Loyola Marymount University Unemployment Essay

Source: https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-top-employers-ofmedicaid-and-food-stamp-beneficiaries.html
POLITICS
Walmart and McDonald?s are among top employers of Medicaid and food stamp beneficiaries,
report says
PUBLISHED THU, NOV 19 20201:13 PM ESTUPDATED THU, NOV 19 20201:46 PM EST
Hannah Miao
@HANNAHMIAO_
KEY POINTS
?
Walmart and McDonald?s are among the top employers of beneficiaries of federal aid
programs like Medicaid and food stamps, according to a study by the nonpartisan
Government Accountability Office released Wednesday.
?
The question of how much taxpayers contribute to maintaining basic living standards for
employees at some of the nation?s largest low-wage companies has long been a flashpoint
in the debate over minimum wage laws and the ongoing effort to unionize these sectors.
?
The report comes as Florida voted to increase its minimum wage over the next six years
until it reaches $15 per hour.
Walmart and McDonald?s are among the top employers of beneficiaries of federal aid programs
like Medicaid and food stamps, according to a study by the nonpartisan Government
Accountability Office.
The question of how much taxpayers contribute to maintaining basic living standards for
employees at some of the nation?s largest low-wage companies has long been a flashpoint in the
debate over minimum wage laws and the ongoing effort to unionize these sectors.
Sen. Bernie Sanders, I-Vt., commissioned the study, which was released Wednesday by the
congressional watchdog agency. The Washington Post was the first to report on the data.
Sanders, who has run for the Democratic nomination for president, is a leading progressive
lawmaker and a consistent critic of corporations.
The GAO analyzed February data from Medicaid agencies in six states and Supplemental
Nutrition Assistance Program ? known as SNAP, or food stamps ? agencies in nine states.
Walmart was the top employer of Medicaid enrollees in three states and one of the top four
employers in the remaining three states. The retailer was the top employer of SNAP recipients in
five states and one of the top four employers in the remaining four states.
McDonald?s was among the top five employers of Medicaid enrollees in five of six states and
SNAP recipients in eight of nine states.
Other notable companies with a large number of employees on federal aid include Amazon,
Kroger, Dollar General, and other food service and retail giants.
About 70% of the 21 million federal aid beneficiaries worked full time, the report found.
?U.S. taxpayers should not be forced to subsidize some of the largest and most profitable
corporations in America,? Sanders said in a statement Wednesday evening. ?It is time for the
owners of Walmart, McDonald?s and other large corporations to get off of welfare and pay their
workers a living wage.?
Walmart recently reported net income of $5.14 billion for its most recent quarter, while
McDonald?s reported net income of $1.76 billion for the same period.
McDonald?s USA said in a statement that the company believes the data from the report was
taken out of context and framed in a misleading way, citing that McDonald?s and Walmart are
some of the largest employers in the country.
?The average starting wage at U.S. corporate-owned restaurants is over $10 per hour and exceeds
the federal minimum wage. McDonald?s believes elected leaders have a responsibility to set,
debate and change mandated minimum wages and does not lobby against or participate in any
activities opposing raising the minimum,? the company said in a statement.
McDonald?s announced last March that it would no longer lobby against minimum wage hikes.
CEO Chris Kempczinski told CNBC in November that the company would be open to discussing
the minimum wage as he called on Congress to pass another Covid-19 stimulus package.
?If not for the employment access Walmart and other companies provide, many more people
would be dependent on government assistance,? Walmart spokesperson Anne Hatfield said in a
statement. ?We support efforts to raise the minimum wage while we continue to make
investments in our associates.?
The GAO report comes after Florida voted to increase its minimum wage over the next six years
until it reaches $15 an hour. It is the eighth state to approve a $15-an-hour minimum wage and
the second-most populous state to do so.
President-elect Joe Biden supports a $15 federal minimum wage. The federal minimum rate has
remained at $7.25 per hour for more than a decade.
