Race has been a defining aspect of American society since Europeans came to this continent. Although racial identification reflects where people’s ancestors lived, not biological differences between people, it gained a connotation of superiority or inferiority as a justification for actions by dominant settlers of European descent to subjugate non-Europeans for economic benefit. One consequence of years of discrimination and displacement has been continuing differences in incomes.
The gap between the incomes of households headed by residents who self-identify as differing races or ethnicities continues to be significant. Those identified as White Only had incomes 62% higher than Blacks, 54% higher than American Indians, and 30% higher than Hispanics in 2020. Asians had the highest median income – 30% higher than people who identified themselves as White only.
Among Hispanics, 58% self-identified as White, 27% identified as some other race, 8% as two or more races, and 2% as Black in a 2014 survey by the Pew Research Center.
The data for this analysis is from the Census Bureau’s American Community Survey. Because the data is survey-based, the published estimates fall within a range of possible actual values. There was a possible error range in the percentage estimates of less than plus or minus one percent in each case for national-level data, with a 90% confidence level.
Change in Median Income between 2010 and 2020
Although all groups saw inflation-adjusted median income growth, those identified as Black or African-American had the smallest gain. In 2020, the median household income for Black residents was $43,764, while for non-Hispanic Whites, it was $70,843. Unfortunately, the gap increased between 2010 and 2020 by more than $2,000.
Native Americans/American Indians also had relatively little growth in median incomes – only $2,478. The income gap between Native Americans and those who identified as White Only grew by $1,735.
In contrast, other groups – Asians, people who identified with two or more races, and Hispanics/Latinos had greater income growth than those identified as White Only. The gap between the median incomes of Hispanics and those who identified as White Only decreased by $1,409, while between those who identified as members of two races and White Only, the gap decreased by $3,635. Asians out-gained White Only residents by $6,201.
Median incomes of self-identified Black residents were 38% lower than White Only residents in both years. The gap between American Indian/Native American residents and White Only residents was 35%. For Hispanics, the gap decreased from 26.4% to 22.9%, while for those who identified with two races, the gap decreased from 18.9% to 12.9%.
The Distribution of Income in 2020
Although 17% of households headed by people who identified as Black or African American earned $100,000 or more in 2020, the percentage was only about half that of those who described themselves as White, Non-Hispanic – 33%. On the low end, nearly twice the rate of Black households had incomes of $25,000 or less – 30% compared with White non-Hispanic households – 16%. The incomes of Hispanic/Latino households were between those of Black and White, non-Hispanic identifying households. Twenty-three percent of Hispanics had incomes of $100,000 or more, while 25% had incomes below $25,000.
New York State
Household income differences in New York State showed a similar pattern. The median income of households whose heads described themselves as White only – not Hispanic in 2020 was about $80,000. Those who described themselves as Black or African-American had a median income of slightly more than $50,000. For Hispanic households, the median was $52,643. Median incomes in New York state for households were near the middle of the six neighboring states. Because Northeastern states have large populations, the possible error ranges around the income estimates are relatively small, as seen in the error bars on the chart above.
Although the estimates for metropolitan areas are less precise than those for states because of their smaller populations, we again see the same patterns- median incomes for self-identified Black households are only about half of the self-identified non-Hispanic White households. The range of actual median incomes within the 90% confidence intervals is relatively large for metropolitan areas with relatively few residents who self-identify as Black. For example, for Black households in the Binghamton Metropolitan area, the published median income estimate for Black households in 2020 was $28,253. Still, the actual median income could have been between $21,731 and $34,775, within the 90% confidence limits. For Utica-Rome, the published estimate was $29,389, while the actual values might have been between $25,945 and $33,833.
Hispanic median incomes were between White, non-Hispanic households, and Black/African American households in most metropolitan areas in New York State. The New York City metro region, home to more than 70% of the state’s residents, is a significant exception. There, the Hispanic and Latino household median income ($55,836) was similar to the incomes of households that described themselves as Black/African American ($55,570) – only about half those of White non-Hispanic households ($103,551).
