Racial Wage Gap Shrinks in Pandemic, Report Shows

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Orbon Alija

While there is still a sizable wage gap between racial/ethnic groups, a new analysis shows wages for newly hired Black and Hispanic workers have started to catch up to those of their White counterparts in 2020, including throughout the COVID-19 pandemic.

In a report assessing trends across racial/ethnic groups, the W.E. Upjohn Institute for Employment Research, a nonpartisan not-for-profit group that maintains indices on monthly wages and hiring volumes, said the latest hiring picture “may not be as bleak as commonly thought.”

The institute’s New Hires Hourly Wage Index, a measure of how much newly hired workers are earning compared to their salaries in 2005, shows the wages of White workers have risen 8.5% in that time, while those of Black and Hispanic workers have gained 4.9% and 6.6%, respectively. But surprisingly, the gap is starting to narrow. Looking only at January through September of this year, wages for White workers have remained pretty flat, while those for Black workers have risen 3.2% and for Hispanic workers 2.1%.

“This rapid growth for Blacks and Hispanics represents a modest convergence with Whites, even though a sizable gap remains,” Brad Hershbein, the Upjohn senior economist that created the index, wrote in the report, released Tuesday. The indices are based on data from the Census Bureau and the Bureau of Labor Statistics

Hershbein’s report didn’t offer potential reasons behind the narrowing wage gap. He said he considered the theory that the average was going up only because fewer Black and Hispanic workers were being hired in lower-paying jobs relative to Whites, but that is not borne out by the institute’s hiring volume index. That index showed that hiring has in fact increased across the board this year, and at relatively similar rates, he noted.

Research does show the COVID-19 recession has disproportionately hurt people of color.By June, Black and Latino workers had about 12% fewer jobs than they held in February, compared with 7.5% losses among White workers, and minorities have been slower to recover lost jobs, according to a University of New Hampshire study.

Hershbein told The Balance he didn’t have a great hypothesis to explain the shrinking gap, and noted that the gains are relatively small. 

“Because there’s still a lot of churn, with significant hiring and separations still occurring, it may take more time to deduce what’s driving the patterns over the past six to eight months,” he wrote in an email.