Black workers’ wage gap widens for hard-to-explain reasons

Bloomberg

WASHINGTON — Black workers earn less than their white counterparts in a worsening trend that holds even after accounting for differences in age, education, job type and geography, new Federal Reserve research shows.

In 1979, the average black man in America earned 80 percent as much per hour as the average white man. By 2016, that shortfall had worsened to 70 percent, according to research Tuesday from the San Francisco Fed, which found the divide had also widened for black women.

“Especially troubling is the growing unexplained portion of the divergence in earnings for blacks relative to whites,” San Francisco Fed Research Director Mary Daly and her fellow authors wrote in the report, adding that this could owe to hard-to-measure factors including discrimination or school-quality differences.

“The opportunity to succeed is at the foundation of our dynamic economy. In this context, large and persistent shortfalls for African-Americans, or any other group, are troubling,” they wrote.

The San Francisco Fed’s study marks a growing focus by the U.S. central bank on inequality and the lagging employment performance of U.S. minorities. Chair Janet Yellen has talked about the subject and the Philadelphia and Minneapolis Feds have set up institutes to study inequality and social mobility. The increased attention stands in contrast to the past, when the topic was rarely investigated by Fed research staff or broached by officials, who viewed the problem as outside their remit for monetary policy.

The new research, which highlights the persistence of a racial wage gap 50 years after the passage of the U.S.’s landmark anti-discrimination Civil Rights Act, points to a problem for politicians and policy makers: It’s tough to address disparities if it’s impossible to measure what’s driving them.

The fact that the gap has lingered and even worsened over time also means that a stronger labor market, which politicians often cite as a remedy for black workers’ economic disadvantage, probably won’t permanently narrow the divide.

“A job is the first condition, but it’s really not a sufficient condition to fix disparities,” Daly said.

Black workers have consistently higher unemployment than their white counterparts, but that divide is highly cyclical: In strong labor markets, it shrinks, but then it skyrockets again during recessions. Black wage gaps change less across business cycles.

The fact that black workers earn less is a problem in part because it limits their chances at moving up the income ladder. Lower wages can make it harder to afford time off for education and training, for instance.

And it’s particularly worrying that the black-white gap is climbing on the back on unexplainable factors. While a sizable portion of the racial wage divide arises from the different industries and occupations black people work in, their education levels, and their ages, the share owing to factors that aren’t traceable accounts for much of the growth in the wage gap over time.

In 1979, about 8 percentage points of the earnings gap for men was hard to explain, and by 2016, that had risen to 13 percentage points — just under half of the total earnings gap.

“This implies that factors that are harder to measure — such as discrimination, differences in school quality, or differences in career opportunities — are likely to be playing a role in the persistence and widening of these gaps over time,” the authors write.

Talk to us

More in Herald Business Journal

FILE - In this Monday, March 1, 2021 file photo, The first Alaska Airlines passenger flight on a Boeing 737-9 Max airplane takes off on a flight to San Diego from Seattle-Tacoma International Airport in Seattle. A Boeing pilot involved in testing the 737 Max jetliner was indicted Thursday, Oct. 14,2021 by a federal grand jury on charges of deceiving safety regulators who were evaluating the plane, which was later involved in two deadly crashes. (AP Photo/Ted S. Warren, File)
Alaska Airlines to add Boeing 737s to the Paine Field fleet

It’s a sign of the growing popularity of flying from Everett. So far, much smaller Embraer E175s have been the rule.

FILE - Washington Attorney General Bob Ferguson talks to reporters, Monday, Aug. 26, 2019, during a news conference in Seattle. In a 5-4 decision Thursday, Jan. 20, 2022, the Washington Supreme Court upheld an $18 million campaign finance penalty against the Consumer Brands Association, formerly known as the Grocery Manufacturers Association. Ferguson sued the group in 2013, alleging that it spent $11 million to oppose a ballot initiative without registering as a political committee or disclosing the source of the money. (AP Photo/Ted S. Warren)
Washington justices uphold $18M fine in GMO-labeling case

Big grocers funneled dark money into a campaign against genetically modified labels on food packaging.

Mara Wiltshire, left, celebrates her first place finish in Mario Cart against her son Miles Jenkins, 7, as Calvin Jenkins, 5, looking on Friday evening at their home in Everett, Washington on January 7, 2022.  (Kevin Clark / The Herald)
Child care’s heightened burden takes parents out of workforce

One Snohomish County mom said she couldn’t return to work “because I didn’t have child care and I wouldn’t be able to afford it.”

In this photo taken May 17, 2017, wine barrels are shown at a vineyard adjacent to the Walla Walla Vintners winery in Walla Walla, Wash. The remote southeastern Washington town of Walla Walla - which used to be best known for sweet onions and as home of the state penitentiary - has now reinvented itself into a center of premium wines and wine tourism. (AP Photo/Nicholas K. Geranios)
More sustainable Washington wines are on the way

Labels will indicate grape growers met guidelines in 9 areas, including water, pest and labor practices.

A sign bearing the corporate logo hangs in the window of a Starbucks open only to take-away customers in this photograph taken Monday, April 26, 2021, in southeast Denver.  Starbucks is no longer requiring its U.S. workers to be vaccinated against COVID-19, reversing a policy it announced earlier this month. The Seattle coffee giant says, Wednesday, Jan. 19, 2022,  it's responding to last week’s ruling by the U.S. Supreme Court.  (AP Photo/David Zalubowski)
Starbucks nixes vaccine mandate after Supreme Court ruling

The move reverses a policy the coffee company announced earlier this month.

Logo for news use featuring the municipality of Stanwood in Snohomish County, Washington. 220118
Regulators OK doubling of composting operation in Stanwood

Lenz Enterprises can now handle 150,000 tons a year. Residents worry odors will be a problem.

Christian Sayre
Everett bar owner arrested again on new sexual assault charges

Christian Sayre, longtime owner of The Anchor Pub, was charged Friday with 10 counts of felony sex offenses.

FILE - Bill Gates speaks during the Global Investment Summit at the Science Museum, London, Tuesday, Oct, 19, 2021. A small city in the top U.S. coal-mining state of Wyoming will be home to a Bill Gates-backed experimental nuclear power project near a coal-fired power plant that will soon close, officials announced Tuesday, Nov. 16, 2021. (Leon Neal/Pool Photo via AP, File)
Microsoft to review workplace harassment, including Bill Gates allegations

One engineer wrote in a letter that she had a sexual relationship with Gates over several years.

Snohomish roofing company fined another $425K for safety violations

Allways Roofing has had at least seven serious injuries on its job sites, according to the state.

Most Read