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Race and Gender Differences in the Earnings of

Black Workers

MARLENE KIM*

In addition to facing earnings penalties because of their race and additional penalties
because of their gender, black women appear to suffer a small but additional penalty
because of the intersection of their race and gender. Black women have larger gen-
der than race penalties. Although black men have greater racial penalties than do
black women, black women experience larger earnings losses because in addition to
racial penalties they face gender and race–gender interaction penalties.

BLACK WORKERS CONTINUE TO EARN LESS than white workers. On aver-


age, black men who work full time and year round receive 75 percent of white
men’s weekly earnings, while black women earn 84 percent of white women’s
and 89 percent of black men’s earnings.1 Although numerous studies have
examined racial earnings disparities, fewer studies have investigated black
women’s earnings penalties or have compared the earnings penalties of black
women with those of black men. As a result, many questions have not been fully
addressed. Are black women in fact underpaid, and if so, to what extent is this
due to their race and ⁄ or to their gender? How do gender and race interact for
black women? How do their earnings penalties compare to those of black men?
Why do some studies find race penalties for black women while others do not?
I address these issues by using standard earnings decompositions in a novel
way to examine the extent to which black women are underpaid due to their
gender separately from their race and how the intersection of both their gender
and race affects their earnings. These results are compared to the earnings pen-
alties of black men. I also investigate a number of different econometric speci-
fications in order to determine why research on earnings penalties by race has
reached different conclusions regarding black women.
The surprising results indicate that black women are underpaid because of
their race and their gender and that the sum of these two penalties is less than
the total amount of the earnings penalties they face. This suggests that the

* Department of Economics, University of Massachusetts, Boston, MA. E-mail: marlene.kim@umb.edu.


Thanks to Doug Kruse and William Dickens for helpful comments and advice.
1
Author’s calculations from Table 37 of the U.S. Bureau of Labor Statistics (January 2006) Employ-
ment and Earnings. Data are for full-time year-round workers in 2005.
INDUSTRIAL RELATIONS , Vol. 48, No. 3 (July 2009).  2009 Regents of the University of California
Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington
Road, Oxford, OX4 2DQ, UK.

466
Race and Gender Differences in Earnings / 467
intersection of their race and gender leads to additional penalties on top of
their separate effects. In other words, black women appear to suffer from lower
earnings resulting from their race, their gender, and an additional penalty
because of the combination of the two. These additional earnings penalties
appear to be due to the jobs in which black women are employed. In addition,
although black men suffer from greater racial earnings penalties than black
women, black women receive higher earnings penalties in total because of
their additional gender and interaction penalties.

Previous Research
Many scholars, using a variety of research methods, have examined whether
or not employers treat black workers differently because of their race and gen-
der. Audit studies, experiments in which pairs of black and white workers who
have equivalent qualifications apply for the same jobs, find that black men are
less likely to receive job offers than their white counterparts (for a summary of
these studies, see Darity and Mason 1998; Bergmann 1996; see also Bertrand
and Mullainathan 2004). When they are both offered jobs, the wages offered
to black men may be lower than those offered to equivalent white workers
(see Bendick, Jackson, and Reinoso 1994). Audit studies find that employers
are less likely to offer jobs to black women than to either similarly qualified
white women or black men (Darity and Mason 1998). Thus the audit studies
indicate that black men face disadvantages due to their race, and black women,
because of both their race and their gender.
Interviews with employers suggest that, in part, employers are less likely to
hire black workers because they perceive them to be less skilled or having less
desirable work habits than other workers (Kirschenman and Neckerman 1991;
Moss and Tilly 2001). Black workers have to work harder to signal that they
are indeed productive and dependable workers (Kirschenman and Neckerman,
1991). The few employers who are enthusiastic about hiring black workers
offer low-paid jobs (Moss and Tilly 2001). Thus the consequences of employ-
ers’ perceptions of black workers are jobs that offer lower pay and lower
hiring rates compared with other workers.
With notable exceptions discussed below, econometric studies of wage dispar-
ities are consistent with these results. Black men are paid less in part because
they have lower skills than white men; in particular, they are less likely to have
college degrees (Weinberger and Joy 2007). But even when black men have the
same observable educational and skill levels as white men, they still receive
lower wages than white workers (Darity, Guilkey, and Winfrey 1996; Weinberger
and Joy 2007; for a review of these studies, see Darity and Mason 1998).
468 / MARLENE KIM
However, research on the effects of race on black women’s earnings has
found contradictory results. Kim (2002) and Zalokar (1990) find that black
women are underpaid compared with white women. Yet Darity, Guilkey, and
Winfrey (1996) find that when black women are compared with all women
(not just white women), they earn the same or more when skill levels are
taken into consideration. It is important to try to understand why these studies
find seemingly contradictory results. Does comparing black women’s earnings
to white women as opposed to all women lead to these different findings? Or
do the results differ because of using different econometric specifications? I try
to resolve this issue by examining these possible explanations.
In addition, qualitative research posits that black women may face dis-
crimination because of both their race and gender and that the total amount
of discrimination they experience may not equal the sum of these two parts
(Bell, Denton, and Nkomo 1993; Kilbourne, England, and Beron 1994;
King 1995; McGuire and Reskin 1993; Reskin and Charles 1999). There
may be a positive interaction, so that the effect of race and gender is less
than the sum of the two. This can occur if employers view black women
as counting for affirmative action twice and consequently prize them more
than either white women or black men (Bell, Denton, and Nkomo 1993).
Alternatively, a positive interaction may result if race and gender work in
similar ways. For example, being black or female may be so devalued that
the second characteristic may be inconsequential (McGuire and Reskin
1993). On the other hand, there may be a negative interaction, so that the
interaction of race and sex ‘‘produces further disadvantages than those
which accrue from the sum of the variables taken individually’’ (Almquist
1975: 130).
Researchers have argued that it is impossible to quantify the extent to which
black women suffer from gender discrimination separately from race discrimi-
nation and the interaction of gender and race (McGuire and Reskin 1993). As
a result, most research on black women examines only racial earnings penal-
ties; whereas a few examine the extent to which both gender and race contrib-
utes to lower earnings of black women by comparing the earnings of black
women to those of white men (see, e.g., McGuire and Reskin 1993).2
2
Tomaskovic-Devey (1993a, 1993b) examines the extent to which individual and job characteristics
account for gender and race differences in earnings. Similarly, Kilbourne, England, and Beron (1994) exam-
ine whether the same factors (such as individual and job characteristics) that contribute to earnings differ-
ences by race affect men and women differently, and whether the factors that affect earnings differences by
gender affect blacks and whites differently. Although these studies are important in suggesting the factors
that contribute to wage differences, none of them examine the total wage disparities black women may face
because of both their race and gender and thus how race and gender interact particularly for black women.
They also neglect examining the extent to which differential returns to human capital characteristics accounts
for these wage disparities.
Race and Gender Differences in Earnings / 469
Although the latter provides useful information, it fails to investigate the sepa-
rate effects of race and gender. For example, McGuire and Reskin (1993) find
that black women earn $7000 less than similar white men. But how much of
this is due to their gender, and how much to their race?
Almquist (1975) notes that sex differences in earnings (measured as the
differences between the earnings of black men and black women and
between white men and white women) are greater than race differences
(those between white women and black women and between white men
and black men). But because she does not explicitly examine how gender
and race interplay in the earnings of black women, she cannot examine
how gender and race separately affect the pay of these women or how they
interact.
Researchers believe that the intersection of gender and race is likely to be
complex and that it varies depending on the economic and social outcome
studied and groups examined (King, 1995). ‘‘In some cases, race may be the
more significant predictor of black women’s status; in others, gender or class
may be more influential’’ (King, 1995: 298). In still other situations, the inter-
action of race and gender may lead to unique outcomes (Bell, Denton, and
Nkomo 1993; Browne and Kennelly 1999).
I revisit this area of research and examine the extent to which black women
suffer from gender penalties separately from race penalties as well as how gen-
der and race intersect. By comparing standard earnings decompositions of
black women to those of white men, black men, and white women, this paper
is the first to investigate how gender, race, and their interactions contribute to
the earnings disparities black women face.
Previous research suggests that part of the race and gender earnings dif-
ferences are the result of holding different jobs. Women have historically
worked in jobs such as clerical occupations that pay less for their skills
than the jobs that men hold, and black workers have historically been shut
out of many industries that pay higher wages (Amott and Matthei 1991;
Reskin and Padavic 1994; Reskin and Roos 1990). To examine the extent
to which holding different jobs causes wage differences, I will control for
industry or occupation3 and whether or not one works in the government
sector.4 Working in different jobs can result from discrimination in hiring
and promotion, but it can also result from a preference for working in

