Theory Overview

Split labor market theory, originally proposed by sociologist Edna Bonacich in the early 1970s, is an attempt to explain racial/ethnic tensions and labor market segmentation

Labor market segmentation

A labor market is seen as segmented if it "consists of various sub-groups with little or no crossover capability". Segmentation can result in different groups, for example men and women, receiving different wages for the same work...

 by race/ethnicity in terms of social structure

Social structure

Social structure is a term used in the social sciences to refer to patterned social arrangements in society that are both emergent from and determinant of the actions of the individuals. The usage of the term "social structure" has changed over time and may reflect the various levels of analysis...

 and political power

Political power

Political power is a type of power held by a group in a society which allows administration of some or all of public resources, including labour, and wealth. There are many ways to obtain possession of such power. At the nation-state level political legitimacy for political power is held by the...

 rather than individual-level prejudice

Prejudice

Prejudice is making a judgment or assumption about someone or something before having enough knowledge to be able to do so with guaranteed accuracy, or "judging a book by its cover"...

. Bonacich argues that ethnic antagonism initially emerges from a split labor market, where two or more racially/ethnically distinct groups of workers vie for the same jobs, and where the total cost to the employer (including but not limited to wages) of hiring workers from one group is significantly lower than the cost of hiring from the other group. Employers (or capitalists

Capitalism

Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

) prefer to hire cheaper workers and will do so absent active opposition from higher-priced workers, creating an antagonism between higher- and lower-priced groups. Differences in the price of labor are sociological and political in nature, not a matter of personal preference, so that, e.g., native, unionized workers, who enjoy full political rights will demand higher wages and be more likely to resist employer prerogatives than undocumented immigrant, non-union workers from poorer countries. According to Bonacich, likely outcomes of a split labor market include not only antagonism but, depending on the political power of higher-priced workers, a caste

Caste

Caste is an elaborate and complex social system that combines elements of endogamy, occupation, culture, social class, tribal affiliation and political power. It should not be confused with race or social class, e.g. members of different castes in one society may belong to the same race, as in India...

-like system where lower-priced workers are restricted to specific occupations, or total exclusion of the lower-priced group from the labor market.

Dynamics of Three Labor groups

Conflict develops between these three classes because each has a different interest.

Business or Employers (White Capitalists) aim to have a cheap and docile labor force in order to compete effectively with other businesses and maximize economic return. Business will dispense with and undercut the white working-class if they could, and have done so when they have the opportunity.

Higher Paid Labor is threatened by introduction of cheaper labor into their market fearing that it will force them to leave the workplace or reduce their pay level. If the Higher Paid Labor is strong enough or possess the power resources, they can prevent being replaced or undercut by cheaper labor through exclusion movements or creating caste systems (exclusiveness or aristocracy of labor).

Cheaper Labor is used by the employer to undermine the position of more expensive labor through strikebreaking and undercutting. Cheaper laborers are usually unskilled, but can be trained.

Economics of Discrimination

The split labor market theory attributes events to social structure rather than to individual preferences. It is a form of conflict theory

Conflict theory

Conflict theories are perspectives in social science that emphasize the social, political or material inequality of a social group, that critique the broad socio-political system, or that otherwise detract from structural functionalism and ideological conservativism...

 in that it sees discrimination

Discrimination

Discrimination is the prejudicial treatment of an individual based on their membership in a certain group or category. It involves the actual behaviors towards groups such as excluding or restricting members of one group from opportunities that are available to another group. The term began to be...

 as a result of the conflict between competing interest groups. "The business owner or capitalist recognizes that racial discrimination is dysfunctional for the business enterprise and prefers not to discriminate. The objective of the capitalist is to get the best worker for the cheapest wage, and it is therefore in the capitalist's interest not to discriminate, because discrimination limits the pool of workers available for the position. Accordingly, those doing the hiring discriminate not because they have a 'taste for rimination', but rather because they might have been forced to do so by the laborers that do benefit" (Farley). Higher paid laborers may be able to impose a system of discrimination in a number of ways. Discrimination occurs in a split labor market because workers benefit when they eliminate minority competition.

Ethnic Antagonism in relation to Split Labor Market

Ethnic antagonism

Antagonism

Antagonism is hostility that results in active resistance, opposition, or contentiousness.Additionally, it may refer to:*Antagonism , where the involvement of multiple agents reduces their overall effect...

 is produced when competition arises from a price differential. A source of antagonism between ethnic groups is assumed to be a split labor market or one in which there is a large differential in price of labor for the same occupation/work. The price of labor is not a response to the race or ethnicity of those entering the labor market. A price differential results from differences in resources and motives which are often correlates of ethnicity.

Conclusion

According to Bonacich, "The central hypothesis [deriving from split labor market theory] is that ethnic antagonism first germinates in a labor market split along racial lines". Split labor market theory traces the roots of racial/ethnic stratification to social and political differences that predate inter-group contact in the labor market, but the specific outcomes (caste system, exclusion, or something else) result mainly from the actions of the higher paid segment of the working class and their power relative to that of capital.

In one of the best-known applications of split labor market theory, William Julius Wilson

William Julius Wilson

William Julius Wilson is an American sociologist. He worked at the University of Chicago 1972-1996 before moving to Harvard....

argued in The Declining Significance of Race that a split labor market provided much of the racial antagonism between blacks and whites during the earlier years of what he called the period of industrial race relations. Wilson argued that this did not last, however, as "the passage of protective union legislation during the New Deal era, and the equal employment legislation in the early sixties have virtually eliminated the tendency of employers to create a split labor market in which black labor is deemed cheaper than white labor regardless of the work performed".