Negro Employment in Public Utilities: A Study of Racial Policies in the Electric Power, Gas, and Telephone Industries [Reprint 2016 ed.] 9781512820836

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NEGRO EMPLOYMENT IN PUBLIC UTILITIES A Study of Racial Policies in the Electric Power, Gas, and Telephone Industries

INDUSTRIAL RESEARCH UNIT W H A R T O N SCHOOL O F F I N A N C E A N D COMMERCE UNIVERSITY OF P E N N S Y L V A N I A Founded in 1921 as a s e p a r a t e W h a r t o n Department, the Industrial Research Unit has a long record of publication and research in the labor market, productivity, union relations, and business report fields. M a j o r Industrial Research Unit studies a r e published as research projects are completed. Advanced research reports a r e issued as a p p r o p r i a t e in a general or special series.

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Bernard E. Anderson, Negro Employment in Public Utilities: A Study of Racial Policies in the Electric Power, Gas, and Telephone Industries. (Studies of Negro Employment, Vol. III.) 1970. $8.50

and

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NEGRO EMPLOYMENT IN PUBLIC UTILITIES A Study of Racial Policies

in the Electric

Telephone

Power, Gas, and

Industries

(Volume III—Studies of Negro Employment)

by BERNARD

E.

ANDERSON

Assistant Professor of Industry Wharton School of Finance and Commerce University of Pennsylvania

Industrial Research Unit Wharton School of Finance and Commerce University of Pennsylvania

Copyright © 1970 by the Trustees of the University of Pennsylvania Library of Congress Catalog Card Number 70-140575 Manufactured in the United States of America ISBN: 0-8122-7623-X

Foreword In September 1966, the Ford Foundation announced a major grant to the Industrial Research Unit of the Wharton School to fund studies of the Racial Policies of American Industry. The purpose of the research effort, now in its fourth year, is to determine why some industries are more hospitable to the employment of Negroes than are others and why some companies within the same industry have vastly different racial employment policies, and to propose appropriate policy. The studies have proceeded on an industry by industry basis under the direction of the undersigned, with Dr. Richard L. Rowan, Associate Professor of Industry, as Associate Director. By the end of 1970, at least twenty-one industry reports will have been published and ten more will be in various stages of preparation. In addition, the Industrial Research Unit is publishing a series of books updating, revising, and combining our industry studies, and analyzing the reason for different racial policies and Negro employment representation in different industries. Volumes I and II, Negro Employment in Basic Industry and Negro Employment in Finance have recently been published. Volume IV, Negro Employment in Southern Industry, is scheduled for late 1970. This study covering the public utility industries is being issued both as Report No. 10 in our Racial Policies of American Industry series and as Volume III in our Studies of Negro Employment because it covers not only similar industries, but an entire segment of employment with unique characteristics. Hence, the racial policies of the electric power, gas, and telephone industries are not only examined as in our industry reports, but also compared and contrasted with each other and with industry generally. The result is a pathbreaking study covering a key sector of employment in which the racial policies have not hitherto been examined. This study is the work of Dr. Bernard E. Anderson, Assistant Professor of Industry in the Wharton School. Originally written as a doctoral dissertation at the University of Pennsylvania, it has since been thoroughly reworked and rewritten. Prior to the completion of his dissertation, Dr. Anderson spent two years on

v

Foreword

vi

the research and writing. A graduate of Livingstone College, he also earned an M.A. degree at Michigan State University and has served on the staff of the U. S. Department of Labor and the Opportunities Industrialization Center, Inc. His careful scholarship, keen insight, and diligent research enabled him to produce a fine, scholarly work. Despite the lack of cooperation of the American Telephone and Telegraph Company, the only major concern which has not cooperated with the Industrial Research Unit in this series of studies, the reader will find the same objective treatment of AT&T policies as is accorded those of the companies which assisted with data and other information. As in most previous reports, the data cited as "in the author's possession" have been carefully authenticated and are on file in the Industrial Research Unit library.

R. N O R T H R U P , Director Industrial Research Unit Wharton School of Finance and Commerce University of Pennsylvania HERBERT

Philadelphia September 1970

Preface The disparity in the employment of black and white workers in American industry has long been a topic of investigation by many social scientists. Numerous industries, occupations, and geographic areas have been studied in an attempt to identify and explain the characteristics and determining factors responsible for the widespread inequality in the utilization of black manpower. An examination of the literature on racial employment patterns, however, will reveal an almost total lack of information on the employment practices of the public utility industries. This information gap is somewhat surprising in view of the volume and quality of job opportunities in the public utility industries, and the highly important role such industries play in supporting the nation's economic growth and standard of living. The following study was undertaken in an attempt to close the information gap by developing a comprehensive body of data to describe and to evaluate the employment of black workers in the major investor-owned electric power, gas distribution, and telephone industries. In approaching the topic, strong emphasis has been placed on the economic, institutional, and behavioral environment in which public utility firms operate. This approach is based on the view that statistical employment patterns cannot be clearly understood in isolation from the environmental milieu in which attitudes and policies toward black workers are developed and perpetuated. In addition, joint consideration of industry statistical patterns and the operating environment may yield important insight into the factors responsible for generating change in the employment of black workers. Although the public utilities are in many ways unique among industries, the employment problems of black workers in such firms do not differ markedly from similar problems observed throughout American industry. As a result, the evidence presented in the study should offer insight into the development of private and public policies designed to advance economic opportunity for black workers. The research in this study was made possible by the generous interest and assistance of many people. The author is heavily indebted to Professor Herbert R. Northrup, whose research on

vii

viii

Prefacc

industrial race relations spans more than twenty-five years and was undertaken long before the study of Negro employment problems became fashionable in academic circles. Valuable assistance in formulating the research methodology and in refining the study was received from Drs. Richard L. Rowan and Leonard Rico of the Wharton School of Finance and Commerce, Department of Industry, and Dr. Lowell E. Gallaway, formerly of the Wharton School faculty. Statistical assistance was rendered by Miss Elsa Klemp and Mrs. Marjorie C. Denison, of the Wharton School, Industrial Research Unit. The manuscript was typed by Mrs. Helen White, Mrs. Rose K. Elkin, Mrs. Veronica Kent, and Miss Mary McCutcheon. Mrs. Margaret E. Doyle, Administrative Assistant of the Industrial Research Unit, cared for the numerous administrative details associated with the field research and the preparation of the manuscript. Mrs. Marie R. Keeney edited the manuscript and prepared it for publication. All of these persons provided services of inestimable value, which greatly reduced the burden on the author. Many persons outside the university were also most helpful. The Edison Electric Institute, and especially Mr. Richard Connerty of its staff, were most cooperative, as was the American Gas Association, and the Independent Telephone Association. Management officers and nonmanagement employees of many electric and gas utilities, independent telephone companies, including subsidiaries of General Telephone and Electronics were of material assistance. The study profited by an early pilot study made with the cooperation of the Bell Telephone Company of Pennsylvania. Several management officers of that company were most helpful in discussing the personnel and racial employment problems confronting the telephone industry. Unfortunately, however, cooperation could not be obtained from the American Telephone and Telegraph Company to enable other Bell operating companies to participate in the study. As a result, information on the employment of black workers in the Bell System is based primarily upon secondary sources, including published reports and discussions with government and community leaders concerned with equal employment opportunity. Special thanks are due to staff members of the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance for their assistance in discussing the role

ix

Preface

of the federal government in guaranteeing equal job opportunity in American industry. Valuable insight into the role of government was also obtained from representatives of the Atomic Energy Commission, the Federal Power Commission, and the General Services Administration contract compliance staffs. Representatives of the human relations commissions in Pennsylvania, N e w Jersey, and Missouri were also generous in contributing source material on Negro employment problems in the respective states. Although the government officials preferred to remain anonymous, their assistance was essential for an in-depth analysis of racial employment conditions in local areas. Finally, the author owes a heavy debt of gratitude to his family for their continued support and encouragement. Special bouquets are due to the author's w i f e for her willingness to share the sacrifice, and to display the patience and perseverance required during the preparation of the original version of this study as a doctoral dissertation. Although many persons contributed to the completion of this study, the author takes full responsibility for the errors, shortcomings, and conclusions contained herein.

BERNARD E . ANDERSON

Philadelphia

TABLE OF CONTENTS

PAGE

FOREWORD

...

v

PREFACE

vii

CHAPTER I.

INTRODUCTION

1

The Nature of Employment Policy

2

Previous Research on the Negro in Public Utilities...

3

Framework of the Study

4

Labor Market Analysis Market Discrimination and Negro Employment... . The Influence of Monopoly .

4 6 8

Industry Coverage

9

Source of Data Selection of Firms Company Interviews Limitations of the Study II.

10 10 11 12

T H E PUBLIC UTILITY INDUSTRIES

13

Demand and Production

13

Regulation

14

Functions of Regulatory Agencies

14

Impact on Employment Policy

15

The Electric Power Industry Markets Structure

.

16 19 20 xi

xii

Table of

CHAPTER

Contents PAGE

Electric Power Manpower Characteristics

24

Employment Trends 24 Occupational Characteristics . 26 Female Employment 28 Generation Techniques and the Impact of Nuclear Energy 28 Transmission and Distribution Techniques 31 Customer Service Occupations 32 Wages and Fringe Benefits 33 Working Conditions 34 Unionization 36 The Gas Industry Conversion to Natural Gas Residential Market Commercial and Industrial Markets Structure Distribution Companies

...

38 40 40 41 42 42

Gas Manpower Characteristics Occupational Characteristics Wages Working Conditions

43 44 46 47

The Telephone Communications Industry Growth of the Industry Markets and Services Structure American Telephone and Telegraph Company AT&T Structure and Employment Policy The Independent Telephone Sector

47 48 48 50 50 53 53

Telephone Manpower Characteristics Employment Trends Occupational Characteristics Technological Changes Affecting Employment Future Impact of Technology Wages Fringe Benefits Unionization

54 54 56 59 60 60 62 63

Table of Contents

xiii

CHAPTER III.

PAGE

NEGRO EMPLOYMENT FORE 1 9 5 0

IN

THE

PUBLIC

UTILITIES

BE64

Early Negro Employment

64

Labor Demand in the Utilities Industry Location The Ethnic Worker Labor Supply Racial Attitudes Trade Unions

66 67 68 72 74

Negro Employment between 1930 and 1950

75

Employment Change 1930-1940 World War II and Its Aftermath IV.

NEGRO

EMPLOYMENT

IN

THE

POSTWAR

78 79 ERA,

1950-

1960

82

Regional Variations

82

State Trends Metropolitan Areas

83 89

Occupational Trends

92

Telephone Operators 92 Linemen, Servicemen, and Power Station Operators . 100 Factors Influencing Negro Gains, 1950-1960

101

Labor Market Conditions Impact of Technological Change Fair Employment Demands Direct Action

102 103 105 107

Summary V.

RECENT NEGRO EMPLOYMENT TIES

The National Picture

107 IN

THE PUBLIC

UTILI109

110

Employment Variations among Industry Sectors ..... I l l Change in Negro Employment 1966 to 1967 114 Negro Occupational Patterns

114

xiv

Table

of

CHAPTER

Contents PAGE

Industry Variations in N e g r o Employment

115

Electric P o w e r Companies L a r g e Electric P o w e r Companies Gas Distribution Companies

117 121 122

L a r g e Gas Distribution Companies

125

Combination Electric and Gas Companies ..... L a r g e Combination Companies

125 127

Impact of ment

Occupational

Growth

on

Negro

Employ-

Industry Variations among Metropolitan A r e a s

129 133

Managerial Policy, Employment Growth, and Company I m a g e 136 L a b o r Supply and the N e g r o Utilization Index

136

Electric and G a s Utility Employment in 1968

139

N e g r o e s in the Telephone Industry in 1968

144

Regional Variations ... 147 Individual Company Variations 149 Change in Telephone Employment 1966 to 1968 150 Telephone Industry Compared to Electric and Gas Utilities 152 VI.