3
Similar to Blau and Beller (1992), I had to combine some major occupations, due to such a small
sample in some cells. Due to multicollinearity in my sample, I could not control for both occupation and
industry.
4
This includes federal, state, and local government employees as well as those in the Post Office; they
are designated as working in the ‘‘public administration’’ sector in the industrial codes.
470 / MARLENE KIM
different jobs or from holding different skill levels.5 Although examining
the cause of occupational differences is beyond the scope of this paper,
including controls for occupations in separate regressions allows me to
examine the extent to which wage differences are caused by holding differ-
ent jobs versus other factors (Blau and Beller 1992).
One caveat is that like much research on earnings penalties, I do not include
quantitative measures of skill, other than education and potential work experi-
ence. Research that has included test scores from the Armed Forces Qualifica-
tion Test (AFQT) as control variables find that black men and black women
earn the same as their white counterparts once these controls are included (see
Neal and Johnson 1996; O’Neill 1990). Proponents of these studies believe
that AFQT scores are better measures of skill than those typically used in
wage studies, such as years of education and estimated work experience, and
that the AFQT measures aptitude, intelligence, or school quality.
Like many quantitative measures of aptitude and intelligence, however, their
use remains highly controversial. For example, studies that include AFQT scores
as well as measures of psychological capital find evidence of race penalties for
both black men and women (see Goldsmith, Darity, and Veum 1998; for an
excellent summary of the critiques of racial studies with AFQT scores, see Darity
and Mason 1998; see also Rodgers and Spriggs 1996). Because my data do not
contain them, and because I am examining why previous research that does not
include these variables finds contradictory results for black women, I do not
include these variables in my analyses. This research thus extends and re-exam-
ines previous research that does not include such quantitative measures of skill.

