Key Findings on Inequality and Discrimination in the US

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Posted Dec 18, 2020
Tiffany Mullin

At the Insighter Community Virtual conference, Melissa Gonsalves – Co-Founder & Director, Colour of Research (CORe) & Director of Strategic Insights at Differentology delivered a riveting presentation titled, 'Equality in an Unequal World.' 

She tackled the hard-to-swallow facts on how imbalanced the world currently is due to rife inequality. She also dove into the very timely topic of diversity and how you can use it to enrich your market research.

In this post, I'll share some key learnings, strategies, and tools from her presentation to empower you to conduct and use diverse research and build a team that is representative too. 

What's the difference between equality and diversity? 

Since one of the goals of this post is to shed light on diversity and equality, it'll be useful to begin with a few definitions related to these topics:

  • Inequality – A lack of being equal, especially in status, rights, or opportunities. You can categorize inequality into five broad categories: inequality in wealth, gender, ethnicity, sexuality, and health.
  • Equality - It's essentially the reverse of inequality. All operate on a level playing field with equal opportunities regardless of any differing traits.
  • Diversity – A mixing of people with different characteristics—for example, race or nationality.
  • Discrimination - Discrediting or disadvantaging someone based on (a) characteristic(s) they possess. For instance, gender and race.
  • Controlled Gender Pay Gap  – The controlling of the pay gap according to factors like job positions, years of experience, and location.
  • Uncontrolled Gender Pay Gap – The raw gender pay gap which looks at median salaries for men and women, regardless of job or worker seniority.
  • Zero/Negative Wealth -  When a person's debts exceed the value of their assets.

We'll be looking at wealth, gender, and ethnicity, with cross-sectional examples for better context.

The truth about inequality and diversity in wealth, gender, and ethnicity (+ the statistics)

Without data, it’s hard to know the true extent of an issue. So, it’s time for some eye-opening stats about inequality, diversity, wealth, gender, and ethnicity. Buckle up. It's going to be a bumpy ride.

Wealth across gender

In an uncontrolled gender pay gap, women earn 81 cents for every dollar earned by a man.

In a controlled gender pay gap, women earn 90 cents for every dollar earned by men. In other words, the median salary for men is roughly 19% higher than the median salary for women. 

The gender pay allows you to look at factors such as experience, industry, job level, and education. 

You'll notice when you dig into the data that even when you look at males and females in a like-for-like, apples-to-apples comparison, their earnings differ.

The figure above represents a 2% improvement from 2019 and a 7% increase from 2015. Despite this, the truth is that even when men and women are in the same job and at the same level, a woman still earns about two cents less for every dollar that's earned by a man. 

Putting it another way, you can hold the same role and have identical qualifications and still be paid two cents less, with no other reason except for being a woman. 

This figure may not seem like much at first. But when you consider that the average American worked around 1726 hours in 2019, you can see how it can add up to a significant financial loss over the lifespan of a woman's career.

Stagnating gender wage gap decline

The controlled gender pay gap is the same as last year, and the closing of this controlled gender pay gap has slowed in recent years, shrinking by a dismal 0.01% year on year since 2015.

When you look at the data on male and female earnings and job titles throughout their careers, you gain interesting insights, which Melissa called the binary gender pay gap.

For instance, under this framework, you can assess two positions at opposite ends of the earnings chart, like Fortune 500 CEOs and minimum-wage workers side-by-side.

You'll notice that white males particularly dominate in terms of income. This is because they often have lucrative financial industry jobs. 

To put this into context, around 95% of Fortune 500 CEOs are white men, with the remaining 5% being made up of women and ethnic minorities.

A good example of this disheartening statistic can be found by looking at the top five US investment banks. JP Morgan Chase, Goldman Sachs, Bank of America, Merrill Lynch, Morgan Stanley, and the like. They are are ALL run by men from the top down.

This disparity is so ingrained in society that when Citigroup announced their first-ever female CEO, Jane Fraser, the news broke the internet.

There was so much noise about it because Wall Street has existed since 1817, and it's taken them 200 years to put a woman to the top position. 

Conversely, if you look at minimum wage workers, you will see a high proportion of women (over 60%) who hold jobs that fall into this category. So, the most lucrative roles are held by men, and women occupy jobs that pay the least.

Even if you slice this data by ethnicity, the trend remains the same. There is a massive disparity between men and women.

Looking at the data in this way provides a logical explanation of why there is a gender pay gap. 

