A Northeast Ohio Recovery That Excludes Some Fails Everyone

by | Feb 4, 2021

Editor’s Note: This is the first article in a four-part, month-long series published on Cleveland.com.

By the Fund for Our Economic Future

If ever there was a time for Northeast Ohio to choose between two tomorrows, this is it.

As political environments shift and recovery strategies take focus, the region has an opportunity to rise from the devastation of a global pandemic and rebuild in ways that are sustainable and racially equitable.

The stakes are too high to choose differently. As the Fund for Our Economic Future’s Two Tomorrows report and many other analyses show, an economy that excludes some fails everyone. Regions that perpetuate the same old policies and practices that disproportionately exclude Black, Latinx and other minority residents will fall further behind.

Conversely, regions that differentiate themselves and come together to advance a shared agenda to create good jobs and rising incomes for everyone will benefit from increased talent, growth and long-term prosperity. And with the potential for further, significant stimulus, now is the time to be strategic to ensure Northeast Ohio benefits. Federal resources can help communities not only recover but do even more. The key is to be ready!

The good news is there is momentum from which to build, notably, the recently announced Cleveland Innovation District, which will leverage hundreds of millions of state dollars to help create more jobs, with the potential for a $3 billion economic impact.

Still, to get to a better tomorrow, it’s worth learning from yesterday. An important lesson from the Great Recession (December 2007 to June 2009):  Racial economic disparities worsened during that time and during the recovery that followed.

For instance, the gap between Black and white employment rates widened to 20% during the worst of the Great Recession in Northeast Ohio. Though not as severe, significant disparity persisted; as of 2018, there was still a 12% difference in Northeast Ohio’s Black and white employment rates. The racial wage gap also widened during the recession and recovery period, with Black workers earning 70 cents on the dollar on average pre-Great Recession to 63 cents on the dollar as of 2018.

Recovery from the COVID-19 recession could be even more disparate by race and place without concentrated attention and effort. Certainly, some factors are beyond local control (e.g., which industries are impacted the most). But how Northeast Ohio addresses the challenges plays a significant role.

The Fund’s vision for the region: A continuously regenerating economy creating good jobs and rising incomes for everyone. To achieve this, Northeast Ohio needs to focus growth on industries that can bring resources into the region, support young firms, and take deliberate actions to close racial gaps in employment and income.

Here’s how (future stories in this series will drill down into these strategies in more detail):

Boost sectors with new growth potential: The traded sector (companies that trade with people and businesses outside the regional economy) and young firms (less than five years old) are the lifeblood of a dynamic economy. In the Great Recession, regions that were more successful around growth in key traded sectors and new company growth recovered more quickly. Since late 2018, the Fund, the Cleveland Foundation, Greater Cleveland Partnership, Team NEO, and JumpStart have worked alongside some of the community’s top CEOs to develop sector strategies grounded in growing future jobs in health care, manufacturing and water technologies. To enable growth across these sectors, there are strategies to advance talent, capital, digital equity, and place (specifically, Midtown and the Opportunity Corridor). And the newly announced Innovation District presents even greater opportunities for growth in health care jobs. Deliberate strategies are needed to ensure resultant growth is inclusive and benefits surrounding neighborhoods.

Support Black and minority-led young firms: Historically, recovery funding tends to accrue to more established (i.e., white-led) businesses and organizations, which perpetuates disadvantages and leaves behind large numbers of young firms. Explicit support for new businesses led by and that employ people of color can help close this gap.

Improve access to high-quality training programs: The sudden rise in unemployment over the last several months offers one certainty in an otherwise highly uncertain economy: The number of people looking for work and training opportunities will dramatically increase. Another certainty: Black and Latinx residents face significantly more barriers to re-employment during recovery periods. Supporting high-quality training and skill development is crucial to enabling access to better-paying jobs.

Change incentive structures: In addition to programs and funding, policies must adjust. Ohio can be a leading model for more inclusive economic growth by establishing explicit criteria for receiving public dollars that can change the way development occurs. Criteria could include providing living-wage jobs and locating in places more accessible to workers (e.g., job hubs).

Invest in stabilization of families: Disruptions in employment are compounded when a family’s financial safety net is thin to nonexistent. Wealth generation is an important factor in reducing income gaps. New models of community-focused investing and wealth building are emerging across the country and Northeast Ohio can take advantage. Indeed, the design of a community investment fund is taking shape in the Clark-Fulton neighborhood, and the learnings from this effort have the potential to be spread across the region.

Many recovery efforts are already underway. Success hinges on coordination, adequate funding and, perhaps most importantly, a shared vision for a thriving, equitable tomorrow.