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Report: Income Inequality Is Worse For Black Workers Today Than In 1979

Racial wage gaps are wider today than in 1979 due largely to discrimination and growing income inequality, according to new research from the Economic Policy Institute.

The average wage gap between black and white workers was 18.1 percent in 1979, with the gap widening to 26.7 percent in 2015, the left-leaning think tank reports.

Rutgers University economist William M. Rodgers III co-authored the report with Valerie Wilson, director of EPI's Program on Race, Ethnicity and the Economy.

"We've found that racial wage gaps are growing primarily due to discrimination -- and other unmeasured and unobserved characteristics-- along with rising inequality in general," Rodgers said. 

Adjusted average hourly wages were 22 percent less for black men than white men last year, up from 16.9 percent in 1979.

Black women's adjusted average hourly wages were only 4.5 percent less than white women's in 1979. That figure grew to 11.7 percent by 2015, according to the report. The wage gap between black women and white men was 42.3 percent in 1979. By 2015, the wage gap narrowed for black women, but remained sizable at 34.2 percent. 

Black and white wage gaps began to grow in the early 1980s as a result of high unemployment, declining unionization and lax enforcement of anti-discrimination laws, the report states.

"While racial wage gaps are worse today than in 1979, the deterioration has not appeared along a straight line," Wilson noted. "During the late 1990s, the gaps shrank due partially to tight labor markets, which made discrimination more costly, and policy decisions like raising the minimum wage. Since 2000, the gaps have grown again."

The researchers examined how educational attainment among workers affects racial wage gaps. 

From the report:

Though the African American experience is not monolithic, our research reveals that changes in black education levels or other observable factors are not the primary reason the gaps are growing. For example, just completing a bachelor's degree or more will not reduce the black-white wage gap. Indeed the gaps have expanded most for college graduates. Black male college graduates (both those with just a college degree and those who have gone beyond college) newly entering the workforce started the 1980s with less than a 10 percent disadvantage relative to white college graduates but by 2014 similarly educated new entrants were at a roughly 18 percent deficit.

The experts further explained that "changes in unobservable factors--such as racial wage discrimination, racial differences in unobserved or unmeasured skills, or racial differences in labor force attachment of less-skilled men due to incarceration--along with weakened support to fight labor market discrimination continue to be the leading factors for explaining past and now the recent deterioration in the economic position of many African Americans."

Rodgers and Wilson list several policy recommendations to reduce racial wage gaps. Among them: rigorously enforcing wage and anti-discrimination workplace laws, raising the minimum wage, strengthening public employees' collective bargaining rights and requiring the Federal Reserve to "pursue monetary policy that targets full employment, with wage growth that matches productivity gains." 

"In order to fully address racial wage gaps, direct action must be taken to decrease discrimination and address the problem of stagnant wages across the board," Rodgers said. 


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