African Americans see weekly wage decline

Economic Snapshot for July 8, 2009

African Americans see weekly wage decline

by Algernon Austin

Over the last two years (from the first quarter of 2007 to the first quarter of 2009), black workers 25 to 54 years old experienced a 3.7% decline—a drop of about $23—in their inflation-adjusted median weekly wage (see Chart). No other major racial or ethnic group showed a decline over this period.¹

This pattern suggests the continuation of negative wage growth for black workers seen over the last complete business cycle, from 2000 to 2007. Over that cycle, the median weekly wage for African American workers declined 0.6%, while other groups experienced increases, although these increases were generally quite small.² If these trends continue, blacks will likely lead in the percentage-point increase in poverty caused by the recession.

Notes
1. The wage increases are likely due in part to a “composition” effect. Low-wage workers are disproportionately affected by unemployment, which alone would lead to higher median wages among those who keep their jobs. Additionally, the Hispanic and Asian wage growth may also be affected by their geographic location in stronger local economies. Immigrant workers, who make up a large share of the Hispanic and Asian labor force, tend to be disproportionately located in metropolitan areas with strong economic growth. See David Dyssegaard Kallick, Immigrants and the Economy: Contribution of Immigrant Workers to the Country’s 25 Largest Metropolitan Areas, New York: Fiscal Policy Institute, forthcoming.

2. For additional details, see Algernon Austin, Reversal of Fortune: Economic Gains of the 1990s Overturned for African Americans from 2000-07, Washington, D.C.: Economic Policy Institute, 2008; and Algernon Austin and Marie T. Mora, Hispanics and the Economy: Economic Stagnation for Hispanic American Workers, Throughout the 2000s, Washington D.C.: Economic Policy Institute, 2008.