Racial disparity in household incomes of Minnesotans is starting to narrow

Minnesota is finally seeing some narrowing in one of its stubbornly large racial disparities.

Median income for Minnesota's Black households jumped about 43% in inflation-adjusted dollars in the past five years — the most of any racial or ethnic group, according to American Community Survey data released this fall. By comparison, it increased 18% for white households from 2016 to 2021.

That's a big change from the prior five years, when incomes did not budge as much amid a slow recovery from the 2008 recession and when the racial gap actually widened.

"Certainly there's progress and we want to acknowledge that progress," said Tawanna Black, CEO of the St. Paul-based Center for Economic Inclusion.

She said the efforts of workforce training organizations and employers had an impact. Firms have been working harder to find workers amid the state's tight labor market that pre-dated the pandemic, which has re-emerged as a salient element of Minnesota's economy in the past year or two.

"That means we see more employers who are reaching out to communities they may not have had partnerships with in the past," she said.

Black median household income in Minnesota surpassed $47,700 in 2021, but a wide gulf remains with white non-Hispanic median household income at about $80,900.

Still, the gap between the two — about $33,000 — closed by a couple thousand dollars over the past five years.

Compared to other states, Minnesota had the 13th-largest gap in income of Black and white households last year, according to Cameron Macht, a regional labor analyst for the Minnesota Department of Employment and Economic Development (DEED).

"We've gotten better," he said. "In 2011, we had the fourth-largest gap ... We're trending in a positive direction, but obviously there's still a significant amount of work to do."

He added that Minnesota had the eighth-fastest increase in Black median household income over the most recent five-year period, moving up 10 spots to have the 22nd highest in the U.S.

Minnesota ranks much higher when viewed through its white and overall median incomes, coming in at 16th- and 14th-highest in the U.S.

Latinos in Minnesota also saw sizeable gains in the most recent five-year period, with their median household income jumping 40%, coming in at about $64,000 in 2021. Asian Americans, who have the highest median household income in the state at more than $92,000, saw an increase of 13% during that time.

"We moved into a period of strong economic growth and strong job growth," State Demographer Susan Brower said of the five years ending in 2021. "I think those are reflected in the numbers."

It also corresponds with a time in which the state's Black unemployment rate, which had often been more than triple the white jobless rate, declined to the lowest levels in years in 2018 and 2019 as the state's tight labor market and rising wages led more Black workers to enter the labor force and to find jobs.

When the pandemic first struck, Black Minnesotans initially lost jobs at a higher rate than white workers. But during the recovery, the racial unemployment gap not only narrowed, it flipped. For several months of 2021, Black unemployment for the first time dipped below that of whites.

While the Black jobless rate in Minnesota had been rising earlier this year, a troubling trend at a time when Minnesota was otherwise recording the lowest state unemployment rates in U.S. history, it has been steadily dropping in more recent months.

Brower added that she's been tracking continued strides for workers of color in the state in terms of job growth, more full-time as opposed to part-time work, and higher pay.

"We've seen this continued improvement in full-time year-round work at higher wages, which tells me that this is a steady trend rather than kind of just an anomaly," she said.

Shauntina Beatty, 44, has experienced that firsthand. She had been working a number of low-paying "dead end jobs" up until she entered a job training program at Twin Cities Rise, a Minneapolis nonprofit, more than a decade ago.

She first landed a job as an administrative assistant at a small affordable housing nonprofit.

"It was stable," she said. "I didn't have to do two jobs the way I was doing before."

From there, she worked her way up into other roles within the organization such as project coordinator and compliance manager. She has changed employers a few times since then, most times taking on higher-paying jobs at bigger organizations. She's now a property manager for Minneapolis Public Housing, making about three times as much as she did when she was starting out.

"Just from being around the co-workers I was around, I fixed my credit and I became a homeowner," she said. "A lot of other things I have learned along the way just being in the housing market."

Last year, she got her general contractor's license and is now hoping to build up her own business in what she points out is a very male-dominated field.

Many people point to the Minnesota's large racial disparities in education as being a big driver of the state's significant income gaps. Black of the Center for Economic Inclusion also pointed to other issues, such as the over-concentration of Black workers in entry-level jobs in health care.

A recent DEED report on the state's Black labor force showed that 40% of Black Minnesotans work in health care and social assistance jobs. The most common occupations for Black workers include personal care aides and nursing and home health aides, which are low-paying jobs.

"Health care is a great field to be in and it's one that's in high demand in our marketplace and can move a person up into a really stable and prosperous income level," said Black. "But we don't see that happening for African Americans in the way that we see it occurring for other races."

On-the-job training, development and apprenticeships are the kinds of things that can help those workers gain more skills and move then into higher-paying jobs, she added.

Heading into 2023, labor experts are concerned about how an economic slowdown would impact people of color, who often see more job losses during downturns.

But for now, Minnesota's job market continues to hum along with employers eagerly snapping up new workers. Manny Seyon, 20, of Brooklyn Park is among those who recently landed a new job — and a much higher-paying one at that.

Seyon was homeless in his senior year of high school after his family's apartment was damaged by fire. He went to college for a couple of years, but the pandemic interrupted his studies. He relocated to Minneapolis, taking warehouse jobs that made as much as $22 an hour.

A conversation with an Uber driver convinced him to enter an application developer program at Summit Academy, a job training center in north Minneapolis. He graduated in September. Last week, he started a new full-time gig as a software engineering apprentice at U.S. Bank at a salary of $37 an hour.

"It's unbelievable to me," he said. "I'm still trying to wrap my head around it."