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Confronting the Racial Pay Gap

CEO of Intel Brian Krzanich speaks at the PUSHTech2020 summit on May 6, 2015, in San Francisco, California.

The Intel Corporation is about to do something so radical and unconventional in the realm of American business that its CEO, Brian Krzanich, admits that he’s “scared to death.” What could possibly so rattle the confidence of the top official of the world’s largest semiconductor chip manufacturer?

How about Krzanich having to publicly admit to the world that his highly visible and extremely profitable firm pays its African American, Latino, and Native American employees unfairly in comparison to its white and Asian American workers?

Krzanich told The Huffington Post that Intel is reviewing the pay for all of its 50,000 employees in the United States to determine how it pays minority workers. “We’re scared to death,” the website reported Krzanich saying to an audience last month at an event supporting equality in Beverly Hills, California.

Krzanich has every reason to be alarmed by what his pay audit is likely to show, and he has promised to reveal the results at the end of the year. If Intel is representative of the nation’s employers, the Silicon Valley firm is unlikely to come out of the internal review unscathed since U.S. Census Bureau statisticians and economists have long documented a yawning racial pay gap.

“We know that it is something that exists in the economy as a whole,” Valerie Wilson, an economist at the Washington-based Economic Policy Institute, or EPI, told me in a phone interview. “So there shouldn’t be any reasonable expectation that Intel would deviate broadly from others operating in the economy.”

Wilson, who is the director for EPI’s Program on Race, Ethnicity and the Economy, has studied racial disparities in the nation’s economy for 15 years and expects to release a paper in the coming weeks that documents and analyzes a persistent racial pay gap. While reluctant to share her findings prematurely, she said that despite some fluctuations since 1979, the aggregate nationwide gap in pay between whites and minorities “has grown.”

Generally speaking, when economists, social scientists, and policy experts talk about pay gaps, their attention focuses on the difference in what women make compared with men. For example, my colleagues at the Center for American Progress recently conducted a thorough explanatory analysis of the gender wage gap, which included the disparities faced by women of color.

By contrast, the racial wage gap—which is a key component of the overall wealth gap between white Americans and racial and ethnic minority Americans—is often less remarked upon or totally ignored. But that is an act of will rather than a lack of knowledge about the persistence of the issue. As Gawker’s Hamilton Nolan wryly noted in a recent post, “The benefit of talking about the racial wealth gap is that you can put numbers on it, which allows for far less rhetorical squirming.”

Calling the racial wealth gap “a disgrace,” Nolan noted that white households in America have a median wealth 13 times higher than black households.

If you kidnap one group of people and systematically extort free labor from them for hundreds of years and then systematically disenfranchise and oppress them after that without any real attempt to pay them back for all that stolen labor, this is what you get. … Further, the racial wealth gap is the single most quantifiable facet of racial inequality in America. And for that reason, closing the racial wealth gap is also the easiest and most direct way for the government to attack the effects of racism in this country.

So what to do? Deborah M. Figart, an economics professor at Stockton University in Galloway, New Jersey, offered some intriguing, multi-faceted policy prescriptions in a policy brief for the National Committee on Pay Equity. Among her list of suggestions are:

  • Widespread adoption of comparable-worth job evaluations to assess and correct the undervaluation of female-dominated and minority-concentrated jobs in specific workplaces
  • Strengthened labor laws and support for workers’ right to organize so that equal pay policies and comparable-worth job evaluations can be bargained for collectively
  • Tougher enforcement to ensure compliance with the existing Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964; when it comes to legislative priorities, working women cite stronger equal pay laws more than any other issue.
  • Expansion of compensatory and punitive damages for equal pay violations
  • Passage of federal legislation that prohibits employers from retaliating against employees for sharing salary information and requires employers to release summary payroll statistics by gender, race, ethnicity, and job category
  • Amend existing legislation to incorporate the principle of equal pay for equivalent jobs

But, as Wilson told me, changes like these all begin with fair-minded executives who are willing to look in a corporate mirror. “It’s interesting to me that Intel is confronting this,” said Wilson. “The fact that [Krzanich] is worried about the results suggests he knows already that things are out of line. So it’s going to be incumbent on his leadership to do what’s necessary to alleviate any discrepancies that he announces.”

Failure to act in the face of self-revealed pay imbalances would open Intel to potential discrimination lawsuits, Wilson said. And, yes, that is a very good reason for Krzanich to be scared to death.

Sam Fulwood III is a Senior Fellow at the Center for American Progress and Director of the CAP Leadership Institute. His work with the Center’s Progress 2050 project examines the impact of policies on the nation when there will be no clear racial or ethnic majority by the year 2050.