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racial pay gap
For Equal Pay Day, Let’s Finally Close the Gender Pay Gap
There has been little progress in narrowing this gender wage gap over the past three decades.
Mar 12, 2024
March 12 is Equal Pay Day, a reminder that there is still a significant pay gap between men and women in our country. The date represents how far into 2024 women would have to work on top of the hours they worked in 2023 simply to match what men were paid in 2023. Women were paid 21.8% less on average than men in 2023, after controlling for race and ethnicity, education, age, and geographic division.
There has been little progress in narrowing this gender wage gap over the past three decades, as shown in Figure A. While the pay gap declined between 1979 and 1994—due to men’s stagnant wages, not a tremendous increase in women’s wages—it has remained mostly flat since then.
The Gender Wage Gap Persists Across the Wage Distribution
The experience of men and women across the wage distribution differs considerably, but the gender wage gap persists no matter how it’s measured. Women are paid less than men as a result of occupational segregation, devaluation of women’s work, societal norms, and discrimination, all of which took root well before women entered the labor market. Figure B shows that women are paid less than men at all parts of the wage distribution.
What’s very stark from the data is that women with advanced degrees are paid less per hour, on average, than men with college degrees.
The wage gap is smallest among lower-wage workers, in part due to the minimum wage creating a wage floor. At the 10th percentile, women are paid $1.86 less an hour, or 12.8% less than men, while at the middle the wage gap is $3.87 an hour, or 14.9%. These low- and middle-wage gaps translate into annual earnings gaps of over $3,800 and $8,000, respectively, for a full-time worker. The 90th percentile is the highest wage category we can compare due to issues with topcoding in the data, which make it difficult to measure wages at the top of the distribution, particularly for men. Women are paid $14.74 less an hour, or 22.6% less, than men at the 90th percentile. That would translate into an annual earnings gap of over $30,000 for a full-time worker.
Women Are Paid Less Than Men at Every Education Level
Despite gains in educational attainment over the last five decades, women still face a significant wage gap. Among workers, women are more likely to graduate from college than men, and are more likely to receive a graduate degree than men. Even so, women are paid less than men at every education level, as shown in Figure C.
Among workers who have only a high school diploma, women are paid 21.3% less than men. Among workers who have a college degree, women are paid 26.8% less than men. That gap of $13.52 on an hourly basis translates to roughly $28,000 less annual earnings for a full-time worker. Women with an advanced degree also experience a significant the wage gap, at 25.2% in 2023. What’s very stark from the data is that women with advanced degrees are paid less per hour, on average, than men with college degrees. Men with a college degree only are paid $50.37 per hour on average compared with $48.21 for women with an advanced degree.
Black and Hispanic Women Experience the Largest Wage Gaps
If the overall gender pay gap isn’t enough cause for alarm, the wage gaps for Black and Hispanic women relative to white men are even larger due to compounded discrimination and occupational segregation based on both gender and race or ethnicity. In Figure D, we compare middle wages—or the average hourly wage between the 40th and 60th percentile of each group’s wage distribution—for white, Black, Hispanic, and Asian American/Pacific Islander (AAPI) women with that of white men.
White women and AAPI women are paid 83.1% and 90.3%, respectively, of what non-Hispanic white men are paid at the middle. Black women are paid only 69.8% of white men’s wages at the middle, a gap of $8.65 on an hourly basis which translates to roughly $18,000 less annual earnings for a full-time worker. For Hispanic women, the gap is even larger at the middle: Hispanic women are paid only 64.6% of white men’s wages, an hourly wage gap of $10.15. For a full-time worker, that gap is over $21,000 a year.
These pay gaps are even larger when examining average hourly wages for all workers instead of just the average for middle-wage workers because of the disproportionate share of highly paid workers who are white men, which pulls up their average. Using the average measure, Black and Hispanic women are paid 63.4% and 58.3%, respectively, of white men’s wages, an hourly wage gap of $14.80 for Black women and $16.90 for Hispanic women. Even when controlling for age, education, and geographic division, Black and Hispanic women are both paid about 68% of white men’s wages. In other words, very little of the observed difference in pay is explained by differences in education, experience, or regional economic conditions.
