Discrimination
Women and many minorities have long faced discrimination in U.S. labor
markets. Employed women earn less, on average, than men with similar levels
of education. In part this wage disparity reflects different educational
choices that women and men have made. In the past, women have been less
likely to study engineering, sciences, and other technical fields that
generally pay more. In part, the wage differences result from women leaving
the job market for a period of years to raise children. Another reason for
the disparity in wages between men and women is that there is still a
considerable degree of occupational segregation between males and
females—for example, nurses are much more likely to be females and dentists
males. But even after allowing for those factors, studies have generally
found that, on average, women earn roughly 10 percent less than men even in
comparable jobs, with equal levels of education, training, and experience.
Analysis of wage discrimination against black Americans leads to similar
conclusions. Specifically, after controlling for differences in age,
education, hours worked, experience, occupation, and region of the country,
wages for black men are roughly 10 percent lower than for white men, though
occupational segregation appears to be less common by race than by gender.
Issues other than wage discrimination are also important to note for black
workers. In particular, unemployment rates for black workers are about twice
as high as they are for white workers. Partly because of that, a much lower
percentage of the U.S. black population is employed than the white
population.
Hispanic workers generally receive wages about 5 percent lower than white
workers, after adjusting for differences in education, training, experience,
and other characteristics that affect workers' productivity. Some studies
suggest that differences in the ability to speak English are particularly
important in understanding wage differences for Hispanic workers.
The differences between the earnings of white males and earnings of females
and minorities slowly decreased in the closing decades of the 20th century.
Some laws and regulations prohibiting discrimination seem to have helped in
this process. A large part of those gains occurred shortly after the
adoption of the 1964 Civil Rights Act, which among other things, outlawed
discrimination by employers and unions. Many economists worry that the
discrimination that remains may be more difficult to identify and eliminate
through legislation.
Discrimination in competitive labor markets is economically inefficient as
well as unfair. When workers are not paid based on the value of what they
add to employers' production and profit levels, society loses opportunities
to use labor resources in their most valuable ways. As a result, fewer goods
and services are produced. If employers discriminate against certain groups
of workers, they will pay for that behavior in competitive markets by
earning lower profits. Similarly, if workers refuse to work with (or for)
coworkers of a different gender, race, or ethnic background, they will have
to accept lower wages in competitive markets because their discrimination
makes it more costly for employers to run their businesses. And if customers
refuse to be served by workers of a certain gender, race, or ethnicity in
certain kinds of jobs, they will have to pay higher prices in competitive
markets because their discrimination raises the costs of providing these
goods and services.
Those who are discriminated against receive lower wages and often experience
other forms of economic hardship, such as more frequent and longer periods
of unemployment. Beyond that, the lower wage rates and restricted career
opportunities they face will naturally affect their decisions about how much
education and training to acquire and what kinds of careers to pursue. For
that reason, some of the costs of discrimination are paid over very long
periods of time, sometimes for a worker's entire life.
It is clear that there is still discrimination in the U.S. economy. What is
not always so clear is how much that discrimination costs the economy as a
whole, and that it costs not only those who are discriminated against, but
also those who practice discrimination.
Here are the average annual earnings for 1999, the latest figures available,
arranged by level of education:
Education Level
Male Female
No High School Diploma
$19,155 $11,353
High School Diploma
$28,742 $17,898
Some College (one to three years) $32,005 $19,327
College Diploma
$55,057 $31,452
The income data seen here are from the Statistical Abstract of the United
States, 2000. You can find similar data online from the Department of
Education. To find out why men tend to earn so much more than women, see
United States (Economy): Factors Affecting Labor Markets: Discrimination.
The data for college costs are from Trends in Student Aid 2001, published by
the College Board.