High Profits, Low Wages, and Discrimination: Corporate America and the Double Wage Gap
March 31, 2020
By Ariela Weinberger
A Roosevelt report explores how US corporations make billions in profit from the gender and racial wage gaps, even before the coronavirus
New York, NY—Since the 1980s, American corporations have seen their profits skyrocket, and while they are hurting now due to the coronavirus pandemic, many groups of workers have been hurting for decades. Income from wages has fallen, and as many economists have observed, increased worker productivity has not led to increasing returns for those workers. This fact is painfully true for Black women, who face pay discrimination through both gender and racial wage gaps, a reinforcing confluence otherwise known as the “double gap.” As the American economy currently grapples with the onslaught of the coronavirus, the main work-related challenges currently confronting Black women are reductions in work hours or job loss. But as the US economy recovers, African American women will once again face the double gap.
In The “Double Gap” and the Bottom Line: African American Women’s Wage Gap and Corporate Profits, Michelle Holder, an assistant professor of economics at John Jay College of Criminal Justice, quantifies this pre-coronavirus gap. The report, produced in partnership by the Roosevelt Institute and John Jay, explores how corporate America is a direct beneficiary of the double wage gap Black women face. Holder finds that Black women involuntarily forfeited wages upwards of $50 billion in 2017 alone. This means significant, recurring cost-savings for the private for-profit sector, but a recurring annual loss for the Black community—which has tangible implications for income and asset-building.
To determine exactly how Black women’s labor power is largely under-compensated by employers, Holder used the following methodologies:
- First, she aggregated wage differentials between the most educated Black women in major occupations and similarly educated white, non-Latinx men in the same occupations;
- Second, she assessed the double gap by employing regression analysis, which allowed for control of other variables besides educational attainment that likely contribute both to the racial and gender wage gaps; and
- Third, she included an independent analysis of the double gap examining wage differentials between Black women and white non-Latinx men in 88 minor occupational groups.
“The economic landscape has obviously changed, with the coronavirus pandemic and necessary response measures adding much uncertainty to America’s outlook for productivity and growth. As corporations look to rebuild, the private for-profit sector now has an opportunity to improve its treatment of workers, especially those it compensates the least—Black women,” said Holder. “Paying all employees fair and equal wages is not only good for the long-term success of American companies, but it’s good for the American economy.”
We are at a critical moment in US history. Across the nation, Americans must grapple with long-standing income inequality that has only gotten worse during the pandemic and find new ways to support the millions of people now without wages. There is no better time to acknowledge the significant contribution women—especially women of color—make to the workforce and to our economy. Just as the Roosevelt Institute explains in its “Why This Matters” series, our economy isn’t working until Black women are treated fairly. You can learn more about Roosevelt’s work around the racial wealth gap and worker pay here.
About the Roosevelt Institute
The Roosevelt Institute brings together multiple generations of thinkers and leaders to help drive key economic and social debates. With a focus on curbing corporate power and reclaiming public power, Roosevelt is helping people understand that the economy is shaped by choices—via institutions and the rules that structure markets—while also exploring the economics of race and gender and the changing 21st-century economy. Roosevelt is armed with a transformative vision for the future, working to move the country toward a new economic and political system: one built by many for the good of all.
To keep up to date with the Roosevelt Institute, please visit us on Twitter or follow our work at #RewriteTheRules.
About John Jay College of Criminal Justice
An international leader in educating for justice, John Jay College of Criminal Justice of the City University of New York is a Hispanic Serving Institution and Minority Serving Institution offering a rich liberal arts and professional studies curriculum to 15,000 undergraduate and graduate students from more than 135 nations. John Jay is home to faculty and research centers at the forefront of advancing criminal and social justice reform. In teaching, scholarship and research, the College engages the theme of justice and explores fundamental human desires for fairness, equality and the rule of law. For more information, visit www.jjay.cuny.edu and follow us on Twitter @JohnJayCollege.