The Color of Money: Black-White Wage Gap Persists

Cleveland Call & Post - November 1, 2001

Education and Unionization Dramatically Reduce the Gap

by Amy Hanauer & Mark Cassell, in The Cleveland Call & Post

Although U.S. economists still sing the praises of the last decade’s boom, a recent study
confirms that many African Americans have not been hearing the same tune. The State of
Working Ohio 2001, recently released by Policy Matters Ohio, reveals a steepening wage
gap between black and white workers, overall decreasing trends in wages and benefits for
all workers, and a dramatic increase in work hours over the last two decades.

Startlingly, black men’s median wages plummeted by 23 percent, and black women’s
dropped one percent between 1979 and 2000. Last year, the median black male worker in
Ohio made only $11.44 to the white male median wage of $15.00. Black women, at
$10.00, made $1.00 per hour less than their white sisters. These gaps do not disappear
when accounting for different rates of education in black and white populations. Black
workers made five to twelve percent less than white workers at similar education levels.

Benefits and pensions are also dwindling. Only 59 percent of African American workers
(compared to 66 percent of white workers) received health insurance from their private
sector employers in 2000, a 17 percent decrease for black Ohioans since 1979. At a time
when Social Security may become much less secure, 41 percent of private sector black
workers receive no pension plan from their jobs. In fact, over one-third of Ohio workers
do not receive these benefits from their private sector employers.

Inequality and poverty wages have skyrocketed, with the richest fifth of Ohio’s families
earning ten times what the poorest fifth earns. Last year, over 22 percent of workers
earned below a poverty-level wage of $8.47 an hour: 61 percent of these people worked
full-time. To earn this substandard pay, families have added 500 hours to the time they
clock in per year since 1979, and single parents doubled their work hours. Middle-income
married-couple black families now work more than two full-time jobs on average.

The Good News
As grim as these findings may seem, the study also points to some clear solutions.
Education and unionization are fast routes to much higher wages, especially for black
workers. Black workers saw a 38 percent boost in their wages when they earned high
school degrees, and a stunning 65 percent boost for earning a college or graduate school
degree in 2000.

Similarly, unionized black workers’ wages jumped 32 percent above those of nonunionized
African Americans. Unions virtually eliminated the wage gap between black
and white workers in 2000 (bringing it under two percent), and at $14.71 hourly,
unionized black workers earned much more than non-unionized white workers.
Opening up access to education and reducing barriers to unionization are therefore among
the most important policy solutions available to improve wages of African Americans.

Other remedies include raising the minimum wage, implementing an Ohio Earned Income Tax
Credit, and reducing discrimination. Ohio families are better educated, more productive and
working harder than two decades ago. Yet at the peak of economic expansion, racial and gender
disparities endured, poverty was high, and inequality was extreme. Ohio can and should do better
by its working people.

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