In Cleveland, Why Connecting Blacks and Latinos to the Information Economy Is Crucial for the Region

7.9.12 | Foundations, community, and business leaders are banding together in northeast Ohio to help the local economy adapt to the future. This retooling inevitably means a greater focus on the tech sector, where leaders see some of the region’s “best bets” for growth.

But according to a new study, blacks and Latinos are being left behind in this technology-focused economy, which  is very bad news for the entire region.

The Fusion of Inclusion,” released last month by PolicyBridge, a local think tank, and NorTech, a regional economic development organization, with data analysis by Cleveland State University’s Center for Economic Development, finds that as a group blacks and Latinos have been “largely excluded” from the benefits of job growth in the region’s tech sector thus far and that this gap is a threat to future economic growth in the region.

“In a globally competitive marketplace that rewards knowledge acquisition, technology use and entrepreneurship,” the authors write, “African-Americans and Hispanics find themselves cut off from opportunity and prosperity pathways. This is not a problem unique to Northeast Ohio. It is a national chasm centered along the fault lines of education, employment and entrepreneurship.”

The report examined secondary data sources (National Science Foundation Integrated Postsecondary Education Data System, American Community Survey Public Use Microdata Sample, Census Bureau’s Survey of Business Owners) to analyze minority participation in technology-based growth industries over the past five years and also conducted interviews and focus groups.

They found disparities in employment, entrepreneurship, engagement and education. Minorities make up 20% of the population in the region studied, yet the report found:

    • African-American and Latino workers combined account for less than 10 percent of workers in selected high-tech industries in Northeast Ohio. For the nation overall, they account for about 16 percent of such workers.
    • African-Americans and Latinos combined own only about 2 percent of all businesses in technology-based growth industries throughout the region and state. They account for only about 4 percent of such businesses in the nation.
    • African-American and Latino entrepreneurs report significant obstacles in accessing startup capital and business development support.
    • African-Americans and Latinos in Northeast Ohio lag their non-minority counterparts in educational attainment overall and specifically in the fields of science, technology, engineering and mathematics. Of all minorities working in Northeast Ohio’s high-tech industries, less than a third had a bachelor’s degree or higher. That compares to more than half of all non-minorities working in the region’s high- tech industries. In Northeast Ohio, 30.4 percent of degrees earned by Hispanic students and 32.8 percent of degrees earned by white students were in STEM fields in 2009, compared to only 23.5 percent of degrees earned by African-American students.

Authors warn that having 20% of the population shut out of job and industry growth could have severe consequences for the region as it becomes further dependent on the technology sector.

“Inclusiveness, in this environment, is less an argument of what is morally “right” or socially just; instead, it is an economic imperative,” the authors write. “Such wholesale underperformance has economic impact beyond the individual level: It has region-wide consequences for employment, wealth creation and tax revenues.”

This is the same argument BRR Network Member Manuel Pastor and his colleagues at USC’s Program for Environmental and Regional Equity and PolicyLink make in their paper “America’s Tomorrow:  Equity is the Superior Growth Model.” These researchers argue that racial and economic inclusion is critical to success in the global economy, and that the closer we move toward becoming a majority minority country (the Census Bureau predicts this will happen by 2042) the fate of communities of color will increasingly be tied to the fate of the United States at large.

The authors of this report recommend some of the same action steps as those on the ground in Cleveland: encouraging regional cluster development with attention to increasing the minority presence, and partnerships, mentoring, training, and education programs for minorities in STEM fields. The Cleveland report stresses the importance of establishing performance metrics, expanding the region’s pool of minority workers with technical skills, increasing opportunities for minority workers to connect with the region’s existing tech ecosystem through networking, advisory boards, and other means, and working with local manufacturers to develop apprenticeship and short-term certificate programs.

Pastor also has a new book out that he coauthored with Chris Benner on why issues of equity are important to regional economic growth. To read more about what’s going on in Cleveland, download the full report from PolicyBridge. A more detailed data analysis is available here.

Photo by Ian Friemuth.

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