Jobs Day: Why We Need to Take a Closer Look at the Black-White Unemployment Gap and Other Disparities in the U.S

Media pays attention to the composition of job changes, the path of earnings, and other indicators like labor force participation and the employment-to-population ratio (EPOP

Jobs Day: Why We Need to Take a Closer Look at the Black-White Unemployment Gap and Other Disparities in the U.S

While the nation has been focused on police brutality towards Black Americans over the past week, racism permeates every facet of American life. This Friday when the U.S. Department of Labor releases its monthly jobs day statistics, we’ll get a new window into how systemic racism is impacting Black Americans in the labor market. 

Jobs Day 

Jobs Day drives a lot of attention as it provides the best data on the labor market from the previous month. It informs the public on the direction of the economy and can help inform how policymakers should respond to spur the economy or to keep the economy humming along. While there is a plethora of data available to report, most focus on the unemployment rate (U3). Media pays attention to the composition of job changes, the path of earnings, and other indicators like labor force participation and the employment-to-population ratio (EPOP). 

Racial Disparities in the Labor Market 

However, though we had reach historic lows in unemployment at the beginning of 2020, there were underlying issues with the relative levels in unemployment among African Americans, Latinx, and other groups. I have spent the past year documenting the racial disparities that exist in the labor market. Earlier this year, wrote about these gaps and explained that they can only be explained by structural racism.  

This pandemic has borne this out by showing the cracks in the economy. The April jobs report showed higher disparities in unemployment as Asians, Hispanic/Latino and Whites reach historic levels of unemployment. The African American unemployment rate rose 10% but it was not a historic high (which shows how poor their outcomes have historically been). However, the Black-white unemployment gap – which is normally double (see Figure 1) – fell to the lowest level recorded of just 1.2.  

 

Figure 1. Ratio of Black Unemployment to White Unemployment, 1972–2019

This was an important fact that didn’t receive much media attention outside of a Newsweek article I was featured in. While the fact that this ratio fell to a historic low, this is not a positive development as African Americans who remain in the labor market are in jobs that have been deemed essential. The essential jobs, which are often low-wage and lack benefits, place these workers at a greater risk of contracting the coronavirus. 

In addition to the rise in the unemployment rate, the employed share of the African American  population dropped to under 50%, meaning that half of the African American population were not employed (see Figure 2).  

Figure 2. Employment-to-Population Ratio by Race


This is concerning because African Americans who were previously out of the labor force following previous recessions had begun to return in good numbers. Now we may have lost these individuals for a very long time. 

The Recovery and these Gaps 

When the data is released this month, I’m going to be looking at what happens to this black-white unemployment gap and the employed share in the May jobs numbers and moving forward as the economy recovers. These numbers will inform us whether the COVID packages have helped all residents or whether the benefits have been restricted by race, gender, class, or geography.  

How the recovery proceeds will definitely be dependent of government action. The HEROES Act that is currently being debated may make a difference due to funding for state and local governments. State and local governments have already shed 1 million jobs since the start of this crisis. These jobs fall heavily on communities of color. 

The Congressional Budget Office (CBO) just came out with a forecast for the next ten years and find that not only will lose nearly $16 trillion in GDP from this pandemic, but unemployment will remain above 8% through the end of 2021. These numbers are estimating no further actions by Congress, which means this fall in economic activity will fall disproportionately on African Americans and other communities of color.