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Maxine Goodman Levin College of Urban Affairs
8-21-2014
Increasing Marginal Revenue Product of Urban
Black Men in Public Housing
Arthur Frazier
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Running Head: INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
Increasing Marginal Revenue Product of Urban Black Men in Public Housing
Arthur Frazier
Cleveland State University
Maxine Goodman Levin College of Urban Affairs
1
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
2
Abstract
Black male unemployment is a significant reason why urban neighborhoods fail to reach full
growth potential. This discussion focuses on marginal revenue product (MRP) and how it
impacts employment of Black males living in public housing. MRP is defined as the additional
unit of revenue a firm earns when it employs one unit of labor. Lack of job training, soft skills,
human capital, and psychological capital translates into low (MRP) which discourages firms
from either hiring inner city Black men or relocating near their neighborhoods. This paper will
discuss the problem of low MRP and how collaboration between city and state governments, and
the private sector to develop soft skills through job training and other activities can begin the
process of improving MRP of Black males living in public housing. Evidence suggests job
training can increase Black male MRP to a level that could improve odds of obtaining
employment.
Key Words: marginal revenue product, public housing, employment, soft skills, Armed Forces
Qualification Tests
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
3
Increasing Marginal Revenue Product of Urban Black Men in Public Housing
From an economic standpoint, many Black males living in public housing have low
productivity. One of the main reasons for low production is the lack of job training, soft skills,
human capital, and psychological capital; all which will be addressed later. From a traditional
economic perspective, productivity can increase demand for goods and services in an economy,
whether it is local, regional, or national. Marginal revenue product (MRP) refers to the additional
revenue generated from one additional unit of input whether it is labor and or capital.
(McConnell, Brue, & Flynn, 2012).
Classic microeconomic theory says employers will pay workers up to the point where
wage is equal to marginal product MP. An employer is profitable if a worker is generating more
revenue for the firm than the firm is paying the worker (Schiller, 2011). If the end product that
the resource is producing is highly valued by society, employers will want to hire more labor to
satisfy the demand. Since Black male MRP is not productive, employers have no incentive to
demand this resource.
Another factor associated with low Black male MRP is the concept and location of public
housing. From a historic standpoint, according to Wilson (1987), public housing in urban
centers contributed to high Black male unemployment as a form of isolation. After World War I
millions of Blacks came north to look for work. Many found employment in the industrial cities
such as Chicago, Pittsburgh, Detroit and Cleveland. During the 1920s, over 600,000 Blacks
migrated to northern cities (Goodman, 1975). However, Blacks had difficulty finding suitable
housing in northern cities as they migrated in search of employment. Many were forced to live in
urban ghettos and slums. When the Great Depression occurred in 1929, employment
opportunities became limited for Blacks. During this time period, the unemployment rate for
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
4
Blacks was 30 to 60 percent higher than for Whites (Levine, 1996). When Congress passed the
Fair Labor Standards Act in 1938, establishing minimum wage at 40 cents per hour, White
employers, realizing they could no longer pay Blacks less than Whites for doing the same job,
fired Blacks and replaced them with White workers (Levine, 1996). Consequently, Blacks were
isolated from mainstream society, relegated to low paying menial employment and continued to
live in public housing ghettos with substandard living conditions, a situation that continues to
affect low Black male MRP.
Public Housing and Urban Spatial Theory
Wilson (1987) attributes Black male employment isolation to the urban spatial theory, a
hypothesis which argues Blacks living in urban core areas are segregated and unable to access
high wage jobs because industrial sectors locate in the suburbs. The spatial theory literature can
be summarized into four basic areas: (1) residential segregation (2) employment suburbanization
(3) inner city residential versus suburbs (4) and other measures such as travel and transportation
(Holzer, 1991). Residential segregation refers to fractions of employment in neighborhoods held
by Blacks to their residential distributions across neighborhoods.
The spatial mismatch hypothesis was first advanced by Kain (1968) who found a larger
pool of available workers in urban neighborhoods relative to existing job openings in those areas.
