Press Releases | Inequality and Poverty

News from EPI Black workers’ median hourly wages could be 87 percent higher in the absence of racial and class inequality

A new paper authored by Valerie Wilson, Director of EPI’s Program on Race, Ethnicity, and the Economy, explains that the economic inequality experienced by African American workers is due to both a racial wage gap and the failure of all workers’ wages to keep up with productivity.

In research conducted with Rutgers professor William Rodgers III, Wilson found that that since 1979, racial discrimination has been the largest single factor in the widening difference in pay between white and black workers with the same levels of education and experience and living within the same geographic area. However, growing wage inequality has also played a substantial role.

“Wage stagnation has hit African American workers particularly hard, “said Wilson. “Because black workers tend to cluster on the lower end of the wage distribution, they have been systematically disadvantaged by the disproportionate growth in wages at the higher end of the wage distribution.”

Since 1979, median wage growth for all workers has fallen far short of productivity growth. In other words, rising productivity has provided the potential for substantial pay increases for typical workers but this potential has not been realized, as the fastest wage growth has been concentrated among the highest earners. This is the defining feature of increased wage and income inequality.

Wilson shows that by addressing both class and racial inequality, all workers are made better off, with much larger gains for African Americans because of the dual penalties imposed by class and race. For example, if only the racial wage gap were eliminated by raising the median black workers’ pay to that of whites, the median hourly wages of black workers would be $5.03 higher. However, if the racial wage gap had closed and all workers’ median hourly wages had increased with productivity, they would be $12.33 higher—an increase of 87.2 percent. Under this scenario, white workers’ median hourly wages would also be $7.30 higher—an increase of 38.1 percent.

“In order to help all workers, particularly working black families, reach full economic prosperity, wages must be raised across the board,” said Wilson. “If we continue on the same path as we have since 1979, the benefits of racial equity will be severely limited.”