Friday, February 24, 2012

Wage Gap

Monumental change often occurs imperceptibly, and we don't know it's happened until sometime after it occurs.

It appears to me that racial and ethnic discrimination in employment compensation has come to an end. Not everywhere or with respect to everyone , but pretty clearly on a national statistical level. Personal prejudice and bias is impossible to completely eradicate. However things have changed and for the better, even though politicians and advocates will continue with the old narrative that discrimination is endemic and pervasive in the business world.

Anecdotally I've observed that discrimination in the workplace based on race, ethnicity and gender has all but disappeared. Consistent with a developing set of laws and principles, corporations and government have been vigilant in efforts to elimination racial discrimination in the workplace. It's working.

This view was statistically confirmed in a report I recently read by a University of Chicago Nobel Prize winning economist, James J. Heckman. While his report dealt with the importance of early childhood education, he concluded that more than overt discrimination now drives the achievement gap in the US between Whites, Blacks and Hispanics. He argues that skills now determine success. If you factor in skills (meaning "smarts" including conscientiousness, perseverance and sociability), the wage gap between Whites versus Blacks and Hispanics disappears.

For those who have similar skills ,wage discrimination no longer exist. Blacks and Hispanic men and women who have similar academic and personal skills make the same (or in the case of Black and Hispanic women more) than their White counterparts.

His 2011 study showed using all Black men, the wages for Blacks as a percentage of all White men's wages was 75%. However when adjusted for skills that gap closed to 94%. For Hispanic men, the percentage went from 85% unadjusted to 100% after adjustment. Interestingly , as to Black women, the percentage which was 83 % reversed to 112% after adjustment for skills ; and for Hispanic women from 93% to 117%, after adjustment. I wonder if anyone will start complaining about that "reverse" gap.

The struggle still remains to enhance those skills among minorities through education, parenting and mentoring. However, it is real progress that institutional discrimination in wages in the US apparently no longer exist based on race or ethnicity with respect to those with similar skills.

While I have expressed great skepticism over the politicized use of statistic to fit a political agenda, these figures came from a study which focused on early childhood education and not a study of wage discrimination. As such the author presumably had no particular political agenda in mind on this issue.

The conclusion I take away from this study is that educated Blacks and Hispanics who are conscientious and have good people skills will not be institutionally discriminated against based on their race or ethnicity.

While more needs to be done about those without skills, this is quite a positive societal accomplishment in this country and should be recognized as such, rather than just repeating the old litany of endemic and persistent institutional discrimination.