Higher Education Is the Major Force in Closing the Black-White Income Gap

New statistics from the Census Bureau confirm the powerful economic advantage that accrues to African Americans who hold a four-year college degree. The most current figures, for the year 2004, show that blacks with a college diploma now have a median income that is 90 percent of the median income of similarly educated non-Hispanic whites. Blacks with a master’s degree have incomes nearly equal to those of whites with a master’s degree. Blacks with a doctorate actually have higher incomes than similarly educated non-Hispanic whites.

These are extraordinary achievements that have been consistently overlooked by most commentators.

New figures released by the U.S. Census Bureau unequivocally show that possession of a four-year college degree not only greatly increases the incomes of African Americans but goes almost all the way in closing the economic gap between blacks and whites. This is dramatic and exciting proof of the sure progress that blacks achieve when they pursue and succeed in higher education.

Here is the set of statistics showing how improved educational attainment advances the incomes of highly educated blacks as compared to those with lower levels of schooling.

The first point to note is that blacks with a four-year college degree now earn on average nearly double the income of blacks who have no better than a high school diploma. African Americans with a two-year associate’s degree improve their incomes by 41 percent over blacks with just a high school diploma. But blacks with a four-year college degree outperform blacks with a high school diploma by 93.4 percent. In 2004 blacks holding only a high school diploma had a median income of $18,657. The median income of blacks with a bachelor’s degree (but no graduate degree) was $36,086.

How a College Degree Breaks the Back of Race Discrimination

But the important issue is the impact of a college education on the black-white income gap. Here the story is complicated. The overall median black family income in the United States is 61 percent of the median white family income. This very large gap in the income ratio has remained virtually unchanged for more than 30 years. Through both good economic times and recessions, there has been little fluctuation in the overall racial income gap. But, one asks, what is the effect of the increase in the number of blacks going to college on the overall black-white income gap? Don’t these gains in college completions tend to close the overall racial income gap? The simple answer is, no. It turns out that the much greater earnings produced by more blacks who have completed college make little difference to the median income figure (the person in the middle) because less than 18 percent of all black adults over the age of 25 have completed a four-year college education.

But now look what happens when we put aside the issue of the overall black-white income gap and confine our view only to college-educated blacks and whites. In 2004 blacks with a bachelor’s degree had a median income of $36,086. This is 90 percent of the median income of non-Hispanic whites with a bachelor’s degree, which stood at $39,987.

Why is the racial income so narrow for college-educated blacks and whites? Corporate America is strongly committed to diversifying its work force and particularly its management ranks. Thus, there is a strong demand in the business sector for highly educated African Americans. This demand tends to narrow the income gap between the races for those who hold a college diploma.

Recent Widening of the Racial Income Gap for College Graduates

Unfortunately, the encouraging news we report, regarding the narrow income gap between college-educated blacks and whites, is tempered when we see that from 2003 to 2004 the racial income gap between black and white college graduates actually increased. In 2003 the median income for blacks with a college degree was $36,694. But in 2004 the median income for blacks with a four-year college degree actually dropped 2 percent to $36,086. At the same time the median income for non-Hispanic whites with a college degree increased from $38,667 to $39,987, an increase of 3.4 percent. It is hoped that this is a one-year statistical anomaly and not the start of a long-term trend widening the income gap between college-educated blacks and college-educated whites.

How Gender Impacts the Black-White Income Gap for College Graduates

When we break down the income figures for black and white college graduates by gender we find that the superior performance of black women is responsible for the progress that has been made. In 2004 black males with a bachelor’s degree had a median income of $40,329, which was only 79 percent of the $51,184 median income of similarly educated white males. Thus, a very large racial income gap persists for black men who nevertheless have beaten the odds and earned a college degree.

On the other hand, black women with a bachelor’s degree had a median income of $33,877, which was 111 percent of the $30,413 median income figure for non-Hispanic white women who held a college degree. It is clear then that the strong income performance of black college graduates is largely due to the earnings performance of black women while higher education has failed to produce similar income gains for black men in comparison to white men.

This is not to discount the value of a college degree for black men. African-American men with a bachelor’s degree or higher still earn on average nearly double the income of black men with a high school diploma.

The Racial Income Gap for Graduate Degree Holders

There is more good news to report. The Census Bureau also computes median income figures for blacks and whites with master’s, professional, and doctoral degrees. In 2004 blacks with a master’s degree had a median income of $49,716. This was 98 percent of the median income of non-Hispanic whites with a master’s degree. Furthermore, in 2004, the racial income gap for master’s degree holders closed substantially. In 2003 blacks with a master’s degree had a median income that was 88 percent of the median income of whites who possessed a master’s degree.

Once again, in percentage terms, black women fared much better against their white counterparts than did black men. Black women with a master’s had a median income that was nearly 109 percent of white women’s median income at that educational level. Black men with a master’s degree had a median income that was only 89.7 percent of the median income of white males with a master’s degree. However, black men with a master’s closed the income gap with white men by seven percentage points.

The black-white income gap for holders of professional degrees has traditionally been quite large. The economic opportunities for whites with a professional degree continue to be far superior than they are for blacks with a professional degree. White professionals — lawyers, dentists, accountants, and engineers, to name a few — are far more likely to serve economically well-off and better established white clients and therefore are in a position to charge higher fees and earn greater incomes. On the other hand, a great number of whites are still reluctant to seek out the services of black professionals. Therefore, many blacks with professional degrees perform services for an exclusively black clientele and in all likelihood are not able to charge fees comparable to those of white professionals. These factors explain to some degree the large income gap that has existed between white and black professionals.

But now there is significant progress to report. In 2004 blacks with a professional degree had a median income of $72,749. This was 95 percent of the median income of whites with a professional degree. In 2004 black professionals increased their median income by a whopping 18 percent.

There is also an income gap between blacks and whites who hold doctoral degrees. But this time the racial gap is in favor of blacks. In 2004 blacks with a doctorate had a median income of $74,207. This was slightly higher than the median income of whites with doctoral degrees, which stands at $73,993. The high demand for black academics at American colleges and universities produces a good job market with high wages for blacks with doctoral degrees.

Favorable statistics on the black-white income gap for college graduates always must be viewed in light of the fact that black college graduates still make up only a small portion of the entire black population of the United States. According to the latest count, there are 36.4 million people in the United States whom the Census Bureau classifies as black. Of these, about 11 percent hold a four-year college degree. Therefore, one must always keep in mind that the encouraging economic figures we report here apply to only one in every nine African Americans.