Warning: the income gap between races is widening in America

Summary: We begin the Trump years with generations of progress unraveling in the healing of America’s racial divide, with the likelihood of further deterioration quite high. We should understand what’s happening to better prepare for what’s next. A new study looks at the causes of the widening income gap between black and white Americans. It makes for enlightening but depressing reading.

"Nevermore" says the Raven.

Divergent Paths:
Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014

By Patrick Bayer and Kerwin Kofi Charles.
National Bureau of Economic Research (NBER), November 2016.

“The economic fortunes of black Americans relative to those of whites have improved greatly since the end of the Civil War, but convergence has been both glacial and imperfect. Substantial racial differences in wealth, income, and numerous other economic markers remain and there are signs that the closing of some of these gaps has significantly slowed or even reversed in recent decades. In this paper, we study the evolution of black-white earnings differences among prime-aged men from 1940 through the Great Recession.”

Their findings are disturbing. Many Americans considered the progress of black Americans since WWII, and especially since the 1960’s Civil Rights bills to be among our finest accomplishments — belated recovery from the eras of slavery and Jim Crow. This adds to the research showing that progress has stalled. More specifically, the racial income gap for upper income black Americans has narrowed while the gap for those in lower income brackets has widened.

The reasons for this have been obscure. The racial gap in educational attainment and school quality have narrowed since WWII. Why have black men in the middle and lower income groups done so poorly? Their analysis concludes that the gains went to black men that managed to gain the education credentials that our society uses as the gateway to prosperity.

“…the progressively worse economic outcomes of black men in the lower and middle parts of the earnings distribution in recent decades have been primarily the result of structural changes to the economy that have devastated the working lives of low-skilled men …especially the strengthened relationship between education and economic rank.

“…These results suggest that much of the decline in racial earnings differences among high-skilled men has been the result of more equal access to quality higher education and high-skilled occupations and professions.”

Their analysis tells us a great deal more, but I’ll leave that for another day.

Their graphs tell a sad tale

Since 1980 the racial gap for the “average” working black man has stagnated after the impressive gains since WWII. The gap has widened for those not working in the sample year for any reason (e.g., unemployed, disabled, incarcerated).

Racial earnings gap: 50th percentile


The logical conclusion is that improving our education — at all levels — is a key to boosting national productivity and putting us back on track to improving racial harmony. Our system of largely local control and funding combines with our racially segregated housing to produce a system where those who most need lavishly funded education get the least.

We have a class-based “separate but equal” education system, with ugly effects on groups disproportionately at the bottom. Such as black Americans. Affluent conservatives say that education funding will not help, but ensure that their their children’s schools are adequately funded.

In this, as in so many things, America is regressing — moving back towards the dark days of our past. Many conservatives will rejoice. The consequences for America will be severe.

And the Raven, never flitting, still is sitting, still is sitting
On the pallid bust of Pallas just above my chamber door;
And his eyes have all the seeming of a demon’s that is dreaming,
And the lamp-light o’er him streaming throws his shadow on the floor;
And my soul from out that shadow that lies floating on the floor
Shall be lifted — nevermore!

— Ending the “The Raven” by Edgar Allen Poe (1845).

Abstract of the paper

“Studying working and non-working men, we find that, after closing substantially from 1940 to the mid-1970s, the median black-white earnings gap has since returned to its 1950 level, while the positional rank the median black man would hold in the white distribution has remained little changed since 1940. By contrast, higher quantile black men have experienced substantial gains in both relative earnings levels and their positional rank in the white earnings distribution.

“Using a new decomposition method that extends existing approaches to account for non-participation, we show that the gains of black men at higher quantiles have been driven primarily by positional gains within education level due to forces like improved access to quality schools and declining occupational exclusion. At the median and below, strong racial convergence in educational attainment has been counteracted by the rising returns to education in the labor market, which have disproportionately disadvantaged the shrinking but still substantial share of blacks with lower education.”

About the authors

Patrick Bayer is a professor of economics at Duke. Kerwin Kofi Charles is a professor of public policy at the U of Chicago.

About the National Bureau of Economic Research (NBER)

Founded in 1920, the NBER is the nation’s leading nonprofit economic research organization, a private, non-profit, non-partisan organization dedicated to conducting economic research.

The Bureau’s associates concentrate on four types of empirical research: developing new statistical measurements, estimating quantitative models of economic behavior, assessing the economic effects of public policies, and projecting the effects of alternative policy proposals. The NBER is supported by research grants from government agencies and private foundations, by investment income, and by contributions from individuals and corporations.

For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about racism, about income inequality, and especially these…

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  2. Hard data from Harvard about police violence & race.
  3. Racism is the dark side of populism. Will it divide and defeat us?
  4. Donald Trump leads us back to the future, to the dark days of US history.
  5. Trump and the 1% lead America back to its past, to its dark roots.

12 thoughts on “Warning: the income gap between races is widening in America”

  1. While I agree with the general tenor of the article (within the specific, limited context of Black men), their conclusion is, to my mind, flawed. Those education-as-defined-by-the-intelligentsia required jobs are neither involved in productivity nor near as thick on the ground as they once were. Plus, when you add in the debt needed to achieve such a diploma, the overall profit margin of such an education – assuming you’re responsible enough to pay your debts – is minimal at best for most people.

    1. jonolan,

      “Those education-as-defined-by-the-intelligentsia required jobs are neither involved in productivity”

      What does that mean?