Policymakers Must Pursue a Range of Options to Close the Gender Pay Gap
There is no silver bullet to solving pay equity, but rather a menu of policy options that can close not only the gender pay gap but also gaps by race and ethnicity. These include requiring federal reporting of pay by gender, race, and ethnicity; prohibiting employers from asking about pay history; requiring employers to post pay bands when hiring; and adequately staffing and funding the Equal Employment and Opportunity Commission and other agencies charged with enforcement of nondiscrimination laws.
We also need policies that lift wages for most workers while also reducing gender and racial/ethnic pay gaps, such as running the economy at full employment, raising the federal minimum wage, and protecting and strengthening workers’ rights to bargain collectively for higher wages and benefits.
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Connecticut Leads the Way Forward for Racial Economic Equality
The state’s first-in-the-nation Baby Bond program is the most significant step forward in public policy I’ve seen yet.
Jun 18, 2023
Juneteenth celebrates the end of chattel slavery in the United States. But over 150 years later, discriminatory public policies have prevented African Americans from closing the racial wealth divide in this country they helped build.
Policy created that divide—and policy can close it.
One state is showing how to move forward in advancing racial economic equality. This year, Connecticut is launching the country’s first “Baby Bond” program.
The program will significantly address the state’s racial wealth gap—even as it gives young people of every race in the state a path out of poverty.
This program will invest $3,200 for every baby born into poverty in the state. The bonds are projected to grow to between $10,000 and $24,000 in value, depending on when they’re used.
When they reach an age between 18 and 30, these Connecticut residents will be able to use that money to start a small business, get a higher education or job training, or buy a home.
That money goes to poor residents regardless of their race. But because Black and Latino residents of the state are poorer than their white counterparts, the program will significantly address the state’s racial wealth gap—even as it gives young people of every race in the state a path out of poverty.
I’ve been researching and writing about the racial wealth divide for the last 20 years. In my view, Connecticut’s Baby Bond program is the most significant step forward in public policy I’ve seen yet. It should be an example for the country.
The program builds off decades of analysis and advocacy.
In 1959, over 50% of African Americans lived in poverty—a figure that had fallen to less than 19% by 2019. That’s still more than twice the rate for non-Hispanic whites, but it’s an example of substantial economic improvement for African Americans.
How did this happen? By removing barriers to economic and social opportunities and investing in those facing poverty.
The Black freedom movement of the 1950s and 1960s pushed for important legislation like the Civil Rights Acts of 1964 and 1968. The movement also helped advance the War on Poverty and its associated programs—including SNAP, Medicaid, and the Earned Income Tax Credit, all of which dramatically decreased poverty for the entire country.
Today we see Connecticut taking the next big step forward.
The idea for Baby Bonds came out of the wealth-building movement popularized by Michael Sherraden’s 1992 book Assets and the Poor: New American Welfare Policy. The book’s theme was the need to shift from simply supplementing people’s income to helping them build real assets—to help poor people get beyond day-to-day survival.
Child Savings Accounts under the Saving for Education, Entrepreneurship, and Downpayment (SEED) Initiative were one step in that direction.
By 2017, there were 54 of these programs serving 382,000 children in 32 states and Washington, D.C. At that time, the most common initial deposit for a Children’s Saving Account was $50—not enough to make a significant difference in reducing poverty or the racial wealth divide.
Connecticut’s Baby Bond program was inspired by a vision to address racial economic inequality first proposed in 2010 by economists William Darity and Darrick Hamilton.
Though the return of $10,000 to $24,000 for all babies born in poverty would not bridge the nearly $150,000 wealth divide between Blacks, Latinos, and whites, it would about double the median wealth of Black and Latino households in the state.
Hopefully this is the beginning of states nationwide creating similar wealth-building programs.
It could also build momentum for the national American Opportunity Accounts Act introduced by Senator Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-Mass.). That law would provide a Baby Bond of $1,000 for every American child—with an annual addition of up to $2,000 for the lowest income Americans.
For generations, we’ve done little to bridge the racial wealth divide or get families out of multi-generational asset poverty. Connecticut’s Baby Bond program, which launches in July, and similar proposals across the country show that we may finally be willing to take the next step.
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Oxfam Shows US Billionaires Almost a Third Richer Today Than When Covid Hit
"At a time when the ultrawealthy are amassing historic and dangerous levels of wealth, a federal wealth tax offers a vital and necessary tool for directly redressing extreme wealth inequality."
