Wage inequity for black women in the workforce? Firm Price,

https://doi.org/10.1177/1936724418785411

Journal of Applied Social Science 2018, Vol. 12(2) 145 –163

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Application-Oriented Research

Major Choice and the Wage Differential between Black and White Women

Margaret R. Letterman1, Maryanne T. Clifford1, and Jennifer L. Brown1

Abstract Black workers continue to earn lower salaries than white workers, even among those with comparable levels of education. Previous research has explored the impact that the choice of college major will have on this disparity in earnings. The results of this research suggest that, among men, black bachelor’s degree recipients consistently choose lower paying majors than whites. However, among women, black bachelor’s degree recipients have, in recent years, begun to choose higher paying majors than whites. This recent change in major choice among black women is expected to result in higher starting salaries for black women on average, helping to close the racial earnings gap between black and white women. This paper empirically explores the distributional difference across majors between black and white women in Connecticut and explores the psychological reasons for this shift among black women toward higher paying majors.

Keywords college major, academic achievement, gender roles, college students

Introduction

In January of 2015, the American Association of Colleges and Universities published America’s Unmet Promise: The Imperative for Equity in Higher Education; a document making the case for increasing access to higher education among minority populations (Witham et al. 2015). Such access is expected to increase successful outcomes among minority groups in terms of educa- tional attainment, vocational knowledge, critical thinking skills, and employment opportunities, and, in particular, policies increasing positive educational outcomes among minority groups may indeed help alleviate the persistence of disparate earning across race that has historically plagued the country. However, as monetary returns to higher education can depend heavily on major choice, patterns of choice of major by race and gender may limit the ability of increased educa- tional attainment to substantially reduce the wage gap between whites and blacks, between men and women, and among degree recipient populations of white men (WM), black men (BM),

1Eastern Connecticut State University, Willimantic, CT, USA

Corresponding Author: Maryanne T. Clifford, Department of Economics, Eastern Connecticut State University, Webb Hall, 83 Windham St., Willimantic, CT 06226, USA. Email: [email protected]

785411 JAXXXX10.1177/1936724418785411Journal of Applied Social ScienceLetterman et al. research-article2018

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white women (WW), and black women (BW). To explore this notion further, this paper will build on previous work to explore major choice and expected starting salaries among bachelor’s degree recipients in Connecticut over the course of six academic years.

While perhaps providing a narrow backdrop for this study, Connecticut provides a strong initial foray into this work as its minority population is growing. Specifically, according to the 2010 U.S. Census, Connecticut’s general population expanded at a rate of 4.9 percent between 2000 and 2010. In addition, the minority population is growing as the percentage of blacks in Connecticut has increased from 9.1 percent in 2000 to 10.5 percent in 2010. The notable differ- ence in earnings between black and white workers has drawn more interest as the population of black workers has increased. This difference in earnings is easily visible as between 2007 and 2009, the median household income for a black worker in Connecticut was $43,765, or nearly 60 percent of the typical white worker earnings, with the median white worker earning $72,628 (U.S. Census Bureau 2007, 2009). However, educational attainment is believed to have nar- rowed the earnings gap as, in 2007, the median earnings for black workers with bachelor’s degrees in Connecticut was $48,711, which is 75 percent of the $64,803 median earnings for similarly educated white workers. In addition, bachelor’s degrees awarded to black students by Connecticut institutions of higher education saw a 74 percent increase between 1997 and 2007 as the number of degrees awarded rose from 1,548 in 1997 to 2,698 in 2007, compared with an 11 percent increase (up from 22,187 to 24,601 degrees) in the number of bachelor’s degrees awarded to whites over the same time period (Connecticut Board of Governors for Higher Education 2007).

These figures suggest that an increase in educational attainment among black workers in Connecticut is expected to positively affect earnings and ultimately diminish the earnings gap between black and white workers. However, this paper looks to Connecticut to identify system- atic differences in choice of major among these two groups that are likely to play a role in the persistence of this wage gap. Once initial findings related specifically to patterns in major choice across race and gender among the Connecticut populations are explored, future research will endeavor to expand the scope of this work to a regional or national level.