Consequently, this mismatch resulted in higher unemployment, longer commutes and increased
poverty for urban Blacks. Several studies have tried to identify evidence to support the spatial
mismatch hypothesis (vonLockette, 2010). Ihlanfeldt and Sjoquist (1998) evaluated various
methodologies researchers have used to test this theory. The focus of their evaluations centered
on (1) racial comparisons of commuting times; (2) correlations of labor participation, wages, job
accessibility; and (3) comparisons of labor markets between central and suburban residents.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
5
Commuting is an issue only if Blacks are willing to apply for jobs outside of the central
city. If they are willing, the cost of the commute has to be figured in the decision to accept a job
offer. In addition, other factors such as the availability of public transportation can have an affect
but differences in black versus white commute times have not been found to be significant. Also,
on the issue of labor participation, wages and job accessibility, Blacks may not have complete
information on distant jobs. In addition, consideration must be given to whether available jobs
are suited for Blacks that have to travel long distances to work. Comparisons of labor markets
between central and suburban residents reveal endogenous factors that are associated with
residential choices. Consequently, employment cannot be assumed to be spatially uniform when
making predictions about labor. (Ihlanfeldt & Sjoquist, 1998).
From a historical perspective, Friedlander (1972), using 1960 census data, found,
controlling for Standard Metropolitan Statistical Area (SMSA) characteristics, segregation in
urban areas do not significantly impact Black unemployment. Mooney (1969) found a negative
relationship between the fraction of manufacturing jobs located in the suburbs and inner-city
Black unemployment. In addition, Ihlandfeldt and Sjoquist (1989b) associated a one standard
deviation change in job decentralization with a $1000 decline in income for both white and
Black workers, though inner city less educated Black male residents saw a higher negative
impact on earnings.
However, Mouw (2000) argues that the problem with the spatial mismatch hypothesis is
that residential location is not an exogenous variable. Other factors such as quality of schools,
neighborhood safety, and car ownership may be related to location. Consequently, spatial
mismatch alone is not the reason for high urban black male unemployment (Covington, 2009).
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
6
The Impact of Gautreaux
Another possible reason for high urban black male unemployment is the role of federal
agencies in housing development. Public housing tends to be located in areas where there is a
high concentration of minorities. According to Newman and Schnare (1997) more than 60
percent of public housing is located in central metropolitan areas. The opposite is true for
suburban areas where public housing accounts for less than 20 percent of all units. There are
numerous public housing issues confronting residents on a daily basis. Many inner city units are
crime ridden, have high rates of unemployment, located in areas of extreme poverty, and lack
quality schools. Consequently, neighborhood quality becomes an important factor when
evaluating the impact of residential racial segregation (Holzer, 2009).
In Gautreaux v. Chicago Housing Authority1, a federal court ruled the Chicago Housing
Authority (CHA) and HUD discriminated against black tenants by placing them in large
developments in poor black neighborhoods. The case was eventually resolved by requiring HUD
to issue Section 8 vouchers to CHA current and former residents. The vouchers allowed these
tenants to move to areas that were less than 30 percent black (Popkin, Buron, Levy, &
Cunningham, 2000).
After the court’s decision in Gautreaux, HUD began to offer more alternatives for black
public housing tenants. Several residential mobility plans were implemented. Section 8 vouchers
were used to move tenants into neighborhoods in metropolitan areas experiencing low poverty.
Also, in the 1990s, HUD implemented the Moving to Opportunity (MTO) program which
allowed tenants to move into middle-class neighborhoods in order to improve their quality of
life. In addition, several thousand units of distressed properties were demolished under the
Housing Opportunities for People Everywhere (HOPE) IV program (Popkin et al., 2000).
1
304 F. Supp.736 (N.D. Ill. 1969)
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
7
One of the renovated public housing complexes that benefitted from HUD’s new
initiatives was Lake Parc Place in Chicago. Lake Parc Place was different from other Chicago
public housing units in that it was managed by a private real estate company (Rosenbaum, Stroh,
& Flynn, 1998). The complex had 282 apartments, a security desk, day-care center, and
landscaping. Gautreaux and other HUD programs offered the opportunity for minorities to enter
new labor markets through improved housing. The overall objective of the design was
integration with suburban middle-class residents that would eventually lead low-income
residents to higher-paying jobs.
