Economic of Race and Gender - Essay Example

ECONOMICS OF RACE AND GENDER Diversity and diversity practices have become more prevalent not only in the US economic system but also in other societies for a variety of reasons. Diversity research has a long and close relationship with the legal and social policy community. For instance, in the United States, the passage of the Civil Rights Act of 1964, and additional legislation to protect older workers (Age Discrimination in Employment Act, 1967) and those with disabilities (Americans with Disabilities Act, 1990) have helped define diversity through the establishment of protected classes (e.g., race, sex, national origin). Although such legislation was needed to ensure equal access to employment for all Americans, it also served the purpose of defining diversity by symbolizing what characteristics of American workers should be preserved in the workplace. In this regard, organizations have relied on policies, such as the 4/5ths rule, for ensuring that selection tools do not unfairly discriminate against minority applicants. From the critical perspective, societies themselves made a rational justification for diversity, revealing through their practices that diversification of the workplace in economics is a necessity for increasing workplace innovation and creativity (Cox & Blake, 1991). This rational argument of economic necessity for diversity has been vividly articulated during the United States Supreme Court case of Gratz v.Bollinger (2003). In this case the University of Michigan’s admissions practices were challenged for automatically awarding minority applicants “diversity points” that were not available for non-minority applicants. A number of organizations filed briefs supporting the University of Michigan’s policies because promoting diversity in higher education would increase the pool of highly qualified applicants for future workforce. Arguments raised in the briefs were that students educated around diversity (1) are more adept at facilitating unique and creative approaches to problem solving; (2) are better able to develop products that appeal to a wide variety of consumers; (3) are better equipped for working with diverse business partners, employees, and clientele and; (4) will contribute to a positive work environment through decreasing incidents of discrimination and stereotyping (3M et al., 2003). Cox and Blake (1991) argued that attitudes, cognition, behaviors, and beliefs are distributed differently across ages, races, and genders, therefore, such heterogeneity, can foster creativity and innovations. Moreover, the continuous “exposure to minority viewpoints stimulates creative thought processes” (p. 50). In order to acquire the benefits of diversity, becoming aware of the cultural differences of the organizational members is crucial particularly in contemporary globalized context. The social impact of diversity and its consequent positive outcomes for economics of any society are vividly revealed in study conducted by Gater (2005), who discussed the need of recruiting diverse faculty at the higher education level. According to author, in the global economy with increasing ethnic diversity within the workforce and schools, attracting a diverse faculty with different talents and teaching approaches would benefit students and enhance collaboration with colleagues. 2. Contemporary theory of human capital explains occupation distribution in terms of individual’s choice, emphasizing that individuals select an occupation based on various pecuniary and non-pecuniary costs and benefits associated with different occupations. In other words, individuals who are trying to maximize their utility in a certain occupation base their choice on personal characteristics, socioeconomic background, tastes and preferences, and knowledge of alternative occupations. Workers usually choose jobs that maximize the discounted present value of their potential lifetime earnings. On the other hand, employers will hire only when the qualifications of the worker, such as his or her education, experience, and skill set matches their expectations and job requirements. Occupation segregation represents a repetitive pattern for men and women to be employed in different occupations from each other across the entire range of available occupations in society. Traditionally, occupation segregation is caused by gender bias and various prejudices for individuals’ abilities and competences. For instance, it is believed that women are naturally more emotion and caring, therefore they are allegedly more comfortable working as teachers, nurses and social workers. Index of segregation aims to measure the extent to which a particular sub-group of individuals has a similar distribution to the spatial distribution of the total population. Gender earnings ratio reveals the differences between actual wages received by one gender and another. Labor discrimination exists if individual workers from different demographic groups with identical productive characteristics (education, experience, and training) are treated differently. If the distribution of jobs is noticeably dissimilar between two groups, then it indicates presence of occupational segregation in the labor market. Becker’s model (1971) on labor discrimination implies that employers have a “taste for discrimination” and they will sacrifice profits in order to maintain segregation in the labor market. 