The remainder of this paper utilizes cross-sectional time series data to explore the relationship between major choice, race, and gender. Building on previous work completed by Free, Brown, and Clifford (2007) for the 2005–2006 academic year, black female bachelor’s degree recipients in Connecticut are found to have chosen relatively higher paying majors than white female bach- elor’s degree recipients as compared with their male counterparts. Differences in expected start- ing salaries (as they are a function of choice of major) are calculated for Connecticut bachelor degree recipients by race and gender across six academic years to determine the persistence of such a finding. Furthermore, the variance of major choice is examined across gender and race to determine the degree to which individual groups choose to concentrate on a small subset of majors. Finally, this paper employs quantile regression analysis to identify the salary sensitivity of each examined group of students in terms of major choice conditional on the distribution of these students across major. Potential policy implications of these findings are then discussed.

Theory

The college major selected by each student can have a profound effect on his or her future earn- ings. The choice of college major can be explained by economists using hedonic wage theory. According to this theory, students consider not only wages but also the nonwage amenities that are likely to result from employment opportunities related to specific college majors when esti- mating the returns to each major. Preferences for or against specific job characteristics may make a particular major field of study, and its corresponding employment positions, more desirable for some students and less desirable for others. Using this economic theory of compensating wage

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differentials or more specifically hedonic wage theory, some college students may be willing to forego choosing a major typically associated with higher wages for one that will likely lead to employment opportunities that are closely related to highly valued nonwage amenities such as the opportunity to help others or a flexible work schedule (Gronberg and Reed 1994; Hersch 1998; Hwang, Mortensen, and Reed 1998).

There is ample evidence to support the hypothesis that women, in general, value nonwage amenities more than their male counterparts (thereby often leading female students to choose majors related to lower paying employment opportunities). However, the economic argument for systematic differences in these preferences across race remains unclear. In the field of psychol- ogy, many researchers have studied differences in academic accomplishment through the devel- opment of theories that take into account variables such as gender, race/ethnicity, socioeconomic status (SES), self-esteem, parental support, and teacher expectations. Research has found that there are gender differences with respect to some variables that could influence preferences for nonwage amenities and, ultimately, the choice of college major and postgraduation occupation. It has also been found that black females score higher than white females on these particular variables. For example, males have been found to score higher on self-esteem measures than females (Chubb and Fertman 1992), and black adolescents score higher on self-esteem measures than white adolescents (Adams, Kuhn, and Rhodes 2006). However, when comparing scores of black males and females, researchers have found no gender differences (Kling et al. 1999).

The Bem Sex Role Inventory (Bem 1974) may provide an explanation for these high levels of self-esteem among black women as, when measuring attributes that have been classified as either masculine or feminine through standardized norming measures, black women have been found to score higher on the Bem masculinity scores than white women, with white women having the overall lowest masculinity scores (De Leon 1993). Other researchers found that female college students who scored higher on the Bem femininity scale were more likely to choose female- dominated majors; those who scored higher on the masculine dimension were more likely to choose male-dominated majors (Murrell, Frieze, and Frost 1991). They also reported that the females who scored highest on the masculinity scale “placed greater importance on material values and job opportunities in career decisions” (Murrell et al. 1991:106). Kling et al. (1999) found a positive correlation with self-esteem and attributes associated with the masculine sex role for males and females. It is not clear whether masculine attributes contribute to higher self- esteem or that conversely, higher self-esteem leads to the acquisition of attributes associated with the male sex role. But both may be implicated in the value placed on nonwage amenities as part of the career-decision-making process for black women.

Holding nonwage amenities constant, economists argue that individuals, regardless of race or gender, may select the major with the highest expected return as measured by the discounted value of net lifetime earnings resulting from specific college majors (Polachek 1978). The dis- counted value of net lifetime earnings is calculated by subtracting the cost of degree completion from the expected returns that will be accrued over a lifetime as a result of said degree.

Under this theory, termed the human capital investment theory, net lifetime earnings will be higher as an individual foresees earning a higher salary and an increased number of years of labor force participation. Likewise, expectations of wage discrimination in particular industries could affect the expected benefit of choosing to pursue a career in those industries. Based on social capital theory, individuals who come from privileged backgrounds may perceive a greater likeli- hood of reward from investment in their own human capital. Whereas, those with more limited means in terms of wealth, social networks, and so on may perceive the lack of social capital to be a hindrance to success in the labor market.

