Black unemployment: What Washington can do now to address the high black jobless rate
theGRIO REPORT- While the Great Recession has made the situation considerably worse, black unemployment has consistently lagged the rest of the country long before the 2008 crisis...
At the same time that the unemployment rate in the US fell to 8.3 percent this month, the black unemployment rate also decreased to 13.6 percent, a two-point drop.
While this is still elevated, and the gap between black employment and the overall rate
remains, this can be seen as a positive development in addressing the situation in the black community. However, despite this encouraging news, further improvement will likely require more targeted action from federal and state governments. Given that reality, here are three things Washington can do to continue to address black unemployment.
1. Provide Financial Support for educational training for high-demand job areas
While the Great Recession has made the situation considerably worse, black unemployment has consistently lagged the rest of the country long before the 2008 crisis, largely due to differences in educational attainment. Reducing this education gap is potentially the largest factor in addressing black unemployment, and is a focus of the Obama administration, but it is costly, difficult and will take an extended period of time to successfully accomplish.
In his State of the Union address, President Obama proposed “a new initiative to train and place two million Americans in good jobs through partnerships between businesses and community colleges that give workers the skills employers explicitly need.”
While the details are being fleshed out, this appears to be a promising initiative. What could further enhance it and make it even more effective in addressing black unemployment is to provide increased tax credits and future loan forgiveness directly to qualified individuals (low-income, long-term unemployed, etc.) who pursue degrees that make them more employable, especially in areas that are currently, or are expected be in high demand. These include jobs such as as radiology technicians and home health aides, where training in some cases can be completed in a matter of months as part of certificate programs, therefore quickly preparing unemployed workers for new areas that are hiring.
2. Use remaining TARP funds ($37 billion) for mortgage principal reductions
Nearly half of all US mortgage holders owe more than their house is worth. This continues to put a tremendous amount of pressure on the housing market. Many have advocated (and still do) for allowing mortgage modification through the bankruptcy process. In fact, President Obama did as well during his campaign in 2008. However, that is unlikely to happen in this current political climate.
Instead, several economists have called for using the remaining TARP funds, of which $50 billion was allocated to homeowner relief, for principal reductions for underwater homeowners. Recently, the administration has sought to use these remaining funds to help homeowners by easing requirements to reduce their interest rates in the Home Affordable Refinance Program (HARP) and making changes to the Home Affordable Modification Program (HAMP) to entice banks to voluntarily offer mortgage modifications to homeowners.
Unfortunately, voluntary bank participation in these programs has muted the programs’ effectiveness in the past, and, as a result, only approximately $13 billion of the allotted funding has been used. Obama could additionally propose that the remaining $37 billion in TARP funds be used for direct principle reductions via Fannie and Freddie Mac or through mandatory mediation prior to foreclosure.
Each of these strategies could help reduce foreclosures or black homeowners and, subsequently, unemployment in black communities. Mandatory mediation, in particular, has already proven effective in several states and has been supported by several organizations, including the Center for American Progress, which called on the federal government to support mandatory mediation as far back as 2009.
3. Tailor and target existing funds to areas with high, persistent unemployment
The jobs bill which President Obama proposed in the fall of 2011 didn’t even see a vote in Congress, solidifying what everyone already knew: increased spending to jumpstart the economy is extremely unlikely to occur in 2012 because of the strong opposition by congressional Republicans to anything that resembles the 2009 stimulus.
Given that reality, what President Obama can propose to better target states with high unemployment is to make more state funds subject to formulas that utilize persistent unemployment as the main factor for allocation. By adopting a formula weighted more heavily towards persistent unemployment, the neediest states would receive the most funding necessary to address the ongoing unemployment crisis.
If, in conjunction, President Obama were to encourage or stipulate that states adopt similar formulas for the allocation of their funds at the municipal level, this could result in an even more targeted strategy to combat persistent unemployment , and therefore black unemployment, in the areas that need it most, such as Detroit.
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