Revised City of South Bend Disparity Study Report

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City of South Bend Disparity Study 2020 C. Disparate Treatment in the Marketplace: Evidence from the Census Bureau's 2012 - 2016 American Community Survey As discussed in the beginning of this Chapter, the key question is whether firms owned by non -Whites and White women face disparate treatment in the market- place. In this section, we explore this question using the Census Bureau's American Community Survey data to address other aspects of this question. One element asks if demographic differences exist in the wage and salary income received by private sector workers. Beyond the issue of bias in the incomes generated in the private sector, this exploration is important for the issue of possible variations in the rate of business formation by different demographic groups. One of the deter- minants of business formation is the pool of financial capital at the disposal of the prospective entrepreneur. The size of this pool is related to the income level of the individual either because the income level impacts the amount of personal savings that can be used for start-up capital or the income level affects one's ability to bor- row funds. Consequently, if particular demographic groups receive lower wages and salaries, then they would have access to a smaller pool of financial capital, and thus reduce the likelihood of business formation. The American Community Survey ("ACS") Public Use Microdato Sample ("PUMS") is useful in addressing these issues. The ACS is an annual survey of one percent of the population and the PUMS provides detailed information at the individual level. In order to obtain robust results from our analysis, we used the file that combines the most recent data available for the years 2012 through 2016.146 With this rich data set, our analysis can establish with greater certainty any causal links between race, gender and economic outcomes. Often, the general public sees clear associations between race, gender, and eco- nomic outcomes and assumes this association reflects a tight causal connection. However, economic outcomes are determined by a broad set of factors, including and extending beyond, race and gender. To provide a simple example, two people who differ by race or gender may receive different wages. This difference may sim- ply reflect that the individuals work in different industries. If this underlying differ- ence is not known, one might assert the wage differential is the result of race or gender difference. To better understand the impact of race or gender on wages, it is important to compare individuals of different races or genders who work in the same industry. Of course, wages are determined by a broad set of factors beyond race, gender, and industry. With the ACS PUMS, we can include a wide range of additional variables such as age, education, occupation, and state of residence in the analysis. 146. For more information about the ACS PUMS, see http://www.census.gov/acs/. 0 2020 Colette Holt & Associates, All Rights Reserved. 77