In terms of the cost of degree completion, the lower the perceived cost of degree completion, which is often a function of the individual’s perception of their own abilities, the greater the esti- mate of lifetime earnings will be. Polachek (1978) reports that individuals with higher abilities

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can “acquire a given amount of knowledge with less effort” (Polachek 1978:500); those who have not acquired the preparatory skills to take on a mathematics- or science-based major may not be willing to invest their time or efforts for remediation. In other words, those students who dislike a subject or perceive themselves to be underprepared for certain majors will estimate a higher cost in pursuing these majors than a student that enjoys a particular field of study and/or feels very prepared to pursue a particular major. Finally, other researchers studying students from lower socioeconomic backgrounds found that the students were more likely to enter a field of study if they perceived that the degree had lower costs with a better payoff at completion (Jetten et al. 2008). Therefore, a student who has never felt like he or she was very good at math may avoid mathematically intense fields of study because, even though the lifetime earnings for such fields of study are typically high, the initial time and effort required to successfully complete a mathematically rigorous curriculum may seem prohibitively high to the student, resulting in a low estimate of net benefits for mathematically intense majors. This might suggest that heteroge- neous or varied levels of preparedness (or perceived preparedness) across groups would lead to differences in the way each group values the net benefit of an individual major.

This issue of varied estimates in the net benefits of a major according to race and gender can be further compounded if discount rates utilized by students are dissimilar. Silverman (2003) shows the discount rate, and thus, the value of future earnings varies between men and women, providing motivation for differences in major choice by gender beyond the existence of nonwage amenities. Haushofer, Fehr, and Schunk (2013) illustrate differences in the discount rate depend- ing on gender differences and differences in income levels. Given the historical relationship between race and income level (Thomas and Horton 1992), this could lead black students to discount future earnings differently than their white counterparts potentially leading black stu- dents to systematically choose different majors than white students.

Literature

Several studies have found measurable differences in the distribution of choice in college major across race. For example, St. John et al. (2004) found that black students among Indiana’s public colleges and universities were more likely to have no declared major or to major in social sci- ences, business, and other fields while white students were more concentrated in science and math, health, education, and engineering and technology majors. Weinberger and Joy (2007) noted that among men, black students were more likely than white students to major in education and less likely than white students to major in engineering, business, or computer science. In studying Florida’s public colleges and universities, Pitter et al. (2003) found that black men were more likely than white men to major in low-wage disciplines like protective service and public administration. Finally, Staniec (2004) learned that Asian women and black women are more likely to major in science/engineering/mathematics than white women and less likely to be in humanities/fine arts. However, among all male students, black students were shown to be the only racial group that maintained a significant correlation between race and choice of major once family characteristics and academic accomplishment were controlled for.

In psychology, Gushue and Whitson (2006) found that women who hold less traditional views on sex roles are more likely to have higher career aspirations. The authors found that black women have held dual roles as breadwinner and family caregiver for generations. Black women were also shown to have had a “stronger work orientation, higher work values, a longer history of workforce participation and a more intense commitment to professional goals” (Murrell et al. 1991:108). Black women were found to expect to be working all of their lives (Brannon 1999) as they have historically been more likely to be the heads of households and often the sole support of the family. The high incarceration rate among black men (according to the Bureau of Justice Statistics, one in three black men can expect to go to prison in their lifetime) further supports the

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expectation among black women that future earnings will be central to the well-being of their family. In fact, according to Mechoulan (2011), there is a “positive effect of black male incarcera- tion on black women school attainment and early employment.”

Giele (2008) reported that “among black educated women, there is a more explicit explana- tion—almost what is felt to be a moral imperative—that a woman will use her education in an occupation outside the home for the good of the family and community” (Giele 2008:397). These women are expected to put their focus on their careers; some women who left their professions to remain home with their children full-time were actually criticized for their choice. When white middle class women leave the workforce (or never enter in the first place) to raise children and keep the home, they are merely following the models of their mothers and grandmothers before them. However, most black women have always held dual-roles and have modeled this way of life for their daughters (Giele 2008).

