UK’s Black And Asian Pay Gap Is Some 4% Of Average Pay – Not A Problem

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The Resolution Foundation tells us that there’s a significant BAME – Black And Minority Ethnic in the jargon – pay gap in Britain. This isn’t quite so, that gap they’ve identified being around 4% of the average wage for the country. Sure, we might not really want to have such a gap but we’re getting well down to the point where we’re not actually sure that it exists at all, this could just be statistical noise. And 4% also isn’t the sort of amount that we’re going to spend much time upon either as there are quite obviously larger problems we’d like to get sorted first. For this really is only about 4% of average wages:

The £3.2bn pay penalty facing black and ethnic minority workers

So, what’s £3.2 billion as a part of the British economy? 0.01% – this isn’t going to be all that high up our list of problems to deal with. But perhaps that’s not the right way to look at it?

The British population is about 11% or so BAME. There’re some 30 million in the workforce. So, we’ve 3.3 million people affected here. That’s around £1,00 a head then – something we might consider to be real money. Except, well, the average wage (not quite, this is neither the median nor mean but around and about both) is £25,000 or so a year, we’re talking about 4% of the average wage. Sure, maybe this is evidence of something or other but it’s not exactly startling evidence of anything, is it?

However, there’s a little trick in here:

Average hourly pay for some ethnic minority groups, such as Indian and Black women without degrees, did not differ from white non-graduate women’s pay in a statistically meaningful way. However, once background factors – such as where someone lives or the role they do – were factored in that seemingly non-existent pay gap becomes a statistically significant pay penalty: all things held equal, Indian non-graduate women earned 44p an hour and Black non-graduate women 61p an hour less than their white counterparts.

There’s an awful lot of mischief one can get up to in those adjustments. For example, in the raw numbers, black women have higher hourly pay than most other demographic slices of the population. This is not because black women are over-valued. It’s because the majority are living in London, where wages are higher than the rest of the country. There’s no other measured demographic slice which has this preponderance in this one geographic area. We don’t actually measure Cockneys as a separate group but if we did they’d have significantly higher hourly pay than most other groups we might dice the population into.

Now, we can attempt to adjust for this – which is what the Resolution Foundation is trying to do – but we’re not going to be very accurate at doing so. To the point that a 4% result is very close to, if not actually, a null result. Just a function of the processing we’re doing rather than an actual piece of evidence about discrimination of even differentials in pay.

That is, we’re not certain there is a BAME pay gap in Britain and even if there is it’s not large, in fact small enough that we should go worry about something else. Not what the activists want to hear but true enough for the rest of us.