Why Do Blacks Earn Less?

In 2008, the nation elected its first black president, Barack Obama. While some were celebrating the supposed arrival of a post-racial America, black men more generally earned only 71% of what white men earned. The median hourly wage for black male full-time workers was $14.90; for comparable white workers it was $20.84. There is no reason to expect that these differences are significantly smaller today.

Educational and other differences can explain some, but not all, of the black-white wage gap. At the end of the day, it turns out that being black matters. Two new reports that I co-authored show that neither education, skills nor culture fully explain the black-white wage disparities. The first report focuses on the occupations of black men, the second on the wages of black immigrants.

Black workers do not have equal access to all jobs. “Whiter Jobs, Higher Wages” [PDF] by Darrick Hamilton, William Darity, Jr. and myself shows that, after making adjustments for educational attainment, black men are underrepresented in 49% of all occupations and overrepresented in 38%. Thus, only 13% of occupations look like what we would expect in a land of equal opportunity.

This uneven occupational distribution is particularly important because the occupations where black men are overrepresented have an average wage that is nearly $14,000 less than the occupations where black men are underrepresented. In other words, the whiter the workforce for an occupation is the higher the pay.

This finding of whiter jobs, higher pay is not specific to any class of occupations. Blacks in managerial and professional occupations are overrepresented in the lower-paying managerial and professional occupations. Blacks in the service sector are overrepresented in the lower-paying service occupations. Blacks in manufacturing and transportation occupations are overrepresented in the lower-paying manufacturing and transportation occupations. It does not matter whether occupations require “soft skills,” “hard skills,” or managerial skills, blacks will be overrepresented in the lower-paying jobs.

The conventional wisdom that black immigrants do better economically than U.S.-born blacks because black immigrants supposedly have better cultural values also does not hold up to scrutiny. Patrick Mason and I examine the socio-economic standing and wages of black immigrants relative to U.S.-born whites and blacks in “The Low Wages of Black Immigrants” [PDF].

On all measures, U.S.-born whites come out ahead of the pack. After taking into account 15 wage-relevant factors, we find that black immigrants do not earn higher wages than U.S.-born blacks. In fact, some black immigrant groups do worse. The wages of Haitian and African men are particularly low relative to similar U.S.-born white and black men.

The major point, however, is that all blacks, U.S.-born and foreign-born, face similar economic problems. If one wants to succeed economically in American society, it helps to be white.