Toldson (2011) reported findings that support the notion that black women disproportionately hold dual roles by examining the number of degrees that were conferred on American black males and females. The most striking differences were that black women earned 270,582 degrees compared with 133,026 degrees earned by black men, at an approximate 2:1 ratio in favor of black women. However, examining the “service” majors (i.e., education, psychology, social sci- ences, and social service) was more interesting as 9 percent of all the degrees earned by black men were in these four areas while black women earned 7.8 percent of these same degrees. The reason that black men, who received one third of all the degrees conferred on black Americans in 2009, are studying in these lower paid “service” majors at a higher rate than black women, how- ever, remains unclear. That is to say, persistent differences in preferences for nonwage amenities across race have yet to be fully explained. This limits the ability of hedonic wage theory in shed- ding light on the differences in the distribution of major choice across race. Human capital invest- ment theory, then, appears to be the most heuristic economic explanation for this phenomenon as it is not unreasonable to expect that individuals of differing race may develop varied expectations regarding the net returns to employment.

In sociological literature, Good, Rattan, and Dweck (2012) report that “stereotype threat” informs women in male-dominated fields that they do not belong and are less valued than their male peers. This negative stereotyping of women’s abilities in mathematical areas actually under- mines female performance in math (Good, Aronson, and Harder 2008). Stereotype threat may actually influence women to switch from a male-dominated major to a more inviting atmosphere with a less “chilly climate” (Walton et al. 2015). However, according to Klinger’s (1977) model, one reaction to stereotype threat includes making an increased effort to disprove such an assess- ment of one’s abilities. Block et al. (2011) called this approach “fending off the stereotype.” Previous research (Edmonson-Bell and Nkomo 1998) indicates that young African American girls are psychologically “armored’ by their mothers to be prepared for the racism and discrimi- nation they will face.

Riegle-Crumb, King, and Moore (2016) examined the differences in males (taking a female- dominated major) and females (taking a male-dominated major) and the likelihood of their switching fields compared with their same-sex peers in other majors. In their investigation, they found that although men were “significantly more likely to switch from a female-dominated major” (Riegle-Crumb et al. 2016:445), there were no differences in changing majors between women in male-dominated fields or women in female-dominated disciplines. These authors also found that women of color were significantly more likely to choose male-dominated fields than white women.

Other significant findings included race/ethnicity differences in overall major switching pat- terns with black men changing majors more often than white men; overall major switching pat- terns in women found that Hispanic women changed majors more often than white women. By investigating social backgrounds, Riegle-Crumb et al. found that males that switched majors

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came from less educated families with less wealth; this correlation was not found with females. Females who switched majors had lower SAT scores than females who stayed in their initial major. For both men and women, those students who changed their majors had lower college grades than students who did not change majors.

This study also found that males who came from families with more education and income were much less likely to choose a female-dominated major. However for women—the more education and family income, the more likely the woman would be enrolled in a male-dominated field. High SAT scores were linked to both male and female students enrolling in male-domi- nated fields.

This paper builds on the current literature by not only exploring the differences in major choice across race and gender but also exploring the persistence of these differences over time and the corresponding gap in the returns to educational attainment that exists across demographic groups based on the majors that graduates are choosing.

Method

Data Sources

This study uses two Connecticut datasets to identify racial differences in the distribution of expected starting salaries for female bachelor’s degree recipients resulting from selected major fields of study. Connecticut data were selected for this study, in part, because of the availability of the population data as opposed to sample data used in most studies. However, several charac- teristics of the state provide a rich backdrop for examining disparities in earned wages across race and gender. In Connecticut, the median household income in 2010 was $65,998, which was above the national average of $49,276 (U.S. Census Bureau 2014). Median household income in Connecticut has also been consistently near the top in the U.S. Census ranking of state incomes in the United States (U.S. Census Bureau 2012–2014). Yet, that wealth is not evenly distributed as, in 2010, the state-level Gini Coefficient, a measure of income distribution across a population, calculated by the U.S. Census bureau found that Connecticut ranks 49th in income equality with only New York and the District of Columbia experiencing greater income inequality across the population (U.S. Census Bureau 2010b). Connecticut also remains among the top five in state U.S. Census rankings of the percentage of the population with bachelor’s degrees (U.S. Census Bureau 2009, 2013).