Median household income estimates for Hispanics were relatively uncertain in smaller metropolitan areas. In the Binghamton metro area, the Census estimate of the median household income was $39,063. But, the range of actual values could have been between $29,752 and $48,374, within the 90% confidence interval. In the Syracuse metropolitan area, the estimate was $44,515, but the actual value could have been as low as $38,013 or as high as $51,017.
Also of note is the large income gap between households in the New York Metropolitan area and metropolitan areas in upstate New York. The median income for Black households in the New York metro area, $55,570, is almost double that of Black households in the Binghamton area – $28,253. The median income for White, non-Hispanic households was $103,551 in the New York metro area, compared with $57,352 in the Binghamton area. The gap between median incomes in the metro area with the highest incomes upstate – Albany – and the New York metropolitan area was also relatively large. $37,991 for Black households in the Albany area vs. $55,570 in the New York metro area. For White households, the difference was $77,599 vs. $103,551.
The Effects of Educational Differences
Income differences between self-identified racial and ethnic groups are related to educational levels. The chart above shows that the group with the highest percentage of people with a Bachelor’s degree or higher (55%)- self-identified Asians – also had the highest median income ($91,775) in 2020. Twenty-three percent of those identified as Black/African American had college degrees. The median household income for that group was $44,364, less than half the median for Asians. Eighteen percent of Hispanics/Latinos had college degrees. The group median income was $54,632 in 2020, about 60% of the income of Asians.
The percentage of Non-Hispanic Whites with at least a Bachelor’s degree was 36.5%, 19% less than Asians, but 14% higher than those who identified as Black/African Americans and 19% higher than those who identified as Hispanic. The median income of White Non-Hispanics was 23% lower than that of Asians but 39% higher than Blacks and 23% higher than Hispanics.
Differences at the Same Educational Levels
Although the percentage of group members who completed at least a Bachelor’s degree is associated with differences in median income, differences between groups remain when educational attainment is controlled. In this section, the median incomes of self-identified members of racial and ethnic groups are compared within the group of residents aged 25 or older who hold Bachelor’s degrees and those whose education ended after four years of high school.
For each group, people with a Bachelor’s Degree had substantially higher incomes than those who had only completed high school. Median incomes for those with four years of college were between 70% and 120% higher than for high school graduates.
The 2019 data shows that differences between racial and ethnic groups are smaller for those who completed high school than for those who completed four years of college. For those who completed high school, the median income of self-identified non-Hispanic Whites ($30,000) was between $3,000 and $5,000 higher than other groups.
The differences between groups are larger for those who completed four years of college. Self-identified Asian Americans had the highest median income – $60,000, while the median income of Non-Hispanic Whites was $56,000. Those identified as Black or Hispanic had lower median incomes – $45,000 and $46,000.
A Closer Look at Income Differences among College Graduates
Although college graduates enjoy higher incomes than those high school graduates, people who graduate from more selective colleges and those who choose to major in Science, Technology, Engineering, and Mathematics (STEM) fields typically have higher incomes than other graduates. Differences in the percentages of Black and White students who attend selective colleges and who graduate in STEM fields are likely explanations for the differences.
Data from a group of relatively selective colleges and universities (in most cases, average student SAT scores were 1100 or higher) shows that graduates of the most selective colleges and universities, as measured by the average SAT scores of students, have substantially higher mid-career incomes than those from less-selective schools. The average for the 25 colleges and universities with the highest average SAT scores in the Payscale 2021-2022 survey (examples include MIT, Cal Tech, University of Chicago, Harvey Mudd College, and Duke University) average mid-career income of graduates was $143,542. In contrast, for graduates of the 25 institutions with the lowest average scores (examples include Galludet University, University of Texas at El Paso, Montclair State University, San Francisco State University, and the University of Texas – Rio Grande Valley), the average income was $94,146. The association between average institutional SAT scores and mid-career median income was relatively high, explaining 56% of the variation.
Graduates of the bottom ten percent of institutions sorted by mid-career median incomes typically earned about $70,000 or less. Many of the low-ranking institutions were colleges with open admission, among them private church-related colleges where a significant number of students majored in religion-related fields.
