Reconsidering the declining significance of race: Racial differences in early career wages

Over a decade ago, Wilson (1980) argued that race was declining in significance as a determinant of economic rewards. In response to his critics, he asserted that young Blacks in the 1970s were closing the earnings gap with their White counterparts; he gave no indication that he thought the trend toward racial parity in earnings would reverse. We tested Wilson's assertion by comparing the net effect of race on hourly wages for two cohorts of young workers. We also decomposed the racial gap in hourly wages into a discrimination component and a nondiscrimination component. Our samples were taken from the Panel Study of lncome Dynamics in 1976 and 1985. Contrary to Wilson's proposition, we show that: (1) The effect of race, net of controls, increased during this time, and (2) the proportion of the racial gap in hourly wages due to discrimination (i.e., not explained by racial differences in measured qualifications) increased between 1976 and 1985. We contend that the government's retreat from anti-discrimination initiatives in the 1980s resulted in organizational discrimination against Blacks and contributed to a reversal in the postwar trend toward racial parity in earnings.