Research Shows $1 Million Wage Gap Between White Families and Black and Hispanic Families

Despite high rates of job participation and entrepreneurship among Blacks and Latinos, a significant wage gap is hindering their economic mobility.

 By 2030, Latinos are projected to account for more than one in five U.S. workers. However, the wage gap for Latinos is estimated to be as high as $288 billion annually.

A recent study titled “The Economic State of Latinos in America: The American Dream Deferred” by McKinsey & Co., in partnership with the Aspen Institute, sheds light on this issue. 

The report reveals that Latino workers, as a group, earn only two-thirds of what they would in a parity scenario where all Latino workers are paid at the level of their white counterparts in each occupation.

Impact on Economic Mobility

The study also found that reducing these disparities could increase average wages for Latino workers by 35% and boost over 1.1 million more Latinos into the middle class.

This is not just a Latino issue, but an American imperative, according to Bernardo Sichel, a partner at McKinsey and one of the report’s co-authors.

Latinos, who make up almost 19% of the U.S. population, have a significantly higher labor force participation rate than non-Latino whites. 

However, they are greatly underrepresented in higher-paying jobs and earn less in the same fields as non-Latino whites.

The study found that 50% of the aggregated Latino wage gap can be attributed to lower representation and pay in just 4% of occupations, including management, teaching, STEM, and professions such as law, medicine, sales, and accounting.

Foreign-born Latinos face particular challenges with wages, earning less in the same job categories as U.S.-born workers. 

The median wage for foreign-born Hispanics is $31,700 compared to $38,848 for U.S.-born Hispanics and $52,942 for non-Latino white workers.

If the wage gap were closed, Latinos could spend an additional $660 billion or contribute another 3% to the gross domestic product.

 Addressing this wage gap is essential for the future of the American economy, as Latinos are projected to make up one in three U.S. workers by 2060.