Lower-wage Ohioans have experienced significant pay gains since 2019, leading to the lowest level of wage inequality in the state in over two decades, according to a new report from the Federal Reserve Bank of Cleveland. Workers at the 10th percentile of Ohio’s wage distribution saw their hourly pay increase by an average of 3.2 percent annually, adjusted for inflation, from 2019 to 2023. In contrast, those at the 90th percentile experienced an average annual wage increase of 0.8 percent over the same period.
This shift marks a notable change from the previous trend where wage inequality between these groups increased between 2000 and 2020 both in Ohio and across the United States. The recent decline in wage inequality has been more pronounced in Ohio than nationally.
"A tighter labor market may have contributed to pay increases for lower-wage workers," writes Guhan Venkatu, senior policy advisor at the Cleveland Fed, citing prior research. He notes that whether this trend will continue remains uncertain.
"But whatever lies ahead, the last few years have clearly brought consequential changes to the US labor market, which have at least temporarily disrupted what had been growing wage inequality through the preceding decades," Venkatu writes. "In Ohio, that has resulted in the lowest wage inequality in more than two decades."
The Federal Reserve Bank of Cleveland is one of twelve regional Reserve Banks that comprise the Federal Reserve System along with the Board of Governors in Washington D.C. The Cleveland Fed contributes to national monetary policy formulation, supervises banking organizations, provides payment services to financial institutions and the US Treasury, and supports community well-being through various research and educational activities.
The Cleveland Fed serves an area that includes Ohio, western Pennsylvania, eastern Kentucky, and northern West Virginia through its branches in Cincinnati and Pittsburgh.
For further information:
Chuck Soder
chuck.soder@clev.frb.org
216.672.2798
