A hot labor market is not enough for racial equality

The rapid recovery of the labor market over the past two and a half years has not been enough to reduce persistent racial gaps in employment, jobs and wages. The job market recovered remarkably quickly after the pandemic triggered the recession. Since September 2021, the overall unemployment rate has been less than five percent, and since December 2021, it has been at or below four percent. Not only that, but racial inequality has at least not worsened, as it usually has in recessions. The unemployment rate for black, Latino, Asian, and other workers of color has fallen alongside white workers. However, racial gaps in employment, unemployment, and wages persisted stubbornly, even amid the historic recovery of the labor market. This puts many workers of color at great risk of financial insecurity because Federal Reserve policy threatens economic and job growth.

The US economy has seen a rapid recovery in the labor market after the severe recession in the spring of 2020 thanks to the rapid, significant and continuous government actions. The economy reopened on a sustainable basis in 2021, after vaccines became widely available and the Biden administration and Congress approved a US bailout to support the faltering recovery. Then jobs came back and unemployment fell thanks to massive government measures. By July 2022, the labor market has regained all the jobs initially lost during the recession. At the same time, the unemployment rate reached its lowest level before the epidemic at 3.5%. It took less than two and a half years to fully recover from this recession, while it took almost six and a half years – up to May 2014 – before the total number of jobs reached the level recorded before the Great Recession and the housing crisis from 2007 to 2009. The difference was in the interest in politics The recent recession means that millions of other workers can quickly return to work and avoid the persistent long-term unemployment associated with widespread financial hardship. .

Unlike previous recessions and early recovery, this recovery has not left people of color behind. In the first two years after unemployment peaked in the spring of 2020, unemployment rates were among Latinx and black countries experienced the fastest declines In the record dating back to 1973. The unemployment rate among blacks, for example, is close to historical lows, while a record low of 3.9 percent in July 2022. Employment levels – the proportion of the population with a job – have also risen near pre-pandemic levels for all racial and ethnic groups.

But racial unemployment gaps remain high and widespread. Even with the unemployment rate for African Americans falling near its pre-pandemic low of 5.4% with a recent low of 5.8% for one month in June of this year, it was almost double the unemployment rate for whites. Workers. Similarly, the Latino unemployment rate is hovering near pre-pandemic levels just above four percent from March to July of this year, but that is still well above the nearly 3 percent recorded for white workers since March 2022.

Moreover, large racial wage gaps remained, even in the midst of such a rapid recovery that initially favored wage gains in occupations and industries where many people of color worked. Measured by inflation-adjusted rates, black workers earned approximately 79 cents per dollar in average weekly earnings for white workers in 2021 and 2022, while Latino workers earned 76 cents per dollar in average weekly earnings for white workers. These wage gaps have shown no sign of deflation, even as employers still struggle to find more workers and millions of people of color are looking for jobs but not being hired.

The fact that racial gaps in the labor market are still widespread must stop. The rapid recovery in the labor market and relatively low overall unemployment rates have been in line with persistent racial gaps. The unemployment rate of blacks has always been about twice the unemployment rate of white workers, for example. These differences apply to subpopulations by sex, education, and age (see figure below). More education does Don’t protect black workers from further job instability and job losses than for white workers. That is, structural barriers such as explicit discrimination and occupational guidance where workers of color end up in less stable occupations and industries have not magically disappeared.

This should not be surprising. For example, the unemployment rate for blacks has averaged twice as high as the unemployment rate for whites – 9.0% compared to 4.2% – during all past periods, when the overall unemployment rate was less than five percent. This gap has not narrowed over time and has decreased only slightly during some of the prolonged low unemployment periods – less than 5% in this example – such as the late 1990s and the years leading up to the pandemic (see figure below). Not only does the gap not constantly shrink during periods of low unemployment, but it widens rapidly again, when the economy slows down and unemployment increases in general. This is just another way of saying that the economic slowdown, as the Fed is now risking, is hurting people of color more than whites. In other words, keeping the labor market close to full employment through aggressive fiscal and monetary policy interventions is a critical first step to financial security for all, but it is not sufficient to create truly equitable labor market outcomes.

This current and persistent racial inequality puts workers of color in a more dangerous position than it does for white workers. The Federal Reserve is aggressively raising interest rates in an attempt to slow economic growth and reduce inflation. This aggressive monetary policy The risk of rising unemployment is particularly moving for people of color, who are already experiencing more widespread unemployment and longer bouts of unemployment. Basically, rapid increases in interest rates can cause a recession and thus a return to the “last set, first fired” experience for black people. Additional policy steps are necessary to do so. This basically means making sure that there are enough good jobs with good pay, decent benefits, stability and opportunities for career advancement. It also means that people of color have the same amount of access to good jobs as whites do, resisting decades and centuries of racial exclusion. Specific policies include promoting and enforcing existing anti-discrimination legislation and regulations. It also includes making it easier for workers to join the union because union membership is a critical step towards job stability and raising the minimum wage. The extra steps will require tremendous effort to make sure that people of color can get The same amount of wealth as white families because it is a critical step toward equal opportunity in housing, education, transportation, and health care—all of which are necessary to address past ills and ensure that people of color have the same access to quality jobs as white workers. Policymakers’ work isn’t over yet – not for long. Building a strong labor market recovery was just a first, but crucial, step that policymakers in Congress and the Federal Reserve need to build on.

Leave a Comment