5
There is a large debate around the cause of occupational segregation by race and gender. For segrega-
tion by gender, researchers posit that women may prefer different jobs than men (Killingsworth 1987;
Polachek 1979, 1981) perhaps in order to have more flexible hours and more time with their children (see
the Discussion in Chapter 6 of Blau, Ferber, and Winkler 2006; see also Chapter 3 in Reskin and Roos
1986). Anecdotal reports of women who graduated from Ivy League schools and worked in high level jobs
but who drop out of the labor force to raise kids, either permanently or who return to work in very different
jobs, often part-time and self-employed, support this premise (Conlin, Merritt, and Himelstein 2002). Yet
other evidence argues that women are not treated the same as men and for that reason many quit and start
their own businesses or end up on lower career trajectories than men (Bergmann 1996; Fierman 1990;
Ragins, Townsend, and Mattis 1998). Audit and correspondence studies indicate that women are less likely
to be hired, promoted, or trained than similarly qualified men, and they are less likely to be evaluated as
well as similar men (for reviews of these studies, see Bergmann 1996 and Darity and Mason 1998; see also
Goldin and Rouse 2000; Newmark, Bank, and Van Nort 1995). In addition, if women but not men are
expected to care for children, one cannot argue that women opting to work in jobs that allow them to care
for children is entirely out of choice (Blau, Ferber, and Winkler 2006; Darity and Mason 1998; Reskin and
Roos 1986). For segregation by race, researchers posit that differences in education and skill levels explain
some occupational differences (see Farkas et al. 1997). Proof of this contention is that the education level of
blacks is lower than that of whites. On the other hand, audit and correspondence studies indicate that blacks
are less likely to be hired or interviewed for jobs than similar white applicants, supporting the premise that
discrimination plays a role in occupational segregation (Bertrand and Mullainathan 2004).
Race and Gender Differences in Earnings / 471
Data and Methodology
I use the 2002 Current Population Annual Demographic Survey (CPS), a
data set compiled by asking a random sample of 60,000 households in the
United States about their earnings, occupations, and work during the previous
(2001) calendar year. The sample includes those who were between the ages
of 25 and 64, were wage and salary workers, worked at least 1 week, and
earned at least one dollar in 2001. I exclude students, the self-employed, those
working without pay for family, and members of the Armed Forces.
I use standard human capital regressions to predict the natural log of hourly
wages, computed by dividing total earnings in 2001 by the number of weeks
and hours worked. The independent variables include age, age squared, the
number of children under age 18 and under age 6, dummy variables for educa-
tion levels (high school degree or equivalent, a college degree, and receiving a
professional or graduate degree), regional dummy variables, and dichotomous
variables for part-time work (those who usually worked 34 hours per week or
less), residence in a central city, having a disability that limits the type or
amount of work performed, being of Hispanic descent, being married, and
having a job that was covered by a union. In addition, in order to examine
earnings differences due to industry and occupation employed, in separate
regressions I included dummy variables for the industry and occupation in
which one worked.6 Because neither quantitative measures of skill nor mea-
sures of psychological capital are available in these data (such as the AFQT), I
do not include them in the analysis.7
Tables 1A and B show the means of the variables I use. In 2001, black
men earned 80 percent and black women only 61 percent of white men’s earn-
ings. In addition, black women earned 82 percent of white women’s hourly
earnings and 77 percent of black men’s earnings. Although these wage gaps
are somewhat smaller when examining full-time year-round workers, substan-
tial differences remain (see Table 1B).
Both male and female black workers had lower education levels and were
less likely to be married than white workers. A higher percentage of them live
in central cities and in the South while a lower percentage live in the West.
Although black women were more likely to have children, black men were less
likely. Blacks were more likely to work in the public sector and be represented
6
Because of the small number of women in some cells, some industries, such as agriculture and min-
ing, had to be combined (Blau and Beller 1992; Cunningham and Zalokar 1992). Unfortunately, the data
preclude using more detailed occupations and industries. Past research suggests that doing so would likely
explain more of the variance in earnings and reduce the gender and racial differences in earnings.
7
In addition, to examine if functional form mattered, the regressions were repeated without logging the
dependent variable. The results were not substantially changed. In addition, to see if outliers affected the
results, in other regressions these were omitted. Once again, the results were similar to those reported here.
472 / MARLENE KIM
TABLE 1A
MEANS OF VARIABLES—ALL WORKERS.

Black All White Black White


women women women men men
ln wage 2.47 2.59 2.61 2.67 2.9
Wage (geometric mean) 11.08 13.3 13.58 14.44 18.12
Age 41.4 42.3 42.51 40.96 42.18
Age squared 1810.75 1890.21 1909.52 1773.36 1882.84
Dummy variable if high school education 0.89 0.94 0.94 0.89 0.91
Dummy variable if college degree 0.24 0.33 0.33 0.2 0.32
Dummy variable if graduate degree 0.07 0.11 0.11 0.06 0.11
Dummy variable if part-time work 0.11 0.18 0.19 0.05 0.04
Dummy variable if metro. area 0.43 0.23 0.18 0.43 0.19
Dummy variable if Northeast 0.2 0.21 0.22 0.17 0.2
Dummy variable if South 0.55 0.34 0.31 0.55 0.33
Dummy variable if West 0.08 0.2 0.2 0.09 0.2
Dummy variable if Midwest (omitted cat.) 0.17 0.25 0.27 0.18 0.26
Number of children 0.94 0.79 0.77 0.71 0.8
Number of children less than 6 0.2 0.19 0.18 0.2 0.26
Dummy variable if married 0.4 0.61 0.65 0.54 0.7
Dummy variable if U.S. citizen 0.95 0.95 0.96 0.93 0.94
Dummy variable if job covered by union 0.19 0.16 0.15 0.24 0.18
Dummy variable if Hispanic 0.01 0.05 0.06 0.02 0.08
Dummy variable if has disability 0.02 0.02 0.02 0.01 0.02
Industry dummy variables
Construction 0.007 0.012 0.013 0.07 0.10
Manufacturing 0.10 0.10 0.10 0.21 0.23
Transportation, communications, utilities 0.07 0.05 0.04 0.16 0.11
Trade (wholesale or retail) 0.13 0.16 0.16 0.16 0.18
Finance, insurance, real estate 0.07 0.09 0.09 0.04 0.05
Business services 0.05 0.05 0.05 0.08 0.07
Personal services 0.05 0.05 0.05 0.03 0.03
Public administration (government sector) 0.08 0.05 0.05 0.09 0.06
Professional services 0.45 0.43 0.43 0.15 0.15
Ag., forest, fish, mining (omitted category) 0 0.01 0.01 0.01 0.02
Occupation dummy variables
Executive, administrative, managerial 0.12 0.17 0.18 0.1 0.18
Professional specialty 0.16 0.21 0.22 0.1 0.15
Technician and related occupation 0.03 0.05 0.05 0.02 0.03
Clerical and administrative support 0.26 0.25 0.25 0.08 0.05
Private household or protective services 0.02 0.01 0.01 0.06 0.03
Other service occupation 0.22 0.13 0.11 0.09 0.05
Craft, precision production, repair 0.02 0.02 0.02 0.15 0.2
Machine operator, assembler, inspector 0.05 0.04 0.03 0.1 0.07
Transportation and material moving 0.02 0.01 0.01 0.13 0.07
Farm, fish, forest, laborers, handlers 0.02 0.02 0.02 0.1 0.06
sales (omitted category) 0.08 0.1 0.11 0.06 0.1
N 1277 8962 7098 967 7295
Race and Gender Differences in Earnings / 473
TABLE 1B
MEANS OF VARIABLES—FULL-TIME YEAR-ROUND

