The Effect of Federal Contractor Status on Racial Differences in Establishment-Level Employment Shares: 1979-1992

Federal-contract status is not the most important establishment characteristic that determines the racial or ethnic-group composition of its work force. Still it is significant for African-Americans, and it does increase their share of an establishment's work force. While it has a negative effect on Hispanic work-force shares, it explains little of the variation in the Hispanic work-force share. This means that the direct impact of the President's Executive Order on antidiscrimination efforts through federal contracting may be small. Indirect effects may be larger, including increasing the pool of skilled nonwhite workers, or increasing the competition discriminating firms face from nondiscriminating firms. A useful line for future research would be to pursue those indirect effects (Leonard, 1996). A more direct approach would be to conduct institutional research on the Office of Federal Contract Compliance Programs and changes in its enforcement strategy (Anderson, 1996).