One Step Forward, One Step Back: The Racial Education Gap

Discrimination is one reason Black workers make 20 to 30 percent less than white ones. Discrimination, plain and simple. But, discrimination isn’t the entire reason. The education gap is another one. Black workers are still less likely to have a college education than white ones. But, here’s the thing — this education gap has actually been closing over time. That is only the second piece of good news I have ever given you in this blog! Don’t worry, I’ll bring down the hammer of sadness soon enough. That’s how I roll.

But, before then, a few happy facts. In 1975, Black women were 54.1 percent as likely as white women to have a Bachelor’s Degree. Today, the ratio is 66.6 percent. Improvement! In 1975, Black men were 35.9 percent as likely as white men to have a Bachelor’s Degree. Today, that ratio is 63.6 percent. Even more improvement! So, Black people have closed the education gap on white people. This closing represents a move towards equality. And, yet…here comes that hammer.

My earliest post on racial inequality made an important point about the racial wage gap over the last forty years. It hasn’t shrunk, even one…little…bit. How is that possible? How can relative education improve but not relative wages? Don’t worry, I’ll tell you. But first, a little bit on why the education gap exists in the first place. After all, 66.6 percent and 63.6 percent represent improvements. But, they aren’t equal to 1 unless you are a pretty generous rounder.

The Education Gap

The figure below shows the racial education gap in 2018. As I said, those gaps were a lot bigger in 1975, but they are still pretty big today.

Figure 1. Share of People Age 25-54 with at Least a Bachelor’s Degree by Race, 2018

Source: Author’s calculation from University of Minnesota, IPUMS-CPS.

So, why do Black people have less education than white people? Because they face barriers every step of the way.

Gaps in Preparing for College

Some foundational courses are essential to get into and then excel in college. Some important classes identified by the Department of Education are Algebra I, Algebra II, Geometry, Calculus, Biology, Chemistry, and Physics. I went to a good public school system, and I was lucky enough to take them all. We even had help before school with calculus from some hard working teachers — shout out to Mr. Howard! And, I still remember there is no “Angle Side Side” postulate in Geometry (it would abbreviate to A.S.S…I’m not a mature guy).

All students are not so lucky. And, Black students are more likely to be “not so lucky” than white ones. An issue brief put out by the Department of Education illustrates the disparity. While 71 percent of white students have access to all these classes, just 57 percent of Black students do. One result of this inequality shows itself in Advanced Placement tests. According to the same study, Black students represent 16 percent of all high school students. Yet, Black students represent just 4 percent of all students who pass an Advanced Placement exam.

On top of this inequality in school quality, Black students are also less likely to have a parent who went to college. That inequality is largely driven by history. After all, today’s Black parents experienced the much larger education gap from the past. So, while two-thirds of white children grow up living with at least one college-educated parent, just 44 percent of Black students do. This fact means that Black children often don’t have someone with experience in the application process.

Gaps Paying for College

Preparing for and applying to college are one thing, paying for it is another. Today’s Black households make less than 60 percent of what white households make. This partially reflects discrimination and the education gap. But, it also reflects differences in marriage rates partially fueled by income-inequality (the subject of a future post). Black households are less likely to consist of married people, limiting the possibility for two earners.

Whatever the underlying cause, the end result is that Black students are more likely to need loans than white ones. The figure below illustrates this point, and also shows that things are getting worse. Nearly half of Black students in their late twenties and early thirties have debt.

Figure 2. Share of Students with Own Student Debt in 2016, by Age

Note: The graph shows the share of individuals who have attended college and have their own student debt (i.e., not held for a child) as of 2016.
Source: Author’s calculations from the Federal Reserve’s Survey of Consumer Finances.

The existence of student loan debt really reflects two inequalities. The obvious inequality is that Black students start their financial lives behind their white counterparts. The invisible inequality is that some Black students probably avoid school to avoid the debt. Those with student debt reflect the ones that at least went to school. So, the graph above probably understates the true inequality in paying for college.

Gaps in Graduating from College

Want to hear a depressing riddle? I mean, who doesn’t? Q: What happens when your high school doesn’t prepare you as well, your family doesn’t have college experience, and paying for school is stressful? A: You are more likely to dropout. I wonder if these riddles are why I keep getting uninvited to people’s gatherings…

Anyway, that discouraging pattern is exactly what we see in the data. The figure below shows the share of students who graduate within six-years of entering college. Only 38 percent of Black students had graduated, compared to 62 percent of white students.

Figure 3. Status of Students Six-Years After College Enrollment

Source: National Student Clearinghouse Research Center.

