In a break from decades of stagnation, recent data unveils an encouraging trend in the landscape of labor earnings in the United States. Data from the Bureau of Labor Statistics (BLS) shows that usual weekly earnings for full-time workers were up 24% for Black men and 17% for Black women at the end of 2023 compared to the end of 2021, while the median earnings of white workers rose much more slowly (10% for white men and 11% for white women).
As a result, the pay gap for Black workers is closing for the first time this century, and in 2022 and 2023 was the smallest it’s ever been for both Black men and Black women.
The unadjusted pay gap for Black workers currently stands at 75 cents on the dollar for Black women and 80 cents on the dollar for Black men, compared to the usual weekly earnings of white men (source: BLS Usual Weekly Earnings).
Why is the Black pay gap closing?
Underlying this trend is unevenness in post-pandemic earnings growth between occupations. Black workers are not uniformly distributed between occupations — for example, they are 38% of nursing assistants and 1.2% of web developers. This occupational segregation is one of the major drivers of the pay gap.
Since 2020, wage growth has been high — and it has been even higher in occupations that employ a disproportionate share of Black workers, about two percentage points at the median.
Source: Syndio calculations from BLS CPS Tables 11 and 39
In the figure above, each circle is an occupation. The size of the circle shows the number of workers in the occupation, the vertical location the wage growth between 2020 and 2023, and the shade of the dot shows the proportion of workers in the occupation who are Black. Those with a higher share of Black workers than the overall rate are in the right panel.
The median wage growth for each group is the labeled line, while the interquartile range (capturing the middle 50% of wage growth rates by occupation) is shaded. For example, 17.2% of cooks are Black (vs. 12.8% of all workers — meaning representation of Black workers is 34% higher than their baseline), and the three-year wage growth for cooks was 28.4%.
Can this trend continue?
The pay gap for Black workers has been stagnant for decades, so it is encouraging to see post-pandemic labor market dynamics disproportionately benefitting them. There is, however, a limit to how much this trend can close the pay gap.
Occupations that employ more Black workers tend to pay less, and while strong wage growth in these occupations has narrowed the pay gap for Black workers in the past two years, it’s unlikely that this trend alone can continue until Black workers’ earnings are at a similar level to white mens’.
Put differently, Black workers are still very underrepresented among high-paying occupations such as executives, dentists, lawyers, engineers, and software developers. While wages went up at twice the average rate for psychiatric technicians (an occupation which is 33% Black), it is unlikely that pay rates for psychiatric technicians will ever reach the levels of those other jobs.
The path forward
Closing pay gaps in the U.S. is complex and multifaceted, and will either require increased representation of historically excluded groups from high-earning jobs or reduced income disparities between jobs.
Companies can play an active role in progress by taking steps to close their internal pay gaps. This requires data analytics and sustained efforts to ensure both equitable pay and equitable promotion rates and representation in higher-paying positions.
Assess the pay gaps within your organization with the pay gap calculator linked below.
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