Editor’s Note: Michaela Ayers consulted on this post.
The night before he was assassinated, Dr. Martin Luther King Jr. delivered his famous speech “I’ve Been to the Mountaintop” to a crowd gathered in support of striking sanitation workers in Memphis, TN. Despite the Civil Rights Act banning pay discrimination on the basis of race four years earlier, the sanitation workers had walked out of their jobs in demand of equal pay for equal work and safer working conditions. As Dr. King laid out in his speech, their struggle was not against the city government alone. It was against centuries of systemic racism – from slavery to Jim Crow laws and segregation – that denied people of color opportunities and robbed them of wealth.
Today, 55 years after the passage of the Civil Rights Act, we find equal pay for equal work is still not a reality.
We analyzed the racial wage gaps, or differences in earnings, between white men and men of color using data from the PayScale online salary survey. Given the richness of our data set, we are able to look at the racial pay gap for various racial/ethnic groups of men. These groups include men who identify as American Indian and Alaska Native, Asian, black or African American, Hispanic, and Native Hawaiian and Other Pacific Islander.
We find there is a consistent gap in earnings between black or African American men and white men. Even as black or African American men climb the corporate ladder, they still make less than equally qualified white men. They are the only racial/ethnic group that does not achieve pay parity with white men at some level.
Although Asian men seem to do relatively well in that they tend to outearn white men, they have the lowest rates of being in manager roles. This disparity reveals how fair treatment in the workplace is more than just a question of equal pay for equal work.
The Civil Rights Act has allowed for progress to be made in overcoming racial discrimination in the workplace. However, we need only to look at the data to know we still have a long way to go before equality in the workplace is achieved.
Defining the Racial Wage Gap
We analyzed a sample of 1.8 million profiles from PayScale’s online salary survey that were collected between January 2017 and February 2019 to understand the racial wage gap. Due to the fact our data skews toward professional white-collar workers, we limit our sample to those with at least a bachelor’s degree. This allows us to split data by demographic groups and make a meaningful comparison where our data is the strongest.
We define the racial wage gap as the cents on the dollar men of a racial/ethnic group earn compared to white men. To fully understand the differences in pay across racial/ethnic groups, we look at two different measures: the uncontrolled wage gap and the controlled wage gap.
The uncontrolled racial wage gap does not hold employment characteristics, such as job title or years experience, equal when assessing income by race. It simply compares the median income for each group. The controlled racial wage gap, on the other hand, is a comparison of pay between white men and men of color who have the same job and qualifications.
Pay Equity Is Not a Reality
In our sample, we found black or African American men have the largest uncontrolled pay gap relative to white men. They earn $0.87 for every dollar a white man earns. Hispanic or Latino workers have the next largest gap, they earn $0.91 for every dollar earned by a white man. On the other side of the earnings spectrum, Asian men see an uncontrolled pay gap of $1.15. However, as we detail below, having a higher median salary does not mean Asian men are treated impartially at work.
The uncontrolled pay gap is driven by many forces. In our analysis on employee referrals, we found that a third of workers received some type of employee referral for their current job, yet men of color are 26 percent less likely than white men to receive them. Referrals impact an employee’s relationship with their manager, their engagement at work and satisfaction with their employer. These factors can subsequently influence performance reviews, promotions and pay increases. Other variables help explain the uncontrolled pay gap, such as the opportunity gap and occupational segregation, which we discuss in more detail below.
When we hold all employment characteristics equal, black or African American men still see the largest pay gap. The controlled pay gap for black men is $0.98 for every dollar a white man with the same qualifications makes. To put that in perspective, the median salary of a white man in our sample is $72,900; the controlled median pay for black or African American men is thus $71,500. This suggests a $1,400 difference in pay that is likely attributable to race.
Both Hispanic and American Indian and Alaska Native men earn roughly $0.99 for every dollar a white man with the same credentials earns. However, this does not mean these groups face the same types of discrimination in the workplace.
Asian men have a controlled pay gap of $1.02, earning two percent more than the median salary of equally qualified white men. Again, we do not want to suggest Asian men do not face discrimination at work, especially since the demographic group “Asian” covers many different ethnic groups that are not treated equally in the workplace.
One factor that may be driving the controlled pay gap is bias in performance reviews and pay increase decisions. It’s worth reiterating that referrals can impact these decisions too, even for men of color with matching employment characteristics. In 2018, we researched pay raises between equally qualified employees working in similar jobs and organizations. We found that despite no racial/ethnic group being more or less likely to ask for a raise, men of color were 25 percent less likely than a white man to receive a raise when they ask.
