Use a calculator to make a chart projecting the effects of discrimination in initial salaries offered to Blacks and Whites and annual salary increases for two equally qualified, college-educated new hires.
(a) Make columns for starting salaries of $30,000 and $33,000, respectively for the new employees. Assume the Black applicant earns a 4% increase per year, and the White applicant earns a 6% increase per year, based on their evaluated performance.2 what are the salary differences after ten years? After twenty years?
(b) Make another column, with the assumption that the White applicant receives promotions every three years, and the Black applicant is promoted every five years. For promotions, assume an increase of an additional 10%. What are the salary differences after ten and twenty years given the differences in initial salaries, in increases, and in promotion rates?
(c) What effects would such salary disparities have on each employee's and the employer's contributions to the employees' social security, tax-deferred savings plans, and retirement plans?
(d) Research Summary 4.2 "Why pay more? Race (and Gender) Discrimination in Buying a New Car" considers effects of discrimination against Blacks in car pricing. Speculate on the effects of lower initial starting salaries, lower salary increases, and fewer promotions, combined with high prices for consumer goods, mortgages, and insurance on one's ability to increase wealth.