The percentage of college graduates majoring in STEM is also related to median mid-career incomes. Although the relationship is weaker than for average institutional SAT scores, schools that had higher percentages of STEM graduates had higher mid-career median incomes than those that had lower percentages. Twenty-seven percent of the difference in mid-career income between colleges was associated with the percentage of STEM graduates. For the ten schools (including Cal Tech, Worcester Polytechnic Institute, Georgia Tech, and Rensselaer Polytechnic Institute)with the highest percentage of STEM graduates, the average mid-career income was $139,860 compared with $103,565 for the lowest ten (including New College of Florida, Sarah Lawrence, St. Johns College in Maryland and Emerson College) in the sample of relatively selective colleges and universities.
The chart above shows the percentage of students in the sample by self-identified race and ethnicity that attended very selective colleges (defined as the top quarter of colleges by average SAT). About half of students of Asian descent attended these institutions, compared with 25% of White students, 23.5% of Hispanic students, and 15% of Black students. Because people who attended more selective institutions had higher mid-career incomes than those who went to less selective colleges, the lower percentage of Blacks who attended selective institutions is a likely reason for the disparity in the incomes of Black and White college graduates.
A recent study, “Does STEM Stand Out? Examining Racial/Ethnic Gaps in Persistence Across Postsecondary Fields,” by Catherine Riegle-Crumb, Barbara King, and Yasmiyn Irizarry, found that although Black students were as likely to choose STEM fields when entering college, 58% of White students who chose STEM majors graduated in those fields, compared with only 34% of Black students.
Conclusions
The income gap between people who self-identify with different races and ethnicities continues to be significant. Asians contained to have the highest median incomes, and the gap between them and other races and ethnicities grew between 2010 and 2020. People who identified as Hispanics and of two races continued to have lower median incomes than Asians and Whites, but their income grew at twice the rate of Whites. The median income – $70,843 for Whites grew by six percent and continued to be higher than for all groups other than Asians. Blacks and Native Americans had the lowest median incomes – $43,674 and $45,877, respectively, and slightly lower income growth between 2010 and 2020 – 5.2% and 5.7%.
Much of the difference in median incomes is associated with differences in group members’ educational attainment levels. Asians had the highest percentage of college graduates and had the highest median income in 2020. Blacks, Hispanics, and Native Americans had relatively low percentages of college graduates and low median incomes.
Mid-career incomes of people who attended college are related to college selectivity. Graduates of the most selective institutions averaged $143,000 in mid-career income, compared to less than $70,000 for the least selective. Among those group members who attended colleges and universities that offered Bachelor’s degrees or higher, Blacks and Native Americans were less likely to attend very selective colleges, while Asians were more likely compared to members of other groups.
Income differences between people of different self-identified races and ethnicities are associated with differences in educational attainment associated with differences in parents’ socioeconomic status. Parents’ income and educational status are associated with almost three-quarters of the variation in student performance between schools and school districts. Addressing race-related income differences requires a focus on reducing disparities in student performance that are related to parental education and income differences.
America’s historical oppression of Blacks and Native Americans continues to have negative consequences. The fact that acknowledging this reality is controversial makes it more difficult to implement measures that could reduce the disparities. Beliefs that measures to improve educational and job opportunities for Blacks come at the expense of White residents are a further barrier.
Though people who describe themselves as Black, Native American, or Hispanic are more likely to have low incomes than those of White or Asian-American descent, more non-Hispanic Whites have low incomes than members of other groups. Thirteen million households whose householders describe themselves as non-Hispanic White had incomes below $25,000 in 2020, compared with 4.5 million Blacks, 3.5 million Hispanics, and 856,000 Asian-Americans. While Blacks, Native Americans, and Hispanics have disproportionately lower incomes than Whites and Asians, policies to promote higher median incomes must include initiatives to assist all low-income residents. Because higher levels of educational attainment are strongly associated with household incomes, policymakers must work to counter the socioeconomic factors associated with poor student performance that make young people less likely to attend college and attain Bachelor’s degrees or higher.
Thanks, John. Invaluable!