Fifty years after the passage of civil rights laws outlawing discrimination based on race, ethnicity and sex, blacks, Hispanics and women still earn less than white men. In many circles, this fact alone reinforces the belief that discrimination is widespread and only greater government intervention will solve the problem.
But might there be other reasons to explain these earnings gaps? Yes, according to a provocative new book by economists June O’Neill and Dave O’Neill. “The Declining Importance of Race and Gender in the Labor Market” makes a persuasive argument that other factors are to blame.
The O’Neills don’t downplay the role of discrimination in the past. The wages of blacks in the South, in particular, rose significantly after passage of the Civil Rights Act of 1964. But elsewhere, the wage gap had been narrowing at a fairly rapid rate for 20 years. And anti-discrimination law had little demonstrable effect on the wages of women, though their earnings, too, had been steadily rising.
Blacks, especially black males, saw their earnings rise dramatically in the aftermath of World War II. Indeed, the 1940s was the decade in which the earnings of black men rose fastest — exceeding the improvement experienced after employment discrimination was outlawed. Much of this rise was attributable to the movement of blacks out of the Deep South, where they were barred from certain jobs and were paid less even when they performed the same jobs as whites. But educational advancement was also a major factor.
The differences that persist today are largely the result of divergent work-related skills between the groups. Most differences in hourly earnings disappear when black and white men with similar years of schooling, work experience and regional residence are compared.
The O’Neills use a rich source of data from the Current Population Survey and the National Longitudinal Survey of Youth to measure these factors, as well as scores from the Armed Forces Qualification Test. In 2008, when schooling, work experience, scores on the AFQT, age, region, hours worked and type of employer were accounted for, black men ages 35 to 43 earned 100 percent of the wages of similar white males.
Hispanic males in the same category earned 97 percent of what non-Hispanic white males earned, and those aged 43 to 51 earned 100 percent when these factors, along with the ability to speak English, were taken into account.
But when researchers don’t include these important characteristics in their analyses, the differential appears much greater. The unadjusted earnings of black males are only 70 percent of the earnings of whites, and Hispanics’ earnings are 82 percent of whites.
The same holds true for women. The oft-repeated claim that women earn only 77 cents for every dollar men earn is highly misleading, as the O’Neills go to great lengths to prove.
There is a large wage gap between men and women, one not entirely explained by years or quality of schooling, regional differences or scores on aptitude tests. But women often make choices that have a large impact on their earnings, including the decision to have children.
Working mothers are more likely than men to work part-time and take career breaks in the childbearing years, so they accumulate fewer years of continuous work experience. Women also are more likely to try to balance work and family obligations by choosing occupations that provide more flexibility but less pay. Even women who work full-time work fewer hours per week than their male counterparts. Factor it all in, and the gender gap largely disappears. Young, childless single women, for example, earn comparable wages to similarly situated men.
The best way to close wage gap, the data suggest, is to encourage blacks and Hispanics to stay in school, study hard and commit to gaining work experience. When it comes to women, perhaps we should and honor women’s choices instead of trying to force them to conform to feminist priorities that place little value on families.
In reality, discrimination doesn’t seem to be the biggest problem facing either minorities or women.