Measuring Equitable Economy in Tucson, Arizona MSA
How equitable is Tucson’s access to high-quality jobs, economic security, income, and homeownership opportunities for people of color? According to the National Equity Atlas, an equitable economy results in no racial wealth gap and all individuals having access to good jobs, a rising standard of living, an equal voice, and ownership. They note that a host of structural barriers prevent people of color from getting ahead, including endemic discrimination, predatory financial practices, and stagnant and inequitable wages. As mentioned in the MAP article Highlighting Diversity, Equity, and Inclusivity: Tucson’s Demographic Mix, our region and nation are becoming more diverse each year. It is vital for our region to acknowledge where inequalities may exist. This will allow for inequalities to be addressed by creating policies and removing barriers so all members of our community have access to economic opportunities. However, it is also important to accurately reflect the differences in wage and employment gaps by taking into account the distribution of age, education, and work experiences among race and ethnic groups.
How do we measure a region’s economic vitality and what does that mean for equality? The National Equity Atlas suggests that in an equitable economy, everyone who wants to work would have a good job. They measure this by exploring labor force participation rates from 2019 by race & ethnicity. In Tucson, the Native American population had the lowest labor force participation rate at 71.0%, followed by the white (non-Hispanic or Latino) population (Figure 1). The Mixed/other race posted the highest labor force participation rate at 81.0%, followed by the Latino population at 78.0%.
Figure 1: Labor Force Participation Rate by Race & Ethnicity for the Working Age Population (25-64) in 2019
In Tucson, the labor force participation rate for the Asian and Native American populations increased significantly over the past 30 years. The white and Black populations posted only modest increases during this time. The labor force participation rate for the Latino population increased by 11 percentage points to 78.0%, which was the second-highest rate in 2019. To view data for the U.S., 10 western states, and 11 peer metropolitan areas click on the drop-down menu in Figure 2.
Figure 2: Labor Force Participation Rate by Race & Ethnicity for the Working Age Population (25-64)
Among the different races and ethnicities explored by the National Equity Atlas the largest gender gap for labor force participation rates in Tucson existed for the Asian population, where 69.0% of Asian women participated in the labor force in 2019 and 87.0% of men, an 18 percentage point difference. The Latino population also had a large difference with labor force participation rates for women at 70.0% and men at 86.0%. The smallest gender gaps existed for the Native American and Black populations with a difference of four and five percentage points, respectively. To view data for males vs females click on the drop-down menu in Figure 3.
Figure 3: Labor Force Participation Rate by Race & Ethnicity and Gender for the Working Age Population (25-64) in 2019
In 2019, prior to the COVID-19 pandemic, the unemployment rate in Tucson was the highest among Native Americans (Figure 4). It was nearly double the next highest unemployment rate which was 8.0% for the Mixed/other race. The Asian or Pacific Islander race had the lowest unemployment rate at 3.0%, followed by the white (non-Hispanic or Latino) race at 5%. That was reasonably consistent with trends seen across the U.S, with the exception of the Black race, which had much lower unemployment rates in Tucson when compared to the nation.
Figure 4: Unemployment Rate by Race & Ethnicity for the Working Age Population (25-64) in 2019
Nationally, the unemployment rate falls drastically as the level of education increases. For those with a Bachelor’s degree or better, there is little variation among the races and ethnicities. However, the difference in the unemployment rate by race and ethnicity for those with less than a high school diploma is striking. Among those with less than a high school diploma, the Asian population had the lowest unemployment rate at 5%, followed closely by Latinos at 6.0%. The Native American and Black populations posted the highest unemployment rates for those without a high school diploma at 18.0% and 17.0%, respectively. The trend among race and ethnicity by education for Tucson is similar to the nation. To view data for Tucson, 10 western states, and 11 peer metropolitan areas click on the drop-down menu in Figure 5. Keep in mind that data with large margins of error have been excluded.
Figure 5: Unemployment Rate by Race & Ethnicity and Level of Education for the Working Age Population (25-64) in 2019
The MAP explores the median annual wage by occupation. However, it doesn’t include a breakdown by race and ethnicity. The National Equity Atlas explores the median hourly wage by race and ethnicity and the percentage of the population earning at least $15. The wage one needs to earn to meet their basic needs is highly dependent on family size and cost of living. The current federal minimum wage is $7.25. However, many states and cities have their own minimum wage laws.
Nationally, the Asian and Pacific Islander population had the highest hourly wage at $28 in 2019 (Figure 6). The Latino population posted the lowest hourly wage at $17. The data for Tucson was consistent with the median wage by race and ethnicity for the Nation, except wages overall were lower in Tucson.
Figure 6: Median Hourly Wage by Race & Ethnicity in 2019
It’s important to take into account differences in the distribution of education levels among races and ethnicities. Nationally, those with a bachelor’s degree or better earn a higher hourly wage across all races and ethnicities than those without a degree. However, there is significant variation among the races and ethnicities. The Asian and Pacific Islander population earns the highest wage for those with at least a Bachelor’s degree at $39 an hour, while the Native American population earned the least at $24. Less variation exists among the race and ethnicities for those with less than a high school diploma, a high school diploma, or some college. This trend is consistent within Tucson. However, there is limited data available for smaller regions, like Tucson, due to large margins of error within the data. To view the data that is available for Tucson, the 10 western states, and 11 peer metropolitan areas click on the drop-down menu in Figure 7.
