Black Women’s Equal Pay Day: How Segregation in the U.S. Labor Market Affects Black Women’s Earnings Now and (Potentially) in the Future

One Pagers

Black Women’s Equal Pay Day: How Segregation in the U.S. Labor Market Affects Black Women’s Earnings Now and (Potentially) in the Future

Black women earn just 61 cents for every dollar earned by a White man. Black Women’s Equal Pay Day (August 22 this year) symbolizes how far into the year that Black women must work to earn what White men earned in the previous year and brings needed attention to this stark statistic. Black women’s earnings relative to White men’s are only slightly better than Hispanic women, who earn just 53 cents for each dollar paid to a White man for full-time year-round work. White and Asian women make 77 cents and 85 cents, respectively, for every dollar paid to White man.

Disparities by race/ethnicity indicate how the earnings ratio for all women and men—of 80.5 cent to the average men’s dollar—may understate pay inequality in the United States.

Occupational Segregation is Key to Understanding Pay Equity

The U.S. labor market is profoundly segregated by gender and race, which affects earnings. Women and men tend to work in different jobs and the jobs men work in tend to pay more. Researchers have found that over half of the gender wage gap is due to occupational and sector segregation.

Women in the labor force are not as segregated from one another on the basis of race and ethnicity as women are from men, but there are considerable differences in women’s occupational distributions by race and ethnicity. Some occupations, such as Secretaries and Administrative Assistants and Retail Salespersons, are among the top ten most common occupations for women in each racial or ethnic group. Others—such as Licensed Practical and Vocational Nurses for Black women, Childcare Workers for Hispanic women,  Software Developers, Application and System Software for Asian women and Accountants and Auditors for Asian and White women—are not quite as universal.

Among all groups of women, Black women have historically had, and continue to have, the highest level of labor force participation (60 percent in 2018, compared with 56 percent for White and Asian women and 57 percent for Hispanic women). Despite having high labor force participation rates, Black and Hispanic women are over-represented in low-wage service jobs. By contrast, White men are over-represented in high-wage jobs, driving the relatively wide gender wage gaps between women of color and White men.

Future of Work for Black Women

How will technological change and automation affect the disparities already present in the labor market? That’s one of the questions addressed in IWPR’s groundbreaking report, “Women, Automation, and the Future of Work.”

The report finds that women workers outnumber men at the extreme ends of the automation spectrum, with women overrepresented in jobs that are at both the highest and lowest risk of automation. For women, technological innovation is particularly likely to threaten good middle-skilled jobs, such as secretaries, bookkeepers, or accountants, jobs that can represent pathways to the middle class.

Take, for example, the occupation that employs the most women—secretaries and administrative assistants—a top occupation for women of each of the largest racial and ethnic groups. With median annual earnings of $36,000, these are relatively well-paid jobs that do not require a college degree; yet the U.S. Bureau of Labor projects this occupation to have the highest overall job loss going forward. Many other office jobs are also at high risk of automation. Job losses here may especially affect Black and Hispanic women’s opportunities to earn decent wages. Among Black women’s most common occupations, secretaries and administrative assistant provides the highest median annual earnings without requiring a college degree; for Hispanic women, it is the highest paid common occupation.

The jobs that are adding the largest numbers of new jobs, and employ a particularly high number of women of color, are relatively low-paid and low-quality. Personal care aides ($21,300) are among the fastest growing jobs in the United States, projecting to add 777,000 new jobs by 2026. While women, especially Black women, are also well placed to benefit from strong projected growth in such jobs as nursing and education-related occupations, these fast-growing and better-paid jobs typically require at least a bachelor’s degree.

For many women, the erosion of good, middle-skill jobs means returning to education as adults. But, while education and training improve access to higher paying jobs and will continue to do so in the future, the costs of such investment in human capital are especially high for Black women: one in three older Black women have amassed $26,000 or more in student loan debt, more than older women of any other major racial or ethnic group. Particularly concerning is that Black women are over-represented in private, for-profit schools that promise to help them balance their work and family commitments, but often provide poor returns on their educational investment.

The Economic Impact of Unequal Pay for Black Women

The economic impact of pay disparities extends beyond an individual woman’s paycheck. Research has shown that equal pay would cut poverty in half for working women and add an additional $500 billion in wage and salary income to the U.S. economy. Furthermore, equal pay would lift 2.5 million children with a working mother out of poverty.

For Black women, equal pay is especially crucial: IWPR has found that more than four in five Black mothers are a principal source of economic support for their families.

If current trends continue, pay equity for Black women is still a full century away. (Hispanic women will wait even longer—until 2224.) Improving access to the good jobs of the future and improving affordability of education and training opportunities are essential to speeding up progress on pay equity for Black women.