15 Sep. 2014 | Comments (0)
In 2013, American women made 82 cents to every dollar a man made and 80 cents to every dollar made by a white male; up from 79 cents and 77 cents, respectively, in 2012, according to the Bureau of Labor Statistics. However, white and Asian people, regardless of their gender, make more than blacks and Hispanics – regardless of their gender.
So when it comes to pay gaps, do race and ethnicity trump gender? I set out to find out.
First I explored weekly median earnings by age as well as gender and race/ethnicity. Younger workers, aged 16 – 24, are more likely to be in minimum wage jobs because of lack of experience or less education; if one demographic group had a remarkably younger workforce, that would skew their average income lower. In 2013, men and women had the same percentage of workers between 16 – 24 years of age (8.7%) – but the percentage varied much more widely by race/ethnicity. Hispanics, the group with the lowest wages in the chart above, have the highest percentage (12.4%) of workers between 16 – 24 years of age. Asians, who have the highest earning power, have the lowest percentage (6.5%) of workers between 16 – 24 years of age.
But the correlation between age and earning power breaks down when you look at whites and blacks. The white workforce is younger than the black workforce — 8.8% of their full time workforce is between 16 – 24 years of age compared with blacks at 8.0% — and yet whites earn considerably more. (In addition, it’s worth noting that the unemployment rate for black youth is 26.6% almost double the unemployment rate of white youth at 13.5%.). While age may play a role in the lower weekly median earnings for Hispanics, it does not explain the lower median wage for blacks.
Next I turned to education to help sketch a fuller picture. According to census data, educational attainment is lower for Hispanics and blacks; but comparable for men and women. So at first blush, education appears to explain the pay gap between the races (though not, importantly, the genders).
To see how much education matters to the pay gap, I held education levels constant across both race and gender and excluded workers aged 16-24 (who may not be finished with their schooling). The results are visualized below. Greater education does increase earnings, however, education is not “the great equalizer” it has often been made out to be. Earners with the least amount of education have the smallest pay gap – lack of an education affects everyone about equally, resulting in poverty. But having an education has the most benefit for men, especially white men.
Only now was I starting to get an accurate picture of the wage gap in America – or rather the wage gaps, plural. The oft-used simple chart at the top of this post provides a misleading picture of the status of white women on the earnings pyramid. This second chart shows how men, regardless of race or ethnicity, earn more than women of any race when education level is held constant, with one exception – Asian women. Asian women with bachelor’s and advanced degrees are the only women who make more than one group of men–black men, who earn the least in comparison to their male counterparts at every level of education.
This chart exposes one other important myth: that companies have to pay more for talented women of color. In discussions of affirmative action cases and throughout my career, I have heard both from right-wing bloggers and middle-of-the-road human resources professionals that a premium is paid to attract and retain women and minority talent and especially, women of color. The central argument is that because there are assumed to be so few “qualified” candidates who are both female and nonwhite – and because companies can count women of color towards multiple diversity targets — competition for those candidates means they end up with significantly higher salaries. Setting aside the question of whether there is, in fact, a shortage of qualified women of color, it should by now be obvious that those women aren’t getting paid a premium. In fact, black and Hispanic women vie for last place on the earnings pyramid at every level of education, and the gender pay gap actually increases with higher education for black, white, and Hispanic women. Routinely, when pay equity analyses are done for corporations, the employees whose actual salaries are greater than two standard deviations higher than their predicted salary (based on job-related variables such as market value, time served, and performance ratings) are white men.
This blog first appeared on Harvard Business Review on 06/10/2014.