Rise in black jobless rate sets back US progress on labour market parity

US employment updates

Black workers are struggling to find jobs in the US despite evidence of plentiful openings, with ranks of unemployed on the increase last month even as they fell among other demographic groups.

The gap has forced economists to ask if progress that African-American workers made in the hot labour market before the Covid-19 crisis will outlast the pandemic — or whether historical disparities will persist.

In August the unemployment rate for black Americans ticked up to 8.8 per cent even as the same measure for US workers overall declined to 5.2 per cent, the US Bureau of Labor Statistics reported last week.

Restaurateurs, store owners and theme park operators have said for months that they could not hire enough workers to fully take advantage of the rebounding economy earlier in the summer. Workers’ wages rose sharply, and some employers offered flashy incentives such as signing bonuses and car giveaways to attract new hires.

But even as 287,000 more black Americans joined the labour force last month or started to look for work, fewer got jobs, US labour department data showed. By comparison, the white US labour force shrank in August, but the number employed rose by 269,000.

“You have black workers seeing the [‘help wanted’] signs, hearing businesses whine that they can’t find anybody, they rush out to find jobs and don’t get them,” said William Spriggs, chief economist for union federation AFL-CIO and a former labour department official in the Obama administration. “White workers say, ‘Oh, we don’t want to look,’ and the few who look find jobs.”

Evelyn Hall, a production assistant who works on television shows in New York, was among the black workers who struggled to find work. Despite working steadily through several short-term contracts over the past year, she spent August unemployed.

“I’m in a rut right now,” Hall said.

Evelyn Hall, a TV production assistant, is looking for a second job to supplement her income

Hall landed a part-time executive assistant position in early September, but it offers so few hours that she is now looking for a second job to supplement her income. She has not found anything yet.

Some economists attribute black Americans’ recent struggles in the job market to their over-representation in the service sector, where many businesses have languished in the pandemic. Leisure and hospitality employers added no new jobs in August, while retail businesses shed 28,500 jobs as the Delta coronavirus variant drove a jump in Covid-19 cases.

Spriggs pointed to discrimination. Leisure and hospitality businesses also employ a disproportionately high number of Latino workers, but that group’s unemployment rate still ticked down to 6.4 per cent last month.

The report also showed that black Americans with university associate’s degrees were unemployed at higher rates than white high school dropouts, Spriggs added.

“Employers are clearly picking and choosing,” Spriggs said. “They don’t mean that they can’t find anybody, they mean they can’t find the people they want to find.”

The unemployment rate for black Americans has almost always been higher than for other groups since the government began measuring it in 1972. The disparity widened after the 2008 financial crisis, with double-digit unemployment persisting for years.

But just before the pandemic the gap was closing as the US economy neared full employment, pushing the jobless rate to record lows in 2019.

Line chart of US unemployment rates (%) showing Joblessness rates for black workers have exceeded rates for white workers

Since the start of the pandemic, the black unemployment rate has ticked down inconsistently from a peak of 16.7 per cent in April 2020. In July it dropped by 1 percentage point to 8.2 per cent, before its 0.6 percentage-point jump in August.

Overall, the 7.9 percentage-point decline in the black unemployment rate since April 2020 has been less than the 9.6 percentage-point decline for white workers, whose unemployment rate was 4.5 per cent in August.

Monthly payrolls data are volatile, and recent trends may reverse. Last week initial jobless claims in the US dropped to a pandemic-era low, the labour department reported on Thursday.

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Jay Powell, Federal Reserve chair, has said that he is watching racial divergences in the job market as he makes policy decisions. Racial equity activists say that features of president Joe Biden’s $3.5tn social spending agenda now before Congress could help to improve opportunities for disadvantaged workers.

But the August jobs report resurfaced economists’ concerns over a return to the two-tiered jobs market that followed the 2008 crisis. Or fears that if the Delta variant prompts another mass slowdown, black workers will fall even further behind.

“If we have this kind of repeated, unstable, uneven recovery, that if we can’t get to a stronger place, the people that are going to bear the cost of not only the downside but also the lost gains will be black workers,” said Nick Bunker, an economist for jobs site Indeed.

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