State Economies with the Most Racial Equality

Racial inequality has been brought into the spotlight in recent years, as protests against police brutality and racism have taken place across the U.S. However, it’s not just in policing where discrimination rears its head. A recent study found that only 7% of managerial positions and 4% - 5% of senior managerial positions belong to black Americans, even though that demographic makes up 14% of U.S. employees. The overall black unemployment rate is consistently higher than the white unemployment rate, too.

What’s even more striking than the inequality in employment is the disparity in wealth between white and black Americans. For example the median white person in their early thirties has $29,000 more wealth than the median black person of the same age, and that gap increases to $251,000 for Americans in their late fifties. As racial tensions run high in America, it’s an opportune time to take a look at which states have done the most to promote financial equality.

In order to determine which states have the most racial equality in terms of employment and wealth, WalletHub compared the 50 states and the District of Columbia across eight key metrics. Our data compares the difference between white and black Americans in areas such as annual income, unemployment rate and homeownership rate.

Main Findings

State Economies with the Most Racial Equality

*No. 1 = Most Equality

Median Annual Income Gap

Lowest

• 1. Hawaii
• 2. New Hampshire
• 3. Arizona
• 4. New Mexico
• 5. Alaska

Highest

• 47. Illinois
• 48. Mississippi
• 49. Louisiana
• 50. Wisconsin
• 51. District of Columbia

Best State vs. Worst State: 11x Difference

Hawaii vs. District of Columbia

Labor-Force Participation Rate Gap

Lowest

• T-1. Kentucky
• T-1. Alaska
• T-1. Vermont
• 4. Arizona
• 5. Tennessee

Highest

• 47. Illinois
• 48. Pennsylvania
• 49. Wyoming
• 50. Wisconsin
• 51. District of Columbia

Unemployment Rate Gap

Lowest

• 1. Alaska
• 2. Maine
• 3. South Dakota
• 4. Oregon
• 5. Vermont

Highest

• 47. Wyoming
• 48. Michigan
• 49. Montana
• 50. Illinois
• 51. District of Columbia

Homeownership Rate Gap

Lowest

• 1. District of Columbia
• 2. Virginia
• 3. California
• 4. South Carolina
• 5. Maryland

Highest

• 47. Maine
• 48. Iowa
• 49. Minnesota
• 50. South Dakota
• 51. North Dakota

Best State vs. Worst State: 5x Difference

District of Columbia vs. North Dakota

Poverty Rate Gap

Lowest

• 1. Hawaii
• 2. Alaska
• 3. Montana
• 4. Texas
• 5. Maryland

Highest

• 47. Mississippi
• 48. District of Columbia
• 49. Iowa
• 50. Wisconsin
• 51. Wyoming

Homeless Rate Gap

Lowest

• T-1. New Hampshire
• T-1. Idaho
• T-1. Vermont
• T-1. West Virginia
• T-1. Wyoming

Highest

• 47. Maryland
• 48. Delaware
• 49. Louisiana
• 50. New York
• 51. District of Columbia

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Ask the Experts

In order to provide further insight on how to promote equality in employment and wealth, WalletHub turned to a panel of experts. Click on the pictures of the experts below to read their bios and see their responses to the following key questions:

1. What are the major causes of the racial wealth gaps in U.S. states?
2. In your opinion, have we made any progress in closing the racial gap in the economy?
3. What policies and programs should policymakers implement to reduce economic disparities by race?
4. In evaluating the states' economies with the most racial equality, what are the top five indicators one should focus on?

Ask the Experts

William A. Darity
Samuel DuBois Cook Distinguished Professor of Public Policy, Sanford School of Public Policy – Duke University
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Terrell Strayhorn
Ph.D. – Professor in the Evelyn Reid Syphax School of Education, Department of Psychology; Director of the Center for the Study of HBCUs – Virginia Union University
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hephzibah v. strmic-pawl
Ph.D. – Associate Professor of Sociology, Sociology-Anthropology Department – Manhattanville College
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Jamshid Damooei
Ph.D. – Professor and Director, Economics Program, School of Management and Executive Director, Center for Economics of Social Issues (CESI) – California Lutheran University
Read More

Methodology

In order to determine the states with the most racial equality in terms of employment and wealth, WalletHub compared the 50 states and the District of Columbia across eight relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most equality. We determined the level of equality by subtracting the values attributed to white people and black people for a given metric, using only the most recent available data.

If in some states black people scored as high as or better than white people on a given metric, all such states were awarded the maximum number of points.

Finally, we determined each state and the District’s weighted average across all metrics to calculate its total score and used the resulting scores to rank-order the states.

• Median Annual Household Income: Double Weight (~21.05 Points)
• Labor-Force Participation Rate: Full Weight (~10.53 Points)
• Unemployment Rate: Double Weight (~21.05 Points)
• Homeownership Rate: Full Weight (~10.53 Points)
  Note: We are using homeownership as a proxy for wealth.
• Poverty Rate: Full Weight (~10.53 Points)
• Homeless Rate: Full Weight (~10.53 Points)
• Share of Unsheltered Homeless: Half Weight (~5.26 Points)
• Share of Executives: Full Weight (~10.53 Points)

 
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, U.S. Equal Employment Opportunity Commission and U.S. Department of Housing and Urban Development.

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