The State of Minority- and Women- Owned ... - Cleveland.com

Market-Based Disparities in Business Formation and Business Owner Earnings
PUMS through the “class of worker” variable, which distinguishes the unincorporated and
incorporated self-employed from others in the labor force. The presence of the class of worker
variable allows us to construct a detailed cross-sectional sample of individual business owners
and their associated earnings.
3. Findings: Race and Gender Disparities in Wage and Salary Earnings
Tables 5.1, 5.2 and 5.3 report results from our regression analyses of annual earnings among
wage and salary workers. Table 5.1 focuses on the economy as a whole, Table 5.2 on the
construction sector, and Table 5.3 on the goods and services sector. The numbers shown in each
table indicate the percentage difference in that sector between the average annual wages of a
given race/gender group and comparable nonminority males.
a. Specification 1 - the Basic Model
For example, in Table 5.1 Specification 1, the estimated percentage difference in average annual
wages between African Americans (both genders) and nonminority males in 2006–2010
was -32.0 percent. That is, average annual wages among African Americans were 32.0 percent
lower than for nonminority males who were otherwise similar in terms of geographic location,
industry, age, and education. The number in parentheses below each percentage difference is the
t-statistic, which indicates whether the estimated percentage difference is statistically significant
or not. In Tables 5.1 through 5.6, a t-statistic of 1.99 or larger indicates statistical significance at
a 95 percent confidence level or better. 237 In the example just used, the t-statistic of 214.27
indicates that the result is statistically significant.
Specification 1 in Table 5.1 shows adverse and statistically significant wage disparities for
African Americans, Hispanics, Asians/Pacific Islanders, Native Americans, persons reporting in
multiple race categories, and nonminority women, consistent with the presence of discrimination
in these markets. Observed disparities are large as well, ranging from -22.5 percent for Hispanics
to -32.0 percent for African Americans.
Specification 1 in Table 5.2 shows similar results when the basic analysis is restricted to the
construction sector. In this sector, large, adverse, and statistically significant wage disparities are
once again observed for African Americans, Hispanics, Asians/Pacific Islanders, Native
Americans, persons reporting in multiple race categories, and nonminority women, consistent
with the presence of discrimination in these markets. Observed disparities are large as well,
ranging from -19.8 percent for Hispanics to -34.8 percent for nonminority women.
Similarly, Specification 1 in Table 5.3 for the goods and services sector also shows large,
adverse, and statistically significant wage disparities for African Americans, Hispanics,
Asians/Pacific Islanders, Native Americans, persons reporting in multiple race categories, and
nonminority women, consistent with the presence of discrimination in these markets. Observed
disparities are large as well, ranging from -22.7 percent for Hispanics to -31.7 percent for
African Americans.
237 From a two-tailed test.
NERA Economic Consulting 153