3. AFDC is acronym for federal program established by the Social Security Act of 1935 aimed to provide a support for families with dependent children. Aid to Families with Dependent Children enables states to conduct cash welfare support for needy children who do not have parental support because their parents are incapacitated, unemployed, absent or deceased. In 1996, AFDC has been successfully replaced with TANF, another federal welfare program aimed to provide a temporary assistance for needy families. Temporary Assistance for Needy Families is delivered in the form of cash monthly payments to families assisting them in food, medical care, clothing, utilities, transportation, etc. The volume of TANF assistance depends on family’s size and its income. The duration of TANF assistance for a parent varies from 12 to 16 months and is typically based on several factors, particularly, parent’s education, financial situation, and professional background. TANF program is unlimited in duration for children. Earned Income Credit or Earned Income Tax Credit constitutes a tax credit designed for individuals who work but still have low wages. From the practical perspective, this tax reduces the amount of money individual owe, effectively reducing one’s expenditures. EITC equals a specified percentage of earned income up to a maximum dollar amount over the “phase-in range.” Over a range of income termed the “flat range,” individuals obtain the maximum credit. EITC then diminishes to zero over the “phase-out range.” This tax is refundable. Claimants are paid regardless of whether the credit-qualified taxpayer has any federal income tax liability. The EITC payment is typically made once a year as an adjustment to tax liabilities or refunds. For those who have children and want to claim the EITC, their children need to pass an age, relationship, and residence tests to qualify. Dependent Care Tax Credit constitutes a federal tax credit designed for individuals who pay for day care expenses their children or adult with disabilities. The Economic Growth and Tax Relief Reconciliation Act signed into law in June 2001 raised the allowable child care expenses in the Dependent Care Tax Credit from $2,400 to $3,000 for one child and from $4,800 to $6,000 for two or more children. It also made the credit calculation more generous. Previously, the maximum credit was 30% of expenses for families earning under $10,000 and progressively phased out at higher income levels; now families could earn up to $15,000 and still get the higher credit rate of 35%. Child Tax Credit is a federal tax credit aimed to assist households having dependable children in lowering their tax burden by $1000 per child. From the historical perspective, it was one of the ways legislators searched to assist the poor and working-class families. However, because of the earlier expansions of the EITC, most low income families already were receiving money back rather than paying taxes. To have any impact on their taxes, the government would have to expand refundability further. One solution was to increase the child tax credit and make it partially refundable. 4. From contemporary perspective, one of the most influential pieces of legislation involving child support enforcement was the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. One of the most important premises of PRWORA was holding both custodial and non-custodial parents financially accountable for their children. For example, states were now able to deny food stamps to non-custodial parents who were behind in their child support payments. This new law was the first effort of the federal government to withhold welfare benefits from low-income non-custodial parents as a penalty for not satisfying their child support obligation. PRWORA also allowed states to design their own welfare-to-work programs, and established a lifetime limit on receipt of welfare benefits. One of the most significant aspects of this act was to eliminate the federal requirement that states pass through the first $50 of child support that was paid to welfare families. States were now given the option of how much child support would go to these families. For example, in some states if a custodial parent had a $300 support order and received $361 in welfare benefits, any child support paid by the non-custodial parent went directly to the state for reimbursement of welfare benefits on behalf of the custodial parent. In recent year, one of the main objectives and focuses of the child support enforcement system was to provide economically vulnerable single-parent families with an important source of income. If child support provides enough income to help a custodial parent become economically self-sufficient by combining child support with earnings and other types of income, child support may indirectly reduce reliance on, and the costs of, welfare to a state. However, because some of the child support collected was used to offset government costs, it did not significantly raise a custodial parent’s income. Not receiving collected child support was one reason why parents were less likely to cooperate with child support authorities. Questions arose from both custodial and noncustodial parents: Why should there be any cooperation with a system in which the children do not directly benefit when the support is paid? Within PRWORA, there was a “pay families first” section that stated that if a custodial parent went to work and no longer received welfare benefits, that parent would receive all of the child support that was owed and collected for his or her children. Therefore, the only way that a custodial parent could receive the full amount of child support was to leave welfare and find a job. WORKS CITED 3M et al. Brief for amici curiae 65 leading American business in support of respondents, 2003. Retrieved May 09, 2010, from University of Michigan Admissions Lawsuits, website: Becker, Gary S., The Economics of Discrimination, 2nd ed. Chicago: University of Chicago Press, 1971 Cox, T. H. Jr., & Blake, S. Managing cultural diversity: Implications for organizational competitiveness. The Executive, 5(3), 45-56, 1991 Gater L. Diverse faculty reflects diverse world. Human Capital, 2005. Retrieved May 09, 2010, from the EBSCOhost database. Read More