June 19, 2014
By Freddie Allen
As fast food and retail workers continue to march for higher wages, a new study by the Economic Policy Institute revealed that Blacks are more likely to earn poverty wages than Whites.
EPI released the “Raising America’s Pay” study in conjunction with the launch of a new research initiative focused on “broad-based wage growth as the central economic challenge of our time – essential to alleviating inequality, expanding the middle class, reducing poverty, generating shared prosperity, and sustaining economic growth.”
During a panel discussion about the new project, Valerie Wilson, director of EPI’s program on race, ethnicity, and the economy, said that over the last 30 years, wage growth has been far below productivity growth, for a lot of workers, regardless of race, ethnicity or gender.
Although the number of Blacks and Whites working poverty-level wages has increased since 2000, nearly 36 percent of Black workers made those wages compared to less than 23 percent of Whites.
“As we see a shrinking piece of the pie for workers to divide, Black and Hispanic workers have been left behind,” said Wilson.
Wilson said that the new project will examine occupational segregation in gender and race, observe the rise of mass incarceration and how it affects Black male workers, and the surge in undocumented workers.
In a 2011, EPI researchers reported that Black males earned less than $15 working full-time, compared to their White male peers who made more than $20, even with the same levels of education.
“One possible explanation for this wage disparity is that Black men tend to be crowded into lower-paying occupations – even when they have similar educational attainment as white men,” stated the report. “The result is an oversupply of workers in the crowded occupations, which has the effect of lowering wages further in those jobs.”
In 2013, the Center for Economic Policy Research, reported “that increases in education and work experience will increase workers’ productivity and translate into higher compensation. But, the share of black workers in a ‘good job’ – one that pays at least $19 per hour (in inflation-adjusted 2011 dollars), has employer-provided health insurance, and an employer-sponsored retirement plan – has actually declined.”
Wilson said that higher levels of education have not translated into wage growth.
“If we look at those workers who are the highest earners, these are also the workers that tend to be the most highly educated,” said Wilson. “More education has helped minorities and women to get higher wages, but it hasn’t necessarily gotten them to equal wages, so that’s an additional step that needs to be taken to close the gap.”
Lawrence Mishel, president of EPI, agreed, adding that college education is important, but when it comes to inclusive income growth over the next 10 years, addressing education is not very high on that list.
Mishel said that when economists lean on technology and globalization as prime movers for an inevitable growth in the wage gap, they ignore “a huge realm of policy actions which have generated wage suppression and income inequality.”
Mishel pointed to a Clinton-era tax break for performance pay that contributed to the expansion of high wages in financial sector and the erosion of unionization to explain the growth in the wage gap.
Mishel said, “No deity created that. That was created by policymakers. It’s not driven by innovators, it’s not Steve Jobs.”
Elise Gould, director of health policy research for EPI, said that 70 percent of income comes from wages, wage-based equity or transfers related to work and that’s why wages have are critical in reducing poverty.
“We need to use all the levers we have at our disposal. We need to look at [Temporary Assistance For Needy Families], we need to look at food stamps, we need to look at unemployment insurance,” said Gould. “We need to strengthen the social safety net and we have seen over the last 30 or 40 years that the social net has made progress in reducing poverty.”
Gould said that if we don’t try to close some of these gaps, we’re failing American society.
“If we don’t do anything to change where these rungs are in wage distribution, if we don’t change what this income distribution looks like, some people are always going to be at the bottom and we know those low rungs are not a great place to be,” said Gould.