Lastly, although this is an analysis on men of color, we still want to emphasize the role that gender has on pay inequality and career advancement. When we compare these results to the racial pay gap analysis from our Gender Pay Gap report, we see that women of color face much larger pay gaps than men of color. This suggests men see advantages women don’t in the workplace.
Hiring Discrimination & The Unemployment Penalty
As robust as the racial pay gap analysis may be, it doesn’t always capture the mechanisms of discrimination in the workforce. Hiring biases drive unemployment for people of color – something the pay gap doesn’t measure. Hiring discrimination hasn’t seen an improvement in 25 years. Race is consistently shown to have a high impact on getting callbacks or interviews for a job.
According to the BLS, the unemployment rate for black or African Americans in the first quarter of 2019 was at 7.1 percent. For Hispanics, it was 5.1 percent. For whites, it was 3.7 percent.
In our research on unemployment penalties, we found that on average and controlling for relevant factors, those who were unemployed at the time of receiving a job offer make 4 percent less than someone who was not unemployed. In addition, those unemployed for longer periods face larger unemployment penalties. Someone who was unemployed for more than a year experiences a 7.3 percent wage penalty.
Aside from driving unemployment, hiring discrimination also makes career growth more difficult for people of color. Biases in hiring decisions limit advancement into higher level or higher paying jobs. This, in turn, drives the racial wage gap. Hiring discrimination can occur irregularly in any organization. Staying with an organization that is not intentional in removing bias from their hiring practices could result in a promotion outcome that plays out differently for a person of color than it does for a white employee.
Beyond the Racial Wage Gap: The Opportunity Gap
The prevalence of hiring discrimination in the workforce and the large uncontrolled pay gaps seen by men of color are concerning. While the uncontrolled pay gap may not hold all compensable factors constant, when taken together with other measures it highlights the social barriers that prevent economic equality for marginalized groups. One such measure is the opportunity gap, or the extent to which men of color climb the corporate ladder at the same rate as white men.
One way to measure the opportunity gap is to look at the percentage of each racial/ethnic group in the following job level categories.
- Individual Contributors (ICs), i.e. they do not manage people
- Managers or Supervisors
- Directors, i.e. managers of managers
- Executives, i.e. those who are at least a vice president.
A higher percentage of individual contributor roles indicates that a group has a harder time climbing the corporate ladder to attain jobs with higher pay and more influence.
When we look at the opportunity gap, we find men of color have higher rates of holding individual contributor jobs than white men. Sixty-three percent of black or African American men and 61 percent of Hispanic or Latino men in our sample are in individual contributor roles compared to 56 percent of white men.
However, at 71 percent, Asian men have the highest rates of being ICs. This large percentage of ICs among Asian men may be a result of unfair expectations for them to stay in their lane. Asian Americans are often perceived as the “model minority.” There is a cultural expectation for them to be smart, successful and perfectly adhere to the “American Dream.” This notion is often accompanied by an expectation for them to be obedient, uncomplaining and soft-spoken. While the model minority perception may drive a willingness to hire Asian Americans, it may also serve to dissuade promotions and advancement up the career ladder.
The lack of representation of men of color in senior level positions contributes to pay disparity. White men have higher rates of being in roles above the manager level. In our sample, nine percent of white men are directors and six percent are executives. Asian, black and Hispanic men each have a three percent representation in executive roles and also see lower representation in director roles than white men. Diversity in leadership positions does not only alleviate the racial wage gap, it also supports corporate innovation and translates into better representation in the boardroom.
Along with the opportunity gap, occupational segregation partially explains the uncontrolled pay gap. Data from the Bureau of Labor Statistics shows Asian workers make up a large percentage of software and applications developers. Black or African American workers, on the other hand, make up a large percentage of vocational nurses, probation officers and social workers. Software developer jobs are in high demand and see a median salary of $70k. This is significantly higher than the $44k median salary of vocational nurses.
Racial stereotypes, i.e. racism, can drive career choices. Ever heard that Asians are good at math? Or that African Americans are good at sports? The model minority narrative is forced on Asian Americans while the antithesis of that narrative is often pushed on black Americans; both are damaging and unjust. Any stereotype can ultimately undermine one’s accomplishments and enfeeble their spectrum of abilities. These inherent biases can dictate how an employee receives encouragement to apply for leadership positions within an organization, or what lane of work they are expected to stay in.
