Decreasing the gap in educational attainment between white and Black people may help reduce the racial pay gap, whereas ensuring that women receive the same returns on their education as men would reduce the gender pay gap, according to a new study that indicates fixing pay disparities in the U.S. isn't a one-size-fits-all solution.
In a study published May 16 in Social Science Research, researchers examined how the closure of the educational gap matters for labor market outcomes, and they noticed a major problem. At the intersection of race and gender, a particular group of people is being left in the dust: Black women, who are disadvantaged both in terms of racial pay disparity as well as in gender pay disparity, unlike Black men or white men and women.
This research comes as U.S. President Joe Biden begins unveiling policies, including the use of federal purchasing power to increase federal contracting with minority-owned businesses, to narrow the wealth gap between Black and white Americans.
The researchers of the present study tried to explain why the race and gender pay gaps persist despite the narrowing gap in educational attainment by both race and gender. Part of the pay disparity enigma is that more women are now earning college degrees than men, but research continues to show pay disparities between men and women, according to the study.
"Inequity is a hard thing to eradicate," said Michelle Budig, the lead author of the paper and professor at the University of Massachusetts Amherst. "Things that look equitable on the surface may not be equitable unless you take the deeper dive."
The study's data comes from 1979-2012 waves of the National Longitudinal Survey of Youth, which captured a sample of 12,686 individuals aged 14-21 in 1979. The researchers were able to follow this cohort, and the longitudinal data allowed them to estimate the returns to education across the full career of participants' working adult lives, which means they were able to average the effects of education on earnings across ages 18 to 55.
The researchers found that differences in educational attainment and choices of academic field explain 13% to 23% of the racial pay gap, but they do not explain any of the gender pay gap. In contrast, differences in wage returns to education seem to be a driver of the gender pay gap, with men of both races receiving higher wage returns relative to women.
The data shows that obtaining a master's degree for white men increased wages by about 43%, and for Black men it increased wages by about 43.5%. However, the returns are much lower among women. For white women, obtaining a master's degree increased wages by about 27%; for Black women, a master's degree only increased wages by about 21%.
The researchers found that if Black men had the same educational attainment as white men, specifically at the high school level as well as in post-secondary degrees in business, science, technology, engineering, math, and legal and medical studies, the male racial pay gap would close by about 15% to 20%. Likewise, if Black women had the same educational attainment as white women, the female racial pay gap would close by about 18% to 23%.
Thus, narrowing the educational gap between Black and white people may help decrease the racial pay gap, but ensuring that women receive the same returns on their education as men would be a mechanism that helps narrow the gender pay gap in the U.S.
But it's going to take more than this to bolster Black women.
Budig said Black women are disadvantaged by both education and race: Black women have lower educational attainment than white women, which contributes to the race gap among women, and Black women also receive lower wage returns on education compared to everyone else.
It's important to close the educational attainment differences, especially by race, which will make things more equitable between Blacks and whites, Budig told The Academic Times, but this isn't a sufficient solution for Black women as they are "left behind on multiple dimensions."
The researchers point to a prior study that shows how Black women are left behind. Even when they have the same qualifications and educational attainment, Black women aren't promoted along managerial ladders within organizations — an issue that is pervasive in the labor market.
"So just getting Black women to have master's degrees, which is excellent and good and we should do that, we have to disrupt biases we're facing in the labor market as well if we really want to have equitable outcomes related to educational attainment," Budig said.
This research shows the need to continue monitoring the race and gender pay gaps, even as structural inequities like educational attainment among groups of people diminish over the years.
"We have to continually pay attention to processes that lead to inequitable outcomes by gender and race," Budig said. "And even if it looks good, and we think we have a handle on it, if we stop working on it, it will get worse again."
The study "Racial and gender pay disparities: The role of education," published May 16 in Social Science Research, was co-authored by Michelle J. Budig, University of Massachusetts Amherst; Misun Lim, WZB Berlin Social Science Center; and Melissa J. Hodges, Villanova University.