Regulatory Spillover and Workplace Racial Inequality

Abstract

This article suggests that regulations targeting the U.S. public sector may influence racial inequality in the private sector. Since the 1990s, nine states have banned affirmative action practice in public universities and state governments. I theorize that although these bans have no legal jurisdiction over private-sector firms, they could influence such firms normatively. After such a ban, executives who have been skeptical of Equal Employment Opportunity (EEO) policies may feel more normative license to reduce commitment to EEO practices. Using a difference-in-differences estimation on 11,311 firms from 1985 to 2015, I find that the bans are indeed associated with slower racial progress in private-sector firms: after a state adopts the affirmative action ban, growth in the proportion of Black managers in establishments with corporate headquarters in that state slows by more than 50 percent, and this slowdown is mostly concentrated in firms with politically conservative CEOs. These findings suggest a mechanism for the persistence of racial inequality and show that regulations can influence actors well beyond legal jurisdictions.

Racial Inequality in Work Environments

“…I therefore used presidential election voting data as a third measure of county-level racial attitudes. Past research consistently shows that political ideology is strongly associated with racial beliefs: more politically conservative individuals tend to hold more conservative racial attitudes (Zhang 2022). Thus, my third measure of racial attitudes is simply the proportion of people who voted for the Democratic Party presidential candidate in the 2012 election in each county.…”

“…Asian men, after controlling for their education level, earn about 8 percent less than comparable White men (Kim and Sakamoto 2010). Sociologists have also examined the racial gap in occupational attainment by looking at, for example, the proportion of racial minorities in management (Dobbin, Schrage, and Kalev 2015; Kalev and Dobbin 2006; Kalev et al 2006; McTague et al 2009; Sakamoto, Goyette, and Kim 2009; Skaggs 2009; Tomaskovic-Devey et al 2006; Zhang 2021, 2022). Like studies on wages, these studies find that Black and Hispanic employees are 30 to 50 percent less likely than White employees to be managers, and Asian employees are about 10 percent less likely.…”

“…Sociologists have long sought to understand the extent of workplace racial inequality. In the past, scholars have mostly focused on gaps in earnings (e.g., Cancio, Evans, and Maume 1996; Carrington, McCue, and Pierce 1996; Grodsky and Pager 2001; Huffman and Cohen 2004; Mandel and Semyonov 2016; McCall 2001; Peoples and Saunders 1993) and occupational attainment (e.g., Kalev, Dobbin, and Kelly 2006; McTague, Stainback, and Tomaskovic-Devey 2009; Skaggs 2009; Tomaskovic-Devey et al 2006; Zhang 2021, 2022), as these are important determinants of workers’ social status and well-being. These studies find that in the United States, racial minorities earn significantly less than White employees; the racial pay gap slightly decreased in the 1970s, but it has largely persisted since then (for a review, see Leicht 2008).…”

Corporate Responses to Social Activism: A Review and Research Agenda

“…Apart from direct exposure to social movements or activist proposals, firms can also sense the activism risk in the regulatory environment (Fremeth, Holburn, & Piazza, 2022; McDonnell & Werner, 2016), wherein stakeholders mobilize and engage in social movements that make use of the state as a strategic lever to advocate against firms (Hiatt, Grandy, & Lee, 2015; Marquis & Bird, 2018). These campaigns can have significant ramifications for firms because regulations not only shape resource flows across firms (Bronzini & Piselli, 2016; Hadani et al, 2018) but also exert a normative influence on firm behaviors (Lenox, 2006; Short & Toffel, 2010; L. Zhang, 2022).…”

Examining the Impact of State-Level Affirmative Action Bans on the Enrollment of Historically Excluded Students in Engineering Schools

“…AA bans have been shown to increase the health risk behaviors of underrepresented (UR) minority youth, and UR minority adults who were exposed to bans while in high school are more likely to smoke years later [12]. In the workforce, bans reportedly impact the demographic makeup of employees in private sector firms housed in ban states [13]. Rates of interracial marriage also decrease in states with bans in place [14].…”