Shares of employment in major industry categories are related to area poverty rates, say Cleveland Fed researchers

The shares of a county’s employment that are in major industry categories are correlated with the county’s poverty rate, say Federal Reserve Bank of Cleveland researchers Stephan Whitaker, Christopher Vecchio, and Anne Chen.

The researchers say employment in certain industries could be correlated with poverty for many reasons. One possibility is that the industry serves a clientele that is disproportionately poor. The data show that the share of employment related to social assistance and welfare administration is higher in high poverty counties.

Another possibility is that industries that employ low-skilled, low-wage workers might have employees whose household income remains below poverty thresholds. Two low-paying industries, agriculture and accommodation and food service, display significant positive correlations between their shares of employment and the poverty rate.

Examining changes in county poverty rates from 2007 to 2012, the researchers found that counties with the greatest increases in poverty experienced large job losses in construction and manufacturing, while counties that kept their poverty rates down had notably higher job growth in accommodation and food service and mining.

Read Industries, Job Growth and Poverty Trends

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.218.1892