Education Key To Narrowed Black-White Wage Gap, Study Says

By James Crawford — July 03, 2019 9 min read

The wage gap between black and white Americans has narrowed dramatically over the past 40 years-largely because of improvements in the quantity and quality of blacks’ education-says a Rand Corporation study commissioned by the U.S. Labor Department.

The gains for blacks, however, had little to do with reforms brought about by the civil-rights movement, including school desegregation and affirmative action, the study concludes.

Black male workers, who earned 43 percent as much as their white counterparts in 1940, by 1980 were earning 73 percent of what whites earned, according to the report, which was written by two economists, James P. Smith and Finis R. Welch.

The researchers cite as the leading reasons for that relative improvement “the narrowing of education disparities” between blacks and whites and “the improving economic return to black schooling.” Their analysis is based on U.S. census data for the past four decades.

Released last week, the study immediately provoked controversy. It conflicts with a widely held view, reiterated in January by the National Urban League, that blacks’ economic status has stagnated or even declined relative to whites’ over the past 15 years.

Also, the report’s optimistic conclusions about black education come at a time of rising concern over high dropout rates and low academic achievement among urban black youths.

“In doing a study, where you choose your starting date makes a big difference,” said David H. Swinton, professor of economics at Clark College and author of the Urban League report. “It’s misleading to treat 1940 to 1980 as one period [because] of the structural transformation of the black workforce from agrarian to industrial employment.”

In addition, the Rand study uses male wage figures rather than family income and assumes steady, year-round work, ignoring the increase in black unemployment since 1970, Mr. Swinton said. These and a variety of other methodological problems combine to “greatly exaggerate” the trend toward black economic gains, he charged.

The study, “Closing the Gap: Forty Years of Economic Progress for Blacks,” concedes that “fully 20 percent of working black men [are] still part of the poor black underclass.” But it adds that “placed in historical perspective, such figures still represent enormous progress toward eradicating black poverty.”

The researchers argue that, except for the bottom 10 percent, all segments of the black male workforce have advanced considerably.

“In [1940], only one in 12 black men earned an income larger than that of the average white,” the report states. “By 1980, 29 percent of working black men had incomes above that of the median white.”

‘Benefits of Schooling’

Due primarily to a narrowing of the educational gap between blacks and whites, that advance can be attributed secondarily to economic growth and black migration to higher-wage areas, the authors conclude.

They argue that: ''Forty years ago, the typical black male entering the workforce finished the 6th grade four grades less than those new white workers with whom he had to compete. Today, the average new black worker is a high-school graduate and trails his white competitor by less than a year of education.”

“And this is only half the story,” the authors write. “Dramatic improvements in the quality of black education increased the ability of blacks to translate their schooling into more dollars in the job market.”

“Forty years ago, whites gained twice as much income as blacks from attending school for another year,” the study states. “Today, there is little racial difference in the economic benefits of schooling for young workers.”

Improvements in education accounted for between 44 percent and 71 percent of these gains, depending on black workers’ income and job experience, and migration from the South accounted for between 11 percent and 19 percent, the study concludes.

While acknowledging “the current, and in many cases valid, criticism of contemporary black education,” the authors stress that “the situation historically was much worse.”

Progress Before Desegregation

They assert that blacks made significant strides toward closing the educational gap before 1960 and even before the 1954 Brown v. Board of Education decision outlawing “separate-but-equal” schools. “The narrowing of racial differences in the benefits from education was as large during the 20 years from 1940 to 1960 as it was in the 20 years after 1960,” the study says.

“The change that may have been of greatest importance in terms of learning acquired is the convergence in length of school term between blacks and whites [in the South],” it adds.

''In 1920, black youths attended school three-fourths of a year less than white students. In 1954, the year of the Supreme Court desegregation decision, there were no real differences in days attended,” the study says, noting similar trends in the reduction of class size before 1954.

Besides “the overall rise in the quality of Southern schools,” blacks benefited educationally from “migration to the better schools of the North,” it explains.

Among workers with identical years of schooling, blacks earned 50 to 55 percent what whites did in 1940, as compared with 75 to 82 percent 40 years later, the authors found.

But their attempt to link this economic progress with educational improvements drew criticism last week. “The data about the increasing quality and quantity of education are not tied in any empirical sense to increasing wages from 1940 to 1960,” said Gerald D. Jaynes, a Yale University professor of economics. “They can’t prove it.”

Mr. Swinton also questioned the study’s assertion that the increased economic value of schooling for blacks in the labor market is directly related to improvements in the quality of schooling. “Earning more at each educational level is usually a measure of [a decline] indiscrimination or of structural changes in the workforce,” such as the transition from farm to factory, he said.

