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Theory Overview

A split labor market is a three-way conflict between the Capitalist and two labor groups with the Capitalist seeking to displace higher paid workers by cheaper labor.[1] A split labor market occurs when the price of labor for the same work differs for at least two groups or would differ if they performed the same work.[2] The "price of labor" refers to labor's total cost to the employer, for example, wages, cost of recruitment, transportation, room/board, education or healthcare that employer may pay.

Dynamics of Three Labor groups

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

Business or Employers (White Capitalists) aim to have a cheap and docile labor force in order to compete effectively with other businesses and maximize economic return.[1] Business will dispense with and undercut the white working-class if they could, and have done so when they have the opportunity.[1]

Higher Paid Labor is threatened by introduction of cheaper labor into their market fearing that it will force them to leave the workplace or reduce their pay level.[1] If the Higher Paid Labor is strong enough or possess the power resources, they can prevent being replaced or undercut by cheaper labor through exclusion movements or creating caste systems (exclusiveness or aristocracy of labor).[1]

Cheaper Labor is used by the employer to undermine the position of more expensive labor through strikebreaking and undercutting.[1] Cheaper laborers are usually unskilled, but can be trained.

Economics of Discrimination

The split labor market theory attributes events to social structure rather than to individual preferences. It is a form of conflict theory in that it sees discrimination as a result of the conflict between competing interest groups.[3] "The business owner or capitalist recognizes that racial discrimination is dysfunctional for the business enterprise and prefers not to discriminate. The objective of the capitalist is to get the best worker for the cheapest wage, and it is therefore in the capitalist's interest not to discriminate, because discrimination limits the pool of workers available for the position. Accordingly, those doing the hiring discriminate not because they have a 'taste for discrimination', but rather because they are forced to do so by the laborers that do benefit" (Farley). Higher paid laborers may be able to impose a system of discrimination in a number of ways.[3] Discrimination occurs in a split labor market because workers benefit when they eliminate minority competition.[3]

Ethnic Antagonism in relation to Split Labor Market

Ethnic antagonism is produced when competition arises from a price differential.[1] A source of antagonism between ethnic groups is assumed to be a split labor market or one in which there is a large differential in price of labor for the same occupation/work. The price of labor is not a response to the race or ethnicity of those entering the labor market. A price differential results from differences in resources and motives which are often correlates of ethnicity.[1]


William Julius Wilson states "The central hypothesis of the split labor market theory is that ethnic antagonism first develops in a labor market split along racial lines".[2] The split labor market theory traces racial stratification directly to the powerful, higher paid working class.[2]

Political changes "to the passage of protective union legislation during the New Deal era, and the equal employment legislation in the early sixties have virtually eliminated the tendency of employers to create a split labor market in which black labor is deemed cheaper than white labor regardless of the work performed".[2] The market provided much of the racial antagonism during the earlier years of the period of industrial race relations.[2]


  1. ^ a b c d e f g h Template:Cite journal by Jonathan G. Mason
  2. ^ a b c d e Wilson, William J. (1980). The Declining Significance of Race. The University of Chicago Press. ISBN 0-226-90129-7.  
  3. ^ a b c Farley, John E. (1988). Majority-Minority Relations. Edition 2. Prentice Hall. ISBN 0-13-545625-8.  


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