Major field of study by gender and race. The Degree Completion Database housed by the Connecti- cut Department of Higher Education1 was the primary source of degree completion data used in this study. Through this database, the number of bachelor degrees within the state of Connecticut was acquired for the academic years between 2002 and 2007. The data were composed of infor- mation that colleges and universities provide to the U.S. Department of Education’s Integrated Postsecondary Education Data System and includes, by gender and race, the number of bachelor degrees awarded in the state by academic program (major field of study).

For the 2006–2007 academic year, the state of Connecticut awarded a total of 18,509 degrees. Of these, 7,767 were awarded to men, and 10,742 were awarded to women. Among degrees awarded to women, 828 were awarded to black women, and 7,638 degrees were awarded to white women. Growth in degree recipients in the state of Connecticut is considerable compared with the 1996–1997 academic year where a total of 13,855 degrees were awarded with, 6,200 degrees awarded to men and 7,655 awarded to women. During this time period, 408 were awarded to black women while 6,055 degrees were awarded to white women. The increase in the number of black, female college graduates over this time period was 103 percent while graduation rates

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for white women increased by only 26 percent. Furthermore, during this time period, graduation rates for all women increased by 40 percent.

Average starting salaries. Each year, the National Association of Colleges and Employers (National Association of Colleges and Employers 2003) assembles a Salary Survey compiled of information from college and university career services offices. This Survey estimates the average starting salary offered nationally to bachelor degree recipients by field of study, job function, employer type, and degree level. Salary data for 2007 are provided for 79 different majors. Of these, 65 are offered in Connecticut.

Procedures

Identified in the Connecticut Department of Higher Education Degree Completion Database are more than 100 fields of study (program names). To facilitate the matching of this relatively larger database to the NACE database, the fields of study were sorted into the 65 majors contained within the NACE database according to the degree of commonality across the types of majors listed in each database. To use the available salary data in the most realistic manner possible, sal- ary data from three years prior is matched up with that year’s graduation data to reflect the infor- mation that would have been the most current when the students were selecting their majors. For example, graduates in the year 2003 would have been selecting majors three years prior to gradu- ation when salaries for the year 2000 were available. Thus, salaries from the year 2000 are matched up with major choices in 2003. Table 1 displays the 2009–2010 distribution of bachelor degree recipients across majors with the list of majors sorted from highest paying to lowest.

Using the national starting salary figures provided by the NACE Salary Survey (NACE 1999, 2000, 2001, 2002, 2003, 2004), the expected starting salary in a given year for each demographic group in this study (males, females, black men, black women, white men, and white women) is calculated. This calculation is accomplished by multiplying the percentage of graduates in each major by the major’s average starting salary offered and then totaling across all majors. The ensu- ing result is a weighted average of the starting salary for each group of graduates for each aca- demic year from 1997 to 2007. Estimated starting salaries associated with major choice can be compared between each of the four demographic groups within a given year by calculating the difference in expected starting salary between graduates in each group. This allows for a com- parison of the expected starting salaries of male and female bachelor’s degree recipients, the expected starting salaries of black and white bachelor’s degree recipients

USEFUL NOTES FOR:

Wage inequity for black women in the workforce

Introduction

The wage gap between black women and white men is one of the most important issues facing our society today. It’s a problem that affects us all, but it especially affects black women who are more likely than any other group in America to work for low wages. That said, there are some ways we can help close this gap—and they start with looking at the facts about how black women fare in the workforce compared to their white peers.

Black women make 62 cents to every dollar a white man makes.

Black women make 62 cents to every dollar a white man makes, but more than that for black men. This is because black women hold less than 1% of all managerial positions (compared with 6% in 2017). Additionally, the number of female CEOs at Fortune 500 companies dropped from 20% in 2016 to 16% in 2018. And although there are more black women working outside the home than ever before—44% work full time and 26% work part time compared to 39% full time and 24%, respectively—they still earn less than their male counterparts for comparable jobs.

While the wage gap is closing overall, that is not the case for black women.

While the wage gap is closing overall, that is not the case for black women. The wage gap between white men and women has been narrowing since 1980, but it’s still larger than it used to be. In fact, the gap between white men and black women was even wider in 2000 than it had been in 1980 — which means that while wages were rising for everyone else (and even dropping for some) things weren’t getting better for black women at all.

