Changing Numbers, Changing Needs American Indian Demography and Public Health (1996) / Chapter Skim
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7 The Individual Economic Well-Being of Native American Men and Women During the 1980s: A Decade of Moving Backwards
7 The Individual Economic Well-Being of Native American Men and Women During the 1980s: A Decade of Moving Backwards
Pages 133-171
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From page 133... ...
Low hourly earnings tend to increase relative to the median, and unemployment falls. Native Americans have always been disadvantaged in the labor market, and on the basis of aggregate job growth over the 1980s, their economic position should have improved.
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From page 134... ...
The third section of the paper examines the components of the income ratio change in terms of changes in annual earnings, annual hours worked, and earnings per hour. Native Americans have lost ground on all dimensions, but the greatest losses have been in terms of earnings ner hour, followed by annual hours worked.
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From page 135... ...
The income ratio is a better measure of well-being as it includes income from all sources and the effects of different employment rates. To help in understanding why average income is so different for Native Americans and whites and why the income ratio changed over the decade, the first method of analysis proceeds in two steps.
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From page 136... ...
Applying the above method, we find that in 1979, 19.1 percent of Native American men aged 16-64 received income that placed them in the same income range as the bottom decile of the white male income distribution (column 1 of Table 7-1~. At the other end of the income ladder, 3.5 percent of Native Americans were in the same income bracket as the top 10 percent of white males.
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From page 137... ...
Thus, if income compression had not changed, the income ratio would have fallen from 62.5 to 57.4 percent. Native Americans lost 5.1 percentage points of relative income because they slipped down the white ladder.
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From page 138... ...
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From page 139... ...
Columns 5 and 6 indicate that although they occupied the lowest ladder positions, they, too, unlike Native American men, moved up the ladder. The proportion of Native American women who received income in the top decile of the white male income distribution increased from 0.3 to 0.4 percent, while the proportion in the bottom decile fell from 36.2 to 30.0 percent.
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From page 140... ...
ANNUAL INCOME, ANNUAL EARNINGS, ANNUAL HOURS WORKED, AND HOURLY EARNINGS The decline in the annual income ratio could come from many sources. A comparison of rows 1 and 2 of Table 7-3 allows us to apportion the income ratio change to employment and nonemployment income, and a comparison of rows 3 and 4 then enables us to apportion the change in employment earnings into the change in annual hours worked and average earnings per hour employed.4 Each of the variables for Native Americans and whites annual income, annual earnings, annual hours worked, and average earnings per hour is divided by its respective working-age population, aged 16-64; the individual means of both groups are then expressed as a ratio.
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From page 141... ...
There has been no change in the relationship between male income and earnings ratios and only a marginal shift for women. Therefore, the income ratio change between 1979 and 1989 arises almost completely from changes in annual hours worked and hourly earnings, rather than changes in nonemployment income.
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From page 142... ...
Income = earnings + unearned income Earnings = hourly earnings x annual hours Annual Hours = weeks worked in the year x usual hours worked per week THE INCOME EQUATION A fuller development of the human capital model is found in Mincer (1974)
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From page 143... ...
The link between these variables and human capital is not usually developed in any detail. Family variables can be thought of as reflecting motivation in the labor market and willingness to invest in on-thejob training (which is typically not measured in these data sets)
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From page 144... ...
Employment and hours decisions should reinforce human capital effects on hourly earnings, and as a result, the returns to education and labor market experience in the income equation should be larger than in the hourly .
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From page 145... ...
The Native American mark-downs across education levels increased marginally in two of the education groups, but fell for those who did not complete high school. These changes, however, did not offset those among whites, and thus the widening returns to education among whites extended to Native Americans.
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From page 148... ...
There was little change in these relationships over the decade for Native Americans, but it does appear that the marriage premium among whites may have fallen. Finally, other things being equal, white males who resided in metropolitan areas received on average 12.0 percent more income than those in rural areas.
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From page 149... ...
Higher education levels narrow the income gap between white and Native American women, but leave the gap among men unchanged. In the next section, we attempt to determine whether the difference arises from the hourly earnings or the average hours equation.
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From page 150... ...
The data presented above in Table 7-3 show that on average, the hourly earnings of Native American men are 10-12 percent below those of whites. When other factors such as location, age, and marital status are taken into account, as in the regression equations reported in Table 7-5, this relationship changes, and Native American men, in all except the college degree category, receive higher earnings per hour than their white counterparts.
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From page 151... ...
Thus for Native Americans who have not completed high school, earnings per hour remains much the same relative to earnings per hour for a high school graduate, but earnings per hour for a Native American with a college degree increases from 35.7 to 51.3 percent. As Native Americans are disproportionately represented among the less educated, the increased hourly earnings for more-educated men will ensure that the income ratio falls.
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From page 152... ...
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From page 154... ...
In 1979, white residents of metropolitan areas worked fewer annual hours than those who lived outside metropolitan areas, but in 1989 the relationship was reversed. However, Native Americans who live in metropolitan areas work substantially more hours, and the hours gap relative to nonmetropolitan areas has increased.
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From page 155... ...
The male income ratio change can therefore be explained by regression coefficient changes and not by the change in the relative human capital characteristics of Native Americans and whites. A comparison of hypothetical and predicted ratios for hours worked and hourly earnings moving down columns 1 and 2 of Table 7-7 indicates that this 13We predict income by multiplying the regression coefficients by mean values of the explanatory variables to calculate the predicted log income by race and gender.
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From page 156... ...
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From page 158... ...
The changes in average education levels, marital status, labor force experience, and location of Native American and white men over the decade do not explain a significant proportion of the decline in annual income, annual hours worked, and hourly earnings ratios. Having determined that it is coefficient changes which matter most, we can go one step further.
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From page 159... ...
and changes specific to Native Americans (79-73~. The changes in the characteristics of Native American women do not affect the hourly earnings ratio.
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From page 160... ...
CONCLUDING COMMENTS The economic circumstances of Native Americans are very poor. They have low income, work fewer annual hours, and receive lower hourly earnings than whites.
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From page 161... ...
Native American women lost significant income relative to white women during the period a 9 percent loss in the income ratio, a 7 percent loss in average hourly earnings, and a 4 percent loss in annual hours workedbut they gained income relative to Native American and white men. With the exception of those who had not completed high school, they experienced real income gains.
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From page 162... ...
Another is that judgments cannot be made on the basis of looking at Native Americans alone. To a considerable degree, the economic future of Native Americans is being determined by economy-wide changes and not just by changes that are specific to them, particularly with respect to the changes in hourly earnings.
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From page 163... ...
Of course, in the future there will be economic gains for Native Americans from gambling casinos and particular development projects, but the general changes that are currently occurring in the U.S. economy seem adverse for the majority of Native American men.
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From page 168... ...
Annual hours Weeks worked in 1979 and 1989, multiplied by usual hours worked per week in 1979 and 1989, for those with positive annual hours and positive hourly earnings in said years. Independent Variables Education No high school DV: One if in or finished 11th grade or lower.
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From page 170... ...
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