However, with all the changes instituted by HUD to improve public housing, the issue of
black male productivity still needed to be addressed. Rosenbaum et al (1998) acknowledged
upscale changes at urban public housing complexes such as Lake Parc Place would not solve the
underlying issues many Black males faced such as low job skills and high unemployment. A
significant investment in public housing properties does not transcend into better public schools,
lower rates of poverty or a reduction in discriminatory hiring practices. As a result, the issue of
human capital and black male productivity needs to be analyzed.
Human Capital
A key issue when discussing MRP is why differences in productivity exist between
groups. When reviewing economic models, an assumption is that workers have identical
productivity. However, in reality, this is not the case. Consequently, from a labor perspective,
human capital becomes important.
Goldsmith, Darity & Veum (1998) believe human capital, which includes education,
intelligence, and experience, has a major impact on MRP. Glaeser and Shapiro (2001) suggest
human capital, through education, is vital for urban city growth. Highly educated workers have a
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
8
spillover effect which can spread new ideas and innovation across a broad spectrum of
industries. At its core, human capital is a fundamental resource that is acquired through formal
education which allows individuals to be exposed to markets and technology (Baptista, Karaoz,
& Mendonca, 2014).
A key element of human capital is the ability to transfer this resource into work
experience. Ucbasaran, Westhead and Wright (2007) see human capital as a transferable
commodity that can be categorized in terms of “inputs” and “outputs”. Highly skilled workers
have the ability to have more quality inputs which will result in more productive outputs. As a
result, cities and regions will benefit from this resource. From a neighborhood perspective,
growth and prosperity will primarily be determined by the work efficiency of the resident
population.
Studies have found that a 25 percent gap in earnings and education of Black men can be
accounted for in variation in neighborhood quality (Rosenbaum et al., 1998). Local productivity
is a significant contributor to positive neighborhood growth. According to Ellen and Turner
(1997), public schools are very important to neighborhood quality and nurturing productivity at
an early age because they are close to residential areas where children live who are likely to
attend public schools. If these schools lack resources to effectively teach, children will not
acquire basic math and reading skills needed to be competitive in the job market and be
productive members in a capitalistic economic system. Consequently, Black males in urban
public housing neighborhoods face severe obstacles when it comes to acquiring the human
capital needed to improve employment prospects. One of the obstacles that will be discussed
next is the perception that urban Black lack soft skills needed to succeed in the labor force.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
9
Soft Skills
Very little research has focused on the relationship between black male unemployment
and the importance of soft skills even though employer surveys indicate it is the most important
hiring component for entry level jobs (Cappelli, 1995). Soft skill measurement is not an objective
assessment because the definition of what constitutes a soft skill is difficult to quantify. Because
these skills are not universally defined, several views emerge from an employment perspective.
Conrad (1999) identifies four workplace competencies considered necessary soft skills:

Think/cognitive skills

Oral communication

Personal qualities/work ethic

Interpersonal/teamwork skills
Cognitive skills are difficult to measure because they are often based on mathematical
standardized tests but usually classified as soft skills. They include the ability to identify
problems, evaluate alternative solutions, reaching decisions in a logical manner, and being able
to adjust to unanticipated situations by applying established rules. Oral skills are based on the
ability to communicate messages appropriate to the audience, being able to understand
instruction and give direction, and verify information. Personal qualities/work ethics include the
attributes associated with self-esteem and the willingness to work. However, this attribute as a
soft skill has been debated. O’Neil, Allred, and Baker (1993) argue that these qualities are not
soft skills per se but are the product of soft skills. Interpersonal skills include the ability to
negotiate, being a team player, participate in group decisions, and be able to resolve conflict
(Conrad, 1999). When addressing these competencies in the context of employment three
common elements emerge: 1) soft skills relate to interaction between individuals; 2) soft skills
are likely to be environmental specific; and 3) soft skills are difficult to define (Conrad, 1999).