Apr 14, 2023
As the deadline for Americans to file federal income tax returns fast approaches, Oxfam America on Friday renewed calls for taxing the ultrarich while publishing an analysis showing America's growing number of billionaires saw their wealth increase by nearly one-third since the start of the Covid-19 pandemic and by nearly 90% over the past decade.
"Wealth inequality in the U.S. is more extreme and dangerous than income inequality; and we need to change our approach, so we effectively tax wealth as well as income," the charity said in an introduction to the report, Tax Wealth, Tackle Inequality.
Based on Forbes data, the report found that "U.S. billionaires are almost a third richer (over a trillion dollars, in real terms) than they were at the onset of the pandemic in 2020," while overall U.S. billionaire wealth has soared 86% since 2013.
The number of U.S. billionaires—of which there are now more than 700—is also nearly 60% higher than it was a decade ago, according to the analysis.
\u201cOur new report shows US billionaires got a third richer during pandemic - and why today\u2019s wealth inequality is so extreme and dangerous.\n\nAhead of #TaxDay, we outline five arguments why we need a wealth tax now. Read in @Marketwatch https://t.co/ZCVqNM3Xga\u201d— OxfamAmerica (@OxfamAmerica) 1681496603
As the report notes:
At the same time, our country has a "permanent underclass" of working families who are denied their economic rights, trapped in poverty, and unable to accumulate wealth no matter how hard they work. Oxfam data shows that almost a third of the U.S. labor force earns less than $15 an hour; half of all working women of color earn less than $15.14.
The racial wealth gap is actually growing wider since the 1980s, and today is close to what it was in 1950. The average Black American household currently has only about 12 cents in wealth for every dollar of the average white American household.
And while the gender pay gap has barely budged in two decades, the gender wealth gap is much wider. One study found a raw gender wealth gap of women owning 32 cents for every dollar of male wealth. For women of color, the gap is even more profound.
"At a time when the ultrawealthy are amassing historic and dangerous levels of wealth, a federal wealth tax offers a vital and necessary tool for directly redressing extreme wealth inequality, as well as advancing racial justice, tackling the climate crisis, and protecting democracy," Oxfam argued. "It also offers a reminder that today's debt ceiling gridlock is a consequence of giving tax breaks to the ultrawealthy."
\u201cJeff Bezos is worth $122 BILLION, while a market trader selling rice in Uganda makes $80 monthly.\n\nGuess which one is taxed at 40%?\n\nJoin the global call to tax the mega-rich now.\n#TaxBillionaires\n\nhttps://t.co/DtdocnOHik\u201d— Mark Ruffalo (@Mark Ruffalo) 1681425400
Oxfam urges Congress and the Biden administration to enact legislation like Sen. Elizabeth Warren's (D-Mass.) Ultra-Millionaire Tax Act, which would impose a 2% annual tax on the net worth of households and trusts exceeding $50 million, plus a 1% annual surtax on billionaires.
According to an analysis by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, the tax would bring in at least $3 trillion in revenue over 10 years without raising taxes on 99.95% of American households worth less than $50 million.
Citing figures from the Institute for Policy Studies and Patriotic Millionaires, Oxfam's analysis showed that:
- The wealth tax proposed by Sen. Warren, based on taxing U.S. billionaires alone, would raise $114 billion annually—more than enough to pay for reinstating the Child Tax Credit;
- An annual net wealth tax could raise over half a trillion dollars ($582.6 billion) each year, by taxing more than only billionaires and using marginally higher rates: 2% for wealth above $5 million, 3% above $50 million, and 5% above $1 billion; and
- If there had been a net wealth tax of 6.9% since 2013, it would have kept billionaire wealth simply constant.
"Tax Day is a reminder that the tax system isn't working for ordinary Americans. It's built to favor the richest in our society," said Nabil Ahmed, Oxfam America's director of economic justice. "The ultrawealthy are sitting on mountains of wealth that remain largely untouched by taxes, and their wild riches are in no small part a result of intentional public policy."
"We need to implement strategic wealth taxes if we want to stand any chance at reining in this kind of Gilded-Era wealth inequality that allows the super-rich to have a stranglehold over our economy," Ahmed continued.
"Taxing the ultrawealthy is essential to tackle extreme wealth inequality and protect our democracy from the threat of oligarchy—but it is also central to advancing racial and climate justice, connections that we must pay more attention to," he added. "It's also clear that political gridlock around the debt ceiling is a consequence of tax cuts on the richest."
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