Black women are least likely to be among UK’s top earners

One of the most striking things for me about working in the financial sector for many years is that it draws on a very narrow talent pool of people.
- Dame Minouche Shafik, Director of LSE

Black women are the least likely to be among the UK’s top earners compared to any other racial or gender group, according to a new LSE report.

Researchers from LSE’s The Inclusion Initiative (TII) analysed pay over the past 17 years to establish who is among the top 1 per cent, 10 per cent and 20 per cent of earners.

They found that while all women experience substantial differences in pay, hours and representation in top jobs, it is Black women, regardless of whether they are UK born, who have the lowest probabilities of being top earners. While 1.3% of UK-born White men are in the top 1%, it is only 0.2% of UK-born White women and less than 0.1% of UK-born Black women.

Overall, the biggest differences between Black and White women are in Banking, Finance and Insurance.

The analysis used data from the Quarterly Labour Forces Survey from January 2003 to September 2020 - the main survey of individual economic activity in the UK which provides the official measure of the national unemployment rate.

Grace Lordan, Associate Professor of Behavioural Science and Director of TII, said: “It is striking that men are consistently the top earners, regardless of race. This is true both if we consider UK born workers, or those that move to the UK from other countries. What is even more striking is that Black women – regardless of whether they are from the UK or elsewhere – have the lowest probabilities of being top earners.

“A critic of our work will point to more women working part-time or choosing to stay at home with children. However, we draw the same conclusions if we document statistics related to full time, full year workers only. UK-born Black women are the most under-represented in the top percentile of incomes, as compared to all other women and men.”

The researchers also examined if the results could be explained by Black women working in occupations that lack progression opportunities, having more childcare responsibilities than other women, working fewer hours or lower levels of education. Controlling for age, education, marital status, hours and occupation, there were still significant differences for Black women. Researchers also found that Black women are less likely than any other group to be in the top 1% of income even when looking only at the black and minority ethnic workers population, where UK-born Black women are still 0.5% less likely to belong to the top 1%.

Researchers also examined how Black women compared to White women at different stages of their career. At early career stages, Black and White women are equally likely to be in the top 1% income bracket. But 10 to 15 years later, in mid-career stages, gaps in earnings widen and the likelihood of a Black woman being a top earner is far lower than a White woman. For example, Black women are 6.1 percentage points less likely than White women to be in the top 10% of income.

Dr Lordan said: “It would seem that income penalties increase at the ages where income is increasing fastest, similar to the pattern found for the overall gender wage gap. However, while the prevailing explanation for the gender wage gap is career interruptions because of children, because we are comparing within groups of women, this explanation does not carry much weight.”

The research concluded: “While we have seen an increase in women on boards in recent years, now 32% on FTSE100 boards according to the Hampton-Alexander Review published last month, the representation of black and minority ethnic workers people is less than 10 per cent and none of these are women.”

Denise Wilson, Chief Executive of the Hampton-Alexander Review, said: “I have always paid attention to the gender pay gap, and worried about hidden differences for black and minority ethnic workers.  This study from The Inclusion Initiative illustrates the need to monitor gender pay gaps by ethnicity and race also.  By doing so, we get a good proxy for representation gaps in the board pipeline, in leadership and more generally in career progression.

“As we face the significant challenge of developing the UK economy in the wake of the COVID-19 pandemic and a world rapidly disrupted by technology, success depends on fostering and utilising all of our talent. We should focus on leveraging the talent of all women in the UK as they are, without a doubt, grossly under-represented. We should focus specifically on Black women as the group that is right now most left behind for reasons that have nothing to do with their ability.”

Dame Minouche Shafik, Director of LSE, said: "One of the most striking things for me about working in the financial sector for many years is that it draws on a very narrow talent pool of people from very similar backgrounds.  This reduces innovation and risks groupthink.  

“The analysis from The Inclusion Initiative at LSE powerfully demonstrates the lack of diversity in terms of ethnicity and race and how this gets translated into sizable pay gaps.  It also highlights the pressing need to give more voice and opportunities specifically to Black women, as the group who are the furthest behind in earnings.

“I am glad that the researchers will now extend this analysis to move from describing the problem, to highlighting solutions in collaboration with Black professional women currently working in the City of London.”  

Erika Brodnock, Research Officer at TII, said: “Empowering the UK with the necessary information to put right some of the historical actions that have created the levels of inequity we see throughout the banking, finance, insurance and technology industries is essential. This will undoubtedly offer the potential to yield significant returns to the UK economy for generations to come.”

Further research by The Inclusion Initiative, funded by Mastercard and sponsored by the 30% club, will identify actions to help companies address the issue.

Ann Cairns, executive vice chair of Mastercard and global chair of the 30% Club, said: "We have known for a long time that many women face a double hit of discrimination - on the basis of gender and race.  This research makes grim reading, showing that black women in particular face the biggest earnings impact regardless of their education and occupation.  It is clear that employers have a responsibility to ensure their policies, systems and structures enable fair opportunities for all staff and in doing so enable the best talent to thrive and push their businesses forward.  I am delighted to see Mastercard and the 30% Club supporting the next stage of this important research and look forward to seeing the recommended actions. Of course, if we are to ensure that we level the playing field for black women, the most important next step will be to implement the recommendations."

More details.