Discrimination is fueling the gender pay gap 

People often express that they don't understand why women are paid less than men.

Data can help to clarify the reasons behind this trend. In 2017, a Pew Research survey found that 42% of female respondents had experienced gender discrimination at work, compared to 22% of male respondents.

This is evident in our everyday lives. For example, American women earn less than men on average in all industries. 

The largest pay gaps exist in management positions where men take home around $88,000 a year and women around $55,000. The smallest gap is in the construction sector, where women make up about 9% of the workforce

There's a smaller earnings gap because fewer women are working in this industry, not because huge strides in increasing equality have been made.

Discrimination in the working world is rife. One of the most reported forms of discrimination is wage inequality. 

25% of women say they've earned less than men doing the same job, compared to 5% of men experiencing the converse.

The 'motherhood penalty' holding women back

It gets worse. Women with children make less than men with children or women with no children. This is often known as the motherhood penalty or the childbearing penalty.

Career breaks to have children can adversely affect how much women earn and how much they make in their lifetime.

Research has also shown that women occupy more lower-paying positions than men. 

While the representation of women in higher-paying jobs is higher than ever before, as we saw in the Fortune 500 example, the progress is still very minimal, particularly at the C-Suite level.

Wealth in the transgender community

There's a disproportionate amount of unemployment among transgender Americans. 

The figure stands at around 15%, compared to 5% of the general population. However, this rate rockets the moment you cut the data by color. 

This uptick in unemployment applies whether they're Black, Latinx, Asian, or bi-racial transgender Americans.

Wealth and ethnicity: The effects of 'white privilege'

Between 1983 and 2016, the median Black family saw their wealth drop by more than half after adjusting for inflation, compared to a 33% increase in median White households.

Over the same period, the number of households with more than $10 million skyrocketed by 856%. Now, the median black family in the USA today holds just $3,600.

That's just 2% of the $147,000 in assets owned by a median white family. The typical Latinx family has assets totaling around $6,600. This equates to 4% of assets an average White family has. 

In other words, a median white family in the US will have 41 times more wealth than a black family and 20 times more wealth than a Latinx family. 

Worse still, the racial wealth gap in the US continues to widen. If this trajectory continues, which has happened in the past three decades, by 2050, median White families will have $174,000 worth of wealth, while typical Latinx families have a fraction of this at $8,600, and an average black family will lag behind with a wealth of just $600.

In fact, the median black family, as it stands today, is on track to reach zero wealth by 2082 if these trends continue. 

This would mean constantly living on the edge for many black families. They'd be just one minor economic setback away from tragedy. 

For example, if a black person with zero wealth suddenly suffers a heart attack, is diagnosed with a lifelong condition like diabetes and needs insulin, or even has a baby, it could spell disaster for them and put them in dire straits. 

This due to the American healthcare structure, which sends people automatically into debt.

Additionally, the racial wealth divide report shows that Black and Latinx families are much more likely to be in this precarious situation, and the chance of this occurring is continuously rising.

The starkest stat is that if current trends continue, it will take a typical Black family a staggering 52 million years to reach a white family's wealth.

For Latinx families, the probability sits at 24 million years. This is a huge wake-up call that bigger steps must be taken immediately to course correct the poverty train on which black and Latinx communities were unwillingly placed.

By the middle of the 21st century, the US will become a majority-minority country. If the US wants to ensure a strong middle class, it must start by improving the financial health of households of color. This is now more urgent than ever before.

Closing the persistent wealth divide between white households and households of color is not just a matter of social justice. It's also becoming a priority for broader economic policy. 

COVID-19 wake-up call

It's well-known that the pandemic has exacerbated the long-standing racial inequalities in America rooted in systemic racism. 

We've seen high hospital admissions and mortality rates among the non-White population. Statistics show that Black and Native Americans have suffered disproportionately during this crisis.

People of color also disproportionately make up the numbers for low wage

essential workers who had no choice but to risk their lives on the frontline to put food on the table. 

For instance, those who have had to keep going to work because they work in:

  • Food processing plants
  • Packaging factories
  • Grocery stores
  • Restaurants
  • Hospitals and care homes

This setup has meant that people of color have lost more jobs and have experienced more wage losses than their white counterparts.

This comes at a time when people of color and especially Black people have suffered racialized police brutality in the US and militarization.

While these facts are disturbing, we need to face them head on to get educated on pressing issues and decide what we want to do about it.

Read part two to learn what market researchers can do to champion change.

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