This study is concerned with the role of educational institutions as mechanisms of labor market selection, in particular the role of high schools for terminal graduates. The aspects of this process under primary concern are racial differences in economic achievement generated and sustained by educational institutions in their capacity as gatekeepers to the economy. The study examined the economic situation of a group of urban youth--white, Negro and Puerto Rican New York City vocational graduates--at their point of entry into the labor market and during their early career years. Employment and earnings data obtained from their Social Security records was used. The study describes the High School of Fashion Industries in New York City, a vocational high school, and demonstrates the outcome of strategic decision-making processes in the careers of students attending the school and explains how these outcomes come about in terms of the operation of the school. (Author)