He added that the Rand study’s conclusion reflects the authors’ emphasis on “human capital"-focusing on the worker’s qualifications and the needs of employers-to the exclusion of political factors such as discrimination.

Affirmative Action Debate

This “ideological bias,” said Mr. Swinton, is related to the authors’ attempts to discount the effects of affirmative action in raising black wages during the 1970’s, “despite their own data to the contrary.”

The study notes that young black male workers, who earned 75 percent as much as their white counterparts in 1966, had achieved wage parity by 1972 in employment covered by federal equal-opportunity and affirmative-action laws. But by 1977, “these wage gains [had] evaporated,” it reports, citing a decline in demand for black labor by employers who had met their hiring goals.

Thus “affirmative action apparently had no significant long-run impact, either positive or negative, on the male racial wage gap,” the study concludes.

Mr. Jaynes responded that this analysis ignores the issue of enforcement of affirmative-action rules, which, he said, “came under attack about 1977.”

“What their data show is that affirmative action works when a lot of pressure is put on firms to comply with it, and it doesn’t improve wage or employment levels when the pressure is off,” Mr. Jaynes said.

The authors asked “the wrong question,” according to Mr. Jaynes. “I don’t think many people would argue with [the view that] education and migration were more important than affirmative action” in raising wages over the past 40 years, he said.

“The question is: Given the conditions post-1970, has affirmative action done anything?”

The Labor Department is still analyzing the report, said Everson W. Hull, a deputy assistant secretary for policy. ''But we find it somewhat disturbing that it makes year-to-year comparisons with wages and affirmative action without looking at causal effects,” he said.

''The proper way would be to look at [actual data on affirmative action] rather than simply tabulating bits and pieces of statistical information on the economy,” Mr. Hull said.

He predicted that the report would probably be used as ammunition by opponents of the Labor Department’s stand on affirmative action, a policy that has created a split within the Reagan Administration. Attorney General Edwin Meese 3rd is seeking an end to hiring and promotion “goals,” while Secretary of Labor William Brock is defending them.

Political Fallout

The Rand authors note the relevance of their conclusions not only to affirmative action, but also to debates over “social safety net” programs and busing to achieve desegregation. They argue that these policies are of little use “as a vehicle for long-term reductions in black poverty.”

Instead, they recommend an emphasis on such “proven eradicators” as education, while adding the caveat: ''These trends having largely run their course, further improvement in black schooling depends critically upon what takes place in urban black schools of the North.”

Mr. Welch, professor of economics at the University of California at Los Angeles and chairman of the Unicon Research Corporation, is also conducting a controversial research project on desegregation, funded by the U.S. Commission on Civil Rights. (See Education Week, Feb. 19, 1986.) An advisor to that project, Gary Orfield, resigned in protest last fall, criticizing its “strong ideological tilt” toward the anti-busing position.

Contending Studies

Mr. Smith and Mr. Welch describe the Rand study as “the most comprehensive examination of the economic status of black America since [Gunnar] Myrdal.”

“In doing so,” they say, “we have found a partial American resolution to his American Dilemma.” (Writing in 1944, Mr. Myrdal, a Swedish economist, portrayed blacks’ economic situation as ''pathological.’')

Mr. Jaynes, who is directing a three-year study of the 1940-1980 period for the National Committee on the Status of Black Americans, acknowledged that the Rand study is “sophisticated, a strong piece of empirical research.” But he disputed the claim that “Closing the Gap” represents anything new.

“It’s exactly what the same two authors have said over the past nine years,” he said. ''The only difference I can gather is that they’re using census data from 1940, 1950, and 1980. They drew the same conclusions in the past mainly from 1960 and 1970 data.”

Mr. Swinton argued that the study “focused on a much more narrow measure of progress than the National Urban League study.”

“Rather than looking at family income, per capita income, poverty rates, and employment rates, it basically concentrates almost entirely on the wage rates of employed males,” he said.

“What they call income is not really income-it’s wage rates multiplied by the number of weeks in a year,” Mr. Swinton said. “That’s not a good measure of income, because all people don’t work for a full year.”

According to the Urban League analysis of census data known as Current Population Surveys, the ratio of black-white earnings for those at the same educational level declined slightly from 1980 to 1984. And it calculated that black workers earned 64 percent of what white workers earned, as compared with the Rand study’ 73 percent figure for its sample of black working males.

“What we found was that there has been no sustained progress since the 1970 period,” Mr. Swinton said. ''Many indicators showed deterioration or continued stagnation in the early 1980’s.”

He argued that because the Rand study did not take into account the increasing incidence of lower-paid black males who have dropped out of the workforce in the past 15 years, it artificially inflated the average wage of those who remained.

A version of this article appeared in the March 05, 1986 edition of Education Week

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