M A N A G E M E N T POLICY AND NEGRO E M P L O Y M E N T

The Employment Process Employee Recruiting H i r i n g Standards and Employee Selection H i r i n g Standards and N e g r o Job Preferences Seniority and Promotion Systems Decision-making on Promotions N e g r o Promotional Opportunities The G r i g g s Case Prospects f o r N e g r o U p g r a d i n g Current Racial Employment Policy Declaration of Equal Employment Policy Communicating the Policy to Management Communicating the Policy to Employees

155

... . 156 156 158 161 . 162 166 167 168 ... 170 ._ 171 . 171 173 174

xv

Table of Contents CHAPTER

PAGE

Policy Modification to Improve Negro Employment.-.. 175 Washington Gas Light Company Cleveland Electric Illuminating Company Detroit Edison Company Philadelphia Gas Works Consolidated Edison Company of New York

176 177 179 181 183

Racial Employment Policy in the Telephone Industry

185

The Bell System and Equal Employment Service Quality and Employment Standards New York Telephone Company Southwestern Bell Telephone Company Promotions and Upgrading Summary VII.

186 188 189 190 192 193

PUBLIC POLICY AND NEGRO EMPLOYMENT IN THE UTILITY INDUSTRIES

Early Government Efforts for Fair Employment

195

..... 195

State and Local Activities in the 1950's

197

Expanded Federal Efforts in the 1960's

200

Plans for Progress

201

Complaints and Enforcement

202

Developments since 1964 Equal Employment Opportunity Commission Office of Federal Contract Compliance Atomic Energy Commission Compliance Efforts General Services Administration Jurisdiction The McKersie Plan The Alabama Power Experience Impact of Federal Manpower Policy JOBS Program Utility Industry Participation

204 204 208 . 209 .. 211 212 213 214 214 215

xvi

Table of

CHAPTER VIII.

Contents PAGE

CONCLUSION

217

Factors Determining Negro Employment

218

Company Employment Policies and Practices Labor Demand Government Policy Union Policy Implications of the Study

218 220 - 220 222 222

APPENDIX

A.

Basic Statistical Tables

224

B.

Cities Included in Field Research

249

C.

Brief in Griggs v. Duke Power Company

250

INDEX

257

LIST OF TABLES

TABLE

1 2 3 4 5 6 7 8 9

10 11 12 13 14

PAGE

Electric Power Industry, Operating Statistics, Selected Years, 1902-1968

18

Electric Power Industry, Installed Capacity and Production by Type of Ownership, 1946, 1966, and 1968..._

21

The Nineteen Largest Electric Power and Combination Companies, 1969 Statistics

23

Electric Power Industry, Major Interconnected Systems, United States, 1964

24

Public Utility Industries, Employment by Standard Industrial Classification, 1947-1969

25

Electric Power Industry, Employment by Occupation, 1960 and 1967

27

Electric Power Industry, Investor-Owned Nuclear Power Plants in Operation, 1967

30

Electric Power Industry, Planned Nuclear Plants, 19681980

31

Public Utility and Selected Industries, Average Hourly Earnings, Nonsupervisory or Production Workers, 1947-1969

33

Electric Power Industry, Average Hourly Earnings, Selected Occupations, October-November 1967

35

Gas Industry, Operating Statistics, Selected Years, 19451967

39

Gas Industry, Employment by Occupation, 1960 and 1967

45

Telephone Communications Industry, Operating Statistics, Selected Years, 1935-1968 „„„

49

Bell Telephone System, Operating Statistics, Twentythree Companies, 1940 and 1968

52 xvii

xviii

List of

Tables

TABLE

15 16 17 18 19 20

21 22 23 24

25

26

PAGE

Telephone Communications Industry, Size Distribution of Major Companies, 1968

52

Telephone Communications Industry, Employment and Earnings, 1947-1969

55

Telephone Communications Industry, Employment by Occupational Group, United States, 1968 ...

57

Telephone Communications Industry, Employment by Occupational Group, 1950, 1960, and 1968

58

Electric Power and Gas Industries, Total and Negro Employment, 1920 and 1930 . ..

66

Electric Power and Gas Industries, Total, Negro, and Foreign-born White Employment, Selected Occupations, 1930

70

Public Utility Industries, Employment by Race and Sex, United States, 1930-1960 .....

76

Public Utility Industries, Percent Negro Employment by Sex and Region, 1950 and 1960

83

Public Utility Industries, Employment by Race and Sex, Selected States, 1950 and 1960 ... .

84

Public Utility Industries, Employment by Race and Sex, Selected Standard Metropolitan Statistical Areas, 1950 and 1960 ..

90

Public Utility Industries, Total and Negro Employment, Three Occupational Groups, Selected States, 1950 and 1960 ...... .

93

Public Utility Industries, Total and Negro Employment, Two Occupational Groups, Selected Standard Metropolitan Statistical Areas, 1950 and 1960

97

27

Public Utility Industries, Employment by Race and Major Occupational Group, Establishments with 100 or More Employees, United States, 1966 and 1967 112

28

Public Utility Industries, Percentage Distribution of Employment by Race and Occupational Group, United States, 1967 and 1968 116

List of Tables TABLE

xix PAGE

29

Electric Power and Gas Distribution Industries, Employment by Race and Occupational Group, Fortysix Companies, United States, 1966 and 1967 118

30

Electric Power Industry, Employment by Race and Occupational Group, Twenty-seven Companies, United States, 1966 and 1967 119

31

Electric Power Industry, Change in Employment by Race, Sex, and Occupational Group, Twenty-seven Companies, United States, 1966 to 1967 120

32

Gas Distribution Industry, Employment by Race and Occupational Group, Eleven Companies, United States, 1966 and 1967 123

33

Gas Distribution Industry, Change in Employment by Race, Sex, and Occupational Group, Eleven Companies, United States, 1966 to 1967 124

34

Combination Electric and Gas Industry, Employment by Race and Occupational Group, Eight Companies, United States, 1966 and 1967 126

35

Combination Electric and Gas Industry, Change in Employment by Race, Sex, and Occupational Group, Eight Companies, United States, 1966 to 1967 128

36

Electric Power and Gas Distribution Industries, Index of Occupational Change Among Negroes, 1966 to 1967 130

37

Electric Power and Gas Distribution Industries, Employment by Race and Major Occupational Group, Selected Standard Metropolitan Statistical Areas, 1967 134

38

Paired Utility Industries, Percent Negro Employment by Major Occupational Group, Selected Standard Metropolitan Statistical Areas, 1967 135

39

Electric Power and Gas Distribution Industries, Index of Negro Utilization, Selected Standard Metropolitan Statistical Areas, 1967 138

xx

List of

TABLE

Tables PAGE

40

Electric Power and Gas Distribution Industries, Employment by Race, Sex, and Occupational Group, Twenty-nine Companies, United States, 1966 140

41

Electric Power and Gas Distribution Industries, Employment by Race, Sex, and Occupational Group, Twenty-nine Companies, United States, 1968 141

42

Electric Power and Gas Distribution Industries, Change in Employment by Race, Sex, and Occupational Group, Twenty-nine Companies, United States, 1966 to 1968 143

43

Telephone Communications Industry, Employment by Race and Occupational Group, Thirty-seven Companies, United States, 1968 145

44

Telephone Communications Industry, Percentage Distribution of Employment by Race and Occupational Group, Thirty-seven Companies, United States, 1968 146

45

Telephone Communications Industry, Negro Percentage of Employment by Occupational Group, Four Regions, 1968 . . 148

46

Telephone Communications Industry, Change in Employment by Race, Sex, and Occupational Group, Fourteen Companies, United States, 1966 to 1968 151

47

Public Utility Industries, Employment by Race and Occupational Group, United States, 1967 and 1968 153

LIST OF FIGURES

FIGURE

PAGE

1

Electric Power Industry, Typical Job Progressions...

164

2

Gas Distribution Industry, Typical Job Progressions

165

CHAPTER I

Introduction Public utility industries have an impact on our lives unlike that of any other industrial group in our economy. The consumer's morning coffee and evening television program would not be available without the services of electric power and gas companies. The frequent contact between family and friends would be greatly limited without the services of the telephone company. Beyond their importance to consumers, however, public utility companies are important in providing a framework on which other industries can grow. Rapid and dependable telephone communication is the nerve system of modern business with its diversified branch plants, warehouses, and district sales offices. Reliable and efficient sources of electric power are necessary for maintaining high levels of production in most industries throughout the economy, and natural gas also plays an important role in many manufacturing operations. Because of their widespread importance, public utility firms are located in every section of the nation and in communities of every size. The impact of the public utility industries on the rate of economic progress, the standard of living, and the economic development of diverse communities gives great significance to the operating policies and practices of public utility firms. The purpose of this study is to describe, to analyze, and to evaluate the employment policies and practices of electric, gas, and telephone companies with respect to black workers. The study will focus on the economic, institutional, and behavioral factors which explain the variation in such employment policies among different utility firms and industries. Special attention will be given to the employment process within public utility firms, because the volume and level of job opportunities for black workers often depend upon company recruiting, selection, training, and promotion systems. A n attempt will be made to ident i f y the variables which determine the choice and sequence of employer policies toward black workers. In addition, the study will show how changes in the utility industry labor market, prod-

2

The Negro in the Public Utility

Industries

uct market, technology of production, and other factors in the institutional environment affect company employment policy and practices. THE NATURE

OF EMPLOYMENT

POLICY

The study begins with the assumption that each public utility company has a management policy pertaining to the employment of Negroes. The policy may be active or passive; it may be tacit or explicit. In every case, however, the policy will reflect managerial preference in the hiring and promotion of black workers. The type of policy pursued by a firm will be determined by a number of factors including, but not limited to, labor market conditions, management attitudes, union attitudes, and government pressure and policy. Management policy is designed primarily to meet company manpower needs, as perceived by the top executives of the firm. Changes in company policy are determined by changes in the economic, institutional, and behavioral environment in which the firm operates. The pace and direction of change in racial employment policy is often dictated by managerial assessment of the demands for economic efficiency. In some cases, however, economic efficiency may be balanced by managerial concern for social justice, or managerial response to various external pressures exerted by minority group organizations, trade unions, customers, or the government. The employment pattern of Negro workers may reflect the employment policy pursued by the firm. In some cases, however, the employment policy and the Negro employment pattern may not be positively correlated. This situation will arise when the factors responsible for the formulation of employment policy differ in content or degree from those which determine the number and relative status of Negroes employed. For example, a company may adopt a policy of encouraging Negro employment in order to comply with government fair employment legislation. The number of Negroes employed, however, may change very little from year to year, because of the slow growth and turnover of jobs in the company, or the limited supply of Negro workers qualified to fill positions available in the firm. This study, in focusing upon existing employment patterns, will identify, and where necessary, distinguish between the factors responsible for the development of employment policy and those which determine the number of Negroes employed by utility firms.

3

Introduction PREVIOUS

RESEARCH

ON THE NEGRO UTILITIES

IN

PUBLIC

Despite the relative importance of public utility firms in the American economy, very few investigations have been made of Negro employment in these industries. Reports on Negro employment in utility firms in N e w Jersey and Missouri were prepared in 1966, under grants issued by the U. S. Equal Employment Opportunity Commission. 1 The reports, utilizing 1965 data, described the pattern of Negro employment in twenty electric power, gas, and telephone companies operating in different sections of the two states. No attempt was made, however, to relate the occupational data to company employment policy or to labor force characteristics. Moreover, since industry coverage varied between the two studies, Negro employment in similar utility industries in both states could not be compared. Negro employment in Pennsylvania utilities was studied by the Pennsylvania Human Relations Commission in 1967. 2 The survey included water and sanitation companies, together with electric, gas, and telephone firms. Although the nature of employment policy was investigated, no attempt was made to ident i f y the factors which determine employer policies and the number of Negroes employed. This study is the first one dealing with nation-wide employment of Negroes in public utility firms. The emphasis on the relationship between company characteristics and racial employment policy provides insights which permit an objective comparison of Negro employment in different utility companies and industries. Moreover, the results of the study should provide the basis for understanding differences in Negro employment between utility and nonutility firms. The attempt to distinguish between the forces determining employer policy and those determining results achieved under management policy provides a framework 1. See Roger Miller, "Employment Practices of Selected Missouri Public Utilities: Natural Gas and Electric," Technical Report No. 2, mimeographed, Jefferson City: Missouri Commission on Human Rights, June 30, 1966; and Myron J. Levin, Survey of Equal Employment Opportunities in New Jersey Investor-Owned Public Utilities (Trenton: Division on Civil Rights, Department of Law and Public Safety, State of New Jersey, July 1966). 2. Pennsylvania Human Relations Commission, "Pennsylvania Public Utilities Survey," mimeographed, Harrisburg: The Commission, July 1968.

