Earlier this month, the Health Policy Institute of Ohio released a brief on the prevalence of racial disparities in Ohio. The study quantified the disparity between racial groups of Ohio at $79 billion from gaps in income, consumer spending, tax revenues, health care spending, productivity, and corrections spending.
Racial inequality has economic implications, but it’s also something worth eliminating for its own sake. But how do we do this?
The brief from the Health Policy Institute of Ohio has a few suggestions. It suggests implementing policies that promote justice and fairness, tailoring policies to support people of color, allocating resources to community-building policies, evaluating disparities, reforming criminal justice, and ensuring equitable access to financing.
I’ll add some other policies to consider.
Income
One of the biggest disparities between different racial groups in Ohio is income. According to 2021 5-year American Community Survey data, Black Ohioans are 2.6 times more likely to be in poverty than white Ohioans.
Income disparities could be closed through tax policy. One option is the state earned income tax credit, a tax credit that goes to low-income workers. Ohio’s earned income tax credit rate is rather high, but because taxpayers can’t receive any more from the credit than they pay in taxes, its ability to alleviate poverty is hampered compared to the federal credit. Changing this policy would put more dollars in the pockets of low-income workers, which would help reduce the racial income gap.
Another option is the child tax credit. This credit gives cash assistance to families with children. Recent analysis by my practice revealed that creating a state child tax credit in Ohio could generate anywhere from $60 to $300 million in net economic benefits, mostly realized through higher future incomes for children in families that receive the credit. Adopting a state child tax credit could help narrow the racial income gap by helping low-income households with chilren.
Housing
Housing is a living cost no one can avoid. A National Association of Retailers study from earlier this year found 30% of Black homeowners in the United States are housing cost burdened, meaning they spend over 30% of their income on housing. This compares to only 21% of white homeowners. If housing costs can be controlled, it could have an impact on closing the gap between Black and white households.
One way housing costs can be controlled is by encouraging construction of housing. Reducing restrictions on construction of multifamily housing such as those promoted through single-family zoning could ease the cost of housing, especially in more tight housing markets.
Education
A 2020 brief from the National Institute for Early Education Research found black children are nine months behind white children in math achievement and seven months behind white children in reading achievement as early as kindergarten entry. Promoting access to early childhood education can be a tool for leveling the playing field between people from different racial backgrounds.
We have tools for reducing disparities between different groups. Reducing these disparities will help Ohio’s economy, and it is also just the right thing to do. Ohio should not be a place where people’s outcomes are predetermined at birth based on skin color or ethnic background. It should be a place where the field is level for people of all different backgrounds to contribute. Policy can be a tool for making that a reality.
This commentary first appeared in the Ohio Capital Journal.