The data above make a compelling point. Black people not only face barriers getting into school, and also once at school. But, data can only go so far in telling a story. If you want to really get a sense at the struggle students face, I recommend the Boston Globe’s Valedictorian Project. The Globe followed valedictorians from Boston Public Schools, the plurality of whom were Black. In the end, a full one-quarter did not graduate from college, even though they were the top of their High Schools. Financial struggles and the need to provide income for family come up as frequent barriers. To connect it to last week’s post, when parents struggle with joblessness or low income due to discrimination, it can hit kids.

OK, now you know a bit about the origins of the education gap. But, again, the gap is smaller than it used to be. The puzzle is: how did we make progress on education without making any progress on wages? Doesn’t education drive wages? It does. That’s the problem.

One Step Back

The fact that the racial wage gap is constant while the education gap has closed comes down to two facts. One, technology is biased. Two, an education gap still exists.

Technology is Biased

A few months ago, I wrote about how technology is biased. The idea of that post was really simple. One of the defining features of our economy over the last several decades has been the rise of computing power. That computing power makes workers more productive, and should increase their wages. But, some workers have benefited more than others. Specifically, workers with the most education have benefited. That’s because jobs that require the most education use nearly four times as many technologies as those that require the least.

Practically, this bias has driven highly educated workers’ wages up. In 1975, a person with their Bachelor’s degree made 30 percent more than someone with a High School degree. In 2018, it was 70 percent more. For graduate school, it was an increase from 40 percent more to 130 percent more. So having an education is more important than ever with respect to wages. So…shouldn’t the closing education gap therefore close the wage gap? Nope.

The Remaining Gap Hits Harder

Some economists smarter than me (that’s most of them!) wrote a paper on the racial wage gap. In that paper, Patrick Bayer and Kerwin Kofi Charles point out the reason for our puzzle. Basically, education has become more important then ever in determining wages. Therefore, the fact that Black workers still have less education is even more damaging than it used to be. The education gap closed, which is good. But, the remaining education gap is even more damaging. The two things have offset each other. One step forward, one step back.

To illustrate, I want to walk you through a bit of a thought experiment. The figure below shows some calculations I did. The first bar shows the racial wage gap due to education in 1975. In 1975, I calculate that Black workers made 10.9 percent less than white workers due only to education.

Now, imagine the returns to education didn’t change between 1975 and 2017. For example, perhaps no technological progress was made. Then, Black workers would have caught up to white ones as they closed the education gap. The gap due to education would be just 5.1 percent today, the second bar.

Now, reset your imagination. Instead of imagining the returns to education didn’t change, imagine they did. But, now imagine Black workers made no progress in closing the education gap. The racial wage gap due to education would have exploded. Black workers would be much less educated than they actually are, and hurt much more by education being more valuable. The third bar shows that in this sad reality, the wage gap due to education would be 20.3 percent.

Finally, the last bar shows what actually happened. We went nowhere. In 1975, the wage gap due to education was 10.9 percent. In 2017, it was 10.9 percent. The education gap closed, but the remaining gap was even more damaging.

Figure 4. Racial Wage Gap Due to Education, Real World and “Counterfactuals

Note: The graph shows the wage gap due to education for black men from 1975-2017.  This amount is found by multiplying the returns to education relative to a high school degree by the share of black workers and white workers with those education levels and then dividing the white number by the number for black workers.
Source: Author’s calculation from theCPS-IPUMS.

Nowhere Fast

In the U.S., we discriminate against Black people. On top of that, our society has not equalized educational attainment. Fortunately, we have made progress towards more equality in education. However, the fact that education is more important than ever means that the remaining inequality is more damaging than ever.

We need to fix this educational inequality. And doing so will be hard. For one thing, discrimination discourages education. What’s the point of getting a good education if people still won’t pay you fairly? So, we can’t fix educational inequality without fixing discrimination.

Secondly, the entire structure of our society is working against educational equality. Just think about our schools. School quality is largely a local issue. And, localities are segregated. A Washington Post study found that while we have made progress, racial segregation is a shockingly persistent problem in many places. Not a shocker — when Black people try to live in higher-income areas, they get discriminated against.

So, Black people often live among other Black people. And, Black people have less income because of discrimination and the education gap. This fact leads to poorer schools. So, Black children have trouble going to college. And it goes on. Unless we decide to stop it. We need to end racial discrimination in wages and housing, change how we finance schools, expand preschool to everyone, and a whole lot more. But mostly, we have to act.

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