BUSINESS

Racial inequities costs Columbus economy $10 billion a year, report finds

Mark Williams Erica Thompson
The Columbus Dispatch
Columbus mom of two Stevi Knighton, pictured in April 2021, has struggled financially amid the pandemic.

Long-standing racial gaps among Columbus-area workers is costing the regional economy $10 billion a year, according to a new report that lays out historical inequities in the labor market that are threatening the region's future prosperity.

The region's workforce remains deeply segregated, according to the report, which finds that workforce development is too fragmented to address the drivers of racial inequities and ensure that people of color can share equitably in the region’s growth.

"Columbus is characterized by stark residential segregation, with Black residents concentrated in certain neighborhoods within the city of Columbus as a result of inequitable policies both past and present, and increasingly separated from the growth in good jobs in the surrounding suburban community," the report said.

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"With ongoing demographic changes toward a more diverse workforce and community, the economic costs of racial inequities to the Columbus region continue to mount."

The report, called Advancing Workforce Equity in Columbus: A Blueprint for Action, was released this week by the National Equity Atlas, a partnership between PolicyLink and USC Equity Research Institute. Additional contributors include the Cincinnati-based Workforce Innovation Center and the Emsi Burning Glass analytics firm, along with One Columbus, the region's economic development arm.

JPMorgan Chase & Co., the region's biggest private employer with about 18,000 workers, paid for the report.

"This research gives us important context as we work to remove obstacles and connect people to the private sector jobs being created in growing businesses across our region,” said Kenny McDonald, president and CEO of the Columbus Partnership, made up of about 80 of the region's CEOs.

Income inequality for Black, Latinx workers

The region's economic output was $137 billion as of 2020, according to federal data, so a $10 billion increase would be about a 7% increase.

For pay equity to be reached with white workers, wages for Black workers will need to rise 68% and incomes for Latinx workers will have to go up 59%, according to the report.

Racial gaps in employment and wages cost people of color in the region an average of about $18,000 per year. Closing those gaps would raise their average income to about $55,000 per year.

The average Black worker earns $32,553 and the average Latinx worker makes $34,395, according to the study.

"Despite the growing diversity of the Columbus workforce, workers of color tend to be crowded in lower paying, and lower opportunity, occupational groups, while white workers are overrepresented in many higher paying professions," the report said.

Black and Latinx workers make up about a quarter of Columbus workers between the ages of 25 and 64, yet they are much less likely to earn $15 per hour that the report called the bare minimum wage for Columbus.

The region also notes the shortfall of future-ready jobs defined as stable, with family-sustaining wages.

Only 42% of Columbus-area workers are in such jobs, and that share drops to just 12% for jobs that don't require a college degree. The report says that disparity "has significant racial equity implications, considering that over 40 percent of Black adults and nearly 70 percent of Latinx immigrant adults have no college education."

While higher education can help close the gap, it's not enough, the report said, with white workers without a college degree earning as much as Black workers with an associate's degree. White workers with a college degree earn 20% more than workers of color with a degree. 

"Building a growing, thriving workforce is important at all levels," said Corrine Burger, the Columbus market leader for JPMorgan Chase and a member of the Partnership.

Burger said inequities in the labor force have become a frequent topic of discussion among Partnership members.

"I don't know everyone understands the gravity of the current situation. We know we haven't shared the equity across all groups," she said. "You start looking at the cost of inequities, the cost of the racial disparities and you start to put numbers on it, that number is not completely shocking."

Like others with the Partnership, Burger said the key  lies in education and training for workers.

"The jobs are there. We just don't have the skills yet to bring to the jobs," she said.

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Measuring progress in marginalized communities

With analysis of wages, housing, education and more, the report provides a baseline that government officials, employers, educators and organizations can use to measure progress — and that the public can use to hold those in power accountable.  

For example, the study found that “33% of Black households and 31% of Latinx households have zero net wealth, compared with only 17% of white households.”

This figure could be measured in the future to determine whether the racial gap is closing.  

The report also sheds light on worsening circumstances for people of color. 

While the unemployment rate for white workers has stabilized since the early months of the pandemic, the rate for Black workers has been volatile. By August 2021, approximately 5% of white workers in the Columbus metro region were unemployed, compared with about 15% of Black workers.  

The study also found that the Black population living in high-poverty neighborhoods grew from 19% in 2000 to 25% in 2019. By comparison, the figure for the white population increased from 4% to 7%. 

Rising rents have also disproportionately affected Black residents. In 2019, 51% of Black renters in Columbus paid more than 30% of their income in rent — up from 42% in 2000. The rate for white renters increased from 32% to 40%. 

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Taking corporate action 

JPMorgan Chase said the findings will help inform its initiatives, including its five-year $30 Billion Racial Equity Commitment.

By the end of 2021, it had deployed or committed more than $18 billion to closing the racial wealth gap, largely through “increasing homeownership and affordable housing, growing and strengthening small businesses, and improving access to banking”—according to its 2021 environmental, social and governance report

mawilliams@dispatch.com

@BizMarkWilliams

ethompson@dispatch.com

@Miss_EThompson