A racial salary gap has persisted in the US for more than 50 years among minority groups, with Black people currently earning 30 to 35 percent less than Whites. Now new research shows that in addition to receiving smaller paychecks, Black workers are also less likely to have supportive bosses, a positive work culture, and a healthy work-life balance.
“When we think about racial gaps in the United States, we tend to mostly measure relative income levels.”
At a time when many companies are looking to recruit and retain more people of color to correct racial imbalances, business leaders should evaluate their work environments, says Harvard Business School Assistant Professor Letian Zhang, because these softer measures of workplace quality matter to employees—in some cases, even more than pay.
“When we think about racial gaps in the United States, we tend to mostly measure relative income levels,” Zhang says. “But especially younger generations are increasingly concerned with other elements in the workplace, and they are even willing to sacrifice wages for these other amenities.”
Black employees get fewer workplace perks
For his study, “Racial Inequality in Work Environments,” published in American Sociological Review in April, Zhang measured culture, manager quality, and work-life balance based on almost 933,000 employee reviews of 8,800 companies on the career website Indeed.com. The site, which also provides salary information, uses a five-star rating system to gauge working conditions.
While such reviews are published anonymously, Zhang cross-referenced the data with a government database from the Equal Employment Opportunity Commission that lists the racial percentages of employees at all US companies with 100 or more employees. That allowed him to compare the rankings for these environmental factors with the racial makeup of various firms.
When he did, Zhang found that Asian employees scored highest on work environment, followed by White and Hispanic employees, who ranked about the same, whereas Black employees fared the worst. Although the differences among the groups weren’t large, they remained consistent across Zhang’s research models.
“We saw consistent racial differences when it comes to the level of amenities in the workplace,” Zhang says.
What’s causing work environment inequities?
These differences, says Zhang, could be attributed to two different factors. First, there could be a spillover from broader societal inequalities. For example, Black and Hispanic workers are overrepresented in blue collar and service positions.
“Companies such as Google and Facebook have pretty good work environments, and these are tailored toward highly skilled employees,” who are more likely to be White or Asian, Zhang says.
Likewise, Black people make up a higher percentage of the population in the South, where workers have fewer workplace protections compared to the Northeast and Silicon Valley. When Zhang controlled for variations in occupation and geography, the differences in work environments among White, Asian, and Hispanic employees went away. However, the gap between Black employees and the other races persisted.
“Firms with better work environments are presumably more attractive to employees.”
That brought Zhang to another possibility: that Black employees are being sorted into lower-quality workplaces, even within the same occupation or geographic region. “Firms with better work environments are presumably more attractive to employees,” Zhang says. “So at the point of hiring or recruiting, some employees have the opportunity to work for these firms, while Black employees are left out of these positions and therefore have to work in companies with worse work environments.”
Zhang speculates that this sorting is due to a combination of racial discrimination by managers bypassing Black applicants, as well as more systemic factors that perpetuate the privileges of certain racial groups.
“A lot of hiring comes through referrals, and people’s networks tend to be pretty racially segregated. So it’s possible that referrals will reinforce some of these disparities,” Zhang says. “If most employees in a firm are already White, then the people they refer are probably also going to be White.”
The racial gap is worse in conservative areas
The study provides valuable insights into the racial disparities that can make the difference between whether employees love or hate their jobs.
“Over and over again, surveys show that Black employees report lower levels of job satisfaction,” Zhang says. In the past, some researchers have attributed that dissatisfaction to discrimination by managers or a lack of camaraderie with people of the same race. Zhang’s data, however, provides another possible explanation for lower levels of workplace happiness: “It may actually be because they have been sorted into firms with worse work environments,” he says.
“It’s possible that in more liberal states, there are more policies and practices to reduce some of the stereotypes and alleviate potential racial inequality in hiring.”
Zhang’s data also shows that while the work condition gap is consistent across the board, it is worse in geographic areas with more conservative political views. For example, a county with 70 percent Republicans has a Black-White gap in work environment that’s three times higher than a county with 40 percent Republicans. That suggests that the broader culture may play a role in exacerbating or mitigating some of these disparities, Zhang says.
“It’s possible that in more liberal states, there are more policies and practices to reduce some of the stereotypes and alleviate potential racial inequality in hiring,” he says.
A first step toward improving workplaces
Zhang warns of several caveats to the data, most importantly that the reviews on Indeed are self-selecting, so don’t necessarily represent a comprehensive assessment of all employees at a particular firm. He did perform several checks using another data source that seem to bear out his findings. Even so, he says, the findings are only a first step toward creating awareness around racial disparities in the work environment.
By highlighting the importance of these issues, he hopes policymakers can begin to track these factors with an eye toward reducing inequities in the future.
“The IRS does a really good job of tracking everyone’s wages, but we need to be tracking these other dimensions as well,” Zhang says. “The more ways we have to do that, the more we can start thinking about how to make the work environment better and reduce these gaps.”
You Might Also Like:
- It’s Not All About Pay: College Grads Want Jobs That ‘Change the World’
- Confront Workplace Inequity in 2023: Dig Deep, Build Bridges, Take Collective Action
- What's Missing from the Racial Equity Dialogue?
Feedback or ideas to share? Email the Working Knowledge team at hbswk@hbs.edu.
Image: iStockphoto/erhui1979