Racial Wage Inequality: Job Composition Effects across U.S. Labor Markets

Philip N. Cohen, University of California, Irvine
Matt Huffman, University of California, Irvine

One explanation for why Black jobs pay less tha n comparable White jobs is that work performed by Blacks is "devalued" because of the low social status of Black workers. We test whether the penalty for working in a Black job in fact results from devaluation, as is often assumed. To this end, we examine job composition effects as a function of the population proportion Black in local labor markets, which has been uniformly associated with discrimination and anti-Black prejudice. Our analysis is based on a unique construction of U.S. Census data and a three- level hierarchical linear model that allows us to control for variables at the individual-, job-, and labor market- level. The results provide strong new evidence that Black jobs pay less than otherwise comparable jobs; however, contrary to the devaluation hypothesis, we find that the penalty for working in Black-dominated jobs is not stronger, and may in fact be weaker, in local labor markets with larger Black populations. We suggest alternative explanations for the job composition effect and its spatial variation.