The wage gap between African-Americans and white Americans is substantial in the US and
has slightly narrowed over the past 30 years. Today, blacks have almost achieved the same
educational level as whites. There is reason to believe that discrimination driven by prejudice
plays a part in explaining this residual wage gap. Whereas racial prejudice has substantially
declined over the past 30 years, the wage differential has slightly converged overtime. This
‘prejudice puzzle’ raises other reasons in explaining the absence of convergence of this racial
differential. In this paper, I assess the impact which of the boom of jobs in contact with
customers has on blacks’ labor market earnings. I develop a search-matching model with
bargaining to predict the negative impact which of the share of these contact jobs has on
blacks’ earnings in the presence of customer discrimination. I test this model using the
IPUMS, the General Social Survey and the Occupation Information Network. My estimates
show that black men’s relative earnings are lower in areas where the proportions of
prejudiced individuals and of contact jobs are high. I also estimate that the decreased
exposure to racial prejudice is associated with a higher convergence of the residual gap,
whereas the expansion of contact jobs partly explains the persistence of the gap.