Higher Education and the Racial Wage Gap

Higher Education and the Racial Wage Gap
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During this election season, Donald Trump pointed to the dismal employment situation in many urban black communities. While the statistics he presented were faulty, he was basically right. Most deplorable, the share of all black men nationally without a job averaged almost 40 percent during 2000–14; and in many of the Atlantic Coast and old industrial Midwestern cities it was 50 percent or more. In growing Charlotte, it was still 35.5 percent, whereas the city’s white and Latino rates were 15.5 and 9.7 percent, respectively. No wonder there’s anger at a recent police killing there, as the city’s prosperity is leaving the black community behind.

Less discussed, however, is the plight of recent black college graduates. New research highlights the difficulties they face. In one important study, Valerie Wilson and William Rodgers assessed the changing wage gap between black and white workers from 1979 through 2015. After two decades of modest decline, the racial gaps among both men and women increased after 2007, particularly for college graduates. Among college graduates with no more than 10 years of experience, the racial gap increased by 3.7 and 5.9 percent among men and women, respectively.

In a second study, Judith Scott-Clayton and Jing Li found that black graduates have almost $53,000 in student loans four years after graduation, close to double the amount white graduates hold. Just a few years earlier, when students collect their baccalaureate diplomas, the gap was just $7,400. One factor is that blacks with bachelor’s degrees are more likely to go to graduate school. Almost half of the 2008 cohort of black graduates the researchers studied enrolled in graduate school within four years, compared to just 38 percent of white graduates.

The Wilson-Rodgers study only measured wage gaps among graduates who were employed. For those with bachelor’s degrees or more, the unemployment rate was 4 percent, compared to 2.4 percent for whites. These rates were measured for those 25 years old or more. Since unemployment is concentrated among younger graduates, this suggests that for recent black college graduates, the unemployment rate is probably well over 10 percent.

Wilson and Rodgers contend that “racial wage gaps are growing primarily due to discrimination;” and Scott-Clayton and Li emphasize that black indebtedness is the result of the disproportionate enrollment of black students in graduate programs at for-profit schools. (28 percent sign up at for-profit schools, compared to less than 10 percent for their white peers.) While labor-market discrimination and for-profit enrollment certainly plays a role in the weak employment and high debt of black graduates, there are other important factors. In particular, the Wilson-Rodgers study does not take into account racial differences in student majors, student grades, or the selectivity of colleges attended.

On average, black students graduate college with lower grades. A comprehensive study found that at a group of selective public colleges, 65 percent of white students had GPAs of 2.8 or higher, compared to only 28 percent of black students. Similarly, a study of the University of Michigan, before affirmative action was upended, found that while the median GPA of black students was 2.4, with half being on academic probation at one time, three-quarters of white students had GPAs of at least 3.05.

Black students disproportionately major in lower-earning subjects. For example, 20 percent of degree holders in human services and community organizing are black, with a median salary of about $40,000 per year. By contrast, only 7 percent of those who receive STEM-related bachelor's degrees, with a median annual salary of $84,000, are black.

Black students also disproportionately attend less selective schools. For example, during the 2009–10 academic year, black students comprised 12 and 44 percent of the graduates from the most selective and least selective City University of New York (CUNY) four-year colleges, respectively.

Competition increased for professional employment immediately after the Great Recession. Candidates from the least selective schools, especially those with weak grades, would have faced the most difficulties finding employment. The rates of enrollment reported by Scott-Clayton and Li suggest that many of these candidates may have sought post-baccalaureate credentials instead. Here they would have faced competition due to their weak college records, forcing many to enroll in for-profit schools and less-selective private universities. In many cases, these efforts did not result in successful outcomes.

Whereas between 2007 and 2015, the white unemployment rate declined for those with more than bachelor’s degrees, the opposite was true for black college graduates. Wilson and Rodgers found that when those with graduate education are included, the racial wage gap among recent female college graduates, for instance, increased from 5.9 to 6.8 percent.

All of this calls into question efforts to encourage students, including black students, to focus on four-year degrees regardless of their academic credentials by first entering the community colleges where they face remediation hurdles. The graduate rates at CUNY community colleges are dismal — below 20 percent, in some cases. Rather than discouraging the most at-risk students from matriculating, advocates have successfully convinced the administration to eliminate many of the requirements on the math entrance exam. Do we really need more college graduates with little knowledge of mathematics? And if they fail to obtain professional employment, how many of them will go on to graduate programs, accumulating student debt rather than marketable skills?

Hopefully, Trump’s education czar will understand that that this blanket college promotion does not serve our nation and is particularly harmful to young black Americans, reinforcing rather than addressing racial disparities.

Robert Cherry is Professor of Economics at Brooklyn College and CUNY Graduate Center.

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