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Cleveland Fed Report: Gaps in Racial Economic Inclusion Persist in Ohio

shaking hands at job interview
Black employment rates drop more than white employment during a recession and expand more during periods of economic growth, the report explains.

Wage gaps between Black and white laborers in Ohio have widened over the past two decades, according to a report from the Federal Reserve Bank of Cleveland, and a significant Black-white employment gap persists as well.

Ohio tends to generally follow national economic inclusion patterns, said Cleveland Fed Senior Policy Analyst Kyle Fee, but the most recent numbers show the state is underperforming.

“Most recently, in 2020, Ohio has a larger Black-white employment rate gap than the rest of the nation,” Fee said.

Black employment in Ohio is 3 percentage points lower than the national average, Fee said, while for white Ohioans, the employment rate is 1.4 percentage points higher than the rest of the country, further stretching the state’s employment gap.

Fee said the long-term data also show the cyclical nature of the Black-white gap, with it widening during downturns and narrowing during economic expansions.

“Over the last three recessions, Black employment on average, declines 1.5 times more than white employment, indicating that economic inclusion worsens during downturns,” Fee said. “Conversely, during the 3 expansions we have had since 2000, Black employment increases more than 2 times white employment, on average.”

The cycles are slightly less pronounced in Ohio’s workforce, Fee said, but still present in the data. The difference comes from variations in market characteristics between states, he said. But avoiding recessions and prolonging expansions will improve the gap between Black and white workers overall, Fee said.

“This finding tells us that economic inclusion might be a greater concern in some states than in others and that policies may need to adapt to the specific challenges of the workforce and the industrial composition of the particular states,” Fee said.

The report also found a widening gap between the median earnings of Black and white workers. The difference grew from $3.16 in 2000 to $4.64 in 2018, before dropping back down to $3.94 in 2020.

Employment across the state took a hit in 2020 in general because of the coronavirus pandemic, which prompted many businesses to close or furlough employees as the state issued shutdown orders and health mandates.
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