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03.22.21

Have Disparities Between Blacks and Whites in Labor Market Outcomes Narrowed or Widened?

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New analysis from the Cleveland Fed finds that the Black-white (BW) earnings gap widened over the past two decades, even as other measures of labor market differences between racial groups showed improvement. These findings hold for both the nation and three states within the Fourth Federal Reserve District: Ohio, Pennsylvania, and Kentucky.

In “Economic Inclusion 2000-2020: Labor Market Trends by Race in the US and States,” Cleveland Fed researcher Kyle Fee looks at outcomes attained by different groups in various labor market measures such as labor force participation rates, employment and unemployment rates, and earnings, and examines whether disparities between Blacks and whites have narrowed or widened since 2000.

Fee finds Kentucky, Ohio and Pennsylvania generally mirror national economic inclusion trends in the labor market. This shows that even though labor market status-based measures of economic inclusion indicate some progress in closing the BW gaps over the past decade, the BW gap in earnings grew over this period.

“The data highlight that the cyclical nature of BW gaps—which widen during recessions and narrow during expansions—is largely a function of greater movement in the Black labor market experience as opposed to the white labor market experience,” says Fee. “Conversely, when comparing the levels of BW gaps across states in 2020, I find that BW gaps reflect differences in both the BW labor market experience.”

Read the Economic Commentary.

Access the labor market inclusion data by state.

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. For more information, go to www.clevelandfed.org or follow us on Facebook, Twitter, Instagram or LinkedIn.

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