Black All White Black White


women women women men men
ln wage 2.5 2.64 2.67 2.72 2.93
Wage (geometric mean) 12.14 13.98 14.38 15.24 18.73
Age 41.63 42.33 42.52 41.25 42.27
Age squared 1826.54 1890.61 1908.25 1793.25 1886.80
Dummy variable if high school education 0.91 0.94 0.93 0.89 0.92
Dummy variable if college degree 0.25 0.33 0.34 0.22 0.32
Dummy variable if graduate degree 0.08 0.11 0.11 0.06 0.11
Dummy variable if lives in metro. area 0.42 0.24 0.19 0.42 0.19
Dummy variable if lives in the Northeast 0.2 0.20 0.21 0.17 0.21
Dummy variable if lives in the South 0.55 0.36 0.33 0.55 0.34
Dummy variable if lives in the West 0.07 0.20 0.20 0.09 0.20
Dummy variable if Midwest 0.18 0.24 0.27 0.19 0.26
Number of own children 0.88 0.70 0.66 0.75 0.81
Number of children less than 6 0.19 0.16 0.15 0.22 0.26
Dummy variable if married 0.40 0.58 0.62 0.56 0.71
Dummy variable if U.S. citizen 0.95 0.95 0.97 0.93 0.94
Dummy variable if job covered by union 0.21 0.16 0.15 0.23 0.19
Dummy variable if of Hispanic descent 0.02 0.05 0.06 0.02 0.08
Dummy variable if disability 0.01 0.01 0.01 0.01 0.01
Industry dummy variables
Construction 0.01 0.01 0.01 0.07 0.09
Manufacturing 0.10 0.12 0.12 0.22 0.25
Transportation, communications, utilities 0.08 0.05 0.05 0.16 0.11
Trade (wholesale or retail) 0.12 0.15 0.15 0.16 0.18
Finance, insurance, real estate 0.07 0.10 0.11 0.04 0.06
Business services 0.05 0.05 0.05 0.06 0.06
Personal services 0.05 0.04 0.04 0.03 0.03
Public administration (government sector) 0.08 0.07 0.06 0.10 0.06
Professional services 0.44 0.40 0.40 0.16 0.14
Ag., forest, fishing, mining (omitted category) 0 0.01 0.01 0.01 0.02
Occupation dummy variables
Executive, administrative, managerial 0.13 0.20 0.21 0.11 0.19
Professional specialty 0.16 0.20 0.21 0.11 0.13
Technician and related occupation 0.03 0.05 0.05 0.02 0.03
Clerical and administrative support 0.28 0.25 0.25 0.08 0.05
Private household or protective services 0.02 0.01 0.01 0.06 0.04
Other service occupation 0.20 0.10 0.08 0.09 0.05
Craft, precision production, repair 0.019 0.02 0.02 0.16 0.20
Machine operator, assembler, inspector 0.06 0.04 0.03 0.10 0.07
Transportation and material moving 0.01 0.01 0.01 0.12 0.07
Farm, fish, forest, laborers, handlers 0.02 0.01 0.01 0.09 0.05
Sales (omitted category) 0.07 0.1 0.11 0.06 0.1
N 1014 6296 4867 822 6413
474 / MARLENE KIM
by unions. They were less likely to work in managerial, professional, or techni-
cian occupations and were more likely to be employed in service occupations.
Black men were especially overrepresented in private household or protective
service occupations and in transportation and material moving.
Although in some regards black women followed the employment patterns
of black men, in others, they followed those of other women. Like their female
counterparts, for example, more black women were found in professional ser-
vices and clerical jobs, and fewer in construction or manufacturing industries
or in craft, precision production, transportation, material moving, or laborer
occupations.
To examine the extent to which the earnings differences are due to differ-
ences in human capital versus discrimination, I ran the following human capi-
tal regressions:
woi ¼ Bo X oi þ eoi ð1Þ
wbi ¼ Bb X bi þ ebi ð2Þ
where woi is the log of hourly earnings of the high-wage group,8 here called
‘‘other workers,’’ Xoi is a vector of human capital and other control variables
for other workers, wbi is the log of hourly earnings of the low-wage group,
here called ‘‘black workers,’’ Xbi is a vector of human capital and other control
variables for black workers, and eoi and ebi are the error terms.
I then decompose the log earnings difference between black and other work-
ers using the Blinder–Oaxaca procedure (see Blinder 1973; Oaxaca 1973) into
two components—the ‘‘explained’’ component, and the ‘‘unexplained’’ compo-
nent:
X ^o  X
o B ^b ¼ B
b B ^ o ðX
o  X
b Þ þ X
 b ðB
^o  B
^ bÞ ð3Þ
where X  b is a vector of the means of the independent variables for black work-
o a vector of the means of the independent variables for other workers,
ers, X
^ b the coefficients on the variables for black workers, and B
B ^ o the coefficients
on these variables for other workers.
The first argument on the right-hand side of equation 3, B o  X
^ o ðX  b Þ, is the
portion of the log earnings difference attributed to different levels of observa-
ble human capital. It is called the ‘‘explained’’ or non-discriminatory compo-
nent of the wage gap, since differences in the characteristics of workers can
explain the difference in earnings. X ^o  B
 o ðB ^ b Þ, the second argument on the
right-hand side of equation 3, is the difference in the log earnings gap attrib-
uted to different returns to the control variables. It is the ‘‘unexplained’’
8
For notational simplicity, I refer to blacks as the low-wage group and other workers as the high-wage
group.
Race and Gender Differences in Earnings / 475
portion of the wage gap. Because this portion is due to black workers receiv-
ing lower returns to their human capital than other workers, it is a measure of
discrimination, the effect of unmeasured variables, or both.9
Decomposing the log earnings gap into these two components allows me
to examine the extent to which differences in earnings between black and
other workers are due to differences in observable human capital or other
characteristics, such as regional distributions, that are associated with higher
earnings (called ‘‘human capital’’ in the remainder of this paper), versus the
extent to which they are due to rewarding these traits differently by race or
gender.10