4

The Negro in the Public Utility

Industries

for evaluating the potential impact of various industry and government programs designed to expand job opportunities for black workers. FRAMEWORK

OF THE

STUDY

An empirical study of Negro employment involves an almost unlimited array of statistical and impressionistic observations. In order to make sense out of the mass of data, and to identify the most relevant observations, a conceptual framework of analysis is required. In this study, the analytical framework is based upon the concept of duality in the employment problems of black workers. These problems are characterized by duality in the sense that variations between the occupational pattern of white and black workers may be expressed in terms of a) the formal and informal operation of labor markets, and b) the presence of racial discrimination in labor markets. LABOR

MARKET

ANALYSIS

A labor market, in the broadest sense, is an area in which employers of human resources come together with potential employees to consummate an exchange through which labor resources will be made available for use in productive activities. The efficient operation of labor markets largely depends upon the propensity of workers to respond to opportunities and the knowledge workers have about market opportunities. Labor mobility, or the flow of human resources between alternative uses, assumes a high degree of economic maximizing behavior on the part of workers and employers. If, for example, we consider interindustry labor mobility, the most efficient operation of the labor market would require workers to flow in the direction of the industries with the highest wages and lowest unemployment rates. 3 The shift from low to high wage industries will then determine an equilibrium wage structure in which the net advantage of job changes will just equal the cost of movement for each employee in each separate industry. The same type of equilibrium process may be applied to different occupations, firms, geographic areas, and other types of labor markets. 3. For a recent study of the theory of labor markets, specifically involving interindustry mobility, see Lowell E. Gallaway, Interindustry Labor Mobility in the United States: 1957 to 1960, U.S. Department of Health, Education, and Welfare, Social Security Administration, Research Report No. 18 (Washington: Government Printing Office, 1967).

Introduction

5

The process leading toward equilibrium in the labor market may be hampered by barriers to mobility. These may be economic barriers, such as the cost of movement; or noneconomic barriers including lack of knowledge regarding job opportunities, rules restricting entry to job markets, and the socioeconomic stratification of society. 4 When such barriers exist, labor resources cannot be allocated among markets in the most efficient pattern of utilization. Moreover, the impact of low earnings and frequent unemployment will fall disproportionately upon the labor groups most restricted by the barriers. Barriers to labor mobility may create "noncompeting groups," a labor market concept introduced long ago by the British economist J. E. Cairnes. 5 By employing the concept of "noncompeting groups," Cairnes suggested that in the short run, a worker is available for only several jobs, and an employer for several workers, although in the long run, the competitive market process might prevail. The noncompeting groups referred to were the socioeconomic classes, including manual workers, white collar employees, and professionals. Barriers to movement between these groups are set up by skill gaps, geographic distance, lack of knowledge, tastes of workers, trade unions, and the personal predilections of employers. In the contemporary economy, labor markets usually operate under a set of formal and informal rules which seriously reduce the free flow of labor resources among different markets and perpetuate the presence of noncompeting groups. The rules create "institutional" labor markets in which the job rights and preferences of some employees take priority over the individual preferences of others. The institutional rules are set by employer associations, company personnel policies, trade unions, and government. They tend to be strengthened by the preferences and attitudes of individual workers reflected in custom and tradition. The rules introduce security, order, and certainty into the employment decision process. The pervasive presence of the 4. The socioeconomic stratification of society is i m p o r t a n t in determining how effectively the market operates to improve the occupational position of individuals over time. This factor in labor mobility is discussed by Milton Friedman, Price Theory (Chicago: Aldine Publishing Co., 1965), pp. 224-225. 5. J . E. Cairnes, Political Economy (New York: H a r p e r and Brothers, 1874), pp. 67-68. See also Clark Kerr, "Labor M a r k e t s : Their Charact e r and Consequences," American Economic Review, Vol. XL (May 1950), pp. 278-291.

The Negro in the Public Utility

6

Industries

institutional rules, however, tends to create highly structured labor markets which have a profound influence upon the allocation of labor and the distribution of economic opportunity among different groups within the economy. The model of institutional or "structured" labor markets will be used in this study to gain insight into the utilization of Negroes in the public utility industries. Later sections of the study will identify some of the employer and union policies which: 1) impede the flow of employment information to black workers, 2) place black workers at a disadvantage in competing with whites for entry-level jobs even when information is readily available, and 3) hamper the occupational advancement of blacks relative to whites within the firm. Most utility company personnel policies undoubtedly contribute to operating efficiency and cost minimization. They also contribute to a high degree of job security and income stability. The record will show, however, that the goal of equal employment opportunity has often been difficult to achieve within the framework of the highly structured labor markets which characterize public utility firms. Market Discrimination

and Negro

Employment

A cursory examination of the labor force will reveal a marked disparity between the relative occupational and income position of white and black workers. 0 The difference between the groups may be explained partly in terms of unfavorable labor market adjustment mechanisms. A major factor, however, is racial discrimination, or the denial of equal opportunity to black workers for no reason other than their racial identity. In order to explain this aspect of the Negro employment problem, several investigators have attempted to develop a systematic theory of market discrimination. 7 6. For a recent description of such differences, see U. S. Bureau of Labor Statistics, The Social and Economic Status of Negroes in the United States, 1969, Report No. 375 ( W a s h i n g t o n : Government Printing Office, 1970), pp. 13-46. For a description of racially unequal employment patterns in private industry, see U.S. Equal Employment Opportunity Commission, Job Patterns for Minorities and Women in Private Industry, 1966, Report No. 1 (Washington: The Commission, 1968). 7. Gary Becker, The Economics of Discrimination (Chicago: University of Chicago Press, 1957) and Anne O. Krueger, "The Economics of Discrimination," Journal of Political Economy, October 1963, pp. 481-486.

Introduction

7

The basic f r a m e w o r k of the theory, developed by Gary Becker, revolves around the nonpecuniary motivation of employers and employees. Assuming that employers are rational profit maximizers and t h a t employees are paid in accordance with their marginal productivity, if workers are perfect substitutes for each other, the equilibrium process involving the free choice of firms and occupations should lead to a random distribution of job opportunities f o r members of different population groups. If, however, discrimination operates in the labor market, employers and employees exercise subjective judgments and act as though they are willing to pay an additional cost, either directly or indirectly in the f o r m of a reduced income, to be associated with some persons r a t h e r than others. 8 Discrimination, alone or in combination with institutional restrictions in the labor market, can create a significant disparity in the distribution of job opportunities between white and black members of the work force. It is important to note that m a r k e t discrimination occurs only when members of the work force are perfect substitutes in production. If differences in the level of employment between white and black workers reflect differences in productivity as measured by education, training, and job experience, the differential may not be due to the tendency toward discrimination. Moreover, discrimination resulting f r o m incorrect estimates of worker productivity may be caused by a lack of knowledge on the p a r t of employers. 9 P u r e market discrimination exists only when comparative productivities are known, but employers prefer, or are forced by employees or customers, to pay an additional cost to exercise preference f o r or against particular members of the work force. 10

8. Becker, op. cit., p. 7. 9. This type of discrimination may be eliminated by increased information regarding the productivity of prospective employees. Advocates of fair employment legislation often assume that educational campaigns, by improving the distribution of information, will lead to a reduction in employment discrimination. The fact that education alone rarely achieves equal employment opportunity indicates that much discrimination is based upon conscious choice rather than lack of accurate information. 10. The market discrimination concept is symmetrical in the sense that minorities with sufficient power may force employers to practice discrimination in reverse. Often, this technique is employed to redress longstanding discrimination against minority groups.

8

The Negro in the Public

Utility

Industries

The Influence of Monopoly Because discrimination, in part, imposes additional costs on employers, the extent of discrimination may be related to the degree of competition in the market place. All other things being equal, nondiscriminators may be expected to have a lower unit cost of production, and thus, be able to enjoy higher sales or more rapid expansion. In terms of economic theory, the nondiscriminator will maximize profits at a lower unit cost than the firm which practices discrimination. For this reason, some economists have stressed the importance of competition and free entry into product markets as a means of reducing discrimination and broadening the opportunities for black workers.11 While economic theory suggests that competition may reduce the degree of market discrimination, the influence of monopoly on racial discrimination is not entirely clear. Because they have discretionary market power, monopolistic employers are largely immune from the cost consequences associated with practicing discrimination, and thus, may pursue goals other than profit maximizing.12 As a result, such employers may choose either to discriminate or to pursue a nondiscriminatory employment policy. The insights obtained from the theory of market discrimination are useful for examining the disparity between white and Negro occupational patterns in public utility firms. Because these firms are monopolistic in their market structure, utility company employers have wide discretion in pursuing alternative employment policies with respect to black workers. While seeking to attract manpower qualified to perform the myriad tasks required in utility firms, company managers are in a position to modify hiring and selection standards within broad cost constraints. Although no attempt will be made to measure discrimination in the utility industries, a major goal of the study will be to ex11. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), pp. 108-115. Also, Council of Economic Advisors, " T h e High Cost of Discrimination in Employment," statement presented to the Joint Economic Committee of Congress in September 1962, released by its Southern Regional Council, Atlanta, October 15, 1962. 12. Armen A . Alchian and Reuben A . Kessel, "Competition, Monopoly, and the Pursuit of Pecuniary Gain," Aspects of Labor Economics, Report of the National Bureau of Economic Research (Princeton: Princeton University Press, 1962) ; Oliver E. Williamson, "Managerial Discretion and Business Behavior," American Economic Review, Vol. L I I I , No. 5 (December 1963), pp. 1032-1057.

9

Introduction

amine interfirm differences in the utilization of Negroes in an effort to determine how the discretionary market power of utility company managers has been used to expand, or limit, the employment opportunities of black workers. 13 INDUSTRY

COVERAGE

The public utility industries which are the subjects of this study include electric power, gas distribution, and telephone communications firms. The specific industries, as defined by the Standard Industrial Classification Code are listed below.11 Where possible, data on the pipeline transmission segment of the gas industry have been omitted. SIC 481

Telephone Communication (wire or radio) Companies primarily engaged in furnishing telephone communication service by placing parties in vocal conversation with each other. This industry includes domestic, international, marine, mobile, and aeronautical services.

SIC 491

Electric Companies and Systems Companies and systems engaged in the generation, transmission, and/or distribution of electric energy for sale.

SIC 492

Gas Companies and Systems Companies engaged in transmission, storage and/or distribution of manufactured or natural gas for sale.

SIC 493

Combination Companies and Systems Companies and systems providing electric or gas services, in combination with other services. Companies or systems are classified here only if one service does not constitute 95 percent or more of revenues.

13. For a similar investigation, covering a broader range of industries, see William G. Shepherd, "Market Power and Racial Discrimination in White-Collar Employment," The Antitrust Bulletin, Vol. XIV (Spring 1969). 14. U.S. Bureau of the Budget, Standard Industrial Classification Manual (Washington: Government Printing Office, 1967), pp. 216 and 218-219.

10

The Negro in the Public Utility

Industries

The study will focus on privately owned and operated public utility firms. Although local transit companies may be considered public utilities, the occupational characteristics of transit firms differ substantially from employment in electric, gas, and telephone firms. Since a meaningful comparison of employment patterns between firms and industries depends upon similar occupational structures, transit firms have been excluded from this study." Source of Data Several sources were used to obtain information on the employment in public utility industries. Historical data were found in past publications of the decennial Census of Population. More recent employment and wage figures were obtained from Employment and Earnings Statistics, published by the U.S. Bureau of Labor Statistics. Industry employment data also were obtained from the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance. These data provide employment patterns in utility firms with 100 or more employees in 1966 and 1968. Since federal law requires the preservation of confidentiality for racial employment records submitted by the companies, the two federal agencies do not publish information on specific firms. Industry and area data, however, have been published, and will be used in this study. Selection

of

Firms

In order to obtain an in-depth view of Negro employment in public utilities, a number of companies in cities with a significant Negro labor force were selected. The selection criteria required each city to have at least a 10 percent Negro representation in the labor force, and utility companies to have 1,000 or more employees. Sixteen cities located throughout the nation were selected. (See Appendix B.) Several companies participating in the study provided detailed statistics on their total and Negro employment by occupation. These records were offered under a guarantee of confidentiality which preserves the anonymity of individual firms. Since public 15. This industry will be covered in Philip W. Jeffress, The Negro in the Urban Transit Industry, Racial Policies of American Industry Report No. 18 (Philadelphia: Industrial Research Unit, Wharton School of Finance and Commerce, University of Pennsylvania, 1970).