Earlier this year, Costco, Amazon and Target raised their minimum pay to $15 per hour. On
Wednesday, Starbucks announced it would raise wages for its baristas.
In the past, companies such as McDonalds and Walmart have responded to pressure on
lawmakers to pass mandatory minimum wage laws with ad campaigns touting their jobs as entry
level, and therefore never intended to provide the sole source of income for a family.
McDonald?s launched a memorable marketing campaign in 2016 pitching itself as ?America?s
best first job? and suggesting that teens and young adults make up the bulk of its workforce.
But many advocates for a mandatory minimum wage saw the McDonald?s ads as an attempt to
gloss over reality, which is that millions of McDonald?s workers struggle to support families on
the wages the company pays.
— CNBC?s Christina Wilkie contributed reporting.
Number 2021-06
March 22, 2021
Economic Inclusion 2000?2020: Labor
Market Trends by Race in the US and States
Kyle Fee*
This Commentary examines the extent to which disparities exist between Blacks and whites in labor market outcomes
such as levels of labor force participation, unemployment rates, and earnings. To gauge whether disparities have
narrowed or widened since 2000, national trends in these outcomes during the past two decades are compared to
the trends in three states: Kentucky, Ohio, and Pennsylvania. Finally, to assess the current state of economic inclusion
as reflected in the labor market, gaps in Black and white outcomes are compared across US states in 2020.
Economic inclusion?defined here as a state of affairs in
which all people are able to fully participate in the economy
to the best of their abilities?can be measured along a
number of dimensions. Labor market outcomes by race is
one such dimension, and in this Commentary, I focus on it as
an indicator of one aspect of economic inclusion. Focusing
on the labor market, some useful metrics are the differences
in outcomes attained by different groups in various labor
market measures such as labor force participation rates,
employment and unemployment rates, and earnings.
National estimates from the Bureau of Labor Statistics show
that outcomes in the labor market differ by race. Research
finds that racial disparities in the labor market ebb and flow
with the business cycle, with disparities narrowing during
expansions and widening during recessions (Cajner et al.,
2017).1 Less is known about how those disparities vary within
and across states. Do state trends mirror national economic
inclusion trends? Is the level of economic inclusion consistent
across states? If not, what can explain those differences?
While these differences have historically been measured at
the national level, interest in measuring them at the state
level has been growing. The usual source of data for statelevel metrics is the American Community Survey (ACS),
which publishes annual estimates of state-level labor market
outcomes. But because annual ACS data are released
with a nine-month lag, measures based on it are less
useful for informing real-time policy decisions.2 Instead,
in this Commentary, I use the Current Population Survey
(CPS), which releases data monthly, to examine economic
inclusion across states and in the Fourth Federal Reserve
District states of Kentucky, Ohio, and Pennsylvania. The
CPS is used less often because estimates must be created
from CPS microdata.
*Kyle Fee is a senior policy analyst at the Federal Reserve Bank of Cleveland. The views authors express in Economic Commentary are theirs and not
necessarily those of the Federal Reserve Bank of Cleveland, the Board of Governors of the Federal Reserve System, or its staff.
Economic Commentary is published by the Research Department of the Federal Reserve Bank of Cleveland and is available on the Cleveland Fed?s website at
www.clevelandfed.org/research. To receive an email when a new Economic Commentary is posted, subscribe at www.clevelandfed.org/subscribe-EC.
ISSN 2163-3738
DOI: 10.26509/frbc-ec-202106
Examining differences in state-level outcomes for Blacks and
whites in the employment rate, the labor force participation
rate, the unemployment rate, and real median hourly
earnings, I find that states generally mirror national trends,
but the degree of economic inclusion varies over time and
across states. Disparities in employment, unemployment,
and labor force participation rates have fluctuated since
2000, while gaps in earnings point to increasing disparity
between Black and white workers. I also find that, focusing
on 2020, labor market disparities across states can be
attributed to regional variation in labor market outcomes by
race, such that a Black or white worker?s experience is not
the same in every state. 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.