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
10
Giloth (1990) identifies a sector paradigm and a place-based paradigm when discussing
soft skills, workforce strategies and job training. A sector-based paradigm is a belief that
development begins where the jobs are, and community connections to lower-income job seekers
follow. This method of job creation relies on clusters as a tool of economic development.
Technology, retail, and manufacturing firms would fall into this category. However, a cluster
based approach could create a bias toward employing black males because of the perception that
they lack the soft skills needed to attract firms to the cluster. Consequently, this approach is
qualification-based and acts to “weed-out” applicants that don’t possess the skills needed for
employment.
According to Goldsmith, Darity & Veum (1998) soft skills measured by cognitive skill
tests including the Armed Forces Qualification Tests (AFQT) are commonly used to determine
intelligence and consequently wage levels. Some economists look at innate intelligence versus
acquired intelligence when discussing cognitive ability and come to the conclusion that
employers will not discriminate if both Black and White applicants have similar cognitive ability
unless the employer is risk adverse to hiring minorities (Goldsmith, Darity, & Veum, 1998).
Adopting an innate intelligence perspective means that Whites are biologically smarter than
Blacks. On the other hand, O’Neill (1990) finds that AFQT tests are a measure of learned
intelligence that reflects quality of schooling received as opposed to innate intelligence.
Goldsmith, Darity & Veum (1998) argue that tests such as AFQT present important
policy questions. If intelligence is innate and based on heredity, then any policy considerations
are moot and unnecessary because they are irrelevant to wage differences. However, if
intelligence is learned behavior, policy is important because it can reinforce a place-based
paradigm that focuses on the needs of the individual job-seeker and seeks to improve job
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
11
prospects through community development. In terms of raising Black male MRP, this would be
the most desired approach because performance issues and the possibility of being eliminated
from job opportunities are not as likely as it would be in a sector-based paradigm and real or
perceived deficiencies will not be considered a barrier to employment opportunities.
If a community and or employers adopt a place-based theory, the sector-based
paradigm will lose support. However, sector-based strategies are still the dominate form of
evaluation. As a result, Moss and Tilly (1996) argue that this creates a bias in the eyes of
employers from hiring Black men for entry-level jobs. In support of their argument, between
1991 and 1992, Moss and Tilly (1996) interviewed 75 employer representatives at 56 firms from
four industries: auto parts manufacturing, retail, insurance companies, and public agencies such
as hospitals and local governments. The employers were located in the Los Angeles and Detroit
metro areas. The interviewers gathered information on primarily entry level jobs requiring only a
high school diploma.
Employers in this survey were asked to identify the most important skill needed in their
industries. Over 84 percent of respondents indicated soft skills as the most important criteria
(Moss & Tilly, 1996). Next, Moss and Tilly (1996) expanded the survey to include questions
about the relationship between soft skills and Black males as it pertains to hiring. Moss and Tilly
(1996) argue that the emphasis placed on soft skills in the labor market disadvantages Black
male applicants. “The views employers hold of Black men in this regard were partly, stereotype,
partly cultural gap, and partly an accurate perception of the skills that many less educated Black
men bring to the labor market” (Moss & Tilly, 1996, p. 260).
When discussing Black male interaction skills, 32 percent of the respondents stated that
Black men were hostile, defensive, and had negative attitudes. Forty percent of respondents
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
12
indicated a belief that black males were not motivated to work. In addition, over 80 percent of
employers surveyed in Detroit and Los Angeles believed immigrants had a stronger work ethic
than Black men (Moss & Tilly, 1996). Many of these beliefs were based on perception as well as
past work experience. However, one manager stated the following:
I think it’s how you motivate each group. Two or three years ago, I would have
probably said, well, the Black race isn’t as motivated as the Oriental or the
Hispanic. But I’ve seen that if you motivate, that you have to motivate each group
differently (Moss & Tilly, 1996, p. 267)
What this survey portrays is discouraging for Black men in public housing. Various
perceptions seem to indicate biases that need to be overcome in order to advance past the first
interview. However, the survey also provides hope from an employer perspective. If employers
are willing to assist Black men in overcoming serious soft skill challenges, which include
employer bias, Black male public housing MRP could increase to productive levels.