11

Introduction

utility firms operate under government franchises issued f o r specific geographic areas, only one firm in each industry operates in each city selected f o r study. In order to preserve the anonymity of individual firms, comparison of employment in local areas must be made over broad industry groups. The analysis and tabulations in this report will combine industries and use other techniques of aggregation to avoid identifying specific firms. Company

Interviews

The personal interview was used to obtain information on employer hiring policies and practices. The director of personnel and his staff were the source of information relating to company policy. Other company employees, including personnel interviewers, recruiters, training directors, line foremen, and office supervisors were also interviewed. Discussions with the latter employees focused on their understanding of company policy regarding Negro workers and on personal experiences with Negro applicants and employees. The interviews were largely unstructured, but directed toward specific topic areas, including the history of employment policy in the firm, impact of government policy on the employment of Negroes, and company programs for expanding Negro employment. The interviews, approximately two and one-half hours in length, probed deeply into the rationale and motivation behind company policy on Negro employment. In addition, the nature and r a n g e of company recruiting, selection, training, and promotion procedures were closely examined. Information obtained from company executives was supplemented by discussions with local community leaders and regional officers of government equal employment agencies. In some cases, the comments of these individuals confirmed the information obtained from the companies. In other cases, however, there was a significant difference between the responses of community leaders and company executives regarding company employment policy and practice. The difference usually revolved around the pace at which Negroes were being hired and promoted by the firms. Often a lack of communication between the community groups and the company executives, or dissimilar goals of the two groups, led to a misunderstanding of company policy and programs for expanding Negro employment.

12 Limitations

The Negro in the Public Utility of the

Industries

Study

Although the study covers a large segment of the public utility industries, several limitations should be noted. First, since the research focused upon large utility firms in urban metropolitan areas, the results of the study may not reflect the circumstances surrounding Negro employment in nonurban utilities. The limited available data suggest that Negro employment in such firms may differ markedly from employment in urban-based utilities, because of the small number of jobs and relatively low turnover among employees in nonurban utilities. 16 Also relatively few Negroes are found in the labor force of nonurban areas outside the South. The study is also limited by the focus on private, investorowned companies. These firms represent the bulk of all employees in the electric, gas, and telephone industries. The study does not contain information on the employment policy of publicly owned utilities, although such firms employ a significant number of workers in some areas. Finally, the information contained in the study refers primarily to employment policy and practice through 1968. Most of the research and company interviews were completed by the spring of 1968. As a result, the study will present little evidence of utility company involvement in such programs as the Job Opportunities in the Business Sector (JOBS) and other efforts of the National Alliance of Businessmen to hire the hardcore unemployed. In response to a questionnaire distributed in June 1970, some companies offered information on participation in the JOBS program. Such information, however, reflects only the policy of a small sample of firms, and may not accurately reflect the involvement of the public utility industries at large. Together, the limitations of industry coverage and topical content merely qualify the results of the study. On the whole, the structure and methodology of the study will permit a reasonably comprehensive description and analysis of the prevailing policies and practices related to Negro employment in public utility firms. Before the analysis can proceed, however, the economics and structure of the public utility industries must be discussed.

16. See Miller, op. cit.; op. cit.

and Pennsylvania Human Relations Commission,

CHAPTER II

The Public Utility

Industries

Public utility firms operate in a distinct economic and institutional environment, characterized by the nature of demand, process of production, and public regulation of utility services. The nature of the operating environment helps explain some of the differences between public utilities and other industries with respect to employment trends and occupational characteristics. The employment policies and practices found in electric power, gas, and telephone industries represent managerial decisions designed to adapt manpower requirements to the technological orientation, industry market structure, and customer market relations unique to the public utilities. For this reason, it is useful to review the basic characteristics common to each utility industry, and then trace the structure of each industry separately. DEMAND

AND

PRODUCTION

Public utility services are necessary to support the myriad activities which characterize life in a modern, industrialized society. Electric power and gas are vital sources of energy for numerous uses in private households, commerce, and industry. The need for rapid and efficient communications almost requires the use of telephone service. Because there are few good substitutes for these utilities, and because their use is often necessary for consumer health and safety, they are expected to be available when needed. Although they are widely used in daily activities, utility services are not consumed at a constant rate. Instead, demand varies significantly over relatively short periods of high and low service usage. At the same time, utility companies are expected to meet the demand of all customers who desire to purchase services at the established prices. For this reason, utility firms must create, and continuously expand, a high level of productive capacity through the construction of costly supply, transmission, and distribution facilities. The production requirements make public utilities capital-intensive industries, in which the investment in plant and equipment far exceeds that in most other industries which serve consumers directly. 13

14

The Negro

in the Public

Utility

Industries

The demand and production characteristics of the utilities are related to industry employment in several ways. Because utilities are so frequently used, when service interruptions occur, equipment or appliance repairs must be made quickly. Moreover, in order to install or repair service equipment, company employees are often required to work within the customer's home. Thus, utility firms must maintain a pool of servicemen not only well trained in technical skills, but also capable of dealing directly with customers. This dual requirement has undoubtedly affected the employment of Negroes, because black workers often have been unable to obtain technical training in skilled occupations, and more often have been closely restricted in their employment in customer contact jobs. REGULATION

Public utility firms operate as monopolies in the sense that only one firm in each industry is permitted to conduct business in a specific geographic area. As a result of their monopoly status, the firms enjoy special privileges, including, but not limited to, a guaranteed market for sales, the use of public property, and a limited authority to exercise the powers of eminent domain. In return, utility firms are subject to public regulation designed to protect the public interest. The task of regulation is divided among numerous municipal, state, and federal agencies. Among these, however, the federal agencies have dominated the regulation field since the 1930's, in line with the general trend toward expanding the role of the federal government in private business affairs. The Federal Power Commission has jurisdiction over the interstate sale of electric power and natural gas, while interstate telephone service falls under the jurisdiction of the Federal Communications Commission. In addition, the Securities and Exchange Commission exercises important regulatory functions over the financial operations of utility firms, including gas and electric holding companies. Functions

of Regulatory

Agencies

The primary function of regulatory agencies is the approval of service rates. Early court tests of public regulation established the requirement that regulatory commissions not only follow reasonable procedures, but also allow the investor-owned utilities

The Public Utility

Industries

15

to earn a "fair return on the fair value of the property being used." 17 The requirement for service rate approval has led to regulation of other aspects of the utility firm's operations, including the establishment of a uniform accounting system, approval of acceptable depreciation rates, supervision of new security issues, and approval of dividend payments. In recent years, increasing public concern for protecting the environment and for improving the quality of utility service has led some regulatory agencies to direct more attention to such issues as air and water pollution, frequency of service failures, and the capacity of utility firms to meet the increasing demand for their services. Impact

on Employment

Policy

Although regulatory agencies have no direct authority over company employment policies, public regulation influences several aspects of manpower utilization in utility firms. First, because service rates are controlled by public agencies, utility management must be greatly concerned with minimizing the cost of production. Increases in production cost, including labor, may be passed on in higher service rates in order to permit the company to maintain its return on investment. If rate increases occur too frequently, however, adverse public reaction might develop and create an unfavorable regulatory climate. Consequently, utility managers attempt to keep wages and other labor costs at reasonable levels. This objective is translated into company policies designed to minimize hiring and training costs. Such policies affect methods of employee recruiting, job assignment, and promotion. Because considerations of employee potential for training and promotability weigh very heavily in managerial decisions on hiring and job assignment, many utility firms use elaborate employee selection devices for judging the suitability of job applicants for employment. Such devices often have placed black workers at a serious disadvantage in competing with whites for employment in entry-level and supervisory jobs. A second result of public regulation is the tendency to make utility management conscious of its public image. Certainly, public regulation is not the only factor responsible for generating 17. Smyth v. Ames, 169 U.S. 466 (1898); Federal Power Commission v. Hope Natural Gas Company, 320 U. S. 591 (1944).

16

The Negro in the Public Utility

Industrie»

management concern for its image. Yet, the impact of regulation on company prices, which in turn affects earnings, undoubtedly heightens such concern. The utility managers are anxious to validate the superior performance of the investor-owned sector of their industry, and to show that utility companies are "good corporate citizens." As a result, such firms are often found in the forefront of efforts like the United Fund, the Chamber of Commerce, and other community improvement activities. Presumably, such activities stimulate good will for the firm, and improve the regulatory climate. At the same time, however, concern for the company image tends to make many utility managers cautious about taking bold steps to correct the social injustice of racial discrimination in employment. As evidence presented later will show, few public utility companies have been among the corporations initiating significant change in racial employment practices in local communities. Management may respond to community and government pressures for equal job opportunity to preserve the company's image, but utility companies rarely move beyond the general corporate practices found in their operating areas. The remaining sections of this chapter will trace the economic structure and employment characteristics of the electric power, gas, and telephone industries. Each industry will be discussed separately in order to emphasize differences in development experiences and manpower requirements. In addition to the separate electric power and gas industries, statistical data are often provided for combination gas and electric utilities.18 The combination utility industry, however, will not be discussed separately because its growth pattern and employment characteristics do not differ significantly from those described under the electric power and gas classifications. THE ELECTRIC

POWER

INDUSTRY

The electric power industry has experienced a long period of uninterrupted growth since early in the twentieth century. Table 1 presents some measures of business growth which summarize the industry's economic record for the years between 1902 and 1968. 18. Combination utility companies provide electric power and/or gas, in combination with other services but neither service alone constitutes at least 95 percent of total company revenues.

The Public

Utility

17

Industries

The first two decades of the industry brought rapid growth, as technical advancements made electric power more economical to produce, and convenient and safe to use. From 1902 to 1922, output in kilowatt-hours (KWH) and revenues increased 1500 percent; expenses more than 1450 percent; and value of plant and equipment almost 800 percent (Table 1). Although the proportionate increases are computed on a relatively small base, the rapid growth of the industry is revealed by the absolute and percentage changes in the major business indices. The number of establishments selling electric power increased up to 1917, but since that time, consolidation and merger have steadily reduced the number. Electric power industry output, revenues, and customers continued to grow at a rapid rate through the 1920's, but slowed considerably during the 1930*3 because of the generally depressed economic conditions of that time. Some expansion took place in the public sector of the industry as a result of massive federal power projects in the South and the Far West. Between 1937 and 1947, for example, publicly owned generating capacity increased by 163 percent while the capacity of privately owned systems rose by only 14 percent.19 The chief beneficiaries of the growth in public power were rural farm consumers and industry located in rural areas. Negro workers comprised a large proportion of the work force in many of the areas electrified through public power projects. During World War II, construction of plant and equipment by the electric power industry was delayed because of serious manpower and material shortages. Nevertheless, electric power production and transmission increased rapidly in response to heavy industrial demands. Since 1947, electric power companies have invested heavily in plant and equipment to replace obsolete and inefficient facilities, and to provide the capability to meet increasing demand for electricity. Total construction expenditures by investor-owned utilities alone amounted to $15 billion between 1953 and 1957, compared with $2.7 billion during the 1943 to 1947 period.20 19. Data for early years were obtained from U.S. Bureau of the Census, Census of the Electric Light and Power Industry, 1902 through 1927. For 1937 to 1960, see Federal Power Commission, Statistics of Electric Utilities in the U.S., Privately Owned, 1965 and 1968. 20. Federal Power Commission, Statistics,

1968, op. cit.

