Study: Wage gap widens between Black, white workers, especially in Michigan

Michigan leads all states in the decline in earnings for Black workers, driven in part by the collapse of middle-class manufacturing jobs. (Shutterstock)

Ricky Jefferson has watched the erosion of the Black middle class in the Ypsilanti area over decades.

Today, as a Washtenaw County commissioner, he’s part of the mission to restore economic parity to the part of the county that didn’t thrive during the recovery from the Great Recession. Higher poverty rates, higher unemployment and lower educational attainment set the area apart from the growth around Ann Arbor. So does its concentration of Black residents.


Then, as coronavirus overtook parts of Michigan in the spring, Ypsilanti and Ypsilanti Township residents were disproportionately infected and killed by the virus.

“Every day, I wake up and I have to be hopeful,” Jefferson said. Yet the toll weighs on him. He sees people “working two and three jobs just to make ends meet.

“The income gap is high here,” he said. “To try to combat that … has been difficult.”

A new study from Michigan State University economists shows that since the late 1970s and early 1980s, earnings of Black workers have fallen relative to the earnings of white workers in much of the United States.

Michigan leads all states in the decline in earnings for Black workers, driven in part by the collapse of middle-class manufacturing jobs, says Charles Ballard, an MSU economics professor and study author.

“Forty years ago, Black workers earned more in Michigan than in any other state,” Ballard said.

“Since then, in much of the country, Black workers’ earnings at least kept up with inflation, but white workers’ earnings grew faster.”

His research found Black men in Michigan earned about 20 percent less in recent years than 40 years ago when adjusted for inflation. Black women used to earn 15 percent more than white counterparts in Michigan; now they earn 15 percent less.

“Every day, I wake up and I have to be hopeful,” said Washtenaw County Commissioner Ricky Jefferson, who says he sees people working multiple jobs “just to make ends meet.” (Courtesy photo)

Black men, for instance, earned an average of $52,051 in 2017 values from 1976 to 1981. That fell 19.6 percent to $41,871 per year from 2012 to 2017. 

White men also saw wages shrink, but by far less: down 2.8 percent to $55,372 from $56,979 over the same period.

In the 1970s, Black workers of both genders made more money on average in Michigan than any other state. Today, the state ranks ninth in earnings for Black women and 10th for Black men.

“Diversity has been a delusion for Black people in terms of economic progress,” said Kenneth Harris, president and CEO of the National Business League, which promotes Black business and economic development.

“The research suggests that if Michigan doesn’t start to address the economic disparity gap among Black people, they will not be competitive with the rest of the country, as the U.S. becomes majority Black and brown in the next 20 to 30 years.”

Ballard said he and co-author, MSU economics professor John Goddeeris, started their research two years ago, following a decade of watching the national trend toward rising income inequality. They found states in the Deep South bucked the trend, which made them wonder about the role of race. Eventually, they assembled 42 years of data from all regions of the country to look at regional and racial differences. 

Manufacturing plays a role in the findings, Ballard said, notably in the late 1970s, when Black workers in Michigan were “paid more than Black workers anywhere else,” he said. “Michigan was a real success story.”

“We need to create opportunities for people to become middle class and create opportunities for people in the middle class to want to live here,”  said Ashley Clark, director of Center for Equity, Engagement and Research at Detroit Future City. (Courtesy photo)

Yet the change in more recent years is not a main driver for the change in rates of pay for Black and white workers, Ballard said. “The shrinkage of manufacturing [jobs] hurt whites in Michigan, too.”

A key to understanding the difference in pay comes from what replaced manufacturing jobs: “higher-skilled, higher-tech jobs, where the payoff is having more education,” Ballard said.

In 2019, 40.1 percent of non-Hispanic whites aged 25 and older had a bachelor’s degree or higher, up from 33.2 percent in 2010, according to the U.S. Census Bureau. 

