The (In)Flexibility of Racial Discrimination: Labor Market Context and the Racial Wage Gap in the United States, 2000 to 2021

Abstract

Does racial wage discrimination increase during economic downturns? In this article, the author tests empirically the association between economic conditions and racial wage discrimination for black, Hispanic, and Asian workers. Using data from the Current Population Survey, the author finds that the wage gap between Hispanics and whites, and between Asians and whites, increases with the job-seeker rate and unemployment rate. However, the wage gap between black and white workers increases slightly with the unemployment rate and does not change at all with the job-seeker rate. The author advances the concept of “wage discrimination flexibility” to argue that racial wage discrimination against black workers is more rigid and resistant to changes in economic environments, whereas wage discrimination against Hispanics and Asians is more flexible and responsive to economic conditions. The author discusses the implications of these findings for theories of discrimination and for policies aiming to foster equal opportunities in the labor market.