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Businessweek Archives

The Racial Wage Gap Is Shrinking

Economic Trends

The Racial Wage Gap Is Shrinking

Black men chalk up gains at last

For several decades, black males were the odd men out in U.S. labor markets--losing ground to their white peers. But not anymore, report Kenneth A. Couch of the University of Connecticut and Mary Daly of the Federal Reserve Bank of San Francisco. In a new study, they find that the weekly pay of black male full-time workers rose enough in the 1990s to cut the black-white earnings gap to its lowest level in history.

In recent decades, economists have been particularly interested in the plight of black male workers. By the late 1980s, the wage gap between full-time black and white female workers with similar education and experience had narrowed to just a few percentage points. Yet the gap between the wages of prime-age black and white male workers, which had declined sharply in the late 1960s and early 1970s, actually widened during the 1980s--reducing black men's relative wages from 70% of white wages to 66% in 1988 (chart).

In the 1990s, however, black males began to make up for lost time. Couch's and Daly's study indicates that by 1998, black men's relative wages had risen to a record 73% of white levels. And younger black males--those with less than 10 years experience--were earning 82% as much as their white peers.

What's behind this turnaround? In the 1980s, blacks' wages fell behind even though black males made great educational progress as high school dropout rates plummeted. But since this was a time of sharply rising wage inequality among all workers, economists concluded that the fact that so many blacks were still relatively unskilled offset the positive effect of their educational gains. Some also claimed that blacks suffered disproportionately from the decline in factory jobs--and from lingering discrimination.

In the 1990s, however, pay tides shifted. Although black male college graduation rates have slackened, black progress has been enhanced by recent increases in the pay of lower-wage workers. More important, say Couch and Daly, is the fact that blacks are no longer as concentrated in low-paying industries and occupations.

Fewer black men work as laborers and in menial positions, they report. And more are employed as equipment operators, craftsmen, and--although still underrepresented--as professionals and managers. This shift is most apparent among younger workers.

How would the racial wage gap look if blacks and white had similar educational and job experience credentials? Controlling for such factors and for industry and occupation, Couch and Daly estimate that the adjusted black-white wage ratio is around 85%--which suggests that discrimination in the late 1990s continues to depress black male wages by about 15%.By Gene KoretzReturn to top

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Are Stepparents Just As Caring?

Blood mothers spend more on food

It wasn't so long ago that social observers regarded remarriage as providing a decent substitute for the family environment that children had when living with both biological parents. Recent research, however, has found that children in families with stepparents tend to fare worse than those from intact original families--doing less well in both school and the job market.

While such outcomes can have many causes, some economists have speculated that one reason may be that stepparents are less inclined to invest in their nonbiological children. In a new National Bureau of Economic Research paper, Anne Case, I-Fen Lin, and Sara McLanahan of Princeton University test this idea by comparing food spending in families where there is at least one stepparent with such outlays in families having two biological parents.

The results are intriguing. Controlling for income, household size, age of children, and other factors, the researchers found that households with nonbiological mothers spent significantly less (averaging 5%) on food than households with biological mothers.

If economic considerations--such as the expectation of receiving financial and social support later in life--were the motive, the authors theorized that food spending by adoptive moms would parallel that of biological mothers. As it happens, they found lower outlays in all types of families with nonbiological mothers, whether step, foster, or adoptive. Thus, they conclude, it is the biological tie itself--perhaps the motive of sustaining one's genetic line--that apparently makes the crucial difference.By Gene KoretzReturn to top

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