Racial wage gap in the United States

In the United States, despite the efforts of equality proponents, income inequality persists among races[1] and ethnicities. Asian Americans have the highest average income, followed by white Americans, Latino Americans, African Americans, and Native Americans.[2] A variety of explanations for these differences have been proposed—such as differing access to education, two parent home family structure (70% of African American children are born out of wedlock), high school dropout rates and experience of discrimination—and the topic is highly controversial.

When the Civil Rights Act of 1964 was passed, it became illegal for employers to discriminate based on race;[3] however, income disparities have not flattened out.[4][5][6] After the passage of the act, the wage gap for minority groups narrowed, both in absolute difference with white wages and as a percentage of white wages, until the mid-1970s; at this time, progress for many racial minorities slowed, stopped, or reversed.[5] As of 2009, the median weekly wage for African American and Hispanic workers was about 65 percent and 61 percent that of white workers, respectively. Asian workers' median wage was about 110 percent that of white workers.[7] Overall, minority women's wages in comparison to those of white women are better than minority men's wages when compared to those of white men.[5]

Wages from the labor market are the primary source of income for most families in America,[5] and income is a socio-demographic status indicator that is important in understanding the building of wealth.[6]

History of the racial wage gap

The documented history of the racial wage gap in the United States goes back before the Civil Rights Act, where many modern causes of racial wage inequity, such as educational disparities and discrimination, stem from were even more prevalent. Public state records from the 1930s indicate white owned schools in the south spent approximately $61 per student, or $1,074.14 in 2018 dollars when adjusted for inflation, compared to just $9 per student, or $158.48 in 2018 dollars. Simultaneously, the same schools saw a discrepancy in school time, with white schools in sessions for 156 days on average, compared to 123 days on average for black schools.[8]

While statistical measures of wage discrepancy between black individuals and their white counterparts exist, wage inequity is still poorly understood due to a lack of literature with solid empirical data to link data with an accurate model of wage discrimination.[8] During the 1970s and 80s the scholarly community debated the link between geographical location and wage inequality. Following urban-dominated studies and shifting research based on evolved conceptual and study-driven thinking, sociologists determined that the racial composition of a local population affects racial wage inequality. Studies performed by Leslie Mcall[9] indicate immigration population density is one of the leading factors in racial wage inequality. While black immigrant earnings do not deviate from the already substandard average earnings, numbers on Hispanic and Asian immigrant earnings suggest more extensive negative effects, especially in areas of high immigration density. Hispanic and Asian women, in particular, are shown to be most affected; Hispanic and Asian women are shown to fill less skilled, domestic service jobs where the concentration of their black and white counterparts are lower. Barriers such as language show that such large dominance of immigrant population in such sectors only breed competition between lower-earning groups, further lowering average wages for such families.[9] Since 1980, studies have found that, conversely, such low earning labor may actually boost the economy as a whole, keeping many corporations and higher level jobs afloat with cheap skilled work, boosting the salaries of native born hispanics and whites alike.[10]

Historically, there have been racial discrepancies not only in earnings from labor, but also in the benefits received voluntarily from employers. Benefits include health care, pensions, holiday and vacation days, among other government mandated and voluntary benefits. Studies done by Tali Kristal and Yinon Cohen show a link between such wage inequality and benefits received, with empirical evidence showing a steady degradation of benefits received for those of different ethnic groups. As of 2015, 32% of workers received benefits - including both mandatory and voluntary - from their employers, up from 28% in 1980. As of 2015, 44% of white employees received pension benefits, compared 36% for blacks and 28% for Hispanic employees. Health care showed similar trends, as the 2015 health coverage rates for white, black, and hispanic employees sit at 60%, 55%, and 46%, respectively.[11]