Racial Wage Gap by Job Level
We have already seen that men of color have lower rates than white men of being in senior positions, but even when they do climb through the corporate ranks, they don’t always achieve pay equity. The uncontrolled pay gap at each job level is largest for black or African American men, whereas Asian men continue to earn more than white men at each job level. Native Hawaiian and Pacific Islander men also see higher pay over white men at the individual contributor levels when controlling for employment characteristics.
Among all job levels and racial groups, the largest uncontrolled pay gap is for black or African American men who are executives. Black or African American male executives earn $0.79 for every dollar a white male executive earns. Even when we control for employment characteristics, black or African American men who are executives get paid $0.97 for every dollar white men with the same qualifications do. This difference in the uncontrolled and controlled pay gap may be a result of occupational segregation, signifying a trend in black or African American men to work in different types of organizations as compared to white men who are also in senior positions.
The only racial group that does not match dollar for dollar to a white man at some job level, controlled or otherwise, is black men. Contrary to our racial analysis for women, only black or African American men see the racial wage gap widen as they move up the corporate ladder. 1
Where To Go From Here
Fifty-five years after the Civil Rights Act banned pay discrimination on the basis of race, equal pay for equal work is not yet a reality. Across the board, we’ve found black or African American men see the largest pay gaps relative to white men. This large disparity in income translates into large and persistent gaps in wealth. This in turn manifests into large and persistent gaps in resources and opportunities for advancement.
Beyond the racial wage gap, we’ve seen a lack of representation of men of color in leadership roles, particularly Asian men. Despite the higher pay rates across our data cuts, Asian men largely end up in individual contributor roles, a sign they are strongly impacted by social barriers that inhibit their professional growth into more senior roles.
Outside the parameters of our research, there are further issues of inequality that can affect representation in the workforce. Black male youth today face a crisis of mass incarceration fueled by the school-to-prison pipeline. This effectively removes a large percentage of black or African American men from the workforce and raises obstacles for them returning to the labor market. The resulting employment barriers only exacerbate income inequality by race.
Although the constructs of discrimination have changed since the passing of the Civil Rights Act, the data tells us the racial wage gap remains. Even today, these words from Dr. King’s final sermon fifty-five years ago remain poignantly relevant, “We have an opportunity to make America a better nation.”
Between January 2017 and February 2019, nearly 1.8 million people took PayScale’s online salary survey, providing information about their compensable factors. They also reported demographic information, including age, gender, and race. We leveraged this sample to provide insights into the controlled and uncontrolled pay gap between white men and men of color.
For analysis by race, we look only at those with at least a bachelor’s degree. All pay gap numbers reported are relative to white men. Due to sample size issues, we are unable to report data on Native Hawaiian and other Pacific Islanders beyond the manager/supervisor level.
Total Cash Compensation: TCC combines base annual salary or hourly wage, bonuses, profit sharing, tips, commissions, and other forms of cash earnings, as applicable. It does not include equity (stock) compensation, cash value of retirement benefits, or value of other non-cash benefits (e.g., healthcare).
Median Pay: The median pay is the national median (50th Percentile) total cash compensation (TCC). Half the people doing the job earn more than the median, while half earn less.
Uncontrolled Pay Gap: Median pay for white men and men of color are examined separately, and the difference in the median is reported as the uncontrolled pay gap. Variables such as years of experience and education are not controlled for. This provides a picture of the differences in wages earned by men of color and white men in an absolute sense.
Controlled Pay Gap: This is the amount that a man of color earns for every dollar that a comparable white man earns. That is, this is the pay difference that exists between white men and men of color after we control for all measured compensable factors. If the controlled pay gap is $0.97, then a man of color would earn 97 cents for every dollar that a white man with the same employment characteristics earns.
Controlled Median Pay: To illustrate the racial pay gap between men, we calculate this estimate of what a man of color would earn if he occupied the same position as a white man.
- Individual Contributor: Employees who do not manage others.
- Supervisors/Managers: Employees with people management responsibilities.
- Directors: Employees who manage managers, but are below the level of vice president.
- Executives: Employees with the title of vice president or hire.
Race/Ethnicity: Respondents could choose one or more of the following and could opt to self-identify in a open-response.
- American Indian and Alaska Native
- Black or African American
- Native Hawaiian and Other Pacific Islander
Only respondents who chose exactly one of the above were included in our analysis of the men’s racial pay gap.