In comparison, the percentage of Black residents 25 and older with a bachelor’s degree or higher rose to 26.1 percent from 19.8 percent. The same report showed that high school was the highest level of education for 25.6 percent of whites and 29.6 percent of Blacks.

“Black workers never quite caught up to white workers as far as educational attainment,” Ballard said. “The payoff to education has skyrocketed.”

Another factor showing in the data, Ballard said, is that Black workers are more likely to be in low-paying jobs such as food service or hourly health care positions. “There’s a lot of occupational segregation,” Ballard said. 

Beyond those reasons, Ballard said, a portion of the gap can’t be explained. Some may be because of a lack of data, such as measuring union participation. “Almost certainly a part of it is current labor market discrimination,” he said. 

Solutions, Ballard said, gain some urgency as the nation increases its focus on racial disparity and debate about whether the coronavirus pandemic will accentuate the earnings divide. 

He suggests restoring federal Pandemic Unemployment Assistance funding to bolster the lowest-wage earners who lost jobs and likely do not have savings to fall back on. Until late July, PUA added $600 per week to Michigan unemployment benefits.

Education policy also plays a role, he said, with the threat of students in lower-income school districts falling behind during the learning shifts prompted by COVID-19. Affluent students, meanwhile, are more likely to stay on track, thanks to private tutors and enrichment programs. 

Those are among issues at the forefront for Detroit Future City, said Ashley Clark, director for the nonprofit planning agency’s Center for Equity, Engagement and Research. She said educational attainment and workforce opportunities are important in Michigan’s largest city, where population shifts among the middle class left concentrated poverty in Detroit. 

“We need to create opportunities for people to become middle class and create opportunities for people in the middle class to want to live here,” Clark said.

COVID-19, she added, “showed disproportionate impact on communities of color.” That stretches from social determinants of health, like poverty and housing instability, to employment disparities that Ballard described. 

“We have to acknowledge that the previous ‘normal’ was vastly inequitable and that the crisis has left many people more vulnerable,” Clark said. 

The impact of racial wage gaps on a community is high, said Harris, the leader of the National Business League.

“It means that Blacks continue to be marginalized, isolated and excluded from the economic mainstream of society, further maintaining and underdeveloped and poverty-stricken status in America, removing the possibility of generational wealth and economic opportunities.”

Back in Washtenaw County, that’s a concern for Jefferson, too. 

A retiree from General Motors before he moved into local politics, Jefferson saw what good-paying manufacturing jobs meant to the Ypsilanti area: Workers of all races were able to buy homes, contribute to the tax base and count on a quality education from local schools. 

“Without those earners, with their fair wages, our school district suffers,” Jefferson said, noting how two Ypsilanti-area districts had to consolidate while students continue to move to nearby affluent districts. “That impacts what resources are available to our children and what opportunities they find.”

The ripple effects show the complexity: child care, health care, housing affordability all rise as issues in a low-income community, he said. Then business startups may struggle for financing, further limiting economic progress.

The economy amid COVID-19 “has shown me that it’s getting worse and diversity gaps are widening,” Jefferson said. He thinks the wave of protests over the summer will help by mobilizing younger adults to drive change, which he hopes results in policy changes.

“On the horizon,” Jefferson said, “there’s a zeal from younger generations to no longer tolerate these disparities.”

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Thu, 08/13/2020 - 12:01am

The talk of the 70s is looking in a review mirror in hopes of finding the future.
The reality that is being ignored is that the 70s was the time of transition from an economy that was based on leveraging hard work to an economy that is based in leveraging knowledge and skills.
The focus/policies need to be about creating a culture in our neighborhoods/communities that reinforces the value of academic success, that tell the stories about how individuals create their own success by taking control of their learn process, that elevate the social recognition of those who succeed using their learning and their minds.
We need to be asking why a black man who lifted himself out over poverty in Detroit to become a world renowned surgeon is belittled by partisan politics. If academic success in Detroit is not highlighted with every success we find, why should we be surprised that academic disappointment is the norm.
The reality these studies always seems to ignore is that learning is a personal process, that the individual does the learning not the teachers or administrators, and they never include the role/responsibilities the individual has, so the individual is never made part of the plan, and the plan always fails.
There is nothing new in the article, there is nothing that can be used to change the learning results.

