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June 2001
The experience of the Ford Motor Co. from 1918-1947 provides a unique opportunity to study a firm willing to employ significant numbers of black workers when similar firms would not. An analysis of Ford employee records over this period suggests that Ford did profit from discrimination at other auto firms, but not by hiring black workers at low wages. An apparent "wage equity constraint" resulted in virtually no racial variation in wages, with the result that the quit rate of blacks at Ford workers was far lower than that of whites, holding working conditions constant. One source of Ford's profits from "arbitraging" the discriminatory labor market, however, came about precisely because it did not hold working conditions constant, placing blacks disproportionately in the hot and dangerous metal foundry where quit rates were generally high. In addition to exploiting this working-condition margin, Ford's policy of hiring blacks may have also helped the company lower overall wages, increase shop floor effort, and fight unions, providing additional sources of arbitrage profit even the face of the wage equity constraint.