Labor and Income Inequality in the U.S.

Introduction

Every day people meet and try to fight with various forms of injustice. Some persons are discriminated against by their religion, nationality, and culture. One may also notice discrimination and inequality in labor and income as, usually, women and ethnic minority groups get a smaller salary or cannot get a job at all. The purpose of this paper is to explore the causes of growing income inequality in the United States by comparing Western and Rosenfeld and Bertrand and Mullainathan readings. Also, evidence of each author supporting their arguments will be provided, and the class factor and ethnic minority groups’ outcomes will be discussed. Finally, the last two paragraphs will be dedicated to an imaginable scenario where America achieved both high national economic growth and low-income inequality.

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Western’s and Rosenfeld’s Ideas

In their article, “Unions, Norms, and the Rise in U.S. Wage Inequality,” Bruce Western and Jake Rosenfeld discuss income inequality. They explore “a decomposition, relating rising inequality to the union wage distribution’s shrinking weight” (Western and Rosenfeld 2011:513). In their research, they link unionization to wage inequality among those workers who do not belong to unions. According to Western and Rosenfeld (2011:521), “if union members are increasingly positively selected, upward bias in wage effects will grow because of union workers’ rising productivity.” Also, they state that unions raise wages among blue-collar and less-educated employees. Because of that, the educational and occupational inequality in unions reduces.

Moreover, more than the educational and occupational inequality, unions reduce income inequality. Wages in industries and firms are being standardized, and the spread of wages among members of the union with similar characteristics reduces.

However, as women who do not belong to unions are concentrated in occupations with low and almost equal salaries, the effect of unions on inequality is the largest among men. What is more, when unions raise salaries for their members, employers may fire people to cut union employment. So, unemployed workers are forced to seek jobs in the nonunion labor market, and because of workers’ spillover into the nonunion sectors, wages fall.

Bertrand’s and Mullainathan’s Ideas

Marianne Bertrand is a Belgian economist, and Sendhil Mullainathan is an American professor; they both work at the University of Chicago Booth School of Business. Their article “Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination” was written in 2004 and is dedicated to the problem of labor and income inequality in the US. Bertrand and Mullainathan decided to prove their ideas about hiring discrimination and conducted an interesting social experiment that they described in detail in their article.

The experiment was conducted in order to make sure and find evidence to support the idea of African-Americans’ discrimination. Bertrand and Mullainathan made thousands of resumes and divided them into four groups. The first and the second were with Whites’ and African-Americans’ higher-quality resumes and names; the third and the fourth groups consisted of lower-quality resumes of Whites and African-Americans accordingly. Bertrand and Mullainathan found various help-wanted advertisements in newspapers and typically sent four resumes, two higher-quality and two lower-quality, in response to each advertisement.

The results were compared after counting the callbacks for interviews. It appeared that “Whites with higher-quality resumes receive nearly 30-percent more callbacks than Whites with lower-quality resumes. On the other hand, having a higher-quality resume has a smaller effect for African-Americans” (Bertrand and Mullainathan 2004:992). In other words, the gap between African- Americans and Whites broadens with the quality of a resume.

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Also, there was another interesting thing noticed after the experiment. It appeared that the racial gap the professors measured “in different industries does not appear correlated to Census-based measures of the racial gap in wages” (Grusky 2018:380). The same may be said about the discrimination measured in various occupations: the racial gaps in callback do not change depending on occupation and industry categories. It means that larger employers, federal contractors, and employers who consider themselves to be equal opportunity ones do not treat the African-American resumes more preferentially.

Class Factor

After the experiment, Bertrand and Mullainathan managed to find some more aspects of the differential racial treatment. It is connected with the class the applicant belongs to. As the professors randomly wrote applicants’ addresses on the resumes, it gave them an opportunity to analyze if the likelihood of callback depends on the neighborhood of residence indicated on the resume. It appeared that living in a wealthier, quieter, and more favorable neighborhood increases rates of a callback (Bertrand and Mullainathan 2004). However, it is interesting that this factor usually works only for Whites; African-Americans are not helped by living in a wealthier neighborhood.

America Without Labor and Income Inequality

One of the many reasons why inequality still exists in a number of countries is that many people do not pay attention to it and do not at all consider discrimination a problem. There is a way to understand and explain to other people how important the fight against labor and income injustice is. One may imagine the United States of America as a country that is already free from discrimination and achieved high national economic growth. After that, people should think about how their country may achieve that state.

America without labor and income discrimination would be a country of freedom, justice, and equality. People would be free from stereotypes, and employers would finally pay attention only to the applicant’s experience, qualities, and skills instead of his or her gender and race. Women and people from ethnic minority groups would be able to find good jobs according to their education and profession and get appreciated according to their qualification level.

To destroy labor and income injustice, it is important to reduce the whole economic inequality. The first step is to increase the minimum wage as higher salaries for the lowest-paid jobs may get millions of people out of poverty. Next, the Earned Income Tax needs to be expanded because it has a positive effect on families lifting millions of children above the poverty line. Thirdly, the government needs to invest more money in education. Differences in early and school education are the essential factors of constant inequality across generations. Investments in education may decrease injustice and increase economic mobility.

Conclusion

To draw a conclusion, one may say that, probably, it is going to take decades to destroy the discrimination in all spheres of society. People fight with injustice and try to draw the attention of the government to the severity of the problem, but it is a slow, challenging process. Undoubtedly, the problem of labor and income inequality should be solved as soon as possible because women and people from ethnic minority groups suffer from low salaries and the inability to get a job. Unfortunately, until the government takes serious measures to eliminate discrimination, it will continue prospering in society.

References

Bertrand, Marianne and Sendhil Mullainathan. 2004. “Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination.” The American Economic Review, 94(4):991-1013.

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Grusky, David, and Hill, Jasmine. 2018. Inequality in the 21st Century. Boulder: Westview Press.

Western, Bruce and Jake Rosenfeld. 2011. “Unions, Norms, and the Rise in U.S. Wage.” Inequality American Sociological Review 76:513-537.

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StudyCorgi. (2021, June 23). Labor and Income Inequality in the U.S. Retrieved from https://studycorgi.com/labor-and-income-inequality-in-the-u-s/

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"Labor and Income Inequality in the U.S." StudyCorgi, 23 June 2021, studycorgi.com/labor-and-income-inequality-in-the-u-s/.

1. StudyCorgi. "Labor and Income Inequality in the U.S." June 23, 2021. https://studycorgi.com/labor-and-income-inequality-in-the-u-s/.


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StudyCorgi. "Labor and Income Inequality in the U.S." June 23, 2021. https://studycorgi.com/labor-and-income-inequality-in-the-u-s/.

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StudyCorgi. 2021. "Labor and Income Inequality in the U.S." June 23, 2021. https://studycorgi.com/labor-and-income-inequality-in-the-u-s/.

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StudyCorgi. (2021) 'Labor and Income Inequality in the U.S'. 23 June.

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