9
In research that examines earnings penalties by race or gender, a controversy exists regarding how to
interpret such measures of earnings differences: whether these differences result from discriminatory treat-
ment or from unmeasured variables. For research that uses race (gender) dummy variables to measure the
effect of race (gender) on earnings, characteristics such as productivity or skill that are not included in the
regression and that are also correlated with race (gender) would explain some of the differences attributed to
race (gender). For example, if blacks have lower skill levels than white workers, and these differences are
not fully captured by education or work experience controls, the race dummy variable may be measuring the
effect of unmeasured skill level, not race, on earnings differences. This is why the debate on AFQT scores
is important. If AFQT scores measure intelligence or skill, it is important to include them in regressions.
However, if they are only correlated with race but fail to measure skill or intelligence, it is improper to
include them. Much of the debate thus involves which variables should be included as controls.
A similar, but more complex argument exists for the results using the decomposition technique, since
the measure of racial(gender) earnings penalties is the amount by which blacks(women) are receiving lower
wage increases than whites(men) for higher increments of the control variables. Thus critics of these studies
argue that blacks may be receiving lower returns to having a college degree compared to whites because
they go to inferior schools.
For studies of gender disparities, the argument is that women may be receiving lower returns to hav-
ing a college education than white men because they major in the liberal arts rather than more lucrative
areas such as engineering. Similarly, women may have lower returns to being married and having children
than men because compared to men, women are working fewer hours per week or take off more time to
raise children. It is very difficult to discern, without perfect control variables, whether these measures are
due to unmeasured variables or differential treatment (although see Weinberger and Joy 2007 for the persis-
tence of race and gender disparities even when college major and educational institution are controlled for).
For purposes of this study, even if one assumes that black women have inferior educations compared with
white women or white men, it would be difficult to argue that this is the case when comparing black women
with black men. Thus although educational differences may be explained by racial differences in the quality
of education, this would not explain the gender gap. Similarly, work hours or more precise measures of
work experience may explain the gender gap in earnings between black men and black women, but it would
not explain the racial gap in earnings between black women and white women. One can surmise that the
persistent gender gaps may be explained by work hours and race gaps by educational quality, but it is diffi-
cult to explain the additional gap I find that is attributed to the intersection of race and gender this way.
10
The decomposition technique is used for this analysis because it allows me to distinguish between
these two effects; alternative methods, such as using dummy variables for race and gender, cannot distin-
guish between these. In addition, this technique is useful because I can estimate the wages black women
would earn if they retained their mean characteristics but received the same returns to their observable
human capital characteristics as black men, white women, and white men. Studies that examine earnings
penalties by using dummy variables for race and gender cannot do this because by design they do not allow
the slopes to vary by race and gender groups for the independent variables.
476 / MARLENE KIM
Up to this point this study has been standard. What is unique is that I ran
regressions for several groups of workers—black women, black men, white
women, and white men. To examine gender penalties in black women’s earn-
ings, I compare black women’s wages with those of black men. I evaluate race
penalties for black women by comparing black women’s earnings with white
women’s earnings. To estimate the total amount of earnings disparities due to
both race and gender for black women, I compare black women’s earnings
with those of white men. I then examine the intersection of race and gender
by comparing the sum of the race and gender penalties with the total amount
of earnings penalties black women face. Finally, I estimate racial earnings pen-
alties for black men by comparing their earnings with those of white men.
This allows me to compare the race penalty for black women with that of
black men.
The number of specifications run precludes showing the results for all of the
regressions, so I will summarize the results for the independent variables.
These were consistent with previous findings. Workers who were older, U.S.
citizens, attained higher education levels, and whose jobs were represented by
labor unions received higher earnings. People who worked part time, were dis-
abled, or Hispanic earned less. Workers in the Northeast and West had higher
earnings, and those living in the South lower earnings than those in the Mid-
west. The coefficients on marital status, urban residence, and number of
children changed signs, depending on the gender or specification used.

Results of the Blinder–Oaxaca Decompositions


Tables 2–4 show the results of the decompositions. Following Kim (2002)
and Cunningham and Zalokar (1992), I simulate predicted wage ratios assuming
that both black and other workers were paid according to the latter’s coefficients
(B  b =B
^ oX  o ),11 and then assuming that both black and other workers have the
^ oX
same (black) characteristics (B b =B
^ bX  b ). These simulated wage ratios, shown
^ oX
in Section A, allow one to examine the extent to which black workers receive
lower earnings because they are rewarded with lower returns to their observable
human capital or because black workers have lower amounts of such observable
wage-generating human capital compared to other workers. To illustrate this fur-
ther, in Section B I show the decomposition from equation 3. The difference in
log hourly earnings between black and other workers is presented as the compo-
nent due to different levels of observable human capital, B o  X
^ o ðX  b Þ, and the
portion due to differential returns to these characteristics, X ^o  B
 b ðB ^ b Þ.

11
Estimates using the black coefficients are available from the author upon request.
Race and Gender Differences in Earnings / 477
TABLE 2
DECOMPOSITION RESULTS

Race penalties for black men


(1) (2) (3)
Controls for occupation ⁄ public sector? No Yes No
Controls for industry? No No Yes
A. Predicted wage ratios
Actual wage ratios 79.71 79.75 79.73
Eliminating difference in coefficients 90.47 84.99 90.06
Eliminating difference in characteristics 88.11*** 93.84*** 88.54***
B. Gap in ln hourly earnings 0.23 0.23 0.23
Unexplained gap in ln hourly earnings 0.13 0.06 0.12
Unexplained gap, percent of total gap 55.82 28.11 53.76
Explained gap in ln hourly earnings 0.10 0.16 0.10
Explained gap, percent of total gap 44.18 71.89 46.24
Percent of explained gap from
Education 23.91 61.91
Occupation ⁄ public sector 51.75
Industry )0.21
Full-time year-round workers
A. Predicted wage ratios
Actual wage ratios 73.35 81.33 81.35
Eliminating difference in coefficients 91.57 85.77 90.86
Eliminating difference in characteristics 80.11*** 94.82*** 89.53***
B. Gap in ln hourly earnings 0.31 0.21 0.21
Unexplained gap in ln hourly earnings 0.22 0.05 0.11
Unexplained gap, percent of total gap 71.57 25.73 53.56
Explained gap in ln hourly earnings 0.09 0.15 0.10
Explained gap, percent of total gap 29.43 74.27 46.44
Percent of explained gap from
Education 24.28 62.05
Occupation ⁄ public sector 53.77
Industry 3.68
NOTES: t Tests were performed as the difference between ln (wagebm) and B bm , where B
^ wm X ^ wm is a vector of the estimated
coefficients for white men and X bm a vector of the means for black men.
***Significant at the 0.1 percent level.

Black Men. The results of the decompositions for black men are shown in
Table 2. Column 1 indicates that even if they have the same levels of observa-
ble human capital, black men earn 12 percent less than white men. Section B
indicates that approximately half of the earnings difference is the result of
differences in observable human capital. When the sample is restricted to full-
time year-round workers, greater racial disparities are found. Black men’s
racial earnings penalties rise to 20 percent, and the unexplained component of
478 / MARLENE KIM
the wage gap rises to 72 percent. These results are consistent with previous
findings.
Working in different occupations appears to explain much of these earnings
gaps. As Column 2 shows, the racial earnings gap falls by half when occupa-
tional controls are added. The results in Section B indicate that occupational
segregation and employment in the public sector explain most of the explained
gap, followed by differences in education. I find similar results for full-time
year-round workers.
Industry of employment explains less of the racial wage gap. Among full-
time year-round workers, industry of employment explains some of the racial
wage gap (note that the race penalty declines from 20 to 10 percent and the
explained gap rises from 29 to 46 percent), but to a much smaller extent than
occupation. When using the whole sample, however, working in different
industries does not explain racial wage differences.

