The latest evidence of the gaps comes in a study by economists at the Federal Reserve Bank of San Francisco. They found that, since 1979, the average earnings of black men had slipped from about 80 percent of white male earnings ($15 per hour vs. $19 per hour in inflation-corrected dollars) to about 70 percent of white male earnings ($18 per hour vs. $25 per hour) in 2016. Although black wages had increased, the gain lagged significantly behind that of whites.
For black women, the trend was similar, though the gaps were smaller. From 1979 to 2016, black women’s wages fell from roughly 95 percent of white women’s wages ($11 vs. $12 an hour) to 82 percent ($16 vs. $20).
To explain these gaps, the economists – Mary Daly, Bart Hobijn and Joseph Pedtke – searched for factors that would automatically skew black wages below those of whites. For example, if fewer black workers are college graduates than whites, their average wages would be lower, because better-educated workers are better paid. Similarly, older and middle-aged workers typically earn more than younger workers. If black workers are younger, their wages would be lower.
The trouble is that the unexplained wage gaps have been growing over time. Today, almost half of the wage gap for men can’t be explained. For women, the unexplained gap is about two-fifths. Why have the unexplained gaps increased? The study doesn’t say.
An earlier study done by Federal Reserve economists in Washington suggested three possibilities, as summarized by the Economist magazine: (1) poor schooling – on average, the degrees earned by blacks are not worth as much in the labor market as similar degrees earned by whites. (2) black men experience higher incarceration rates, reducing their employability; (3) outright discrimination – many employers automatically favor whites.
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