Data and Methods
The data set I use is from the CPS Integrated Public Use
Microdata series and consists of monthly samples that are
then aggregated to produce annual estimates (Flood et al.,
2020). All Black and white working-age (16 to 64 years of
age) individuals in the CPS are included in a sample that
covers the years 2000 to 2020.3
Four different gap-based measures capture the disparity
between Black and white populations. Three of the
measures (employment rate, labor force participation
rate, and median real hourly earnings), are produced by
subtracting the Black estimate from the white estimate,
while the unemployment-rate-based measure subtracts
the white estimate from the Black estimate. In this way,
a positive value in the measure indicates the existence of
a gap between the Black and white populations in which
Black achievement is lagging white achievement, suggesting
that an economy is not inclusive and disadvantages Black
individuals on average. While a given point estimate
may indicate the existence of a gap, small sample sizes
(particularly for Black populations) add uncertainty around
the point estimates. To show the degree of uncertainty
surrounding a point estimate, I add 95 percent confidence
intervals.4 The level of uncertainty rises in states with
smaller Black populations. To avoid reporting problematic
estimates, this analysis shows results only from states that
have an average Black sample size greater than 500 from
2000 to 2020. There are 35 states that meet this criterion.5
National estimates aggregate data from all 50 states and the
District of Columbia.
National and State Trends
In this section I focus on trends in Black and white (BW)
labor market outcomes over the sample period 2000 to
2020. I first examine national trends in BW gaps for
employment, labor force participation, unemployment, and
earnings, and then I compare these with the trends in three
states: Kentucky, Ohio, and Pennsylvania.
Employment
Estimates of the BW gap in the employment rate (also
commonly known as the employment-to-population ratio)
for the nation and three states are shown in figure 1.
The national BW gap shows cyclical behavior such that
it increases during recessions, peaks once the recession
ends, and slowly declines during expansions (panel A).
For example, before the 2001 recession, the national BW
employment gap was 8.4 percentage points; it increased
during the recession, peaking in 2003 at 10.0 percentage
points; after the recession, the gap gradually declined.
Similarly, in 2007 prior to the Great Recession, the gap
was 9.2 percentage points, it peaked in 2011 during the
recession at 11.8 percentage points, and after the recession
it declined to 6.3 percentage points in 2019. In 2020, the
BW employment gap grew to 8.0 percentage points.6
Changes in the gap over the business cycle stem from
larger movements in Black employment than in white
employment. For example, the BW gap widens during the
2001 recession because the Black employment rate declined
more than the white employment rate: Black employment
fell 2.9 percentage points while white employment fell
1.8 percentage points. Likewise, the BW gap narrows
during the expansion from 2003 to 2007 because the Black
employment rate increases more than the white employment
rate (1.3 percentage points versus 0.5 percentage points,
respectively). The same patterns are observed around the
Great Recession: During the recession Black employment
falls 7.3 percentage points while white employment falls
4.8 percentage points (widening the gap from 2007 to
2011) and during the expansion the Black employment
rate increases 9.7 percentage points while the white rate
increases 4.2 percentage points (narrowing the gap from
2011 to 2019). In 2020, the BW employment gap widened
because Black employment declined 5.7 percentage points
and white employment declined 4.0 percentage points. The
decreases in the Black employment rate during each of these
three recessions were roughly 1.5 times the declines in the
white employment rate, while the increases in the Black
employment rate were more than 2.3 times those of the
white employment rate during expansions.
These cyclical features are less clear in Kentucky, Ohio,
and Pennsylvania than in the nation because states differ
with respect to the characteristics of their labor markets
and the timing and magnitude of their recessions and
recoveries. The estimates of the states? BW gaps reflect
these differences, which can obscure the underlying cyclical
patterns. The larger confidence intervals associated with
the limited sample sizes also make it harder to see what is
happening. However, in spite of these issues, the data show
that the cyclical features of the BW employment gaps are
still present in these three states.
