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Chapter VI: Small Business Activity in West Virginia

The issue of disparities across racial groups has received a great deal of attention in the United States in recent months. It is clear that a variety of outcome measures – including economic outcomes – vary significantly across racial groups. This attention has served to spark a renewed conversation in the nation surrounding the longstanding causes of these disparities and the best solutions to achieve a higher level of equality and justice in the long-run. Undoubtedly the issues surrounding these causes and solutions are complex; we only just begin to address these myriad issues here. Rather, in this chapter we present a brief snapshot of a few fundamental economic outcome measures across racial groups. This presentation is intended to inform the reader of these basic facts to serve as a foundation and a motivating factor to further research these inequalities and to find solutions over time. Our presentation focuses almost exclusively on national-level statistics as there exists a dearth of race-related economic statistics for West Virginia specifically.

In Figure 6.1 we begin with a presentation of median household income across racial groups. As illustrated, the median household income across all racial groups was just over $63 thousand for 2018. Asian households far exceed the average, with a median household income of over $87 thousand. In contrast, Black and Hispanic households fall short of the overall average. Hispanic households post a median income of nearly $52 thousand, coming in at around 81 percent of the overall median. Black households report a median income of $41 thousand, or 66 percent of the overall median. Stated differently, the median Black household receives two dollars in income for every three dollars received by the median household across all races. Further, this general pattern has been quite consistent over the long run.

Median Income by Race or Ethnicity Graph showing that Asians have the highest median income followed by Whites.  Blacks have the lowest median income.

[Figure 6.1]

One potential driver of the disparities reflected in Figure 6.1 could be variation across geographic region. For instance, if a certain racial group tends to live in a region of the county that has a lower median income overall, that could explain part of the disparity illustrated. As such, in Figure 6.2 we illustrate the ratio of the median income for Black households relative to the median income for all households across the four major regions of the nation. For the most recent year that data are available, Black households earned the most relative to the overall regional median in the South. There Black households earned nearly 72 percent of the overall median. The figure was lowest in the Midwest, where Black household median income was around 57 percent of the overall median. The figure is largely stable over time, although there is a fair amount of variation in the West.

Ratio of Black Median Income to the Region’s Median Income Graph showing that Blacks income inequality is more pronounced in the Midwest region

[Figure 6.2]

In Figure 6.3 we illustrate how median household income across the various racial groupings for the U.S. and for West Virginia specifically. [4] As illustrated, median income is lower in West Virginia for all racial groups compared to the nation. As in the nation altogether, Asian households receive the highest median income in West Virginia compared to the overall state median. In contrast to the nation, however, Hispanic households in West Virginia receive slightly more than the overall statewide median. Similar to the nation, Black households in the state receive less income than the state median. However, in the state, the income gap between Black households and the overall median is slightly smaller compared to the nationwide gap.

Median Household Income by Race or Ethnicity United States and West Virginia, 2018 Graph showing that all races follow the same trend within the state of West Virginia that they do in the United States as a whole.

[Figure 6.3]

In Figure 6.4 we consider unemployment across the various racial groups. Of course, unemployment has skyrocketed across all groups in recent months because of the COVID-19 pandemic; we focus instead on trends that generally held before the recent crisis. Looking at the end of 2019, Black men and women posted an unemployment rate of 5.6 percent, compared to an overall unemployment rate of 3.5 percent. Hispanic men and women came in at 4.1 percent at that time. Asian men and women have consistently posted the lowest unemployment rate across all groups. As the overall economy improved over the decade that we illustrate (ignoring 2020), the unemployment gap shrunk consistently and considerably.

In a similar vein, in Figure 6.5 we illustrate labor force participation across racial groups. Similar to our approach with unemployment, we focus on the pattern that existed at the end of 2019 and ignore the significant shock that has occurred due to the current pandemic. At that time, the overall labor force participation rate was just over 63 percent, and white households were almost identical to the overall average. Hispanic men and women posted the highest labor force participation rate at nearly 68 percent. The labor force participation rate among Black households was just under 63 percent – a narrow gap of less than one percentage point that had improved noticeably over the decade illustrated.

Unemployment Rate by Race or Ethnicity All unemployment has fallen past decade, the separation between the races and ethnicities has tightened, but blacks still have the highest unemployment rate with Asians having the lowest.

[Figure 6.4]

Labor Force Participation by Race or Ethnicity Graph showing labor force participation has overall been steady, with Hispanics having the highest participation rate.

[Figure 6.5]

Education is potentially one important driver of the disparities considered so far in this chapter. If educational opportunities are limited for one or more racial groups, then this can contribute to persistent economic inequities toward that group. As such, we consider a brief examination of educational attainment across racial groups. As illustrated in Figure 6.6, there are clear and significant differences in education attainment present. Forty-one percent of White household heads hold at least a bachelor’s degree, compared to 26 percent and 21 percent of Black and Hispanic household heads, respectively. All three groups fall well short of Asian households, where 63 percent of household heads hold at least a bachelor’s degree. Conversely, the share of household heads who hold only a high school diploma or less than a high school diploma varies similarly across all four major racial groups.

Overall, Figure 6.6 seems to make it clear that diminished educational opportunities for Black and Hispanic households are one contributor to the disparities in economic outcomes illustrated above. However, to provide a more in-depth overview, in Figure 6.7 we illustrate median household income across racial groups for only those households where the household head holds at least a bachelor’s degree. Here we see that Black households with a bachelor’s degree post a median income of just under $76 thousand, compared to the overall median for just under $102 thousand. This reflects a median income gap of around 25 percent even when restricting our examination to only those households with a college degree. In a similar vein, median income for Hispanic households with at least a college degree comes in at around 85 percent of the overall median.

In Figure 6.8 we provide a similar examination of median household income, but here for households with only a high school diploma. Here we find that Hispanic households are almost exactly at the median across all households. However, Black households with only a high school diploma receive only around $31 thousand, around one-third less than the overall median of around $46 thousand. Overall these figures illustrate that, while limited educational opportunities is one contributor to racial inequities, there are clearly more issues beyond education.

Householders’ Educational Attainment by Race or Ethnicity, 2018 Stacked bar graph showing the percentage of Educational Attainment.  Asians’ have the largest percentage of BA or Higher.

[Figure 6.6]

Median Income for Householders with a Bachelor’s Degree or Higher, 2018 Graph showing Blacks fall below all other races for median income level, Hispanics follow with the second lowest.

[Figure 6.7]

Median Income for Householders with a High School Diploma, 2018 Graph showing Blacks fall below all other races for median income level.

[Figure 6.8]