Between-firm racial segregation and between-race earnings inequality in the US, 1997-2022

• In Event: 20455 - Gender and Racial Inequality in Organizations

Abstract

Social processes taking place within and between racialized organizations (Ray 2019) structure earnings inequalities (Reskin 2000, Wingfield 2020). This paper considers how two recent trends intersect: increasing inequality between workplaces in average pay levels (Song et al. 2019, Tomaskovic-Devey et al. 2020), and increasing racial segregation between workplaces (Ferguson and Koning 2018). Together these raise the possibility that increasing inequality among organizations has heightened earnings differentials between racialized groups, e.g. if white workers are disproportionately found in advantageous organizations pulling away from the rest. Analyzing Census Bureau data, I find generally decreasing within county, between firm ethnoracial segregation at US average, 1997-2022. Further probing indicates the trend is robust and widespread, and suggests sample-based reasons for the contrast with the previous finding of rising segregation. Considering earnings, I find between firm ethnoracial segregation accounts for about a quarter of the unconditional white-nonwhite earnings gap within counties, though there is significant heterogeneity over specific racialized groups. This finding, too, contrasts with previous estimates suggesting little effect of segregation on racial earnings gaps (Hellerstein and Neumark 2008). Further, this component does not necessarily fall when segregation falls: between-firm earnings polarization ratcheted racialized groups’ average earnings further apart, 2001-2012, even as segregation decreased. Counterfactual analyses suggest between-firm polarization in average earnings did indeed bring up between-group gaps for the 2001-2012 period, while later compression (Aeppli and Wilmers 2022) helped shrink them. There is also evidence that white and Asian workers have dispersed away from the middle of the industry premium structure towards either top or lower rungs. Besides providing updated national estimates of racial workplace segregation and its effects on racial pay gaps, this paper contributes to efforts conceptualizing the organizational bases of US racism and attendant earnings inequalities by bringing attention to characteristics of the organizational population into which workers are segregated.

Author

• Matt Mendoza, Columbia University