In Kentucky, the BW gap in employment is relatively small.
That is because Kentucky has one of the lowest white
employment rates in the country (5.2 percentage points
lower than the national rate, on average), while the Black
2
employment rate is on par with the nation?s. The cyclical
pattern of the BW gap in Kentucky was somewhat different
from the nation?s: The gap widened during the mid-2000s
(during the US expansion), the opposite of the national
pattern; yet, consistent with the national pattern, the BW gap
does appear to have gotten smaller in Kentucky since 2010.7
Ohio?s BW employment gap more closely follows the
national pattern; it is statistically indistinguishable from the
national gap throughout the period examined with a few
exceptions. Ohio?s gap is wider than the nation?s in 2008,
2013, 2018, and 2020 because Black employment rates are
more than 3 percentage points lower in Ohio than in the
nation in those years. In Ohio the cyclical pattern of the
BW gap is evident as it changes over the business cycle, and
the changes are statistically significant.
In Pennsylvania, the BW gap tends to be larger than the
nation?s as the Black employment rate is generally lower
than the nation?s (2.4 percentage points lower, on average).
As in Ohio, Pennsylvania?s BW gap is clearly cyclical: we
observe statistically significant changes in the BW gap over
the business cycle. Interestingly, the BW gap in Ohio begins
to widen in 2007, while Pennsylvania?s does not begin to
increase until 2009, potentially reflecting the strength of each
state?s economy heading into the Great Recession or the
possibility that the recession started later in Pennsylvania.
Figure 1. Gap in Employment Rate (White minus Black)
Panel A.
Nation
Panel B.
Percent
20
Percent
20
15
15
10
10
5
5
0
0
-5
-5
-10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel C.
Ohio
Pennsylvania
Percent
20
15
15
10
10
5
5
0
0
-10
National average
-10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel D.
Percent
20
-5
Kentucky
National average
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
-5
National average
-10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Notes: Dashed lines indicate the 95 percent confidence interval. Shaded bars indicate recessions.
Source: IPUMS-CPS.
3
Labor Force Participation
The employment rate has two underlying components?the
labor force participation rate and the unemployment rate.8
The BW gap in the labor force participation rate reflects
more of a longer-term perspective that is less sensitive to
the business cycle, and as a result, it allows one to see to
what degree economic inclusion as reflected in the labor
market is impacted by longer-term trends. The BW gaps
for the nation, Kentucky, Ohio, and Pennsylvania are
presented in figure 2.
Nationally, the BW participation gap widened during the
2000s, from 5.5 percentage points in 2000 to 7.1 percentage
points in 2009, as Black participation rates declined more
than white participation rates. Black participation rates fell
3.9 percentage points over the period (from 72.7 percent to
68.8 percent) and white participation rates fell 2.4 percentage
points (from 78.3 percent to 75.9 percent). During the 2010s,
the BW gap steadily narrowed to a 4.4 percentage point
difference in 2019 as Black participation rates increased
more than white participation rates (2.3 percentage points
versus 0.1 percentage points, respectively). In 2020, the BW
participation gap widened as Black participation
(?2.3 percentage points) declined more than white
participation (?1.1 percentage points). In terms of economic
inclusion, the trend in labor force participation suggests that,
even with the widening of the gap in 2020, racial disparities in
the labor market have lessened over the past decade.
Figure 2. Gap in Labor Force Participation Rate (White minus Black)
Panel A.
Nation
Panel B.
Percent
20
Kentucky
Percent
20
15
15
10
10
5
5
0
0
-5
-5
National average
-10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
-10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel C.
Panel D.
Ohio
Percent
20
Percent
20
15
National average
15
10
10
5
5
0
0
-5
-5
-10
Pennsylvania
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
National average
-10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Notes: Dashed lines indicate the 95 percent confidence interval. Shaded bars indicate recessions.
Source: IPUMS-CPS.
4
The BW gaps in labor force participation rates in the three
Fourth District states somewhat follow the national trend.