Figure 7: Median Hourly Wage by Race & Ethnicity and Level of Education in 2019
In 2019, Tucson’s Latino and Native American populations had the lowest share of workers earning at least $15 per hour at 56.0%. The Asian or Pacific Islander and White populations had the highest share at 75.0%, nearly 20 percentage points higher (Figure 8). According to the Congressional Budget Office, a $15 federal minimum wage would boost the earnings of low-wage workers and decrease poverty. A recent analysis conducted by researchers at the Massachusetts Institute of Technology for CNBC concluded that a $15 minimum wage would help bring single adults in about half of the U.S. states closer to a living wage but would fall short for families.
Figure 8: Share of Workers Earning at Least $15/Hour by Race & Ethnicity in 2019
The poverty rate is a key indicator of financial distress among households. Families with income levels near or below the poverty level have difficulty accessing necessitates such as housing, food, and healthcare. Local poverty rates are important drivers of government decisions related to spending on programs such as affordable housing, free and reduced school lunches, and other forms of public assistance. Higher levels of poverty have been linked to undesirable social outcomes, reduced homeownership rates, and a decreased likelihood of attending college.
The MAP tracks the annual poverty rate for all Arizona counties, the Tucson and Phoenix metropolitan areas, the state, and many small cities, towns, and census-designed places in Southern Arizona. The data is broken down by race and ethnicity when available. In 2020, the Native American and American Indian populations posted the highest poverty rates in Tucson at 38.0% and 32.6%, respectively. That was followed by the Black, Hispanic, and other races, which were all above 20.0%. The white, non-Hispanic population in Tucson had the lowest poverty rate at 11.2%. Tucson’s data was consistent with the national poverty rate trends for each race and ethnicity, except the poverty rate was higher across the board in Tucson.
The National Equity Atlas provides data on the poverty rate trend by race and ethnicity. In Tucson, the poverty rate has declined or stayed consistent over the past forty years. There was a notable uptick in the poverty rate during 1990, followed by a decline to levels below that of 1980. However, as of 2019, the poverty rate was near the level posted in 1980. Research has shown that children who experience poverty are at a greater risk of starting school behind their peers and scoring lower on achievement tests. To view data for the U.S., Arizona, and 11 peer metropolitan areas click on the drop-down menu in Figure 9.
Figure 9: Percent of Population Below the Poverty Rate by Race & Ethnicity
Another way to measure inequality is through wages. Wages are the primary source of income for most individuals. Higher wages are often associated with increased economic opportunities and the ability to acquire goods and services. The gap between high-wage and low-wage earners gives us an indication of the wage inequality within a region. That matters because regions with high inequality may be distributing the benefits of economic growth in a narrow way. The wage ratio between the 90th (high-income earners) and 10th (low-income earners) percentile of the wage distribution reflects a region’s wage inequality. This measure is referred to as the 90/10 wage ratio. The smaller the ratio, the less wage inequality a region displays. The MAP reports this data annually in the Wage Distribution indicator. The Tucson MSA has one of the lowest 90/10 wage ratios among western MSAs at 3. (Figure 10). For reference, the U.S. 90/10 wage ratio is 4.3. In Tucson, wage earners at the 90th percentile earned $96,430, which is 3.4 times more than workers at the 10th percentile.
Figure 10: Wage Inequality 90/10 Ratio in 2021
High levels of poverty and low wages are often associated with low homeownership rates. In Tucson, the percentage of owner-occupied households by race and ethnicity varies substantially. Among the white-non-Hispanic population, 69.0% of households were owner-occupied (Figure 11). That fell to nearly half that rate for the Black population which had a homeownership rate of 36.0%. The Asian or Pacific Islander and Latino populations had the second and third highest homeownership rates in Tucson at 56.0% and 55.0%, respectively. Homeownership is one way that people can build assets and wealth over time. Disparities in homeownership across races can be explained, in part, by differences in income levels among households. However, it doesn’t tell the entire story. The wealth gap that exists between white households and households of color plays an important role.
Figure 11: Homeownership Rates by Race & Ethnicity in 2019
As noted in recent articles published by the Brookings Institute, there is no single, simple explanation for why the racial wealth gap exists. The article “Examining the Black-white wealth gap” shows that the median net worth for white households far exceeded that of Black, Hispanic, and Other Race households for the past thirty years. Further, during economic downturns, the median net worth for whites declined by less than for Black families. The wealth gap between whites and Black Americans exists when accounting for age differences, at every level of household income, and for every level of educational attainment. As mentioned in the article, wealth is a safety net that helps buffer temporary setbacks and the loss of income. It also allows people to take career risks, access housing in safe neighborhoods with good schools, and is taxed at lower rates than income from work which allows for wealth accumulation.
The MAP will continue to explore these trends as more data become available. In the meantime, stay tuned for an upcoming MAP article on how connected the Tucson region is in terms of diversity, equity, and inclusion.