How Disparities in Benefits Contribute to the Racial Wealth Gap
The black construction worker, the Latina home health aide, and the white entry-level data analyst may all work just as hard and take equal pride in their work.
But a new research study from Brandeis University and The Workers Lab, an organization that develops strategies to improve the lives of working people, suggests two of the three may be facing predictably uncertain futures. And, it’s not just because of the gaps in their pay.
Not Only Unequal Paychecks: Occupational Segregation, Benefits, and the Racial Wealth Gap links disparities in benefits in the workplace to the racial wealth gap in the U.S. and examines how workers of color and their families are now so far behind that left unaddressed, there is no way for them to catch up.
“This report expands the aperture of what we think working people need,” says Carmen Rojas, CEO and co-founder of The Workers Lab. “We’re so focused on wages, that we leave on the table one-third of the compensation that comes in the form of benefits, and a whole host of other things that include training and development.”
The study looked at five major industries and quickly found that Black and Latinx workers are overrepresented in the lower-paying fields of food service, construction, and health care, while white workers are overrepresented in the higher-paying ones of finance and STEM.
Now, within these fields, wage disparities do exist, the study finds. Workers of color in each of the five industries tended to be paid less than their white peers with similar educational backgrounds.
But the lack of access to the same set of benefits – retirement savings products, healthcare insurance, paid time off and family leave – has proven to have long-term toxic effects for families of color in the U.S., particularly if income levels are used a threshold to keep people from participating in benefit schemes.
Here’s just one stat. According to the study, barriers to pension benefits diminishes the wealth of black and Latinx workers by $5,600 and $9,800 respectively. Employers’ denial of health care coverage takes $2,700 in wealth from black workers and $5,400 from Latinx ones.
These barriers add up.
According to a report published by the Institute for Policy Studies, by 2020, the median white family is projected to own 86 times more wealth than its black counterpart, and 68 times more wealth than its Latinx one.
But if all things were truly equal, it would make a meaningful difference.
“Median wealth among Latino employees would increase 71 percent if employer-based health coverage were equalized and would more than double if pension rates were equalized,” the researchers say. “For Black workers, median wealth would also go up substantially, increasing 25 percent if employer-based health were equalized and 53 percent if pension rates were equalized.”
Of course, there’s a history lesson. From the report:
The structures for sharing [post-World War II] prosperity between employees and owners were established in the context of strong unions with benefits beyond the paycheck that protected family savings and provided opportunities for improved well-being and brighter futures. Workplace-based health insurance, paid time off, and retirement plans became a crucible through which working families could protect and create wealth through their jobs. Yet, today and in the post-war period, not all working families were included in work savings and benefit structures—workers of color, women, and those in low-paid jobs are particularly left out. Occupational segregation is a major reason that post-World War II prosperity created in the workplace primarily benefitted Whites. Unfortunately, today even as our workforce grows more diverse, occupational segregation continues to characterize the nation’s workplaces.
So, what should be done?
The researchers offer a variety of solutions. (Practitioners, be sure to check out their Racial Wealth Audit framework, too.) But to retain a diverse workforce, larger employers are going to have to understand how current benefit schemes are either insufficient for or unavailable to people of color. Be the advocate, says Rojas. “Advocate for policy changes like expanded paid time off and family leave,” she says. And don’t forget training and development opportunities that often only screen for “professional track” employees.
Even making sure individuals understand the benefits that are available to them helps. “There’s a real need for providers to make worker-friendly products so it isn’t a burden for workers to participate.”
But the math is pretty clear. For white workers, the ultimate perk is having a future. And that’s not sustainable for anyone.
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