Zero Progress in Racial Inequality

So far, I have showed you some pretty sad trends.  Inequality is getting worse at the individual level. The progress of women in achieving equality with men has stalled out. And the progress women have made is not showing up in the form of rising middle-class income.  Depressing.  Perhaps it is time for some redemption — maybe it’s time for a happy story of falling inequality. And, maybe racial inequality is the place for just such a story. After all, in the four decades since the mid-1970s, one would expect the U.S. to have made some progress on reducing racial inequality in income.  Right?   

Wrong. As you have probably come to expect, I’ve got some bad news. If we compare the income of black workers to their white counterparts, a shockingly persistent income gap remains. The graph below shows that, 40 years ago, the wage gap between black workers and white workers was 26 percent. In 2017, it was 26 percent. I am not a mathematician, but 26 percent minus 26 percent is equal to 0. As in, zero progress over a four decade span. As in, not good.

Figure 1. Annual Earnings of Full-time Black versus White Workers, 1975-2017

Note: Includes 25-54 year old full-time, full-year workers who were non-Hispanic. All lines are adjusted for inflation and presented in 2018 dollars. Data come from the 1976-2018 Current Population Survey March Supplement.

Of course, I told you last week that what matters is inequality at the household level. After all, if black households were more likely to consist of two earners, it could serve as an equalizer of sorts. However, the chart below shows that inequality at the household level is actually even worse than at the individual level. The grey bars in the figure illustrate the startling result that, today, black households make less relative to white households than they did 40 years ago.

Figure 2. Annual Total Income for Black Versus White Households, 1975-2017

Note: Includes only households were the “householder” was 25-54 years of age or older and was a non-Hispanic black or white. Data come from the 1976-2018 Current Population Survey March Supplement.

The prior sentence gets us to our fourth stylized fact: the relative wages of black workers as compared to their white counterparts is unchanged since 1975, while relative household income has actually declined.

Black workers’ earnings lag behind white ones for a variety of reasons. The reasons range from outright discrimination to lower levels of education and work experience (both, to some extent fueled by earlier discrimination). And household income lags mainly because marriage rates are vastly unequal — 63 percent of white households are married versus just 38 percent of black households. Fewer potential earners means less income. And, believe it or not, although the reasons for lower marriage rates among black individuals is often debated, economics almost certainly plays a role.

But, we will have plenty of time in the coming weeks to understand these issues better. For now, just know that whatever you may think about racial inequality in the United States, when it comes to income we have not made progress in decades.

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