Pennsylvania?s BW gap behaved differently from the
nation?s in the first decade of the sample period, but it
followed the national trend during the 2010s. In the early
2000s, the gap bounced around before it stabilized for the
rest of the decade. During the 2010s, Pennsylvania?s BW
gap narrowed to become more in line with the nation?s.
The narrowing was the result of Black participation rates
increasing more than white participation rates. Black
participation rates increased 7.7 percentage points (from
64.1 percent to 71.7 percent), while white participation rates
remained stable at roughly 76 percent.
In Kentucky and Ohio, the gaps are relatively stable over
the entire sample period from 2000 to 2020. Kentucky
statistically and consistently shows a 0.0 percentage point
gap over this time period. Ohio?s BW gap is statistically
consistent with the nation?s in all but a few years, yet it is
appears to be stable because of larger confidence intervals.
Unemployment Rate
The unemployment rate is one of the most utilized
indicators for monitoring business cycles because it reliably
rises sharply during recessions and declines gradually
during recoveries. The BW unemployment rate gaps shown
in figure 3 provides the clearest evidence of cyclical patterns.
Figure 3. Gap in Unemployment Rate (Black minus White)
Panel A.
Nation
Panel B.
Kentucky
Percent
15
Percent
15
National average
10
10
5
5
0
0
-5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel C.
Ohio
-5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel D.
Percent
15
Pennsylvania
Percent
15
National average
National average
10
10
5
5
0
0
-5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
-5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Notes: Dashed lines indicate the 95 percent confidence interval. Shaded bars indicate recessions.
Source: IPUMS-CPS.
5
Nationally, the BW gap in the unemployment rate widens
during recessions and in the years immediately following
recessions. It narrows during expansions. Typically, the
BW gap widens because the Black unemployment rate rises
more than the white unemployment rate during recessions,
and it narrows because the Black unemployment rate
declines more sharply during expansions. For example, in
the 2001 recession, the Black unemployment rate increased
2.2 percentage points compared to just a 1.1 percentage point
increase in the white unemployment rate. And during the
expansion from 2003 to 2007, the Black unemployment rate
fell 2.6 percentage points compared to just a 1.1 percentage
point decline in the white unemployment rate. It also
seems that the depth of the downturn and the length of
the expansion play a role in the pace of change in the BW
gap. During the Great Recession, the BW unemployment
rate gap increased by 3.8 percentage points, while during
the shorter and less severe 2001 recession, it increased by
just 1.1 percentage points. Similarly, during the most recent
expansion, which lasted eight years (2011 to 2019), the BW
gap narrowed by 5.2 percentage points, while during the
four-year expansion of the mid-2000s (2003 to 2007), the gap
narrowed by only 1.4 percentage points. In 2020, the BW
unemployment gap jumped to 4.1 percentage points because
the increase in Black unemployment (5.2 percentage points)
was higher than the increase in white unemployment
(4.0 percentage points).
Figure 4. Gap in Real Median Hourly Earnings (White minus Black)
Panel A.
Nation
Panel B.
Dollars
10
Dollars
10
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel C.
Dollars
10
Kentucky
Ohio
-4
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Panel D.
National average
National average
Pennsylvania
Dollars
10
National average
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
-4
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Notes: Dashed lines indicate the 95 percent confidence interval. Shaded bars indicate recessions.
Source: IPUMS-CPS.
6
The BW unemployment rate gaps in Kentucky, Ohio,
and Pennsylvania are more often than not statistically
indistinguishable from the national trend during this time
period; however, there are a few statistically significant
variations during the 2000s that are worth mentioning.
In Kentucky, the BW gap widened from 2002 to 2008, a
situation which is contrary to the national pattern, as Black
unemployment increased from 6.7 percent to 15.1 percent,
while white unemployment remained stable at 5.5 percent.
