Systemic Racism Costs Black Women $50 Billion Annually in Wage Penalties

Systemic Racism Costs Black Women $50 Billion Annually in Wage Penalties

By Sunita Sohrabi | Ethnic Media Services

NEW YORK — Over a lifetime, Black women lose an estimated $1 million in wages because of racial discrimination in employer hiring and wage practices, says labor economist Michelle Holder.

According to data from the Bureau of Labor Statistics, Black women earn 73 cents for every dollar a White male earns. Black women have historically had the highest labor force participation rate among major female demographic groups, but they face both the gender and racial wage gap, which Holder calls the “double gap.” Overall, Black women annually face a $50 billion wage penalty, she states.

Black women have the lowest levels of savings and assets of any racial group, notes Holder, associate professor of Economics at the John Jay College of Criminal Justice, City University of New York. More than half of Black and Latino households have no retirement savings.

Benefits Gap

Black men earn 81 cents for every dollar earned by a White man. The benefits gap — health insurance, sick leave, vacation pay, for example — is also widened by race. White men are the most likely to have access to health insurance and pension benefits through their jobs.

Women of all races earn an average of 84 cents to the dollar males earn. In 2023, men who worked full time earned $62,000 annually, while women earned just $52,000, according to the BLS.

Some of the wage gap can be attributed to women possessing less human capital, says Holder. Human capital includes a number of factors, such as number of years in the work force, college and post-graduate degrees, and advanced skills, particularly in STEM — science, technology, engineering, and math — and management.

Completing College

Women overall tend to possess fewer years in the workforce, because they have dropped out for chunks of time to care for children or parents. “Stopping work has a dampening effect on resumes,” says Holder, speaking June 4 at CUNY Stone Center’s annual workshop “Inequality by the Numbers.”

Only 25% of Black adults have completed college, notes Holder, despite a greater number being accepted to college. Black adults make up 9% of employees in STEM workplaces. And fewer than 8% are in management roles.

Pink Collar Jobs

Women are overcrowded in certain “pink collar” roles — office administration, paralegals, for example — which pay about $46,000 per year. Management roles, on the other hand, pay about $96,000 per year.

Black women largely do not have access to the networks where about half of quality jobs are attained.

But even when employees possess the same amount of human capital, a wage gap still exists, says Holder, who has testified before Congress on the gender pay gap. “There’s still a wage differential between Black and White, and men and women that can’t be explained by the data.”

“This speaks of discrimination,” she states.

Discrimination Report Card

Her theory is supported by audit studies. In April, the National Bureau of Economic Research released the findings of a major study called “A Discrimination Report Card.” Researchers sent out 80,000 resumes for 10,000 jobs to 97 of the largest companies in the US. The researchers changed names on some resumes to make them sound Black: Latisha and Lamar, for example, rather than Adam and Amy.

The employers contacted the presumed white applicants 9.5% more often than the presumed Black applicants, concluded the study. Bias was highest in roles requiring lots of interaction with customers, such as sales. Discrimination was less significant in retail roles.

Employers who ask for salary histories also discriminate in wages: salary histories can show a pattern of underpayment.

‘Ask for More’

Underpaying women benefits corporate interests, says Holder. “Someone, something is benefiting.”

Women asking for more pay are often viewed as aggressive, says Holder. She nonetheless encourages women to make a practice of asking for 5 or 10% more in wages, or the equivalent in benefits.

There are measures underway to narrow the wage gap. Public sector jobs are required to have a salary on their listing. And the Paycheck Fairness Act, introduced last year by Sen. Patty Murray, D-Washington, and Rep. Rosa DeLauro, D-Connecticut in the House, gives employees more leverage in filing wage discrimination claims, and increases civil penalties for violations of equal pay provisions. The bill was referred to the House Committee on Education and the Workforce on March 10, 2023 and remains there. It has not been assigned to a committee in the Senate.

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