The Negro in the Public Utility Industries

18

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The Public Utility

19

Industries

In 1968, the latest year for which detailed production statistics are available, sales of electric energy by the investor-owned electric utilities reached a record of 1,105 billion kilowatt-hours and revenues totaled $19.4 billion.21 These firms spent $1.2 billion to maintain their physical plant and equipment capable of producing 223 billion KWH of electric energy. Recent nongovernment estimates placed capital expenditures for expanding capacity at $2.89 billion during the fourth quarter of 1969.- This rate of spending for plant and equipment exceeds the long-term trend, and demonstrates the level of capital requirements necessary to permit the industry to meet electric power demands which double, on the average, every ten years. Markets The supply of electric power is distributed among three major markets: residential, commercial, and industrial. Although residential buyers individually purchase less electricity than commercial and industrial buyers, together the residential group accounted for 87.8 percent of all customers and 29.2 percent of all revenues in 1968.23 The residential customers market has grown considerably since 1930, when only 68.2 percent of all dwelling units had electric service. Today, that ratio is 98.8 percent. Much of the growth during the past four decades was due to the dramatic electrification of farms made possible by federal power projects during the early 1930's. The proportion of farm residences having electricity tripled between 1930 and 1940, and in 1968, more than 98 percent of all occupied farm dwellings had electricity.24 Among the beneficiaries of rural electrification were many black farm families located throughout the South. The growth of the residential market has given electric utilities a considerable consumer orientation. Today, the average home has ten appliances; in 1930, the average home had only two. Electric power companies heavily depend upon residential 21. Ibid. 22. National Industrial Conference Board, Investment Statistics, Quarterly Survey, Utility Appropriations, Fourth Quarter, 1969. 23. Edison Electric Institute, Statistical Industry, 1968. 24. Ibid.

Year

Book of the Electric

Utility

20

The Negro in the Public Utility

Industries

customers to purchase additional electric-using appliances. Company sales departments constantly herald the virtues of all-electric homes, color television sets, refrigerator freezers, and air conditioners, all of which increase the average consumer's electricity requirements, and contribute to company sales and net earnings. Because of the large-scale migration from rural to urban areas during the last two decades, Negroes now represent a large proportion of the residential customers in many cities throughout the nation. The growth of disposable income has also enabled Negroes to expand their purchase of numerous electrical appliances. The Negro consumer market can be a significant force for generating change in company hiring policies. Selected cases in which such changes have occurred will be discussed in later chapters. Structure The market structure of the electric power industry reflects the impact of technical, economic, and political forces that have played a major role in the industry's development over the past six decades. In the early stages of the industry's growth, many small, independent firms were organized. The inefficiency of small-scale operations prevented the firms from providing adequate service, and demonstrated the need for consolidation and merger. Technical advancements made consolidation inevitable by increasing company capability to produce large quantities of electric power and transmit current over long distances. The extension of franchises permitting single firms to operate over wide geographic areas encouraged separate firms to merge their facilities in order to reap the economies of scale. As a result of technical and economic opportunities, merger and consolidation reduced the 4,000 privately owned firms in operation during 1900 into the 480 investor-owned electric power systems existing today. Although government agencies and independent cooperatives have electric power facilities, the industry is dominated by the investor-owned operating companies, which together provide 75 percent of the nation's electric generating capacity, and serve 80 percent of the residential customers. Table 2 shows the trend in production and ownership of generating facilities during the past two decades.

21

The Public Utility Industries

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The Negro in the Public Utility

24

Industries

Electric Power Industry Major Interconnected Systems United States, 196U

TABLE 4.

Canada—U.S. Eastern System Pennsylvania, New Jersey, Maryland System Interconnected Systems Group

Northwest Interconnected Group Pacific Southwest Interconnected Group Texas Interconnection Source:

Number of States

Region Served

System

Northeast Middle Atlantic Southeast, South, Central, and Midwest Northwest Southwest Southwest

Federal Power Commission, National Power Survey,

ELECTRIC POWER MANPOWER

7 4

39 9 3 1

1964.

CHARACTERISTICS

Throughout the history of the electric power industry, employment requirements have been directly influenced by the capitalintensive nature of production and continuous technological change. Largely because of these factors, the industry has experienced an annual rate of productivity improvement of about 5.5 percent since 1900, a rate three times that for the entire economy.26 Productivity growth is primarily responsible for the rapid increase in electric production which occurred without corresponding increases in employment throughout the industry's history. Technological change has influenced both the level of employment in utility firms and the job characteristics of utility occupations. Employment

Trends

During the past two decades, total industry employment rose from 213,000 to 275,000 workers, a net growth of 29.1 percent, as shown in Table 5. The continuous growth in total employment reached a peak in 1957, and then declined until 1963. Since then, the industry has experienced a modest net growth of about 4,114 workers per year. 26. John Kendrick, Productivity Trends in the United States (New York: National Bureau of Economic Research, 1961), pp. 136-137.

The Public Utility Industries

25

TABLE 5. Public Utility Industries Employment by Standard Industrial Classification 19

Year

Electric Power (SIC 491)

U7-1969

Gas » (SIC 492)

Combination Electric Telephone and Gas Communications (SIC 493) (SIC 481)

(In Thousands) 1947

213.0

n.a.

n.a.

585.5

1948

227.4

n.a.

n.a.

638.9

1949

236.4

n.a.

n.a.

636.7

1950

238.9

117.6

169.4

619.5

1951

240.4

123.8

169.1

644.0

1952

244.0

128.4

171.0

678.4

1953

248.2

133.2

171.1

702.2

1954

249.0

139.1

169.0

698.8

1955

248.7

140.8

172.6

706.7

1956

250.2

145.3

175.7

751.2

1957 1958

258.1 254.4

149.0 151.9

174.7 175.1

768.2 732.1

1959

253.9

154.1

173.7

707.1

1960

252.5

154.8

175.0

706.0

1961

248.6

155.6

175.0

693.3

1962

246.5

154.6

173.1

687.5

1963

246.2

153.3

174.2

685.5

1964

248.9

153.3

174.1

706.1

1965

253.0

153.6

176.5

735.2

1966

256.6

153.2

177.7

773.4

1967

261.4

156.3

181.2

806.5

1968

267.4

159.4

182.9

815.5

1969

275.0

158.1

183.0

882.5

Source:

U. S. Bureau of Labor Statistics, Employment and Earnings Statistics for the United States, 1909-68; and Employment and. Earnings, Vol. 15, No. 9 (March 1969) and Vol. 16, No. 9 (March 1970), Table B-2.

• Includes pipelines.

26

The Negro in the Public Utility

Industries

The number of nonsupervisory workers, mainly consisting of production workers in the three supply activities, increased from 1947 through 1953, then declined through 1964. In recent years, the number of production workers has grown at an average of about 4,000 per year, from 214,600 in 1965 to 234,700 in 1969." Within the total production worker group, the distribution pattern of employees in the major functional activities has followed a long-term trend. The relative number of workers in generation and transmission activities has continued to decline, while maintenance and repair workers in distribution departments have increased in relative numerical importance. The joint effects of rapid output expansion and increased labor productivity, by creating slow growth in generation and transmission jobs, has somewhat reduced the opportunity to increase Negro employment in some of the industry's highest paying occupations. Occupational

Characteristics

The distribution of employment between major occupation groups reflects the electric power industry's technical orientation and functional separation of production activities. As shown in Table 6, in 1960 almost 40 percent of all employees were skilled craftsmen, and slightly more than 10 percent were semiskilled operatives.2® In view of the historical lack of training for craft work, particularly in the electrical trade, this occupational distribution has certainly had an adverse impact on Negro employment. Clerical workers accounted for one-fifth of all employees in 1960, reflecting the industry's customer service and record-keeping requirements. About 10 percent of all employees were professional and technical workers, but relatively few of the industry's employees held jobs as laborers or service workers. 27. U. S. Bureau of Labor Statistics, Employment and Earnings Statistics for the United States, 1909-68; and Employment and Earnings, Vol. 16, No. 9 (March 1970), Table B-2. 28. The 1960 census occupational classification tends to underestimate the number of skilled workers in the electric power industry. The power station operators and welders classified as operatives are skilled workers who should be included in the craftsmen category. Conversely, many mechanics and repairmen classified as craftsmen are, at best, semiskilled workers. Because of the limited availability of company data on specific job classifications, the census classifications will be used in this study, but with due recognition of their shortcomings.

The Public Utility

27

Industries

TABLE 6. Electric Power Industry Employment by Occupation 1960 and 1967

Occupation Professionals and technicians

1960»

1967

Number of Percent Employees of Total

Number of Percent Employees of Total

44,917

10.5

12,237

2.9

32,537

13.2

1,184 2,987

0.3 0.7

Officials and managers

20,299

4.8

28,635

11.6

Clerical workers

99,732

23.4

50,680

20.6

8,971 1,227 285 3,976

2.1 0.3 0.1 0.9

5,362

1.2

5,978

2.4

166,969

39.2

72,536

29.5

10,918 2,857 59,811 41,936

2.6 0.7 14.0 9.8

Operatives

50,107

11.7

38,993

15.8

Apprentices Power station operators Welders Truck drivers Laborers

2,055 16,033 2,394 8,238 23,845

0.5 3.8 0.6 1.9 5.6

10,638

4.3

Service workers

8,362

2.0

6,482

2.6

Occupation not reported

6,713

1.6

426,306

100.0

Electrical engineers Personnel and labor relations workers Electrical technicians

Bookkeepers Bill collectors Messengers Typists Sales workers Craftsmen and foremen Electricians Inspectors Linemen and servicemen Mechanics and repairmen

Total

—

246,479

Source:

U.S. Census of Population: 1960, P C ( 2 ) 7C, Occupation try, Table 2 and Appendix Table A-3.

Note:

Employment in investor-owned sector only.

a

Includes combination electric and gas industry.

100.0 by Indus-

28

The Negro in the Public

Utility

Industries

The occupational pattern shown in the 1960 census did not differ markedly from that for private firms included in this study. Since firms selected for the 1967 survey had, on the average, a larger number of employees than firms included in the census, the 1967 data show a somewhat larger proportion of managers and officials. These data are included in Table 6. Within the broad occupational groups, the employment is heavily concentrated in occupations almost unique to the electric power industry. Linemen, equipment servicemen, and power station operators account for the largest relative number of workers. Electricians and engineers also account for a significant proportion of all employees. Among clerical workers, bookkeepers and bill collectors represent a significant number of employees, and although not shown in Table 6, the industry also employs a large number of meter readers. Female

Employment

Because of its occupational characteristics, the electric power industry is dominated by male employees. Only 15 percent of all workers in 1969 were female,29 and almost all of these were engaged in clerical activities. In recent years, the industry has employed an increasing number of women as home economists and sales workers. These jobs, however, represent less than 2 percent of all occupations available in the industry. Because female labor turnover in the industry is higher than that for male employees, and most women perform clerical work, the job opportunities for Negro women generally have been brighter than those for Negro men in electric utility companies. Current trends in technological development are expected to exert a significant influence on job requirements in the electric power industry.30 The three functional departments of electric power generation, transmission, and distribution each will be affected, but the pace of change will vary among them. Generation

Techniques

and the Impact

of Nuclear

Energy

The generating department of electric power utilities consists primarily of power plant occupations. Among these, the most 29. Employment

and Earnings,

op. cit., Table B-3.

30. U.S. Bureau of Labor Statistics, America's Industrial and Occupational Manpower Requirements, 1964-75 (Washington: Government Printing Office, 1966), pp. 88-91.

The Public Utility

Industries

29

important numerically are boiler, switchboard, and turbine operators. These jobs are expected to be significantly influenced by technological change in future years. The increase in the size and efficiency of turbines and boilers will permit output to expand without corresponding increases in employment. Moreover, the use of computers and other electronic control devices will enable control room operators to perform duties previously handled by turbine and boiler operators. In addition, the number of coalhandling laborers, a major unskilled job, is expected to decline because of increasing reliance on mechanical coal-handling equipment, and other advancements in the transportation of fuel. As a result of these developments, the proportion of industry workers engaged in generating activities is expected to continue the downward trend initiated over four decades ago. A major development of recent years has been the introduction of nuclear energy for generating electricity. The use of nuclear energy represents a significant departure from previous technical change in generating activities. Nuclear energy requires the use of highly dangerous materials which greatly increase the requirements for safety and community protection. As a result, electric utilities using nuclear energy are confronted with more serious problems of manpower training and development than firms relying exclusively on nonnuclear materials for electric power generation. The electric power industry was, at first, slow in developing the use of nuclear energy in electric generation. Between 1957 and 1966, however, the number of nuclear plants in operation increased from three with a capacity of 112,000 kilowatts to nine with a capacity of 1,542,000 kilowatts.31 Research and development have led to the construction of larger nuclear plants which offer greater cost economies. In 1967, more than 130 electric utility companies, in cooperation with the Atomic Energy Commission and electric equipment manufacturers, were participating in one or more projects aimed at making nuclear energy an economic source of power competitive with other fuels. The nuclear power plants in operation in 1967 are shown in Table 7. Table 8 shows planned new units through 1980. 31. Federal Power Commission, op. cit., p. xxxix.