Black Women. The wage gaps for black women can be examined as estimates
of the extent of racial, gender, and total (race and gender) earnings penalties.
Racial Gaps. The racial wage gaps for black women follow patterns very
similar to those for black men. Table 3, Columns 1–3 show these results.
Column 1 indicates that black women earn 9 percent less than white women
with the same observed characteristics. Most of the difference in wages is due
to the unexplained portion of the earnings gap—that due to receiving different
returns to their observed human capital characteristics.
As Column 2 shows, working in different occupations explains much of the
racial wage gap for black women—even more so than for black men. Adding
occupational controls reduces the racial gap to only 4 percent.12 These patterns
are similar when full-time workers are examined. As with black men, working
in different industries does not appear to explain racial wage differences for
black women among the whole sample. This is true for full-time year-round
workers as well.13 (See Column 3.)
Gender Gaps. Columns 4–6 of Table 3 examine the gender gap for black
women. Column 1 indicates that black women earn 15 percent less than black
men with similar levels of observed human capital. Thus the gender penalty is
higher than the racial penalty. The results in Section B show that, similar to
the racial gap, black women’s lower returns on their observable levels of
human capital causes most of the gender wage gap.
12
In addition, most of the difference in earnings is explained by the control variables, especially controls
for occupation
13
Similar to the results for black men, the wage ratios do not change much when industry variables are
added and the coefficient on industry is negative, which indicates that on average black women work in
higher-paid industries than do white women.
Race and Gender Differences in Earnings / 479
TABLE 3
PENALTIES FOR BLACK WOMEN

Race gaps Gender gaps


(1) (2) (3) (4) (5) (6)
Controls for occupation ⁄ public sector? No Yes No No Yes No
Controls for industry? No No Yes No No Yes
All workers
A. Predicted wage ratios
Actual wage ratios 86.95 86.92 91.38 81.74 81.69 85.92
Eliminating difference in coefficients 95.22 90.09 96.06 95.79 94.83 93.88
Eliminating difference in characteristics 91.30*** 96.48* 95.13*** 85.34*** 86.14*** 91.52***
B. Gap in ln hourly earnings 0.14 0.14 0.09 0.20 0.20 0.15
Unexplained gap in ln hourly earnings 0.09 0.04 0.05 0.16 0.15 0.09
Unexplained gap, percent of total gap 65.04 25.58 55.44 78.65 73.77 58.39
Explained gap in ln hourly earnings 0.05 0.10 0.04 0.04 0.05 0.06
Explained gap, percent of total gap 34.96 74.42 44.56 21.35 26.23 41.61
Percent of explained gap from
Education 37.92 143.09 )19.95 )30.69
Occupation ⁄ public sector 68.25 12.35
Industry )24.24 34.78
Full-time year-round workers
A. Predicted wage ratios
Actual wage ratios 84.47 84.44 84.44 79.72 79.67 79.68
Eliminating difference in coefficients 93.99 88.8 94.42 95.62 95.82 93.89
Eliminating difference in characteristics 89.88*** 95.09** 89.43*** 83.36*** 83.14*** 85.77***
B. Gap in ln hourly earnings 0.17 0.17 0.17 0.23 0.23 0.23
Unexplained gap in ln hourly earnings 0.11 0.05 0.11 0.18 0.18 0.15
Unexplained gap, percent of total gap 63.24 29.75 66.03 80.25 81.23 67.55
Explained gap in ln hourly earnings 0.06 0.12 0.06 0.04 0.04 0.07
Explained gap, percent of total gap 36.76 70.25 33.97 19.75 18.77 32.45
Percent of explained gap from
Education 30.94 92.08 )19.09 )20.67
Occupation ⁄ public sector 65.46 )24.46
Industry )5.83 41.42
NOTES: t Tests were performed as the difference between ln (wagebw) and B  bw , for race differences, and ln (wagebw)
^ ww X
and B^ bm X ^ ww a vector of the estimated coefficients for white women, B
 bw , for gender differences; with B ^ bm a vector of
the estimated coefficients for black men and X  bw a vector of the means for black women.
*Significant at the 5 percent level; **significant at the 1 percent level; ***significant at the 0.1 percent level.

Although occupational segregation explains most of the racial wage gap,


it contributes almost nothing to explaining the gender gap.14 But the fact
that black women work in different industries than black men partially
explains the gender wage gap for black women. Adding industry controls
reduces the gender gap by half; black women earn 8 percent less than
14
Adding occupational controls barely changes the gender wage gap for black women (see Column 5),
and only 12 percent of the explained portion of the gender wage gap is attributed to working in different
occupations. The results for full-time year-round workers are consistent with these results.
480 / MARLENE KIM
similarly skilled black men who work in the same industry. Of the
explained portion of the gender gap, one-third is due to working in differ-
ent industries (see Column 6). Similar results were found for full-time year-
round workers.
Total Wage Gaps. Comparing black women’s earnings with those of white
men reveals the total amount of earnings penalties black women face because
of their race and gender. Table 4 shows these results. Column 1 indicates that
even if black women had the same amount of observable human capital as
white men, they would still earn 27 percent less. This is surprising, since the
estimates above generated gender penalties of 15 percent and race penalties of
9 percent. Thus the total earnings penalties black women face is not the simple
sum of their race and gender penalties. If in a simple world black women
faced two distinct and separate penalties, one because of their gender and one
because of their race, one would expect total wage gaps to be the simple arith-
metic sum of the two, 24 percent. If on the other hand, gender and race penal-
ties are positively associated, one would expect total wage penalties to be less
than 24 percent.
But the results suggest a third alternative: There appears to be a negative
association between race and gender. There is an additional statistically signifi-
cant but small wage penalty of 3 percent in addition to separate race and gen-
der penalties. The results imply that black women face earnings penalties
because of their race, a separate one because of their gender, plus an addi-
tional penalty due to the combination of both their race and gender. In other
words, black women appear to be penalized in addition to being black and a
woman—they suffer small but additional penalties for being both as well. For
descriptive purposes, I will call this additional penalty the ‘‘race and gender
interaction penalty.’’15
When the sample is restricted to full-time year-round workers, black women
face even larger total wage disparities (36 percent). Similar to the results
above, the sum of the gender gap (17 percent) and race gap (10 percent) falls
short of the total earnings disparity. The remainder is a statistically significant
race and gender interaction penalty of 9 percent. This interaction penalty is
now sizeable, about equal to the racial penalty, although still half the size of
the gender penalty.
Part of the total earnings disparity results from working in different occupa-
tions. When black women work in the same occupations and have the same