      “…nor near as thick on the ground as they once were.”

      A large body of studies shows the opposite: that low-education jobs are becoming scarcer and pay relatively less.

      “…when you add in the debt needed to achieve such a diploma, the overall profit margin of such an education …is minimal at best for most people.”

      (a) Also false.

      (b) The big gain comes from improving grade schools.

    2. Those education-as-defined-by-the-intelligentsia = a college degree, more often than not these days one that doesn’t translate into a decent job. Most would be better off pursuing specialized training in a skilled trade…but that seems to be deprecated in favor of college.

      And, while “low-skilled” jobs are fewer and pay less, than doesn’t impact that the degree-needed jobs are also fewer now and pay less than they did before. How many graduates are vastly “under-employed” these days?

      As for the poor ROI on a college degree being false these days – If you say so in your sermon from your mount.

      As for the benefit of improving grade schools – Sort of. While the current curriculum and teaching methodologies suck, they do so across the board so it’s not impacting Blacks’ performance. All the “improvements” in the world won’t help the Blacks until they fix their own domestic issues and make their children a priority.

  2. I grew up in the UK. We had a distinctly two tiered system based upon whether you were deemed smart or not so smart at the age of 11. I was fortunate to pass my 11-plus, my brother was not. I went to a nearby parochial grammar (ages 11-18) school that required a 5 mile bus ride every day, while my brother got to walk 1/2 mile to school. At my school, I would say that 1 out of every 3 teachers were good, i.e., knew their subjects and were good and interested in teaching. My brother was less fortunate and had 1 out of 8 teachers who met these criteria. I made it to a top university, my brother left school at 17 and finally got his degree in his forties.

    I always felt growing up that academically weaker or disinterested students needed more “gifted” and committed teachers (and principals ) and those teachers needed to receive “hardship” pay. Smart kids tend to teach themselves. (I am exaggerating here a little to make my point.) Indeed I remember one of my professors saying to a group of his new students that we would learn far more from each other than we would learn from him.
    More money for inner city schools is not a solution – it may be necessary but is far from sufficient. “Better” teachers are necessary and sufficient and it is time to change the culture of US teacher education to more like Finland (see Pasi Sahlberg’s “Finnish Lessons”) where teachers are drawn from the top quintile of students, not the middle third (if not lower) and receive both a rigorous subject matter education and an empirically oriented pedagogical education. (My wife was a HS German and French teacher and she was appalled at the lack of energy,subject mastery and talent among her peers. She now teaches ESL at a local University and remains appalled at the lack of energy and mediocre teaching talent there. We have a systemic problem.)

    If ever a ten year plan was needed it is to address the sorry state of our inner city schools. There are no magic bullets and higher standards (Common Core, NCLB, teacher accountability, etc.) are outcomes not solutions.)

    1. Bernie,

      “More money for inner city schools is not a solution – it may be necessary but is far from sufficient.”

      Exactly so. But affluent conservatives are adamant against more funding — insisting that money doesn’t help. Oddly, they willingly pay high taxes — or expensive private tuition — for their children. What they mean is that more funding won’t help “those” people.

  3. jonolan:
    I agree with your point, but I am totally and adamantly opposed to using demographic categories like black, female, Asian, etc., as if they have any explanatory value. I guess I should have made this position clear earlier. I find the premise of the design of the research problematic. Your comment on family structure reminded me of the issue and it is why I used the term inner city in my earlier comment. Poverty begets poverty. Poverty undercuts investments in education,other things being equal. Black or white or brown, children of children, children with but a single parent, children with no parents are confronted by circumstances that put them at a huge disadvantage that cannot be off-set by more investment in education, per se. We can band-aid the situation and may even be successful with one or two children with such social and economic handicaps. The challenge is much broader as Daniel Patrick Moynihan noted many decades ago.

    1. Bernie,

      One fascinating aspect of debates about race in America is that they take place with astonishing amnesia — as if race has not been one of the major subjects of research for generations — and asserting near-total ignorance of what we have learned.

      “I am totally and adamantly opposed to using demographic categories like black, female, Asian, etc., as if they have any explanatory value.”

      You can be adamantly opposed to gravity too. But gravity exists, and so do effects of demographic categories such as “black, female, Asian, etc.” This is freshman-level information in the social sciences. But deny away!

      1. That is just plain silly. Gravity has operational significance. One can measure it and essentially manipulate it. It can indeed function as an explanatory variable. In that regard poverty is akin to gravity and is dramatically different from race. I guarantee that any solution that you come up with to close the educational achievement gap for poor blacks will also apply to poor whites, poor Hispanics and poor whatever.in similar family situations. Logically, therefore, race is an irrelevant empirical consideration.

        See https://brocku.ca/MeadProject/Blumer/Blumer_1956.html

  4. “…consequences for America will be severe.” Already there. There is a cultural mind set at work here as exemplified by not worrying about “those” people. Seeking refuge in Private Schools is being corrupted by that operant idea….those people. I have long term friendships with teachers and administrators in a multi generational private school. They themselves were educated there, and now have their own kiddies attending—in some cases a third generation. Reports to me are of the competition by a new type of parents trying mightily “to get in” and bidding up the Tuition in the vain hopes of admission. And then once in acting as a super custodians of their child’s treatment by the staff. Rejecting such behavior by dis Enrolling after the year end as was the case in the past is being resisted by the “Finance ” staff.

    “I need to get mine for me and mine and too bad about you.”
    Fix that? Right.


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