The Negro in the Public Utility

30

Industries

TABLE 7. Electric Power Industry Investor-Owned Nuclear Power Plants In Operation, 1967

Name of System or Sponsor »

Name or Location

Name-Plate Rating In OperKw ation

Duquesne Light Co.

Shippingport

100,000

1957

Commonwealth Edison Co.

Dresden No. 1

208,675

1960

Yankee Atomic Electric Co.

Rowe, Mass.

185,000

1961

Consolidated Edison Co. of New York, Inc.

Indian Point No. 1

275,000

1962

Consumers Power Co.

Big Rock Point, Mich.

75,000

1962

Pacific Gas and Electric Co.

Humbolt Bay

60,000

1963

The Detroit Edison Co.

Enrico Fermi

150,000

1966

Northern States Power Co.

Pathfinder

66,000

1966

Philadelphia Electric Co.

Peach Bottom, Pa.

46,000

1967

Connecticut Yankee Atomic Power Co.

Haddam, Conn.

570,000

1967b

Southern California Edison Co. and San Diego Gas and Electric Co.

San Onofre

375,000

1967"

Source:

Edison Electric Institute.

» Only the names of the system owning the generating facilities or the project sponsor are listed. b

Attained criticality; rating based on net expected operating capability.

The advent of nuclear energy in electric generation may have a qualitative impact on employment more significant than any technological development in the industry's history. The use of nuclear energy requires a more specialized operating staff, especially professional and technical workers. Power plant workers employed in atomic-powered plants must have special training to work with fissionable, radioactive fuel in addition to the skills required to operate conventional steam-generated plants." Because of strict government regulations to insure the health and safety of the community, nuclear equipment requires more maintenance. As a result, the number of power plant maintenance 32. James W. Kuhn, Scientific and Managerial Manpower in Nuclear dustry (New York: Columbia University Press, 1966), pp. 114-118.

In-

The Public Utility

Industries

31

Electric Power Industry Planned Nuclear Plants

TABLE 8.

1968-1980 Billions of Dollars »

Number of New Units

Years 1968

3

0.1

1969

6

0.9

1970

5

1.2

1971

9

2.3

1972

8

4.1

1973

13

6.0

1974

16

8.7

1975

16

11.3

1976

15

13.8

1977

19

17.0

1978

19

20.2

1979

19

23.3

1980

23

27.2

Source:

Atomic Energy Commission in Business p. 63.

Week,

August 24, 1968,

» Cumulative investment.

workers should rise. Again, however, the skill level of such employees will be substantially higher than that of present maintenance workers, and hiring and training standards will be adjusted to reflect the change. The increased skill requirements imposed by nuclear production may adversely affect the prospects for Negro employment in generating stations because few Negroes have received the training necessary to qualify for jobs requiring the new technology. Moreover, the electric utility companies have only recently begun to train their own employees for such jobs. Transmission

and Distribution

Techniques

In transmission and distribution activities, the largest number of workers are linemen. Groundmen make up the next largest group, many of whom are in various stages of training for the •

32

The Negro in the Public Utility Industries

lineman job. The increasing use of aerial lift trucks and other mechanical equipment has reduced the size of line crews and limited the number of job opportunities. An offsetting trend has been the rapid expansion of residential and industrial construction in suburban areas, which requires a substantial amount of work by line crews. Electric power transmission also requires a significant number of substation operators and load dispatchers. Much of the work performed by these employees involves monitoring numerous meters and other power measuring devices. Remote control, closed circuit television has been introduced by many firms to permit fewer operators to control a wider geographic area. Computers have also been used in increasing numbers to expand the capability of firms to control unmanned substations. These developments have led to an increase in the number of maintenance technicians and have raised the average skill level of transmission and distribution workers. Customer Service Occupations Industry customer service activities require a large number of meter readers, meter repairmen, and appliance mechanics. Customer services also require a significant number of bookkeepers, bill collectors, and other clerical workers. Automation in office equipment, which normally reduces the number of clerical workers, has been offset by the increase in number of customers served by electric utilities. Because the customer service activities are labor, rather than capital intensive, rapid gains in labor productivity have not been realized to the same degree as in generation and transmission activities. Research and development, however, promise to produce new labor-saving devices for the customer services area. For example, several companies are now considering meter reading by remote control, and one electric utility in Connecticut has already adopted an experimental system for residential meter reading.33 If successful, computerized meter reading could virtually eliminate the employment of meter readers—a major job now offered by electric power companies, and one in which Negroes have recently made some employment gains. 33. Wall Street Journal, October 11, 1968, p. 10.

The Public Utility

Industries

Wages and Fringe

Benefits

38

Workers earn generally higher wages in the electric utility industry than in other public utility industries and in many manufacturing industries as well (Table 9). In 1969, nonsupervisory electric utility workers averaged $3.95 an hour, $165.11 per week. TABLE 9. Public Utility and Selected Average Hourly Earnings, Nonswpemisory Workers 19 U7-1969

Industries or Production

Public Utilities

Year

All P r i v a t e N o n f a r m ManufacIndustries turing

Electric Power

Gas»

Combination Electric and Gas

Telephone Communications

(Dollars) 1947 1948 1949 1950 1951

1.13 1.23 1.28 1.34 1.45

1.22 1.33 1.38 1.44 1.56

1.34 1.44 1.53 1.58 1.70

n.a. n.a. n.a. 1.50 1.62

n.a. n.a. n.a. 1.62 1.74

1.20 1.25 1.34 1.40 1.49

1952 1953 1954 1955 1956

1.52 1.61 1.65 1.71 1.80

1.65 1.74 1.78 1.86 1.95

1.80 1.93 2.01 2.09 2.20

1.70 1.82 1.90 1.98 2.07

1.84 1.99 2.05 2.13 2.28

1.59 1.68 1.76 1.82 1.86

1957 1958 1959 1960 1961

1.89 1.95 2.02 2.09 2.14

2.05 2.11 2.19 2.26 2.32

2.30 2.43 2.55 2.66 2.75

2.18 2.30 2.39 2.47 2.56

2.40 2.56 2.70 2.86 2.97

1.95 2.05 2.18 2.26 2.37

1962 1963 1964 1965 1966 1967 1968 1969

2.22 2.28 2.36 2.45 2.56 2.68 2.85 3.04

2.39 2.46 2.53 2.61 2.72 2.83 3.01 3.19

2.87 2.97 3.09 3.22 3.35 3.50 3.71 3.95

2.66 2.77 2.83 2.94 3.06 3.21 3.37 3.58

3.08 3.18 3.29 3.44 3.59 3.69 3.91 4.21

2.48 2.56 2.62 2.70 2.79 2.88 3.04 3.23

Source:

U.S. Bureau of Labor Statistics, Employment and Earnings Statistics for the United States, 1909-68; and Employment and Earnings, Vol. 15, No. 9 (March 1969) and Vol. 16, No. 9 (March 1970), Table C-2.

Includes pipelines.

The Negro in the Public Utility

34

Industries

Since 1947, average hourly wage rates for these workers, most of whom are operating employees, increased by almost 195 percent. From 1960 to 1969, the average electric utility employee increased his weekly earnings by $55.25, compared to a gain of $39.79 for all manufacturing workers. 34 Table 10 shows average hourly earnings for selected occupations in the three major production activities. The relative level and range of wage rates are a function of both the skill content and availability of manpower for the occupations. Control room operators, load dispatchers, and watch engineers are highly skilled workers not found in large numbers in utility companies. At the time of the last industry survey, hourly wages for these workers averaged 25.3 percent higher than wages earned by appliance servicemen and 68.5 percent higher than the wages of meter readers who are less skilled and numerically more important in the work force. Wage rates for linemen and troublemen exceed the industry average, but the range in hourly earnings within an occupation is relatively wide, reflecting the broad range of skills and seniority of these employees. In considering the variations in wage rates among employees, it is interesting to note that technological change is expected to have the most adverse employment effect on the electric utility industry's highest paying jobs. In addition to paying reasonably high average wage rates, the electric power industry offers a number of attractive fringe benefits. Most firms have pension plans, paid vacations, insurance benefits, and financial aid for employee education. Moreover, employees very often receive 20 to 30 percent discounts on the purchase of appliances sold by electric utility companies. A major advantage for employees in many communities is the "instant credit" available to them at banks and retail stores. Such nonwage supplements undoubtedly contribute to the industry's low rate of labor turnover. Working

Conditions

Although employment in electric utilities is highly stable, work schedules may be, at times, irregular. In order to insure the availability of electricity twenty-four hours per day, seven days per week, some employees must work evenings, nights, and week34. U.S. Bureau of Labor Statistics, Employment, ment and Earnings, op. cit., Table C-2.

op. cit.;

and

Employ-

The Public

Utility

Industries

TABLE 10.

Average

Electric

35 Power

Hourly Earnings, Selected October-November 1967

Department and Occupation

Industry

Occupations

Average Hourly Earnings a

Power Plant Auxiliary equipment operators

$3.34

Boiler operators

3.84

Control room operators Switchboard operators

4.14

Class A Class E Turbine operators Watch engineers

4.07 3.77 4.00 4.82

Transmission and Distribution Groundmen Linemen, journeymen

2.66 4.04

Load dispatchers Substation operators Troublemen

4.84 3.95 4.12

Customer Service District representatives

3.73

Metermen A

3.88

Metermen B Appliance servicemen Meter readers

3.50 3.67 2.73

Source: a

U. S. Bureau of Labor Statistics, Industry Wage Survey: and Gas Utilities, Bulletin No. 1614 (May 1969), Table 2.

Eleetrio

Average straight-time hourly earnings, excluding premium pay for overtime and for work on weekends, holidays, and late shifts.

36

The Negro in the Public Utility

Industries

ends. Moreover, off-duty employees are often required to remain on call for possible service during emergencies. Most union contracts provide premium pay for evening and night work, and unorganized companies also pay additional sums for overtime and irregular duty hours. The nature of electricity creates very hazardous conditions for some electric power workers. Although line and cable splicing crews are more exposed to the risk of accidents than are other workers, the danger of electrocution and other hazards plague many workers in the industry. Despite the high risk, however, the frequency of accidents in the electric utility industry is lower than for all industries combined, and has steadily declined over the past decade.35 The improvement in the accident record is largely the result of intensive efforts by electric utility managers and unions to enforce safe working practices. Unionization Trade unionism was introduced into the electric power industry almost at the beginning of the industry's growth. Indeed, the International Brotherhood of Electrical Workers, the major union now representing electric utility workers, was founded in 1891 to organize workers in the newly emerging electrical industry. The IBEW at first organized linemen employed by the electric utilities, but later expanded the membership coverage to include wiremen, cable splicers, and some employees in other transmission and distribution jobs.3* In 1969, 19 percent of the total IBEW membership worked for electric and gas utilities. Although precise union membership data are not available for detailed industry groups, estimates based on federal government reports show an IBEW utility company membership of about 170,000 in 1969.37 Although the IBEW is the largest single union representing electric utility workers, fifteen other national and international 35. U.S. Bureau of Labor Statistics, Handbook of Labor Statistics, 1968, Bulletin No. 1600 (Washington: Government Printing Office, 1968), Table 140, p. 329. 36. Michael A. Mulcaire, The International Brotherhood of Electrical Workers (Washington: Catholic University Press, 1923), pp. 1-22. 37. U.S. Bureau of Labor Statistics, Directory of National and International Labor Unions in the United States, 1969, Bulletin No. 1665 (Washington: Government Printing Office, October 1970).

The Public Utility

37

Industries

unions also have collective bargaining contracts with electric power companies. Ten of these unions are affiliated with the AFL-CIO, and five are independent. Together, these unions covered 324,000 electric and gas utility workers, or 53 percent of all employees in the two industries in 1968. Other than the IBEW, the major unions representing employees in the electric power industry are: Utility Workers Union of America; Utility Workers of New England; Oil, Chemical and Atomic Workers International Union; and International Union, District 50, formerly affiliated with the United Mine Workers. Among the electric systems in which both office and blue collar workers are covered by labor-management agreements, the contracts in effect are usually with the same union. Most other unionized office workers in the industry are represented by the Office and Professional Employees International Union. Most unionized utility workers are organized in multiplant, single employer bargaining units.38 Relatively few collective bargaining agreements covering 1,000 or more employees provide for single plant or multiemployer units. The organization structure and pattern of ownership of electric utilities largely determine the nature of bargaining units. The industry's experiment with company unions during the 1920's was also important in setting the framework for present collective bargaining structures. Although slightly more than one-half of all electric utility workers are organized, the relative strength of unions is limited by the technology of electric power production. Most critical functions associated with supplying electric energy are highly mechanized and electric power systems require relatively little manpower to operate. As a result, electric power companies can maintain a high proportion of normal production by using supervisory personnel during strikes. This factor has, no doubt, contributed to the high degree of labor peace experienced by electric power firms. Over the past decade, for example, the electric utility industry has experienced fewer strikes than almost all other nonmanufacturing industries with a large proportion of blue collar workers. During 1967, a relatively active year for strikes in many industries, there were only twelve strikes in electric power companies, involving 9,620 workers, and 212,000 man-days of production.39 38. U.S. Bureau of Labor Statistics, Handbook,

op. cit., Table 136, p. 316.

