Race, Gender, and Inequality

The resignation under pressure of Stanley O’Neal, the now-former Merrill Lynch CEO who happens to black, has led to some discussion of what his departure says about the prospects for blacks and women in senior management positions. How concerned should we be about the numbers of blacks and women at the top of corporate America? Maybe about as concerned as we ought to be about blacks and women in the Republican Party, which is to say, not so much. Don’t get me wrong, racism and sexism are still problems in corporate America but perhaps the following quote from the Nov 1 Wall Street Journal will help put things in perspective:

The gap between women's wages and men's is narrowing, but the gap between economic winners and losers of either gender is widening. And the patterns of inequality among women are more similar to than different from the patterns among men: Earnings at the very top are growing much faster than those at the middle or the bottom. Everything else is detail.

Former Treasury Secretary Lawrence Summers puts it sharply. If the distribution of income in the U.S. today were the same as it was in 1979, and the U.S. had enjoyed the same growth, the bottom 80% would have about $670 billion more, or about $8,000 per family a year. The top 1% would have about $670 billion less, or about $500,000 a family.

The point is that with the precipitous rise in inequality it’s possible to narrow the wage gap between women and men or between blacks and whites by getting more blacks and women into the top 1%, while leaving most Americans, blacks, white, and otherwise with the short end of the stick.