Pay gains for lower-wage Ohioans push wage inequality to lowest level in decades

Lower-wage Ohioans have seen strong pay gains since 2019 - big enough to push wage inequality in the state to its lowest level in more than 20 years, according to a new Cleveland Fed report.

Workers at the 10th percentile of Ohio's wage distribution saw their hourly pay increase by an average of 3.2 percent annually, after adjusting for inflation, from 2019 to 2023. By contrast, Ohioans at the 90th percentile saw their wages rise an average of 0.8 percent annually over those years.

It's a big change of pace: Wage inequality between those two groups increased between 2000 and 2020, in Ohio and across the US. The more recent decline in wage inequality was steeper in Ohio than in the US as a whole.

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. Whether the trend continues remains to be seen, he writes.

"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."

Read the District Data Brief:Lower-Wage Workers in Ohio Have Seen Strong Wage Gains Since 2019