The reason why this matters so much isn’t just because there are more black people in America now than ever before—it’s also because they tend to be poorer than whites or other races when they do get jobs at all! This makes sense if you think about how our society functions: Companies hire managers based on meritocratic principles (the best person gets hired), but then compensate those managers with higher salaries than others who aren’t as qualified or experienced because management positions are considered valuable by society as a whole; therefore companies need talented employees who can lead teams of workers efficiently—which means having someone who understands what he/she needs from them knows exactly how much money each worker should make per hour based off his skill set alone.”

Black women have a lower rate of labor participation.

Black women are less likely to be employed full time than their white counterparts.

In fact, according to the U.S. Bureau of Labor Statistics (BLS), black women make up just 5 percent of all those working full time in America—and that’s despite being more likely than any other group to hold a job! It’s not just that they’re willing to work or have jobs; it’s also because they tend not to want them anymore once they get one: 7 out 10 black female workers between ages 25-54 say they’d like more hours at work but can’t find them due to lack of opportunity or pay equity issues related with gender discrimination against minorities who may feel uncomfortable sharing seniority or perceived racial bias among employers who might prefer older white men over younger ones who might seem like troublemakers if given free reign over an office space filled with expensive furniture set up against walls adorned with paintings by famous artists whose names you’ve never heard before (but now know thanks again).

More than one-third of black working women hold service jobs.

One of the most important things to know about service workers is that they tend to be lower paid than other jobs. Service jobs have fewer benefits, such as health insurance, retirement plans and paid time off. But service workers also have flexible hours that can make it easier for them to balance work and family responsibilities.

Service workers aren’t just women; many men hold these jobs as well—in fact, more than one-third of black working women hold service jobs. A study by Women’s Action for New Directions found that this was due in part because many people prefer having a job where they don’t need to be at their desk all day every day (like office workers). And because there are more opportunities for hourly wage work than salaried positions in government or nonprofit industries where professionals may get paid based on experience levels earned over time rather than hourly wages earned during each shift.”

Black women are more likely than other working women to be in management positions.

One of the most basic things you need to know about wage inequity is that black women are more likely than other working women to be in management positions. That means that when it comes to getting paid fairly, it’s less likely for them to experience wage inequality at work.

While there are no official statistics on this issue, research shows that black men aren’t being treated as well by their employers as white men or white women. But when we look at who gets paid what and how much they earn over time, there’s one group that stands out: Black women.

Black female managers have higher earnings than their male counterparts—but only slightly so—and they make more money than any other racial minority group or gender combination at both ends of the scale (high-level executives versus entry level).

Black mothers are more likely to work outside the home than other mothers are.

Black mothers are more likely to work outside the home than other mothers are. In fact, black women make up only 12% of all working mothers and only 16% of all breadwinners in this country. This means that a larger percentage of black women have jobs that don’t require them to be at home with their children—and therefore they may feel more pressure to earn more money because they’re not able to spend as much time with their families as their white counterparts do.

Black women are also much less likely than white or Hispanic women (the latter two groups being about equally represented)

Black mothers with working spouses often make less money than those without partners.

Black mothers with working spouses often make less money than those without partners.

Black women are more likely to be in service jobs, where the pay is lower and hours are longer than in other sectors. They also tend to work as sole breadwinners for their families, which means they’re responsible for paying taxes on their earnings—and if you don’t pay taxes, your employer doesn’t have to provide health insurance benefits or other employee benefits like paid sick leave. And because black women are less likely than white women overall to be married (a fact that has been shown by multiple studies), there’s an even greater chance that a single mother will be making all the decisions about how much money gets spent on food or clothes for her child(ren).

The economy presents challenges faced by black women workers in particular.

The economy presents challenges faced by black women workers in particular. Black women are paid less than white men and have a lower rate of labor participation, but they also work more often outside the home or take time off from work to care for children. These factors combine to place black mothers at a disadvantage in terms of wages compared with their white counterparts.

Conclusion

Unfortunately, the wage gap for black women is one of the most significant barriers to racial equality in America. This fact becomes even more evident when we look at how these women fare compared to their white counterparts: black women receive 62 cents on every dollar a white man makes. It’s clear that there is still much work ahead to close this gap and ensure that all workers are paid fairly!