Equity in Education Could Curb Racial and Ethnic Wage Gaps

• Inequalities in income among racial and ethnic groups continue to widen.
• New data suggests that wage gaps can shrink by addressing equity disparities in education.
• Raising educational attainment among people of color would also benefit society as a whole.

Racial disparities in income have long been a cause for concern among Americans. In addition to costing the U.S. economy trillions of dollars over the last two decades, the racial wage gap has led to further unjust outcomes for people of color in all aspects of life.

But a new Georgetown University Center on Education and the Workforce (CEW) report found that equalizing educational attainment among racial and ethnic groups could be the key to reducing the wage gap and reversing financial outcomes for certain ethnic groups.

A new report found that equalizing educational attainment among racial and ethnic groups could be the key to reducing the wage gap.

Currently, white and Asian Americans are significantly more likely than Black, Latino/a, and Native Americans to earn college degrees. As of 2019, 45% of Black Americans, 58% of Latinos/as, and 50% of Native Americans over the age of 25 had earned a high school diploma or less.

This underrepresentation in postsecondary outcomes directly correlates to underrepresentation in both earned wages and upper-level workforce participation among people of color.

Full Breakdown of Educational Attainment by Race/Ethnicity

Below is the full breakdown of educational attainment by race/ethnicity from the CEW report.

This data comes a year after college students began increasingly demanding racial justice and equity on U.S. campuses. At the time, these demands were a direct response to nationwide protests against police brutality in the Black community.

Students' goal was to encourage their institutions to assume an active role in addressing the adversity students of color face and to take actionable steps toward creating opportunities for underserved students.

People of Color Earn Less Than Their White Counterparts

The racial wage gap in the U.S. has been well documented by experts, activists, and economists over the course of many decades. But as the gap only continues to widen, there's been increasing concerns about its effects.

People of color who earn significantly less than their white counterparts have lower rates of homeownership, have a lower ability to save, and are more likely to face nonmonetary pitfalls, such as poor health, that directly relate to their financial status.

According to the CEW report, there is a $21,000 gap in median earnings between white and Latino men. White men's median earnings were also $28,000 higher than those of Latina women, whose median earnings were the lowest of all racial and ethnic groups.

On average, white women earned more than Black men and women, Latino/a men and women, and Native American women; however, white women were outearned by Asian men and women, white men, and Native American men.

If educational attainment rose to match the levels of the country's top 60% of earners, 58% of adults over 25 would have an associate degree or higher. This would cause median earnings to rise among all racial and ethnic groups, thereby shrinking the wage gap. For example, the current $21,000 gap in earnings between white and Latino men could decline to a $13,000 gap.

Researchers also predict that increases in educational attainment among people of color could affect potential cumulative savings.

If educational attainment rose to match the levels of the country's top 60% of earners, 58% of adults over 25 would have an associate degree or higher, causing median earnings to rise among all racial and ethnic groups.

According to the report, white men's potential cumulative savings are $23,000 higher than those of Latino men. That gap widens to $55,000 between white and Black men. With increased educational outcomes, Latino men could see their savings potential rise by $39,000 on average, meaning they could outpace the savings potential of white men by $1,000.

But there's another factor to consider in earnings disparities: the underrepresentation of people of color in upper-level positions.

According to the Bureau of Labor Statistics, of the 18.6 million Americans who held management positions in 2020, Black workers represented just 8%, Asian workers 6%, and Latino/a workers 11%. Conversely, people of color accounted for a much greater proportion of the entry-level workforce.

Society Benefits Financially From Equity in Education

When people of color benefit from increased educational and economic opportunities, society benefits as well.

Experts estimate that by simply closing education and wage gaps, the U.S. could see increased annual GDP, decreased spending on public health, a reduced need for federal public assistance programs, and significant reductions in incarceration levels and spending on criminal justice expenditures.

These potential changes are attributed to the correlations between education and societal outcomes. People with higher levels of education often have larger incomes that allow them to spend more on goods and services; they are also less likely to be incarcerated and have less need for federal and public assistance.

The First Step Is Closing the Opportunity Gap

While increasing education levels is considered an essential path toward shrinking the wage gap, the first goal should be a plan to boost educational attainment among people of color. This is where colleges and universities play a pivotal role.

The financial barriers of college often deter low-income students from viewing higher education as a viable option.

The financial barriers of college often deter low-income students from viewing higher education as a viable option. Many of these students are also people of color. Universities, therefore, must ensure that they're addressing these education barriers and making a legitimate effort to introduce opportunities.

In addition to reducing financial barriers, colleges need to amend their admissions processes, which tend to pose significant obstacles for students of color. As they currently stand, most of these processes skew heavily in favor of the financially and socially privileged.

Reimagining college entrance exams, increasing awareness among populations of color, and considering the adversity faced by underprivileged students are all ways universities and organizations can help increase educational attainment.

Feature Image: AndreyPopov / iStock / Getty Images Plus