, what has ostensibly targeted discrimination in the workplace has also led to Affirmative Action in practice. Title VII of the Civil Rights Act of 1964, which established Equal Employment Opportunity (EEO) as law, allows for Affirmative Action as a means of remediation for past discrimination. While the main focus of this legislation is the prohibition of discrimination in employment, the Act also allows the courts, when finding that an employer is engaging in an unlawful employment practice, to "order such Affirmative Action as may be appropriate, which may include reinstatement or hiring of employees ..."2
More generally, in practice the difference is muddied further. Many employment discrimination cases concern hiring and are based on evidence of "disparate impact," according to which underrepresentation of women or minorities — relative to some suitably-defined pool of job candidates — is sufficiently large to support an inference of discrimination. Much of the argument in such cases concerns the definition of the appropriate candidate pool (Epstein, 1992, Ch. 18). But regardless of how this issue is settled, employers concerned with a possible disparate impact discrimination claim might seek to ensure that women and minorities are adequately represented among their hires. Indeed, EEOC guidelines for defining disparate impact essentially establish a system of numerical yardsticks, embodied in the "80%" or "four-fifths" rule, which states that "A selection rate for any race, sex, or ethnic group which is less than four-fifths ... of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact ..."3 This is easily monitored for many companies, as employers with 100 or more employees are required to file EEO-1 reports indicating the percentages of female and minority workers in broad occupational categories.
As a consequence, we believe that when analyzing Affirmative Action in the labor market, attention should not be limited solely to the effects associated with contractor status, but ought to focus as well on policies or actions that might encourage anything other than race- or sex-blind
behavior. We can certainly examine the effects of a particular policy, as some of the research described in this paper does. But we do not think that the two policies can always be separated, or
that one necessarily obtains a sharper picture from an exclusive focus on EEO or Affirmative Action.
Another point that this emphasizes is the difficulty of interpreting suggestions of some critics of Affirmative Action that we can do away with Affirmative Action but maintain vigorous enforcement of anti-discrimination laws (or "color blindness").4 Laws barring race- or sex-conscious behavior in hiring, promotions, and discharges are likely to undermine not only explicit forms of Affirmative Action, but also any prohibitions of discrimination that rely on disparate impact analyses for their enforcement. Perhaps this is why recent attempts to limit Affirmative Action have focused largely on university admissions and government procurement, where — unlike in the labor market — the effects of Affirmative Action are not confounded with the effects of EEO, and hence preferences afforded to minorities and women might be more apparent.
Notes from this section of the report
1 Throughout, we use the word "minority" to refer to groups that are typically under-represented in universities and in better jobs in the contemporary economy. Most of the existing work considers blacks and sometimes Hispanics, but rarely Asians.
2 This occurred, for example, in Firefighters Local Union No. 1784 v. Stotts.
3 See Code of Federal Regulations (2001).
4 For example, Steele (1990) writes, "I would ... like to see Affirmative Action go back to its original purpose of enforcing equal opportunity — a purpose that in itself disallows racial preferences" (p. 123). See also Stephen Carter (1991).
Note: This report is available in its entirety in the Portable Document Format (PDF).