Does a foot in the door matter? White-nonwhite differences in the wage return to tenure and prior workplace experience

The theory of ability misperception posits that employers will offer greater rewards to whites than nonwhites for similar levels of prior experience (Proposition 1) but that racial/ethnic differences in the return to additional tenure or seniority with the current employer will be smaller (Proposition 2). To advance the existing empirical literature, this paper evaluates the validity of these propositions by using data on black, Latino, and white workers drawn from the Multi-City Study of Urban Inequality. The analysis is conducted separately for women and men and controls for a wider range of workplace setting descriptors than was used in previous studies. Our results offer support for Proposition I and for Proposition 2. We find that nonwhites, regardless of job setting, receive relatively poor returns to prior workplace experience (the lone exception is Latinas). Second, nonwhites typically receive greater wage gains for accumulating additional tenure than whites.