Fri, 08/14/2020 - 8:44am

Nicely said. People hate the truth.

Fri, 08/14/2020 - 8:47am

It’s hard for people to see the truth. Your comments are dead on.

Thu, 08/13/2020 - 8:20am

So we're all making less than in the seventies. And profits and wealth continue to funnel up toward a small percentage of the wealthiest Americans. And wealth and income inequality continue to ravage American working families. Now there's a story, Gardner.

George Hagenauer
Thu, 08/13/2020 - 8:57am

The decline in manufacturing deepened during the same period that welfare to work programs failed. With fewer manufacturing jobs welfare to work basically moved low income people- disproportionally black- into lower wage occupations. The formulas for the various work support programs. child care , food stamps etc. were not pegged to local cost of living so in urban areas people working their way off welfare would just reach a point where they could not pay the needed copays and lose the supports they needed to move into self-sufficiency. You can't get ahead if your meager savings disappear on an annual basis. Fixing healthcare so it is affordable and developing work support systems staffed by people from the low income communities that actually move people out of poverty is the first step towards solving the problem.

Ren Farley
Thu, 08/13/2020 - 9:08am

I appreciate this essay about the decline in the economic status of Michigan's residents in the last 50 years. On almost all standard measures of economic status such as average wages, median household income, home ownership and median value of owned residences, the black white gap is larger now than in 1970. Among both races, average economic status has decline but there has also been a polarization of income among both blacks and whites.
With regard to social indicators, the picture is very different. Levels of racial residential segregation have decline and the Detroit suburban ring is open to racial minorities in a way it was not in 1970. Now about 45% of the metropolitan Detroit black population lives in the suburbs. Even places with a long history of aversion to black residents such as Warren and the Grosse Pointes now have considerable numbers of African American home onwers. And, in another indicator of social change and integration, interracial marriage or cohabitation is now more common than in the past and Michigan has a growing population of young people who are identified by their parents as both white and black by race.

Thu, 08/13/2020 - 10:19am

And whose fault is that?? It's not the white peoples fault, the blacks have just as much opportunity as any other race!!!!! I am sick and tired of hearing about the 'blacks' at a disadvantage!!!!

Thu, 08/13/2020 - 6:40pm

Of course it's all our fault. Especially if you're white and old. Old white men are the new boogie men and are all to be blamed for all of black failures.

Thu, 08/13/2020 - 10:55am

GOP says it doesn't like the government "to pick winners and losers".

Joe Cochran
Thu, 08/13/2020 - 12:18pm

I read the above article and I have some disagreements about it. First - the only two identifiers or topics with regards to the wage gap according to the article are 1) education and 2) technical skills. Secondly - I find this article slightly racist in that it only described differences between whites and blacks, and it didn't include asians or hispanics in order to get a full view of what is taking place within the wage/employment disparity. Thirdly - this article really doesn't hit on solutions. It has a lot of pointing fingers at what the problems are but what are the true solutions that can be obtained by all races of people and are they truly doable? You can't force people to go to technical school and you can't force people to go to college. If people don't value either one of those two things and believe that it will have a huge impact on your future then you will complacent and be stuck on that same rung of the ladder that you are currently standing on.

Also, a solution of giving more in unemployment benefits didn't seem like it really hit the solution target. That's a temporary fix, what are the long term solutions. As I stated before, what are the real solutions and how can they be immediately implemented to start the process of solving this situation?

Overall, this article, in my opinion, had a lot of fluff that was not centered around true solutions. When I was in the service my Commanding Officer told me if you are bringing me a problem you need to bring me solutions as well - this article didn't meet that objective I'm sorry to say.

Thu, 08/13/2020 - 6:38pm

We know, we know. Michigan is racist and horrible. We know.....Yawn....