Racial Wage Gap

Racial Wage Gap Definition

The racial wage gap is described as the unfair gap between the average pay of two individuals based predominantly on racial differences and discrimination. The whole concept is majorly observed in the United States, given its history of free labor of enslaved Americans, including the native Americans.

The income inequality in the US is far older than the country itself. However, many communities and social workers believe that the problem of racial discrimination is global. Companies have not done anything much about it and have taken it for granted for a long time. Hence, any reform or effort made is far more recent than the problem itself.

• The racial wage gap is the unfair difference between the average pay given to two different races.
• Thus, the problem is deeply rooted in the US, given their vast history of enslaved Africans taken into free labor and social discrimination.
• Women who belong to different ethnic groups are more likely to face both racial and gender wage gaps simultaneously.
• Efforts to understand and address this gap are essential for promoting economic equity and creating a more just and inclusive society.

Racial Wage Gap Explained

The racial wage gap represents the pay and income disparity between people of different races. It is a critical social and economic discrimination. This wage gap is often used as an indicator of economic inequality based on race. And it has a vast history of ill-treatment, free labor, and physical abuse of people, including slavery. Although it can be observed worldwide, it has deep roots and high social penetration in countries like the US and the UK. The historical roots of the racial wage gap in the United States can be traced back to a variety of factors, including slavery, institutionalized discrimination, and ongoing systemic challenges.

The racial wage gap in the US is one of the international issues that still exists and is present in American society and culture. African-American citizens, including the non-Hispanic community, often experience it. There are several causes for it, but the prominent ones are still the basic stigmas, notions, and discriminating culture that persists in Western culture.

Furthermore, even Hispanic people living in the US admit that there is a higher possibility of facing discrimination regarding work opportunities. At the same time, with changing times, people are addressing the issues, and companies are forming anti-discrimination rules and racial and gender wage gap guidelines, constantly monitoring and appointing teams to ensure no such activities are practiced in the workplace and equal pay is encouraged.

Therefore, efforts to understand and address the racial wage gap are essential for promoting economic equity and creating a more just and inclusive society. Additionally, this discrimination can also occur during hiring, promotions, and salary negotiations. Some racial or ethnic groups may face barriers to entry or advancement in certain occupations or industries, leading to occupational segregation and differences in pay.

Causes

The causes of the racial wage gap are –

• In the US, the deep-rooted history regarding the ill-treatment of African-American people still exists.
• Racial wage gap statistics suggest that varying educational backgrounds and workforce experience play a crucial role in such racial wage gaps.
• Stigmas attached to different races, particularly black Americans, are still present in people, so they avoid offering them jobs and calling for work.
• The racial wage gap varies and depends on the industry and the type of work and occupation.
• Most often, people from different races who reside in a particular area form a community; the distance between their residents and workplace affects their ability to find suitable job opportunities.
• Historical and current social discrimination done by white and non-Hispanic citizens against African Americans plays a key role often observed in the workplace, leading to the racial wage gap.

Examples

Below are two examples to understand racial wage gap -

Example #1

Suppose in New York, there is a construction company where two people are hired for labor work. The first is Howard, a white non-Hispanic individual; the second is Henry, an African American. Although, knowledge-wise, Henry is more skilled than Howard, there is a pay disparity between them. Henry is given an average of $15 hourly wages compared to him. Howard is compensated $21 for every hour of work.

When Henry inquired about it, he observed that the same disparity is exercised for the same work between white non-Hispanic workers and African American labor force, generally black Americans. It is a simple racial wage gap example common in the US. Henry can accept it or complain to official authorities regarding racial discrimination laws. He may also choose to protest against it with his fellow African-American workers.

Example #2

According to this June 2023 article in the New York Times, the racial wage gap is shrinking; in the early 2000s, the pay disparity was as large as it was in the 1950s, and according to a senior economist at the Economic Policy Institute, the gap, which is still enormous, has shrunk over the past five years. Social protests like “Black Lives Matter” and the Fight for $15 had significantly brought a positive change in the racial wage gap.

A good example comes from Deloitte reports, which suggested that in 2020, only 9% of board seats were occupied by African-American citizens, which has risen to 12%. At the same time, the institute is concerned that the gap will never be zero as long as social discrimination and racial inequities exist in the US. According to the Institute, a typical American African worker made 13% less than a white non-Hispanic worker of the same age, education, locality, and gender.

Effects

The effects of the racial wage gap are -

• It means fewer work opportunities exist for people from different races, let alone a promotion or increment.
• A severe wage gap describes the median household income of people with the same education but belonging to different races.
• The negative long-term impact on the national economy is less workforce addition and contribution.
• Moreover, it indicates that society and the labor market favor one race or community.
• Instead of filling the gap, such practices invoke social discrimination against people of different races.
• Leads to political disorders, social protest and hatred among people of minority races.
• Induces crime rate and wrongful activities in society often performed by people of varying races due to lack of jobs and pay disparity.

Racial Wage Gap vs Gender Wage Gap

The main difference between the gender and racial wage gap is -

• The racial wage gap is the unfair pay difference between people of different races. In comparison, the gender wage gap defines the average pay gap between two genders.
• This wage gap is primarily prevalent in the US, especially between white, not Hispanic people and African Americans. In contrast, although people now identify with different gender categories, it is mainly observed between men and women.
• Moreover, the racial wage gap is relatively less acknowledged worldwide, but the gender wage gap is commonly present in almost all countries.

Frequently Asked Questions (FAQs)

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This article has been a guide to Racial Wage Gap and its definition. We explain its causes, examples, effects, and comparison with gender wage gap. You may also take a look at the useful articles below –

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