The role of race and social class in compensation decisions

Abstract

Purpose -The purpose of this paper is to examine the influence of race and social class on wage differentials between Black and White employees. Design/methodology/approach -A survey with four possible conditions (white/black target who was lower/middle class) was used in the study to examine the interaction between race and social class on compensation decisions. Findings -The paper finds that there was a significant interaction between race and social class when predicting the percentage of pay increase given to employees. Specifically, there was a significant negative correlation between perceptions of social class and percentage of increase when the target was Black, but there was no such correlation when the target was White.Research limitations/implications -The sample was 95.6 percent White and did not consist of managerial employees in actual compensation decisions; however, it shows evidence that people are affected by their perceptions of social class and race when making such decisions. Practical implications -Policy makers should not forget that perceived social class might interact with race to influence discriminatory decisions in workplaces. This research suggests that Black employees who are perceived to be middle class are discriminated against more than those who are perceived to be lower class. Businesses need to be aware of unintentional biases that may be plaguing their managers and train them to avoid such biases. Originality/value -This paper contributes new insight into the literature on the wage gap between Black and White employees by showing the interaction between race and perceived social class when predicting pay increases.

Socioeconomic status is not judged equally: Target race shifts standards in interpersonal judgments of SES

“…If a Black employee is subjectively perceived to be doing better financially than a comparably paid White employee, there could be less motivation to address the Black employees’ concerns about promotion or being undercompensated. These findings are consistent with previous research on compensation decisions for White and Black employees (Weeks, Weeks, & Frost, ), as well as studies examining the differential compensation increase for White males who search for external positions as opposed to Black males or all females who search (Dreher, Lee, & Clerkin, ). If stereotypic inferences influence organizational decisions and the shift in standards has the effect of masking such influences (Biernat, ), it could explain some of the continued pay‐gap and glass ceiling effects that racial minorities and women still experience in the U.S. workplace.…”

An intersectional approach to understanding how race and social class affect intergroup processes

“…That is, low social class Black employees received a larger percentage raise than did upper middle class Black employees. Social class did not influence the raise received for White employees (Weeks et al, ). The authors suggest that overcompensation for racial biases led to a higher raise for low class Black employees and that this need for overcompensation subsequently went away when faced with Black employees with higher social prestige.…”

“…Emerging evidence suggests that race and social class interact to affect prejudice and discrimination outcomes (e.g., Jussim et al, ; Tapia, ; Weeks, Weeks, & Frost, ). When asked to decide how much of a raise a person should receive in experimental settings, race interacted with social class to influence outcomes for Black employees.…”

Black people are convicted more for being black than for being poor: The role of social norms and cultural prejudice on biased racial judgments

“…Although previous studies have demonstrated the importance of considering social class both independently of and in conjunction with skin color in a USA context [8,9], the results observed to date have not provided sufficient evidence in regard to what extent the effect of information about belonging to the lower classes has on judgments of black and white people [14,42,48], especially in the Portuguese context. The consistency of our results over four studies, in which different manipulations were performed, provides evidence for the hypothesis that belonging to the lower social classes will facilitate the conviction of the black target but not the white one.…”