Separating material before it is picked up is called source separation. Source separation is important for two reasons. The first one is for the length of paper fibers. The paper mills want the longest fibers possible to make recycled paper. Each time paper is recycled, the fiber becomes shorter.
White paper is the longest, colored stock is next, then newsprint, and on down the line.
By sorting the paper, the number of times it can be recycled is maximized. The second reason is related to the first. By sorting the paper, the maximum amount of money will be received for it. White paper brings the most because the fibers are the longest. If white was mixed with colored and newsprint, the price received would be for newsprint since that is the shortest fiber in this particular mix.