39. U.S. Bureau of Labor Statistics, unpublished data.

38

The Negro

in the Public

Utility

Industries

Although many electric utility companies participate in collective bargaining, employment policy, particularly regarding hiring standards, is almost entirely determined by the company managers. The collective bargaining contracts usually require promotion based upon seniority for workers equally qualified in terms of job performance. These contract provisions, however, merely represent a codification of employment practices which have long existed in the electric utility industry. Unilateral management control of hiring policy can have important consequences for Negro employment, because craft unions in the electrical industries have traditionally excluded, or seriously limited, Negro membership. Indeed, some electric utilities in several large northeastern cities had Negro linemen and cable splicers at least a decade before black workers were employed in skilled electrical jobs in the union-controlled building trades located in the same cities.40 Nonetheless, until recent years, employment of Negroes in skilled jobs was rare within the electric power industry, which suggests that management authority was not used widely to expand occupational opportunity for black workers. THE

GAS

INDUSTRY

The gas industry, organized in 1816, is the nation's oldest public utility. Although it predates the electric power and telephone industries, the gas industry did not grow rapidly until the decade following World War II. The industry's growth since the postwar period is presented in Table 11. During the two decades between 1945 and 1967, the total gas supply increased 410 percent, the number of customers 95 percent, and miles of distribution gas main 168 percent. The operating revenues of investor-owned gas companies increased eightfold by $11.5 billion. Over the twenty-two year period, investorowned companies, although regulated by federal, state, and local utility commissions, realized an average net return of 10 percent on operating revenue. Most of the industry growth may be attributed to growth in the population, proliferation of gas applicances, and adaptation of natural gas to a widening range of residential, commercial, and industrial uses. 40. Ray Marshall, The Negro and Organized Wiley & Sons, 1965), pp. 110-114.

Labor

(New York: John

The Public Utility Industries co

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50

The Negro in the Public Utility

Industries

Among the services offered in addition to voice communications are 1) teletypewriter exchange, 2) transmission of digital computer data, and 3) television and radio transmission over telephone circuits. Such wide expansion of customer markets was made possible, in large part, by the continuous technical progress which characterizes the telephone industry. Although telephone service has been adapted to many uses, voice communication remains the bedrock of the industry's operations. In 1968, for example, about 71 percent of the 96 million telephones in service were used by residential customers. In addition, almost 1.5 million telephones were used for coin service in numerous locations.64 The nature of customer markets gives the telephone industry a strong residential customer orientation much like that in the electric power and gas utilities. As a result, employee selection and training methods are designed to attract and retain workers who can maintain good customer relations as well as perform the technical skills required in most industry jobs. Structure The investor-owned sector of the telephone industry consists of more than 700 telephone companies.55 The industry, however, may be divided into two separate segments: the American Telephone and Telegraph system, and the "independent" telephone systems. American

Telephone and Telegraph

Company

AT&T occupies, by far, the dominant position in the telephone industry, being one of the largest privately owned corporations in the world. In early 1969, the company had plant assets of $35.6 billion, operating revenues of $14.6 billion, and employed 697,000 workers.66 AT&T's dominance of the telephone industry is evident in the fact that the company accounted for 94 percent 54. Federal Communications Commission, Statistics of Communications Common Carriers, 1968 (Washington: Government Printing Office, 1970). 55. Ibid.., p. 21; and U.S. Independent Telephone Association, Statistics of the Independent Telephone Industry (Washington: The Association, 1968), p. 14. 56. Federal Communications Commission, op. cit., total communication plant, net of depreciation.

Table 16.

Assets are

The Public Utility

Industries

51

or more of all telephones, capital assets, and operating revenue« reported by all telephone companies in 1968. The AT&T system consists of four major divisions: (1) administrative, including the Long Lines division; (2) an operating division that includes twenty-three (now twenty-four) Bell Telephone operating companies; (3) a manufacturing division, including the Western Electric Company; and (4) a research and development division; including the Bell Telephone Laboratories. Major policy within the system is promulgated within the administrative division which provides financial aid, advice, and assistance to operating companies and unites their telephone lines with almost all telephones throughout the nation and the rest of the world. This study will focus on the employment policies and practices of the twenty-three Bell Telephone operating companies, and will exclude consideration of the Bell System manufacturing and research divisions. The combined operating companies employed 660,690 workers in 1968, or 81.0 percent of employees in all telephone operating firms." The number of employees varies widely among Bell companies, ranging from 1,522 workers in Bell Telephone of Nevada, to more than 87,826 in Pacific Telephone and Telegraph Company in 1968. Variations in the size of Bell companies largely reflect differences in the size of the operating area served. For example, Diamond State Telephone Company, which serves Delaware, has about 3,311 employees, or 5.3 percent of the number who work for Southwestern Bell Telephone Company which serves six states between Missouri and Texas.58 Table 14 shows the growth among the Bell operating companies during the last three decades. Bell Telephone companies control the bulk of the telephone service market in the major urban population centers. As a result, the average number of employees in Bell companies exceeds that in most independent telephone firms, as shown in Table 15. Because a majority of the Negro labor force is located in urban areas, concentration in major population centers gives Bell companies great significance as potential employers of black workers.

57. Ibid. The reorganization in 1968 resulted in twenty-four operating companies. See note, Table 14. 58.

Ibid.

The Negro in the Public Utility

52

Industries

BeU Telephone System Operating Statistics Twenty-three Companies, 19U0 and 1968 TABLE 14.

Item

1940

Number of telephones (000) Number of central offices Miles of pole lines Miles of wire: (000) Underground Aerial Net plant investment (000) Operating revenues (000) Average daily conversations (000) Number of employees Number of AT&T stockholders

1968

17,484 7,052 399,838

91,427 14,388 626,796

54,339 30,307 4,747,674 1,174,322 79,300 275,317 630,902

261,218 176,252 31,922,668 13,268,430 409,900 660,690 3,142,100

Source:

Federal Communications Commission, Statistics of Communications Common Carriers, 1968; Arthur W. Page, The Bell Telephone System (New York: Harper & Bros., 1941) ; and American Telephone and Telegraph Company, Annual Report, 1968.

Note:

Southern Bell Telephone Coimpany was subsequently reorganized into two separate operating companies. There are now twenty-four operating companies, but the discussion covers the period prior to reorganization.

Telephone Communications Industry Size Distribution of Major Companies 1968

TABLE 15.

Number of Operating Companies • Number of Employees 10,000 or more 5,000—9,999 1,000—4,999 500— 999 Less than 500 Source:

Bell System

General Telephone Companies

17 3 3

1 1 9 2

— —

—

Other Independent Companies

—

14 4 17

Federal Communications Commission, Statistics of Communications Common Carriers, 1968. • Includes seventy-one telephone carriers whose operating revenues were $1,000,000 or more in 1968. These companies accounted for over 86 percent of all employees in the telephone communications industry.

The Public Utility AT&T Structure

53

Industries and Employment

Policy

The organization structure of the Bell System has some significance for the development and implementation of company employment policy. AT&T acts as a holding, operating, and service company in relation to the constituent Bell operating subsidiaries. Despite the centralized administration, policy implementation and company operations are decentralized to a certain extent. Such decentralization is required because the Bell operating companies differ with respect to the economic conditions of the areas served, types of service demanded, rates of return allowed by different state regulatory commissions, and many other economic and institutional conditions. Thus, although broad policy is developed for the system at large, operating company management is allowed some discretion in the implementation of policy on the local level. For this reason, AT&T policy statements often may be viewed as "advisory" rather than "directive" statements. Comparability among operating companies is facilitated by the interchange of management personnel and other devices designed to maximize interfirm communications. Ultimately, operating company management is evaluated in terms of profit and earnings performance. Because of the technological orientation of the industry, operating companies display close uniformity in technical and engineering standards. In nontechnical areas, however, operating firms often show marked variation in systemwide policy implementation. Such variation characterizes the Bell System's posture with respect to equal employment policy. As will be noted later in this study, local community attitudes and practices may take precedence over system-wide equal employment policy, with the result that significant variations are found among Bell companies in the employment of Negro workers. The Independent

Telephone

Sector

Although the Bell System controls the largest share of the telephone service market, non-Bell telephone companies account for a significant number of employees and stock of capital assets. In 1967, the 670 major independent companies had $1.8 billion in sales, $401 million in net income, and 114,000 em-

54

The Negro in the Public Utility

Industries

ployeea. In addition, the independent telephone companies operate 15.5 million (17.8 percent) of the nation's telephones.58 The independents use equipment similar to that used by the Bell System, but have a larger proportion of equipment associated with low traffic volume. Independents serve a larger proportion of residences, and as previously noted, serve generally smaller geographic areas than do Bell companies. Business concentration characterizes the independent market as well as the total telephone industry. The largest independent telephone company is General Telephone and Electronics Corporation, a diversified company which controls thirteen telephone operating companies and various other businesses, including the Sylvania Electric Company. General Telephone owns 46 percent of all telephones owned by the independent companies, and in 1967, accounted for 48 percent of all operating revenues, and 47 percent of all assets. General Telephone companies operate in various parts of the nation, but the two largest firms are located in southern California and Florida. These two companies alone account for 40 percent of General Telephone's revenues and employment. Research and manufacturing services are provided by the Automatic Electric Company—a wholly owned subsidiary.80 TELEPHONE

MANPOWER

CHARACTERISTICS

In 1969, the telephone industry had 882,500 employees, 55 percent of whom were women (Table 16). Although the industry's employment was heavily concentrated in Bell System companies, the independents employed more than 94,000 workers. Telephone workers were employed in significant numbers in all sections of the nation, but the largest proportions were found in the Middle Atlantic, Pacific, and Southeast regions, generally reflecting the nation's population distribution and demand for telephone services. Employment

Trends

Table 16 shows the trend in telephone industry employment during the two decades between 1947 and 1969. Despite rapid 69. U.S. Independent Telephone Association, op. ext., pp. 14-28. The 670 companies accounted for 92 percent of all employees and operating revenues; and 90 percent of all telephones and other physical plant in the independent telephone industry. 60. Federal Communications Commission, op. ext., Tables 16 and 17.

The Public Utility TABLE 1 6 .

