The racial wage gap is narrowing
In the early 2000s, the wage gap between black and white workers in the US was the same size as in 1950.
That’s a shocking statistic and a sign of the country’s deep racial inequality. In the past five years, however, the story has changed somewhat: the wage gap, while still huge, has narrowed. “It’s a pretty meaningful reversal,” said Elise Gould, a senior economist at the Economic Policy Institute.
In today’s newsletter — on Juneteenth — I’ll try to explain why the gap has narrowed and what should be done to make it even smaller. After all, even with recent progress, the average black worker earns 21 percent less than the average white worker.
1. A strong economy
There seem to be three main reasons for the recent trend, the main one being the country’s tight labor market. The unemployment rate has been declining for most of the past decade and is recently near its lowest level since the 1960s.
Tight labor markets help almost all workers, and they especially help disadvantaged workers. As Gould put it, “If employers can’t be so picky — if employers have to look beyond their network — that can open up more opportunities for historically marginalized groups.”
This dynamic helps close the wage gap between black and white, as black workers are overrepresented among low-wage workers. (A Times story set in Philadelphia delved into the detailsdirected at Markus Mitchell, a laborer there.) The wage gap between Hispanic and white has also narrowed recently.
William Spriggs, a labor economist and professor at Howard University who died unexpectedly this month, often made this point. In one of his last interviews, Spriggs told my colleague Ben Casselman that he was concerned that the Federal Reserve’s recent rate hikes would weaken the labor market and undo the recent advances of black workers.
“You should see what you’re really risking from this point on,” Spriggs said. (If you have a few minutes this morning, I encourage you to read his Times obituary.)
Inflation is, of course, also a serious economic problem, which is why the Fed has raised interest rates. But the recent narrowing of the racial wage disparity reminds us that the Fed is at risk both from doing too little to fight inflation and from doing too much. “Tight labor markets make almost everything else easier,” says Suzanne Kahn, a historian who works at the Roosevelt Institute, a think tank.
2. The battle for $15
More than a decade ago, a group of fast food workers in New York City began fighting for a higher minimum wage. They received the support of Senator Bernie Sanders, the leaders of the Service Employees International Union and other high-profile allies. The movement became known as the fight for $15.
It failed to persuade Congress to remove the federal minimum wage, mainly due to opposition from congressional Republicans. The hourly federal minimum has been $7.25 since 2009, even as inflation has eroded its value. But the Fight for $15 movement has helped change policies in states and cities.
A minimum wage well above $7.25 is a widely popular idea, including among many Republican voters and independents. Arizona, Arkansas, Colorado, Florida, Missouri, Nebraska, Nevada and several other states have held ballots to raise the minimum wage over the past decade. As a result, the effective national minimum wage — a weighted average of the state’s minimum wages adjusted for inflation — has risen to nearly its highest level in 40 years (before falling somewhat recently due to high inflation).
Increases in the minimum wage tend to narrow the racial wage gap for the same reason as tight labor markets: black workers disproportionately work in low-wage jobs. As a result, a powerful way to reduce racial inequality is to reduce economic inequality.
The cover is also true. The racial wage gap widened in the 1980s, 1990s, and early 2000s, especially as income inequality soared.
3. Black lives matter
After a Minneapolis police officer killed George Floyd on May 25, 2020, racial inequality became a focus of intense national attention. Many companies pledged to diversify their workforce and managerial ranks, and some took concrete action.
For example, at Fortune 500 companies, Black board members will occupy less than 9 percent of all board seats by 2020, according to Deloitte. Last year, the number had jumped to 12 percent (compared to 14 percent of the U.S. population). It remains unclear how widespread the changes in corporate America have been; Boards of directors, of course, account for a small proportion of jobs. But the recent emphasis on diversity has likely played at least a modest role in narrowing racial disparities.
There’s a bigger point here. Yes, a reduction in economic inequality could substantially narrow the wage gap between black and white. But that gap will never approach zero as long as racial disparities remain as great as they are in the US today.
The problem isn’t just that black workers disproportionately work in low wage brackets; it’s also that black Americans earn less on average than comparable white Americans. Last year, according to the Economic Policy Institute, a typical black worker earned 13 percent less than a typical white worker of the same age and gender, had the same education, and lived in the same region. And the racial wealth gap is even larger than the pay gap.
Related: a new book, “Just action,” offers policy ideas for reducing residential segregation, much of which is the legacy of subsidized mortgages designed to exclude black Americans. Today the authors, Richard and Leah Rothstein write, “Putting up ‘Black Lives Matter’ signs is not enough.”
More on Juneteenth
THE LAST NEWS
International
“The Dannahue”: A prestigious rose grower does name a new flower for a black gardener.
Discovery: archaeologists found a 3000 year old sword so well preserved it still shines, reports CNN.
cash crop: An Oregon frontier town thrives thanks to the Idahoans who visit it legal weed shops.
Metropolitan Diary: What is a vegetarian do in a pastrami palace?
lives lived: Donald Triplett was widely regarded as the first person to be diagnosed with autism. His happy life later became the subject of a book and a documentary. He died at the age of 89.
Gen Z’s favorite bag: TikTok has been spreading the Gospel of Baggu Baking. Videos highlighting the lightweight, foldable bags collected more than 130 million views. Now self-proclaimed “Baggu girls” fill farmers’ markets and public parks with the brand’s vibrant prints – recognizable without a logo.