In Ohio, the BW gap widened from 2001 to 2004 and
then remained stable rather than narrowing like the
national pattern. Ohio?s BW gap remained larger than the
nation?s on average because of a markedly higher Black
unemployment rate in the state, 3.9 percentage points
higher on average than the national Black unemployment
rate from 2006 to 2008.
In Pennsylvania, the BW gap was stable from 2000 to 2005
and narrowed sharply thereafter, as the Black unemployment
rate declined by 4.3 percentage points, more than 2.5 times
the 1.6 percentage point decline of the national average for
Black unemployment. Following the Great Recession, the gap
narrowed in all three states as Black unemployment declined
more than white unemployment.
In 2020, the BW unemployment gap widened sharply in
all three states, as Black unemployment rose more than
2.4 times faster than white unemployment in each state.
Earnings
BW gaps in earnings provide a fuller picture of economic
inclusion in the labor market. Figure 4 shows the BW gap in
real median hourly earnings for the nation, Kentucky, Ohio,
and Pennsylvania.8 Unlike the cyclical patterns observed in
employment, unemployment, and labor force participation,
the national BW gap in earnings has steadily increased since
2000. In 2000 the BW gap in earnings was $3.16 and in 2018
it peaked at $4.64. Since then, it has declined, reaching $3.94
in 2020. Stated differently, Black workers earned 83 cents and
82 cents for every dollar white workers made in 2000 and
2020, respectively. Increases in the BW gap from 2000 to
2020 are observed because real median earnings for whites
increased more than real median earnings for Blacks during the
period, with earnings for whites rising by $3.03 (15.9 percent)
compared to an increase of $2.25 (14.2 percent) for Blacks.
In Kentucky, the BW gap in real median hourly earnings
has remained relatively constant at roughly $2.60 on
average over the period. In Ohio and Pennsylvania, the gaps
started off similar to Kentucky?s in 2000 but have widened
since then, by $1.15 and $1.30, respectively. However, the
large confidence intervals indicate that there has been no
statistically significant change in each state?s BW gap in real
median hourly earnings from 2000 to 2020. The less precise
estimates stem from smaller sample sizes; only outgoing
rotation groups report earnings.9 The larger confidence
intervals also make each state?s estimate statistically
indistinguishable from the national estimate.
Figure 5. BW Gaps in Employment Rate by State, 2020 (White minus Black)
Panel A.
Percent
25
US States
National average: 8.0 percentage points
20
Gap Decomposition
Percent
15
Black
White
10
15
5
10
0
5
-5
0
-10
-5
-10
Panel B.
CT MD CA NJ WA MA NC NE DE AL AR LA SC NY IL PA MI CO
AZ KY GA TX OK RI FL MO VA NV TN IN KS MS OH MN WI
Note: Bars indicates the 95 percent confidence interval.
Source: IPUMS-CPS.
-15
CT MD CA NJ WA MA NC NE DE AL AR LA SC NY IL PA MI CO
AZ KY GA TX OK RI FL MO VA NV TN IN KS MS OH MN WI
Note: The horizontal black bars are interpreted as follows: Positive
values indicate that the employment rate for Blacks in the state is
lower than the national average, while negative values indicate the
rate for Blacks is higher than the national average.
Source: IPUMS-CPS.
7
National and State Levels of Economic Inclusion as of 2020
In this section, I explore further whether measures of
economic inclusion differ across US states. To do so, I focus
on levels of the BW gaps in labor market outcomes a single
year, 2020, for 35 states that have an average Black sample size
greater than 500, our criterion for inclusion in the analysis.
Employment
Panel A of figure 5 presents point estimates and the
95 percent confidence intervals for the BW gap in the
employment rate. The variation in BW gaps across states
indicates that the level of economic inclusion varies across
states. Kentucky has one of the smaller BW gaps, even
when factoring in the confidence intervals; Kentucky?s gap
is smaller than the gaps in 10 states. However, even though
Kentucky?s point estimate (3.7 percentage points) may
indicate that Blacks are actually being excluded, when one
considers the 95 percent confidence interval (plus or minus
4.6 percentage points) there are no statistical differences in
Black and white employment rates.