Method
Research Question: Whether programs addressing soft skills and job training increase
employment opportunities
Table 1
Employment
EPUBHSE
ELKWRK
EWRKEXP3
EWELACT1
EWELAC21
EWELAC22
EWELAC23
EWELACT3
EWELACT4
Black
ESEX
THEARN
Employment last month
Residence in public housing project
Spent time looking for work
Worked in a work experience
program
Attend classes to improve basic reading
Attend job readiness to learn
Attend job search program or job
club
Attend training to learn a specific job skill
Did ... attend job training
Participate in a work experience
Race
Sex of this person
Total household earned income
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
13
Table 1 displays the definitions for the variables used in factor analysis and logistic
regression from the longitudinal data set Survey of Income and Program Participation (SIPP)
2004 Panel. Employment refers to participants in the study who had worked in the past 30 days
during the study period. EPUBHSE represents participants living in a public housing project.
ELKWRK refers to participants that spent time looking for work. EWRKEXP3 refers to
participants that worked in a work experience program to prepare for employment. EWELACT1
refers to participants who attended classes to improve reading skills. EWELAC21 measures
participants that attended a job readiness seminar during the study. EWELAC22 refers to
participants that attended a job search program or job club activities. EWELAC23 describes
participants that attended training to learn a specific job skill. EWELACT3 refers to participants
that attended job training workshops. EWELACT4 describes individuals in the study that
participated in a work experience program. Black (1=white 2=black 3=other) was recoded from
ERACE (1-5 1=white 4=residual). ESEX refers to the sex of the participant (1=male 2= female).
THEARN measures total household earned income.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
14
Table 2
Factor Loadings
3
4
-0.019
0.037
0.063
0.065
0.393
0.017
0.098
0.142
0.218 -0.021
0.800 -0.045
-0.617
0.328
-0.566 -0.309
-0.203
0.693
1
0.820
0.681
0.558
0.102
0.001
0.131
-0.159
0.353
0.056
2
-0.034
0.113
-0.54
0.872
0.616
0.159
-0.229
0.127
0.216
-0.225
0.265
-0.043
0.341
-0.3
0.162
-0.148
-0.004
0.238
-0.077
Eigenvalue
Percent of Total Variance
Percent of Common Variance
2.210
17.003
26%
1.953
15.022
23%
KMO measure of sampling adequacy =
Bartlett's Test of Sphericity
n = 124
0.515
Approx. Chi-Square =333.389, df= 78, p<.001
Participate in a work experience
Spent time looking for work
Worked in a work experience program
Attend job search program or job club
Black
Did ... attend job training
Attend classes to improve basic reading
Sex of this person
Attend training to learn a specific job
skill
Residence in public housing project
Attend job readiness to learn
Total household earned income
Employment last month
5 Communalities
0.23
0.728
-0.002
0.485
-0.052
0.760
0.016
0.801
-0.266
0.498
0.101
0.695
0.154
0.590
0.033
0.558
-0.32
0.674
-0.12
0.691
0.683
-0.018
0.044
0.234
0.074
0.868
0.754
0.730
0.574
0.784
0.701
1.725
13.266
20%
1.542
11.859
18%
1.149
8.840
13%
65.989
100%
Table 2 describes a set of 13 employment measures that were submitted to an exploratory
factor analysis, with principal components factoring, orthogonal rotation and an extraction cutoff
of Eigen value= 1.0 (i.e. latent root criterion). The KMO measure of sampling adequacy (MSA)
was .515 and the Bartlett’s test of sphericity resulted in a highly significant chi-square (333.389,
p < .001), indicating the appropriateness of factor analysis for this set of 13 items.
