THE CURRENT JOB OUTLOOK
Racial Wage Gaps Across Major Metro Areas, 2007-2018 by Gregory DeFreitas
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ince the current economic expansion began a decade ago, the country’s labor markets have steadily tightened for all racial and ethnic groups. But earnings growth for most workers has markedly lagged job and profit increases through most years since the Great Recession. The result has been ever more extreme income inequality between the super-rich and everyone else. While these broad trends are well-documented and oft-cited in media reports and political debates, important questions persist about their causes and consequences. Thus, some recent research has found evidence of a substantial widening of the average wage gap between white and black working people nationwide. Among the main causal forces identified for this worrisome trend are declining union membership and bargaining strength and increasing racial discrimination in education and employment of new black job market entrants.
Americans are still paid 14 to 16 percent less than comparable white employees in metropolitan labor markets. • In the New York/New Jersey Metro Area, African Americans earn 17.8% less than comparable white workers. In New York City and Long Island, among those with a 4-year college degree or advanced degree, the median black worker is paid 18 to 20% less than similarly educated whites. • While women have made hard-won progress narrowing the gender pay gap, sizeable gaps persist for both white and black women compared to white men. Controlling for differences in workers’ years of job experience, education and other characteristics, women are still at a significant gender pay disadvantage nationally, as well as in the NY/NJ Metro Area. African American women suffer a substantially steeper wage disadvantage relative to white men.
In this article I try to dig beneath the national trends to find out how well or poorly they fit local patterns in racial wage gaps in a subset of our largest metropolitan areas over the years 2007–2018. Separate results are also provided for the New York/New Jersey Metro Area, the nation’s biggest, as well as for its most populous components: New York City and Long Island. Better understanding of ongoing changes in black-white earnings inequality is important to measuring the pay impacts of job growth and in gauging how much progress is still needed to reach racial parity in access to affordable high-quality schooling, apprenticeships, job networks, and promotional parity on the job. It can also contribute to evaluations of the effectiveness of current anti-discrimination policies and government enforcement efforts.
Analysis Each month, the U.S. Census Bureau conducts an ambitious national survey for the Bureau of Labor Statistics, interviewing random samples of 50,000 to 65,000 households. The survey questionnaire asks about a rich variety of demographic, geographic and employment-related matters. Sampled households are interviewed once each month for four consecutive months. One year later, each of these “rotation groups” is again interviewed for a final four consecutive months.1 Crucially for our study, among the information gathered from all wage and salary employees in these groups (excluding the self-employed) are weekly earnings, number of employees at the respondent’s workplace and union membership and coverage. I here utilized the Outgoing Rotation Group files (CPS-ORG) for all the years from 2007 (the last prerecession peak) through 2018.
My main findings in brief are: • African Americans in major metropolitan areas earn 16-20% less, at the median, than the typical white non-Hispanic worker in those same metros. • The narrowest racial wage gap is among the lowest paid workers, where recent increases in many state and municipal minimum wage floors have substantially raised both black’s and white’s wages. • The wide racial earnings gap cannot be accounted for by blacks’ lower rates of higher education alone. Once we statistically control for differences in workers’ years of job experience, education and other characteristics, it turns out that African
The data set is not, of course, without limitations. In particular, it lacks sufficient single-year sample size for much detailed analysis of metropolitan subsets of the workforce. Even with the large national sample size, the CPS metro- and city-level subsamples are generally not large enough for a single year to yield statistically significant estimates on many narrowly defined demographic or economic subgroups. Such analysis requires focusing on only the very largest metro areas and/or pooling survey data across multiple years for smaller areas.
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