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Research Summary

Completing College is Key for Black Men to Earn Higher Wages and Close the Earnings Gap between Black and White Workers

Madeleine SiroisLast updated on May 07, 2024
Source: American Sociological Review Title: Higher Education and the Black-White Earnings Gap Author(s): Xiang Zhou, Guanghui Pan Original Publication Date: August 2022 Read Full Research Article

The Black-white earnings gap among US workers has been a longstanding and growing problem for decades. In fact, the median annual earnings among Black men was 50 percent that of white men in 2014, compared to 59 percent in 1970. The tight labor market induced by recovery from the COVID-19 pandemic stabilized the gap, but widespread economic growth alone cannot fix this problem. Research by Harvard University economist Raj Chetty and his coauthors shows that no more than half of this gap among men can be attributed to racial differences in parental income, parental education, or other measures of socioeconomic background, with the rest attributed to neighborhood effects.

To design and implement policy interventions that will make a meaningful difference in remediating this earnings gap, academics and policymakers alike must first improve their understanding of what is causing it. In their article, “Higher Education and the Black-White Earnings Gap,” authors Xiang Zhou at Harvard University and Guanghui Pan at the University of Oxford seek to explain the role of college in closing the gap.

It may seem obvious that higher education would help close the Black-white earnings gap, as college is so often seen as a golden ticket to economic mobility. But Black college attendees are less likely to complete their BA degrees than their white counterparts, meaning institutions of higher learning also can serve to reproduce racial inequality. There are many reasons for this disparity, including Black students’ disadvantages in financial resources, academic preparation, and responsibilities outside of school, alongside the enduring impact of racism and negative stereotypes.

The two authors use data from the National Longitudinal Survey of Youth (1997), the US Department of Education’s Integrated Postsecondary Education Data System, and the Opportunity Insights Project to quantify and explain the role of higher education in the Black-white earnings gap. They control for a robust set of individual-, family-, and school-level characteristics. To tease out the effect, they look at four different components of the effect of attending a four-year college on earnings: the direct effect of college attendance; the likelihood of degree completion given college attendance; the net effect of degree completion on earnings; and the interaction between degree completion and the net effect on earnings.

Key findings:
  • Among men, BA degrees have a strong equalizing effect on earnings, yet this effect is partly offset by unequal likelihoods of Black male students completing their BA degrees compared to their white counterparts. When controlling for precollege class background, the earnings gap is much less pronounced among Black and white women, even across levels of education. The authors posit, though, that there is still a racial gap in wages that is masked by Black women working more than white women, on average. Ultimately, the Black-white earnings gap can be reduced for both men and women by improving both college attendance and BA completion rates.
  • A BA degree narrows the male Black-white earnings gap not by reducing the influence of class backgrounds and precollege academic abilities but rather by lessening the “unexplained” penalty of being Black in the US labor market, from employer discrimination to job access. Indeed, a BA degree allows job seekers to signal their abilities in the labor market through common metrics such as grades, majors, and college attended. This may reduce racial discrimination during the hiring process. A BA degree might also help young Black men counteract negative stereotypes held by employers and access better job referral networks and opportunities.
Policy and practice implications

WorkRise has identified the following implications for policy and practice:

  • Interventions that both boost rates of college attendance and BA completion, specifically looking to close racial disparities in these transitions, can substantially reduce the Black-white earnings gap. Policies that focus exclusively on closing racial gaps in college enrollment, rather than degree completion, are insufficient.
  • Interventions can be race-blind and still be effective given that racial disparities in both college attendance and completion are largely attributable to racial differences in class background and academic preparation. Examples of interventions that weaken the influence of class and academic backgrounds on college attendance and degree completion include personalized outreach efforts of counseling, application assistance, need-based grants, and academic and social support during college.
  • Given that employer discrimination and neighborhood effects also contribute to economic inequality among Black men compared to white men without college degrees, it is important to implement interventions that target job creation and stricter enforcement of antidiscrimination laws in the US labor market.

Since the US Supreme Court ruled to end affirmative action in June of 2023, colleges and universities may not consider race as an admissions factor. But they can still implement policies and practices that increase the likelihood of their students remaining in school after admission, such as academic advising and tuition support. In doing so, institutions of higher education will inch closer to fulfilling their promise as an engine of economic mobility and equal opportunity in the United States. 

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