Black-White Wage Gap Narrows
During 1990s to Historic Lows, Study Finds
November 15, 1999
Increased diversity in America's workplaces has narrowed the earnings gap between blacks and whites during the 1990s to their lowest on record, a UConn labor economist has found.
A study by Kenneth Couch, an assistant professor of economics, and Mary Daly, a senior research economist with the Federal Reserve Bank of San Francisco, indicates that after two decades of little progress, the black-white wage gap among prime-age male workers has declined on average by six-tenths of a percentage point per year in the period from 1990 to 1998.
Among younger workers with less than 10 years of labor market experience, the study found a more dramatic 1.4 percentage point annual drop in the wage difference among blacks and whites during the 1990s.
"After more than a decade with a widening gap between black and white wages, the trend during this decade is encouraging," concludes the study, Black-White Wage Inequality in the 1990s: A Decade of Progress. "For both the group of all male workers and younger workers, the recent observations of the wage gap between blacks and whites throughout the 1990s represent historical lows - 27 percent for all male workers and 12 percent for younger workers."
Blacks historically worked disproportionately as farm and non-farm laborers, two of the lowest-paying occupations. During the last 30 years, substantial declines occurred in their employment as laborers, with corresponding increases in manufacturing and professional occupations.
According to the study, it is clear that the substantial shifts to better-paying jobs experienced by blacks has raised their wages relative to whites.
"Among all male workers, the most important factor in explaining this trend is a reduction in the concentration of blacks in industries and occupations with lower pay," the study says. "Among younger workers, a more favorable distribution of employment by industry and occupation also appears to have been important in explaining this reduction in inequality."
The study updates historical information regarding wage inequality in the United States. Prior research showed that wage inequality declined sharply following the passage of the Civil Rights Act and other anti-discrimination measures in the 1960s.
Since the mid-1970s, however, little change occurred in the black-white wage gap. During the 1980s, some researchers found that the wage disparity expanded. The experience of the 1990s represents a change in that trend, after more than a decade of little progress in significantly closing the black-white wage gap.
The study by Couch and Daly also shows other aspects of labor market discrimination that have declined in the 1990s. One has been an enormous jump in the number of black and white workers who finish high school.
The study used information from the 1968-1998 Current Population Survey to obtain three decades of data representative of the years 1967 through 1997. In 1968, 63 percent of blacks had not finished high school. By the last year in the sample, that figure had dropped to less than 15 percent, a reduction of 77 percent.
A similar reduction occurred among white workers in the study sample. In 1968, about 37 percent of all white workers had less than a high school education. By 1998, that figure had dropped to 12 percent, or a 68 percent reduction. "While the reduction for both groups is remarkable, the trend is more important for blacks because of the relatively larger share that did not previously graduate," the study notes.
An examination of the relative wage trajectories of college-educated workers at various percentiles of the study's sample suggests that blacks are gaining relative to whites, as they move up through the white distribution of wages. For example, the researchers found that in 1968, only 7 percent of whites earned less than the bottom quarter of black workers. By 1998, 16 percent of whites earned less than the bottom quarter of black workers.
"Over time," the study says, "the distribution of black wages has become more like that of whites, although considerable progress has yet to be made before they are equal."