Industries

65

Telephone Communications Employment and Earnings

Industry

1947-1969

Year

All Workers (000)

1947

585.5

Percent Female 68

Production Workers Index of Average Weekly Earnings (1957-1959 = 100) 55.9

1950

619.5

66

67.9

1953

702.2

66

81.2

1956

751.2

66

91.7

1959

707.1

58

106.7

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969

706.0 693.3 687.5 685.5 706.1 735.2 773.4 806.5 815.5 882.5

57 57 56 56 55 55 55 56 56 55

111.8 116.6 123.6 127.9 131.5 136.2 141.4 141.3 150.7 162.5

Source:

U.S. Bureau of Labor Statistics, Employment and Earnings Statistics for the United States, 1909-68; and Employment and Earnings, Vol. 15, No. 9 (March i969) and Vol. 16, No. 9 (March 1970), Tables B-2 and B-3.

growth in all sectors of the industry's business operations, employment increased only 51 percent during the two decades. From 585,500 workers in 1947, employment grew to a peak of 768,000 in 1957. From 1958 to 1963, total employment declined following the introduction of improved equipment which led to a sharp reduction in number of operators. Since 1964, industry employment has increased each year by a net average of 29,400 workers. Throughout the period, however, gross hiring exceeded net employment gains as companies attempted to offset the high rate of labor turnover among the industry's female employees. The level of employment in telephone companies responds to changes in the demand for telephone service, which in turn, depends upon the size of the population, level of income, and

The Negro in the Public Utility

56

Industries

rate of economic activity throughout the economy. Since World War II, production, income, and employment have grown rapidly, and the demand for telephone service has increased accordingly. For example, between 1965 and 1969, industry employment grew by 20 percent in response to the rapidly growing demand and diversification of telephone service. Over time, however, the growth of employment in the telephone industry has been limited by the introduction and spread of technical innovations which tend to make telephone service more efficient, while holding down labor costs. Over the past decade, employment in the independent sector of the industry grew more rapidly than employment in the Bell System. Between 1955 and 1967, the independent companies gained a net increase of 83,000 workers compared to 37,000 in Bell companies. The variation in employment growth may be explained, in large part, by differences in traffic volume and customer demand between the two systems. The Bell System's higher traffic volume and wide range of services allows the use of many labor-saving innovations that cannot be employed profitably in most non-Bell companies. 61 Occupational

Characteristics

The most detailed description of the telephone industry occupation structure is contained in reports published by the Federal Communications Commission. Table 17 shows industry employment in the major occupation groups in 1968. Of the 734,495 workers employed in the industry, 218,594 or 29.8 percent, could be classified as skilled employees involved in construction, installation, and maintenance work. Almost 159,000, or 21.6 percent of all employees were clerical workers, and almost 10 percent held professional and semiprofessional jobs. The largest single occupational category, telephone operators, included almost 196,000 workers, nearly all of whom were women. Although some jobs require relatively few skills, the telephone industry has little or no demand for laborers or other unskilled workers. Between 1950 and 1969, the industry occupation structure changed in response to technological advancements and the expansion of telephone service. During the eighteen-year period, 61.

U.S. Department of Labor, Manpower Administration, Technology and Manpower in the Telephone Industry, Manpower Research Bulletin No. 13 (Washington: Government Printing Office, November 1966), pp. 39-41.

The Public Utility

Industries

57

Telephone Communications Industry Employment by Occupational Group United States, 1968

TABLE 17.

Occupational Group

Employees

Percent of Total

6,598

0.9

Professional and semiprofessional

72,873

9.9

Business office and sales

57,534

7.8

Clerical

158,612

21.6

Telephone operators Chief operators

195,775

26.7

9,770 14,512 45,875

1.3 2.0 6.2

Officials and managerial assistants

Sendee assistants Operators in training Construction, installation, and maintenance

218,594

29.8

Central office craftsmen

72,732

Telephone installers and repairmen

79,140

9.9 10.8

Linemen Cable splicers Helpers

12,538 19,575 2,437

1.7 2.7 0.3

22,189

3.0

Building, supplies, and motor vehicle workers All other employees Total

2,320

0.3

734,495

100.0

Source:

Federal Communications Commission, Statistics Common Carriers, 1968, Tables 10 and 16.

of

Communications

Note:

Does not include telephone manufacturing or research activity.

the proportion of all employees classified as operators declined from 43.4 to 26.7 percent, while the relative number of construction and installation workers increased from 23.8 to almost 30 percent (Table 18). Professional and semiprofessional workers registered the largest relative gain, almost doubling in proportion from 4.9 to 9.9 percent of all industry employees. The occupation structure and change in occupation groups did not differ significantly between the Bell System and other telephone companies.

58

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The Negro in the Public Utility

Industries

Employment in the telecommunications 105 industry increased by 140,919 or 26.5 percent in the selected states during the decade. At the same time, Negro employment increased by 10,135 (108.7 percent) of the industry's total employment growth. Negro women, however, gained 7,236 jobs, or almost one and onehalf times the 2,899 jobs gained by Negro men in the industry between 1950 and 1960. Five states, New York, Pennsylvania, Illinois, Michigan, and Ohio, accounted for 5,048 or 69.8 percent of the increase in Negro women employed by the telecommunications industry. In comparison with the gains of Negro women, the employment of all women rose by only 1,833 in the five states combined, and actually declined in Pennsylvania and Illinois. Similarly, the states showing a concentration of employment gains for Negro women accounted for almost one-half of the growth of employment among Negro men in the telecommunications industry. The electric and gas utilities showed far less progress in hiring Negroes than did the telecommunications industry. In the twenty-seven selected states combined, Negro employment increased by only 1,840 or just 4 percent of the total growth of 45,849 jobs in the electric power and gas utilities. The limited growth of Negro employment was in part related to the decline of the male work force in electric and gas utilities in three of the states. Equally important, however, was the failure of Negro men to keep pace with the growth of utility employment in the southern states. In thirteen southern states, male employment in electric and gas utilities increased by 26,968, reflecting the accelerated pace of economic growth in the South during the 1950's. loe In the same states, however, the employment of Negro men rose by only 255, or 0.9 percent of the total growth in male employment. Because the electric power and gas utilities are heavily dominated by male employees, the failure of Negro men to gain a significant share of the expanding job opportunities during the 1950's 105. The telecommunications industry includes the telephone, telegraph, radio, and television industries. Within this group, the telephone industry accounted for 84 percent of all workers, and 87 percent of the Negro workers in 1960. In the absence of detailed industry data for each state, the telecommunications industry at large may be used as a proxy for employment trends in the telephone industry. 106. James G. Maddox and others, The Advancing South, (New York: Twentieth Century Fund, 1967), pp. 22-31. The states are Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

Negro Employment

in the Postwar

Era,

1950-1960

89

reduced the chances for Negroes to improve their status in the industry during the years beyond 1950. Metropolitan

Areas

Further examination of the employment data show that Negro gains in the public utility industries during the 1950's were concentrated not only in a small number of states, but also, in a small number of metropolitan areas within the states. Table 24, showing total and Negro employment in seventeen selected SMSA's, includes the large metropolitan areas to which substantial numbers of Negroes migrated during and after World War II. Also shown, however, are smaller SMSA's included for purposes of geographical comparison. These SMSA's cover the cities in which utility companies were selected for special study in the compilation of data on employment policy and practices to be discussed in later chapters. In the seventeen areas combined, employment in the telecommunications industry increased by 32,427, with Negroes accounting for 7,488, or 23.1 percent of the total employment growth. Among all Negroes, the largest gain in jobs was registered by Negro women, whose employment rose by 5,853 while total female employment declined by 2,319, or 1.5 percent. The employment of Negro women in the telecommunications industry grew significantly in several SMSA's. In New York, Negro women gained 2,540 jobs and rose from 3.3 to 9.6 percent of all female telecommunications workers. In Philadelphia, the increase was 532, raising the relative number of Negroes among all female telephone workers from 0.6 to 5.1 percent. Chicago, Detroit, and Los Angeles each showed increases of 400 or more Negro women, and in 1960, each area had three or more times as many Negro women as were employed by the industry in 1950. Negro men were not as successful as Negro women in obtaining jobs in the telecommunications industry, but their numbers increased significantly in several areas, including New York, Chicago, and Los Angeles. It should be noted, however, that while Negro women showed gains of 400 or more in the metropolitan areas of rapid employment growth, the increase in male Negro employment was more often measured below 300. The differential progress of Negro men and women is clearly shown in the summary of telecommunications employment in the seventeen SMSA's. In all areas combined, the relative number of

The Negro in the Public

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92

The Negro in the Public Utility

Industries

Negro men increased from 2.3 to 2.9 percent during the decade, while Negro women rose from 1.7 to 5.5 percent of the industry's female work force. Negro employment gains were minimal in the electric and gas utilities in the selected metropolitan areas. All areas combined gained 1,046 Negro workers, of whom 590 were men, and 456, women. The small gain for Negroes, however, was associated with a decline in total electric and gas employment in the seventeen areas. The increase in Negro employment at a time when total employment was declining may be significant, in view of the previous racial employment history of electric and gas utilities. On the other hand, the diverging trends, observed more frequently among Negro women than among men, must be interpreted cautiously because of the small number of workers involved. OCCUPATIONAL

TRENDS

The degree to which Negroes made significant progress in obtaining public utility jobs during the 1950 decade cannot be measured fully by industry employment trends. As the analysis of the pre-1950 experience demonstrated, Negroes have always found employment in the public utilities, but almost always were employed in low-skilled and menial jobs. Whatever progress was made toward breaking the traditional occupation status of Negro utility workers should be found in evidence showing the penetration of Negroes into major industry jobs, including linemen and servicemen, power station operators, and telephone operators. Table 25 compares the employment of Negroes and all workers in the three major semiskilled and skilled job categories of the public utility industries in twenty-seven selected states (including the District of Columbia). In 1950, Negroes held about one percent of the selected jobs in all states combined. By 1960, however, the relative number of Negroes had advanced to 2.2 percent, representing an increase of 6,737 Negro workers in the three job groups. Telephone

Operators

The Negro gains largely resulted from increased employment of Negro women as telephone operators. In this occupation group, the number of Negroes rose to 7,791 in the 27 selected states in 1960—more than three times the number of Negro telephone operators employed in 1950. The rapid growth of employ-

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ment for Negroes exceeded the net increase in all operators in the selected states (4,200), and raised the relative number of Negroes among all telephone operators from 0.9 to 2.8 percent. The largest gains for Negro telephone operators were recorded in five states: New York, Pennsylvania, Illinois, Michigan, and California. Together these states accounted for almost 82.1 percent of the increase in the number of Negro telephone operators throughout the nation. Moreover, in three of the five states, Negro employment gains occurred while the total employment of telephone operators declined. These gains are especially notable in view of the near exclusion of Negro women from employment as telephone operators prior to World War II. Although some gains were made by Negro telephone operators in the North and the West, few Negroes obtained employment as telephone operators in the South during the 1950 decade. In twelve southern states,107 the number of telephone operators showed an increase of 6,611 between 1950 and 1960. Negroes, however, obtained only twenty, or 0.3 percent of the additional operator jobs during the decade. Throughout the southern region at large, the proportion of Negroes among all telephone operators failed to reach one percent by 1960, in marked contrast to the slow, but perceptible, gains recorded in all other regions. Within the states where Negroes registered some progress in obtaining jobs as telephone operators, the employment growth was almost entirely concentrated in the large metropolitan areas. The largest numerical gains between 1950 and 1960, as shown in Table 26, were recorded in New York, Chicago, Detroit, Los Angeles, and Philadelphia. Each of these metropolitan areas showed increases of 350 or more in the number of Negroes employed as telephone operators. Moreover, in each of the five cities, the relative growth rate of Negro employment greatly exceeded the rate of total employment growth. A comparison of employment trends in the selected cities suggests that in the areas where total employment declined while Negro employment increased, Negroes actually replaced some whites previously employed as telephone operators. 107. Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

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Table 29 summarizes the participation rates for Negroes in the selected companies. In 1967, Negroes in these companies accounted for 5.8 percent of all utility workers, a ratio almost 50 percent higher than the relative proportion of Negroes among employees in all utilities with 100 or more workers. Negroes held a larger share of both white collar and blue collar jobs in these companies than in the electric and gas industries at large (compare with Table 27). The comparative advantage of Negroes in the selected companies in relation to the total industry might be expected because of the location of the companies in areas where the Negro labor force is concentrated. There were, however, significant variations in the utilization of Negroes among the different utility industries. By examining each industry separately, the comparative employment profiles may be shown. Electric Power

Companies

The twenty-seven electric power utilities included in the sample (Table 30) employed more Negroes in 1967 (5,563) than either the gas distribution or combination gas and electric utilities selected for separate study. The proportion of Negroes among all employees, however, was lower in the electric power utilities (4.8 percent) than in the other two industry sectors. Between the major occupation groups, Negroes were heavily concentrated in blue collar jobs, where their participation rate (7.7 percent) was four times as large as in white collar jobs. Moreover, about six out of every ten Negro blue collar workers were laborers and service workers, although only 13.6 percent of all employees were so classified. The 1966 to 1967 employment changes reduced by 12.2 percent the number of Negroes in the lower blue collar jobs. At the same time, Negro employment increased significantly among craftsmen, operatives, and office workers. Negro women scored the major gain in white collar jobs by obtaining 41.4 percent of the net growth of these jobs for women during 1967 (Table 31). The small but numerically significant gains for Negro women reflect the efforts of a few electric power companies to broaden the range of employment opportunities for black workers. In several cases, the new Negro office and clerical workers were women previously employed as service workers, who were trained and promoted to the higher status, better paying white collar jobs.

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