Panel B of figure 5 breaks down state deviations from the
national BW employment gap into those that are attributable
to differences in the Black and white employment rates. For
example, the green bar indicates that in Kentucky the white
employment rate is 4.1 percentage points lower than the
national average, while the blue bar indicates that the Black
employment rate is 0.2 percentage points higher than the
national average. Thus, Kentucky?s below-average BW gap
is primarily the result of the state having a lower white
employment rate than the national average in 2020.
Ohio?s BW gap of 12.5 percentage points (plus or
minus 3.0 percentage points) and Pennsylvania?s gap of
14.2 percentage points (plus or minus 3.0 percentage points)
are statistically larger than the national average of
8.0 percentage points and the gaps in most other states
in 2020. Connecticut stands out in panel A as having the
smallest BW employment rate gap, and panel B shows that
the state?s small BW gap is mostly due to above-average
Black employment rates. Interestingly, Connecticut?s small
BW employment gap does not translate to earnings-based
measures, as Connecticut has the largest BW earnings gap
(see below).
Further research is necessary to better understand why
different patterns exist in different states? labor markets, but
evidence presented below on the differences in labor force
participation and unemployment rates (there is a little more
variation across states in BW participation gaps than in
unemployment gaps) implies that the gaps in employment
are mostly due to differences in BW participation rates.
Participation rates are less cyclical, and changes over time
happen more slowly.
Labor Force Participation
Panel A of figure 6 shows the point estimates and
95 percent confidence intervals for the BW gaps in the
labor force participation rate in 35 states in 2020. Panel B
breaks down state deviations from the national BW labor
Figure 6. BW Gaps in Labor Force Participation Rate by State, 2020 (White minus Black)
Panel A.
Percent
25
US States
National average: 5.6 percentage points
20
Panel B.
Percent
15
Gap Decomposition
Black
White
10
15
5
10
5
0
0
-5
-5
-10
KY AZ WA OK CA FL MO NV RI TN LA IN SC MS IL KS MN
CT MD NJ TX GA MA NC DE NE VA AL AR OH PA WI MI NY CO
Note: Bars indicate the 95 percent confidence interval.
Source: IPUMS-CPS.
-10
CT MD NJ TX GA MA NC DE NE VA AL AR OH PA WI MI NY CO
KY AZ WA OK CA FL MO NV RI TN LA IN SC MS IL KS MN
Note: The horizontal black bars are interpreted as follows: Positive
values indicate that the labor force participation rate for Blacks in
the state is lower than the national average, while negative values
indicate the rate for Blacks is higher than the national average.
Source: IPUMS-CPS.
8
force participation gap into those that are attributable to
differences in the Black and white rates. Again, the variation
in BW gaps across states indicates that the level of economic
inclusion differs across states. Kentucky has one of the
smallest BW gaps (?0.3 percentage points, plus or minus
4.3 percentage points) because the white participation rate
in the state is lower than the national average (69.1 percent
versus 74.3 percent) and the Black participation rate is higher
(69.4 percent versus 68.7 percent). Factoring in confidence
intervals, Kentucky?s BW participation gap is statistically
smaller than the gaps in 12 of the 35 states examined.
Ohio?s BW gap of 7.0 percentage points (plus or minus
2.8 percentage points) and Pennsylvania?s gap of 7.9 percentage
points (plus or minus 2.9 percentage points) are statistically
similar to the national average of 5.6 percentage points and
the gaps of most states in 2020. Colorado has a larger BW
gap in the labor force participation rate because the white
participation rate is higher than the national average and the
Black participation rate is lower. In a few states (New York,
Michigan, and Mississippi), wide BW gaps are the result of
Black participation rates that are more below average than
white participation rates.
Unemployment Rate
Panel A of figure 7 shows the point estimates and 95 percent
confidence intervals for the BW gaps in the unemployment
rate in 35 states in 2020, and panel B breaks down state
deviations from the nati