Using the 2001-2002 California Workforce Survey, this paper examines the income gap between Hispanic and Caucasian workers. I attribute the income gap between Hispanic and Caucasian workers to differentials in their human capital. However, data analyses indicate that classical human capital indicators such as education, job training, and work experiences are not sufficient to account for the observed income gap between Hispanics and Caucasians. Instead, English fluency is a highly valuable aspect of human capital for Hispanic workers. English non-fluency, along with less education, job training, and work experiences explain why Hispanic workers earn less than Caucasian workers. However, variations in English fluency do not affect the incomes of Asian workers. Those findings suggest that English non-fluency is a unique source of income penalty for Hispanic workers. It may be attributed to stereotyping by employers.
Keywords: Hispanic, income, workers, non-fluency, stereotyping
This research focuses on workplace inequality by investigating sources of the income gap between Hispanic and Caucasian workers. For several decades, researchers on ascriptive workplace inequalities has made significant contributions to our understanding of differentials in job training attainment (Knoke and Ishio 1998; Caputo 2002), pay raises (Kaufman 1983; Browne et al. 2001), job authority attainment (Smith 1997), and work dissolution (Elvira and Zatzick 2002). However, the majority of those studies have focused on two groups: Caucasians and African Americans. Indeed, in much of the literature on workplace inequality, minority is synonymous with African American. However, the turn to the new millennium has witnessed drastic changes in the American demographic landscape. The 2000 U.S. Census Bureau reported that Hispanics (12.5 percent) replaced African Americans (12.3 percent) to become the largest minority group in the nation (http://www.census.gov/census2000/states /us.html). The newly released statistical yearbook of the Citizenship and Immigration Services (CIS) reported that Mexico is among the top five countries sending immigrants to the U.S. in recent years, along with India, People's Republic of China, the Philippines, and Vietnam (http://www.bcis.gov/graphics/ shared/aboutus/statistics/index.htm). The U.S. Census Bureau projected that the Hispanic and Asian populations will double in the next 50 years, in contrast to a slight increase of the African American population and a decline in the Caucasian population (http://www.census.gov/ population/www/projections/natpr oj.html). Indeed, a mosaic is emerging in the American racial landscape, yet research addressing racial discrepancies between Hispanic and Caucasian workers in crucial labor outcomes is scarce.
Decades of studies on workplace ascriptive inequalities have accumulated a large body of knowledge on the causal factors of those inequalities. Early economic studies focused on both sides of labor demand and supply. On the demand side, the observed wage gap between Caucasians and African Americans was due to employer's "discriminatory taste" (Becker 1957) or employer's "statistical discrimination" (Thurow 1975). On the supply side, classical human capital theory states that the low level or low quality of education received by African Americans explains why African Americans make less money than Caucasians (Becker 1993). Later sociological studies report that job and workplace segregations and the devaluation of female and minority jobs are to be blamed for the resulting wage gaps between men and women, Caucasians and non-Caucasians (England 1992; Tomaskovic-Devey and Skaggs 1999; Tomaskovic-Devey and Skaggs 2002).
However, because most studies on racial inequalities have focused on Caucasian-African comparisons, results and models from those studies are not readily applicable to explain differentials between Caucasians and Hispanics. …