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The Black Wage Gap Matters

The grim state of racial economic inequality should sicken our consciences.

Brendan Smialowski/AFP/Getty

The police killing of George Floyd has prompted a stunning increase in the public’s receptivity to the Black Lives Matter movement (which has picked up eight percentage points in public approval since Memorial Day). Just as noteworthy, though, is a parallel rise in support for more wide-ranging policy solutions to address the broader problem of racial and ethnic discrimination, as The New York Times has recently reported. So while this underlying range of issues has our attention, let’s consider the striking, but seldom discussed, gap between black and white wages.

This is not to suggest that economics plays any significant role in the problem of police brutality toward African Americans. (I made that mistake, I was troubled to realize last week, in a front-page Wall Street Journal story that I wrote 28 years ago, after the Rodney King riots in Los Angeles.) But if we’re going to think about the broader problem of white racism, let’s think seriously, from a racial point of view, about what’s been happening to wages in this country. Even if you know about it, you probably don’t know how bad it’s gotten.

As recently as 2012, when I published a book about income inequality, the consensus was that the pay gap between African Americans and whites was the same as it had been in 1979. That itself was a pretty depressing conclusion, given the bright hopes that society had held through the 1960s and much of the ’70s that a visibly more racially tolerant American consensus on race would erase, or at least reduce, wage disparities that were understood to be an artifact of the bad old days.

This decidedly dismal rebuke to past dreams of progress was bad enough—but it turned out that even that assessment wasn’t dismal enough. By 2016, research by economists Kerwin K. Charles (then at the University of Chicago; now at Yale) and Patrick Bayer (Duke) and by Valerie Wilson (the Economic Policy Institute) and William M. Rodgers III (then at EPI, now at Rutgers), indicated that the black-white income gap had widened since 2000. Indeed, Charles and Bayer concluded that the gap had been widening since 1980; as a result, the median black-white earning gap stood—in 2016!where it was all the way back in 1950, when the southern Jim Crow regime still affixed “White” and “Colored” signs above drinking fountains.

Charles and Bayer’s findings were especially grim because of how comprehensive they were. The researchers didn’t just compare the median for black wage earners to the median for white wage earners: They compared the entire African American population to the entire white population, thereby taking into account racial disparities in who received any wages at all. African Americans since 1980 have been significantly less likely than whites to hold a jobin large part because the white majority has been putting a much higher proportion of African Americans in prison. Charles told me that about 40 percent of the racial disparity in employment stems from the racial disparity in incarceration. What’s more, he noted, even that sizable gap doesn’t take into account the greater difficulty ex-cons face in acquiring a job after they leave prison.

Wilson and Rodgers’s EPI study, meanwhile, looked only at full-time wage earners and therefore was less grim. Their research traced the current growth in the black-white earnings gap to a divergence in full-time wages that took off in 2000. (The study also identified an earlier period, during the 1980s, when the black-white wage gap grew due to deindustrialization and an uptick in labor-market discrimination.)

Wilson and Rodgers attributed the steady widening of the wage gap over the past 20 years to the two recessions during the 2000s, a falloff in union membership from 13 percent to 10 percent, and the slack economic recoveries in 2001–2007 and 2009–2016. All these reversals in wage-earning capacity hit African Americans harder than whites.

The racial wage gap is accelerating even in times of broader economic expansion. In a February update to Wilson and Rodgers’s research, EPI’s Elise Gould noted that the black-white wage gap had grown from about 22 percent in 2000 to about 24 percent in 2007 to about 27 percent in 2019. This latter spike was registered after 10 years of economic recovery.

But that wasn’t all. “It’s clear,” Gould wrote, “that education is not a panacea for closing these wage gaps,” because the black-white earnings gap had also increased among high school graduates (15 percent in 2000, then 17 percent in 2007, then 18 percent in 2019); college graduates (17, then 19, then 23 percent); and holders of advanced degrees (13, 17, then 18 percent).

In other words, higher education, far from diminishing racial wage disparities, seems now to widen them. Or to put things less cynically, a college degree fails to neutralize other factors that are steadily enlarging wage gaps between white diploma-holders and black diploma-holders. This is a dramatic break from the past. In 1979, Wilson told me, there was hardly any wage disparity at all between white and black college graduates.

This widening in black-white wages occurred, as Donald Trump never tired of pointing out, during a period when black unemployment was falling sharply and black incomes were rising—both predictable outcomes as labor markets tighten. Another predictable outcome under such conditions, at least to judge from the impact of the tech boom of the late 1990s, is a decline in black-white wage inequality. But that didn’t happen. Instead, the disparity grew.

Now the lengthy economic expansion that followed the Great Recession is over, and there’s every reason to believe that the black-white wage gap is accelerating even more quickly than before. That’s because the layoffs hit African Americans worse than the broader population, and the uptick in employment that the Bureau of Labor Statistics reported Friday did not include any corresponding uptick in employment for African Americans. Even if an economic recovery has begun, it won’t likely feel like one, with the Fed predicting that unemployment will remain above 9 percent through the rest of 2020.

Another mystery I can’t explain is why the growth in black-white income inequality doesn’t get more attention. Perhaps the public is distracted by black-white wealth disparity and the even more lurid story of how that came into being. For what it’s worth, I don’t find the wealth story all that interesting. After all, even most white Americans don’t have much wealth to speak of. Since the shift away from an agriculture-based economy in the late nineteenth century, the soundest measure of economic well-being has been not how many acres of land you possess, or how many shares you own in financial instruments that nobody understands, but how many zeros you can see on your monthly paycheck. In this realm, the color of your skin makes just about as much of a difference as it did 70 years ago—long before the nation even pretended to care about racial equality.