15
Research on disability refers to ‘‘double handicap plus’’ meaning that being female and disabled has a
negative interaction that imparts an additional penalty besides the separate effects of gender and disability
(see Hanna and Rogovsky 1993; see also Deegan 1985; Schur 2003). The race and gender literature, how-
ever, refer to the same phenomena as the ‘‘intersection’’ between the two; hence I use this term.
Race and Gender Differences in Earnings / 481
TABLE 4
PENALTIES FOR BLACK WOMEN

Total gaps
(1) (2) (3)
Controls for occupation ⁄ public sector? No Yes No
Controls for industry? No No Yes
All workers
A. Predicted wage ratios
Actual wage ratios 65.16 65.15 68.51
Eliminating difference in coefficients 89.56 82.54 84.32
Eliminating difference in characteristics 72.76*** 78.94*** 81.24***
Total wage gaps 27*** 21*** 19***
Race and gender interaction penalty 3*** 3** 6
B. Gap in ln hourly earnings 0.43 0.43 0.38
Unexplained gap in ln hourly earnings 0.32 0.24 0.21
Unexplained gap, percent of total gap 74.25 55.20 54.92
Explained gap in ln hourly earnings 0.11 0.19 0.17
Explained gap, percent of total gap 25.75 44.80 45.08
Percent of explained gap from
Education 14.74 27.62
Occupation ⁄ public sector 53.40
Industry 34.82
Full-time year-round workers
A. Predicted wage ratios
Actual wage ratios 58.47 64.8 64.81
Eliminating difference in coefficients 91.07 83.33 85.77
Eliminating difference in characteristics 64.2*** 77.75*** 75.57***
Total wage gaps 36*** 22*** 24***
Race and gender interaction penalty 9*** 0 )1
B. Gap in ln hourly earnings 0.54 0.43 0.43
Unexplained gap in ln hourly earnings 0.44 0.25 0.28
Unexplained gap, percent of total gap 82.57 57.99 64.60
Explained gap in ln hourly earnings 0.09 0.18 0.15
Explained gap, percent of total gap 17.43 42.01 35.40
Percent of explained gap from
Education 14.39 27.45
Occupation ⁄ public sector 55.06
Industry 37.82
NOTES: t Tests for the total wage gaps were performed as the difference between ln (wagebw) and B  bw . For the race
^ wm X
and gender interaction penalty, t tests were performed as the difference between the total wage gaps and the sum of the
gender and race gaps, or B ^ wm X
 bw  ln ðwagebw Þ and ½B  bw  ln ðwagebw Þ þ B
^ bm X bw  ln ðwagebw Þ. Here B
^ ww X ^ ww is a
vector of the estimated coefficients for white women, B ^ bm is a vector of the estimated coefficients for black men, B ^ wm a
vector of the estimated coefficients for white men, and X bw a vector of the means for black women.
*Significant at the 5 percent level; **Significant at the 1 percent level; ***Significant at the 0.1 percent level.

human capital as white men, the total earnings penalty falls to 21 percent (see
Column 2). Working in different occupations and in the public sector explains
one-half of the explained gap in earnings. A closer examination suggests that
wage differences because of occupational segregation are driven by racial
482 / MARLENE KIM
rather than total disparities for the full sample.16 Working in different indus-
tries also explains part of the total earnings gap. When working in the same
industry, black women earn 19 percent less than similarly skilled white men
(see Column 3 of Table 4). Their different industrial distributions account for
one-third of the explained wage gap. Recall that adding industry controls
reduces the gender gap but not the race gap. Taken together, these results
imply that gender segregation explains most of the different industrial distribu-
tions.
The results for the interaction penalties are intriguing. As Column 2 shows,
when occupational controls are added, the interaction penalty remains
unchanged for the full sample but falls to zero for full-time year-round work-
ers. In Column 3, after adding industry controls, the penalty is no longer sig-
nificant; for full-time year-round workers, it effectively drops to zero. The
results imply that for the full sample, the cause of the interaction penalty is
associated with working in different industries. For full-time year-round work-
ers, the race–gender interaction penalty is correlated with working in different
occupations and industries. It is unclear what can explain these different
results.
Overall, it appears as if the total wage gaps are evenly explained by differ-
ences in observed human capital levels and their different returns to these char-
acteristics. Although black women appear to suffer from smaller racial wage
penalties than black men (9 percent earnings penalties for women versus 12
percent for men), they face a greater amount of total earnings penalties
because they are penalized due to their race and gender as well as due to the
negative interaction of the two.

Why Have Previous Studies Failed to Find Racial Penalties for Black
Women?
Previous results indicate that black women face racial penalties, earning 9
percent less than white women who hold the same observable levels of human
capital characteristics. Why do these results differ from studies that have not
found racial earnings penalties for black women? The answer appears to be
that studies that fail to find racial penalties use different comparison groups
and one particular specification.
16
This is because the interaction penalty remains unchanged when occupational controls are added (see
Column 2). Recall that the gender gap also barely changed when occupational controls were added (compare
Columns 4 and 5, Table 3), but that the race gap fell and these controls explained much of the explained
gap (compare Columns 1 and 2, Table 3). Taken together, this indicates that black women work in different
occupations due to their race rather than either their gender or the interaction of their race and gender.
Race and Gender Differences in Earnings / 483
Table 5 shows the decomposition results when comparing black women
with all women (not just white women). Not surprisingly, this comparison
group shows lower racial penalties of 4 percent (see Column 1). Holding occu-
pation or industry constant, black women earn only 2 percent less than women
with the same levels of human capital (see Columns 2 and 3). In addition,
using occupational controls renders the race penalty statistically insignificant.
When occupational and industrial controls are included, full-time year-round
workers continue to show statistically significant racial earnings differences of
5 and 8 percent, respectively.
This explains why some researchers have found evidence of race discrimina-
tion in earnings for black women while others have not. Research that has