Communalities ranged from a low of .485 to a high of .801, indicating a moderate amount of
shared variance of all items.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
15
The analysis resulted in five factors with Eigen values ranging from 2.210 (17% of total
variance to 1.149 (8.8% of total variance). The full five-factor solution explained 66% of the
total variance of the pool of 13 items. The five factors did not have cross-loadings. Factor 1 had
high loadings on items that measured participation in a work experience program, time spent
looking for work, and participants actually working in a work experience program.
Factor 2 had high positive loadings pertaining to attending job search and job club
programs. Factor 3 had high loadings associated with attendance at job training, attending classes
to improve reading, and a demographic measurement of the participant’s sex. Factor 4 loaded
high on attendance to receive training for a specific job, attendance at a job readiness program,
and a demographic measurement of residence in public housing. Factor 5 loaded high with total
household earned income and whether participants were employed during the past month that
they were surveyed. Given an n of 124, a loading of .45 may be considered significant.
Table 3
r
Block 1:
Black
ESEX
Block 2
EPUBHSE
Block 3
ELKWRK
EWELACT3
EWELAC23
EWELAC22
Block 4
EWELACT4
EWELAC21
EWELACT1
Block 5
THEARN
-0.031**
-0.117**
Exp
(B) in
Final
Exp (B)
0.646
2.033
1.320
4.259
0.191**
1.328
0.616
-0.133**
0.100**
-0.047**
-0.070**
2.733*
1.096
0.693
0.731
4.313*
1.933
0.935
0.488
Block
Chi-Sq
Model
Chi-Sq
3.027
3.027
136.432
0.024
0.036
5.699
0.316
3.343
136.116
0.027
0.039
7.490
5.385
8.729
130.730
0.068
0.101
12.314
115.639
0.175
0.259
7.405
89.295
0.333
0.493
8.349
15.092**
0.003
-0.024**
0.031**
6.046**
1.492
2.950
1.002
Cox &
Snell
R²
Nag.
R²
Hosmer &
Lemeshow
Chi-Sq
3.651
2.426
5.560*
26.343**
0.251**
23.820**
Model
-2LL
1.002**
50.164**
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
EWRKEXP3
0.155**
0.789
16
0.789
**p < 0.01
* p < 0.05
Table 3 displays the results from logistic regression predicting the variable Employment
(0=no 1 =yes) which was recoded from RMESR which measures whether a participant held a job
during a one month period (1-8, 1=yes, 8=no). Two blocks in the model achieved statistical
significance bringing the total model to -2LL = 89.295, Cox & Snell R ²= 0.333, Nag. R ² =.
0.493. Block 4 predictors measured job preparation activities and were significant (ChiSquare=15.092, p < 0.01). Also, Block 5, which contains variables that measure earning
potential, such as working in a work experience program, and total household earned income,
was significant (Block Chi-Square=26.343, p < 0.01, Model Chi-Square=50.164, p < 0.01).
The total model with four blocks in is significant at p < .01. Each Exp(B) indicates a
decrease or increase in the odds of the occurrence of the dependent value, assuming all other IVs
are controlled for. The final Exp(B) statistics revealed significant unique contributions of
ELKWRK, spent time looking for work, (Exp(B)= 4.313, p < 0.05), EWELACT1, a measure
of class attendance to improve reading, (Exp(B)= 5.560, p < 0.05), and THEARN, a measure of
household earned income, (Exp(B)= 1.002, p < 0.01) to the dependant variable Employment.
As a result, spending time looking for work, taking classes to improve reading, and
additional household earned income all increase the odds of holding a job for a one month
period. Other final Exp(B) statistics, EWELACT3, worked in a work experience program
(Exp(B)= 1.933, EWELACT4, participate in a work experience (Exp(B)=3.651, and
EWELAC21, attend job readiness to learn (Exp(B)= 2.426, although not significant, also
increased the odds of being employed within the past 30 days.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
17
Discussion
Urban Black males living in public housing have traditionally had low MRP. As shown
in Table 3, a one unit increase of EPUBHSE reduces the odds of employment by 62 percent.
