A Dream on Hold

Matt Yglesias today cites data to the effect that, while the gap between blacks and whites in completing high school has been steadily closing in recent decades, racial gaps in income and wealth have remained stubbornly large. This discrepancy suggests that blacks have made real progress in raising their relative skill levels but for some reason they aren’t reaping the rewards of that progress in the workplace.

Alas, the solution to this puzzle is that the purported racial progress in the classroom is in fact a statistical mirage. The big problem is that the official stats on high school completion rates count GED holders as high school completers, despite the fact that both economic and social outcomes for GED holders much more closely resemble those for high school dropouts than those for people who actually earn a high school diploma. And it turns out that the GED program is used disproportionately by blacks – to a significant extent because black inmates are earning them in prison. So a big increase in GED certifications for blacks is portrayed as educational progress when in fact it is a byproduct of socially catastrophic mass incarceration.

Nobel Prize-winning economist James Heckman from the University of Chicago and coauthor Paul LaFontaine have found that only about 65 percent of blacks finish high school with a diploma, far below the level indicated by the official stats on high school completion. Furthermore, they find no evidence of black-white convergence in high school graduation rates over the past 35 years. Along similar lines, a study by Derek Neal of the University of Chicago found that the black-white gap in educational attainment stopped shrinking around 1990. Neal also looked at test scores and reached similar conclusions: convergence in black-white test score gaps came to a halt in the late 1980s.

The sad fact is that, after great progress through much of the 20th century, racial disparities in human capital levels have remained stuck for decades. The problem isn’t that the marketplace is shortchanging blacks for their rising job skills; the problem is that blacks’ job skills are still so low. This, in turn, is part of a much larger slowdown in human capital accumulation that I talk about in my most recent book.