TABLE 5
PENALTIES FOR BLACK WOMEN

Race gaps
All women as comparison group (1) (2) (3)
Controls for occupation ⁄ public sector? No Yes No
Controls for industry? No No Yes
All workers
A. Predicted wage ratios
Actual wage ratios 88.78 86.77 93.34
Eliminating difference in coefficients 94.42 90.90 95.08
Eliminating difference in characteristics 94.03 97.66 98.17
B. Gap in ln hourly earnings 0.12 0.11 0.07
Unexplained gap in ln hourly earnings 0.06 0.02 0.02
Unexplained gap, percent of total gap 51.72 19.92 26.84
Explained gap in ln hourly earnings 0.06 0.10 0.05
Explained gap, percent of total gap 48.28 80.08 73.16
Percent of explained gap from
Education 34.83 102.93
Occupation ⁄ public sector 64.42
Industry )17.87
Full-time year-round workers
A. Predicted wage ratios
Actual wage ratios 86.86 85.31 86.83
Eliminating difference in coefficients 93.62 89.51 95.04
Eliminating difference in characteristics 92.79 95.31 92.33
B. Gap in ln hourly earnings 0.14 0.16 0.14
Unexplained gap in ln hourly earnings 0.07 0.05 0.08
Unexplained gap, percent of total gap 53.16 30.26 56.50
Explained gap in ln hourly earnings 0.07 0.11 0.06
Explained gap, percent of total gap 46.84 69.74 43.50
Percent of explained gap from
Education 28.19 77.87
Occupation ⁄ public sector 54.75
Industry )7.61
484 / MARLENE KIM
failed to find racial wage penalties compared black women to all women,
while holding industry constant (Darity, Guilkey, and Winfrey 1996). This
seems to be one of only two specifications that find negligible evidence of
wage penalties. Using white women as a comparison group, omitting industry
dummy variables, or examining full-time year-round workers finds that black
women earned less than white women with the same level of observed human
capital.17
Given that the results differ depending on which specification and compari-
son group is used, it is important to understand which is more appropriate. If
black women freely choose their jobs and employers, adding occupational or
industrial controls could be controlling for unmeasured characteristics of the
job, such as different working conditions or excess demand or supply of work-
ers. Their inclusion would not lead to biased estimates of wage penalties. But
if occupations and industries are not freely chosen, so that black women face
discrimination in employment and find it more difficult to enter into certain
occupations and industries, then using the estimates with industry or
occupation controls underestimates the extent of differential treatment in the
workplace.
Although some researchers claim that gender differences in occupational and
industrial distributions can be explained by preferences, no one makes this claim
regarding racial differences. Thus controlling for industry and occupation to
examine racial differences in earnings is unlikely to lead to biased estimates.
Research using audit studies indicates that those with black names, such as
Jamal and Lakisha, are less likely to be hired than those with Anglo names such
as Emily and Brad, even when the qualifications of the applicants are the same
(Bertrand and Mullainathan 2004). This research suggests that black women are
penalized for no other reason than their race, and that adding controls for indus-
try and occupation may underestimate the extent of unequal treatment.
Which comparison group one uses depends on the research question. Darity,
Guilkey, and Winfrey (1996) examined a number of different ethnic and racial
wage disparities, so the most appropriate comparison group to use was all
women, since many of the ethnic groups were racially white. In addition,
using all women makes sense if one is trying to obtain estimates of the wage
that would result for black women in the absence of different treatment in the
workplace, and if white workers face wage advantages in the labor market that
would disappear in the absence of such treatment (Cotton 1988).
17
Interestingly, the results I obtain confirm previous results by Kim (2002) and Darity, Guilkey, and
Winfrey (1996). The latter found that black women were not underpaid when using industry controls and all
women as a comparison group. Kim’s results found that black women were underpaid 7 percent even when
industry controls were added, but when compared with white women. The difference in comparison groups,
using white women or all women, now appears to be the source of the different findings in these studies.
Race and Gender Differences in Earnings / 485
Yet because most researchers are interested in understanding the wage dif-
ferences between black and white workers—and in particular how black
women would fare if they were treated the same in the labor market as white
women—they use white women as the comparison group. Even if white work-
ers face wage advantages that would disappear in the absence of differential
treatment, it is useful to know the earnings penalties that exist under the
current wage structure. Hence, for most research, white women are the more
relevant comparison group.

Conclusion and Future Research


This research finds that black workers continue to earn less than white
workers. Black men earn 12 percent less and black women 27 percent less
than white men with the same levels of observable human capital. The racial
earnings penalties work in similar ways for both black men and women: work-
ing in different occupations explains much of these racial wage disparities.
Although black men face higher racial earnings penalties than black women,
the combined effect of both race and gender disparities results in black women
facing greater wage penalties than black men.
Even when they work in the same occupations or industries, the gender and
race earnings gaps persist. Although the different occupational distributions of
black men and women explain much of their racial wage gaps, they explain
very little of the gender wage gap. In contrast, working in different industries
does not appear to explain much of the racial earnings disparities, but
much—one-third—of the gender wage gap for black women.
Black women appear to suffer from three sources of earnings penalties. The
greatest (15 percent) is because of their gender. They face an additional (9 per-
cent) penalty due to their race. In addition, they face a small (3 percent) but
statistically significant penalty in addition to these because of the interaction of
their gender and their race. This additional interaction penalty appears to be
associated with the jobs in which black women work. These results support
the conjecture that the race and gender penalties black women face are not
additive but are greater than the sum of their parts.
These results bring up as many questions as they have answered. Foremost
is the intriguing interaction effect of race and gender, which begs future
research. What is the cause of this interaction, and does it occur differently or
even disappear in different workplace scenarios, circumstances, and work
groups, as previous researchers have suggested may be the case? Are the inter-
action effects similar for other women of color? How do cross-country esti-
mates compare? The answers to all of these questions remain for further
486 / MARLENE KIM
research. In addition, although the results for full-time year-round workers
were usually consistent with those of the full sample, they usually showed
larger earnings gaps. Future research can also examine why these stronger
effects occur.

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