The article focuses on the discrimination against Negroes and Puerto Ricans in the New York Standard Metropolitan Statistical Area (SMSA). The paper is concerned with an assessment of the impact of occupational and educational differences on 1970 earnings levels of White, Negro, and Puerto Rican males in the New York SMSA. The analysis suggests that earnings differences between races largely reflect real skill differences rather than color based employer discrimination. It has been suggested that individuals within given occupations, especially in narrowly defined occupations, are likely to be of equal productivity. However, despite being rather detailed, the census occupational data are in no way sufficiently disaggregated to warrant the assumption of equal efficiency. Furthermore, within narrowly defined occupations there are likely to be productivity differences between workers as a result of differences in native ability, education, and training. Therefore, an attempt has been made to account for differences in skills.