Consequently, their services are not in high demand from employers. Several theories have been
presented as to the cause of this problem, but there has not been a consensus of the source of
low productivity in black urban males. Giloth (2000) argues that the added barriers of racial
discrimination and criminal backgrounds have a significant impact. Also, lack of Black male
employment increases the number of Black female headed households qualifying for voucher
and certificate assistance (Pendall, 2000).
Research has identified several factors that contribute to this problem. However, the
solutions are difficult to implement because of a variety of political and economic consequences.
One solution would involve identifying Black males that would be attractive to economic
clusters near their neighborhood by increasing psychological capital. According to Goldsmith,
Darity & Veum (1998), psychological capital is an extension of human capital and refers to the
degree in which personality influences productivity. Specifically, psychological capital is
associated with a sense of self-esteem, health and well-being. Luthans (2012) identifies four
components of psychological capital: self-efficacy, optimism, hope, and resilience. Individuals
with high self-efficacy are more likely to be more confident to handle unexpected problems and
control outcomes. Optimism is associated with a positive mental attitude. Hope is goal directed
and individuals that have this characteristic are able to adapt to changes along the path to
accomplishing a goal. Resilience is the ability to successfully respond to adversity. When
discussing productivity, economists typically exclude references to psychological capital as an
unmeasurable variable.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
18
However, Newman, Ucbasaran, Zhu, and Hirst (2014) argue that psychological capital is
measurable and can be developed. It can be measurable through psychological and biological
testing procedures. In addition, it can be measured through survey questionnaires given to
supervisors, associates, and others with knowledge of an applicant’s skill level. Psychological
capital can be developed through training and other work related activities. Chen and Lim (2012)
found that positive psychological capital can reduce absenteeism and improve job search skills.
Applying the concepts of psychological capital to the models discussed in this study,
evidence supports the idea that job training in areas such as time looking for work, attending
classes to improve reading skills and work experience activities increase actual work
opportunities. As a result, the findings of this study suggest positive Black male psychological
capital can be developed within job training opportunities. As a result, referring back to the
previous discussion on place-based paradigm job training, an increase in MRP for Black males
living in public housing can be inferred from exposure to job training activities.
However, when addressing urban employment issues, Porter (1995) advocates a sectorbased approach but from a different perspective than what was earlier discussed. He realizes the
hurdles urban residents face when they attempt to apply for high paying jobs created by
economic development opportunities. Many do not have psychological capital or high MRP to
attract potential employers. Nevertheless Porter (1995) believes urban entrepreneurs have the
capacity to increase local MRP, but their talent must be redirected from the social sector to the
private sector. As a result, inner cities can become export communities and increase prosperity
by attracting clusters.
Porter (1998) defines clusters as a concentration of interconnected companies and
industries such as suppliers of equipment and service industries. Clusters are more common in
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
19
economically advanced regions but they exist on the local level (Porter, 1998). Raising Black
male MRP would attract clusters, but not all companies are willing to train Black men on some
of the soft skills needed to be successful in a cluster environment, such as dressing and
communicating in a business manner.
Consequently, there must be a mechanism that will improve the employment skills of
urban Black men to the level that will attract clusters. Porter (1998) believes that national and
local governments have an obligation to make sure clusters have a supply of resources available
to compete which would include labor. As a result, training urban Black men to compete in this
environment would improve the overall quality of neighborhoods. A consensus between
national, state and local governments collaborating with neighborhood groups such as
community development corporations would be a start towards addressing the issue of chronic
male unemployment in the Black community.
Conclusion
Black men living in public housing face several challenges which do not have clear
solutions. Many live in poverty and have criminal records that exclude them from various
occupations such as health and education. In addition, inadequate education results in low-level
job skills that fail to attract employers. However, evidence indicates job training and other
activities such as classes to improve reading and job readiness skills increase the odds of
employment. Soft skills, human capital and psychological capital are attributes that can be
developed with job training. With a collaborative effort from private and public sectors, Black
males living in public housing can improve MRP and become productive members of their
community.
INCREASING MARGINAL REVENUE PRODUCT OF URBAN BLACK MEN IN PUBLIC HOUSING
20
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