Even with the bevy of data collected on American workers every year, it can be difficult to nail down the exact causes of disparities in certain workers’ pay, let alone do something about them. Workplace protections such as anti-discrimination clauses and minimum wages have helped a little, but there are still big employment and earnings gaps between black and white Americans.
In a new paper from the National Bureau of Economic Research, the economists Celeste K. Carruthers and Marianne H. Wanamaker shed more light on today’s racial wage gap by turning to history: In their research, they look into the forces that determined the wages of Southern men during the 1940s, when segregation was legal and black workers weren’t protected by any anti-discrimination laws.
The big question that Carruthers and Wanamaker wanted to sort out was why the average black man and the average white man were earning different wages. Was it because employers were discriminating against black workers when determining pay? Or was it because black workers’ skill sets were relatively less valuable?
The answer they arrived at, after analyzing school quality, employment, and wages, was that differences in skills accounted for the most significant portion of the wage disparities in the 1940s. But the root of that skill gap was still racial. The explicit sanctioning of segregation by Jim Crow meant that black public schools lacked of resources and public funding—shortcomings that limited the skill sets and education levels of young, black men during this period, which in turn limited their job opportunities.
Carruthers and Wanamaker argue that a major determinant of public-school quality—and thus a school’s ability to churn out skilled workers—is funding. As the mid-20th-century South illustrates, a shortfall of money can hamper the development of entire groups of people: “The discriminatory preferences of white southerners were powerful in limiting black public-school quality and reducing the wages of young black men through the human capital channel,” the authors write. The persistent inequality of educational opportunities, they found, singlehandedly cut earnings of black Southern workers by as much as 50 percent.