The unexplainable growing wage gap | Hacker News Reader

The unexplainable growing wage gap

bls.gov

44 pointskylebenzle23 comments

A important aspect that I think is overlooked is that democratized access to exponential growth (like an index fund or buying a house) mathematically creates a growing wealth gap.

E.g. if 2 people equally start with $100 and grow their money at 7% per year, the difference in wealth is:

100 * 1.07 ^ 10 - 100 * 1.07 ^ 5

This function is still an exponential function.

So even though the second person is always 5 years behind in wealth, the absolute wealth gap will grow exponentially and cut the latter off from being able to compete on anything that they both want access to within the same timeframe. E

Another way to put it: for every dollar I have more than you, in t years I’ll have 1.07^t more.

That correlates to wealth but not wages.

That doesn’t hold over time due to regression to the mean. For example, over half of white Americans are today are descended from Italian, Irish, German, Nordic, and eastern European immigrants who came to the US in poverty. This was before skilled immigration—half of German immigrants in the 19th century came as indentured servants. Today, these groups are economically equal to British descended Americans, many of whom came here as affluent landowners and obviously have been here much longer.

> While a sizable portion of the gap arises from explained factors, including occupation choice, educational attainment, and age

What possible justification is there for reporting the topline number without accounting for age? The median black person is 35; the median white person is 44. That’s a huge difference in seniority and pay in most jobs.

Occupational choice and education I can understand, those might be driven by discrimination so it makes sense to look at a top line that doesn’t adjust for that. But age? The article doesn’t even provide the age-adjusted gap.

[2017]. Apparently this gap has been shrinking in the last 5 years, in a reversal of the long-term trend.

https://www.nytimes.com/2023/06/19/briefing/juneteenth-racia...

> The authors found it most notable that a significant portion of the racial wage disparity is attributable to unexplained factors

It’s probably because systemic racism is a bit more covert and insidious in nature than overt racial discrimination. But just because it’s not obvious doesn’t mean it’s not there. However, one could argue that racism in the US is actually quite overt and obvious. It isn’t unexplainable factors, they’re just factor’s that those in positions of power do not want to pay attention to or don’t appreciate or understand the need to. It’s things like recognising the impact that intergenerational trauma has on individuals, their families and also their wider community. It’s things like poverty. Or over-policing of poor/black communities. And it’s also about how all these different issues intersect and further disadvantage people.

i find 'overpolicing' an inaccurate description here. sure, the police will go into a black neighborhood to bust some heads. but when people in that neighborhood need help from the police, they are either noticeably absent, or treat the victims like criminals.

Is it "systemic racism" if the explicit rules of the system favor the race?

I prefer "endemic", because it is baked into the operators of the system...

> I prefer "endemic", because it is baked into the operators of the system...

There was a pandemic of racism that we fought a war over, now we have to pretend it doesn't exist anymore to keep the economy going and 'live our lives'?

I'm not sure what you mean by that. We certainly didn't fight a war over racism, but instead over chattel slavery and a states right to have that. I do not believe the north was less racist simply because they did not have slaves by the time the civil war broke out.

I also don't understand your "doesn't exist" comment. Racism exists (and we're also seeing the trial of "combat racism by more racism")

Small sample size but the black men I know seem to stay in the same job for much longer than my other friends.

I’m confused why the authors of the original study pegged education as only explaining 5% of the gap, functionally unchanged since the 70s when the labor market was far more favorable towards blue collar work.

As far as I’m aware, there’s a 12-50% gap (depending on level of degree) in educational attainment between black and white men[1]. Seems odd to reduce that effect down to a static 5%, particularly when talking about average wages.

1. https://www.brookings.edu/articles/the-challenges-facing-bla...

The unexplainable, growing black-white wage gap (2017)

is the actual title.

Another factor that would be interesting to control for is 2-parent households. I don't know how you provide adequate support for single parents while also encouraging 2-parent households, but it doesn't seem like we're trying either.

The authors suggested that unexplained factors could include discrimination, differences in school quality, and differences in opportunity.

If that voice was any more passive it would be the gimp from Pulp Fiction.

Just an idea: Could the effects of trauma from slavery be trans-generational, via biological or cultural channels, and impacting ability to compete in the workplace?

This is from 2017 and the picture changed drastically in 2018-2023.

How so?

When labor markets get tight like 2019, 2021-2023, the largest income gains, proportionally, are among lower earning groups.

https://www.atlantafed.org/chcs/wage-growth-tracker.aspx

Click on “Race” and “Wage Level"

I wonder if they accounted for the criminal history of black men? If I understand the statistics right a black man has a one in three chance of serving time in a federal prison. That must have an influence on future wages

That would be an interesting theory to entertain. Systemic as in criminalizing pot but not alcohol.

Well, they tried alcohol for the voting age people and it didn't work out (though is still prohibited for people too young to get drafted)

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