Why won't black unemployment go down?
theGRIO Q&A - For a closer look at the new jobs report, which showed the black unemployment rate up to 14.4 percent, theGrio reached out to Algernon Austin, director of the Race, Ethnicity and the Economy program at the liberal-leaning Washington-based Economic Policy Institute...
For a closer look at the new jobs report, which showed the black unemployment rate up to 14.4 percent, theGrio reached out to Algernon Austin, director of the Race, Ethnicity and the Economy program at the liberal-leaning Washington-based Economic Policy Institute. Here’s our Q&A:
theGrio: Why is the overall unemployment not dropping?
Austin: Although corporate profits have been high, businesses have been reluctant to hire. They have been reluctant to hire because consumers have cut back on purchasing the goods and services of businesses. It is necessary for the government to step in to break this relationship and to get the economy functioning normally again.
Why is the black jobless rate going up? Do you think this is just noise in the data or a real trend?
There are some fluctuations in the employment statistics for blacks, but essentially for blacks as well as the rest of the country, the economy is in a holding pattern. We haven’t seen any real significant change for the first half of the year.
The black unemployment rate was 14.4 percent in June, but it was 14.1 percent in February. It is important to realize the black unemployment rate rose last month because more blacks were in the labor force, not because the share of blacks working declined. We want blacks to participate in the labor force, but we need more jobs to keep them in the labor force.
Generally black unemployment is about twice as high as the rate for whites, even outside of a recession? Why?
No one has a good understanding of how and why this relationship has persisted for the last 50 years or so. We know that it is not simply about education. The black labor force is much better educated today than it was in the 1960s and 1970s, and yet the relationship persists.
The black labor force, on average, has a higher level of educational attainment than the Latino labor force, yet blacks have a higher unemployment rate than Latinos. Anti-black bias in the labor market likely plays some role.
What kind of policies would address the high black jobless rate?
Our goal for the black unemployment rate should be about 4 percent. We can’t get to a 4 percent black unemployment rate while the national unemployment rate is over 8 percent. To address the broad economic stagnation we are in, we need more job-creating investments in the American people and the American economy. We know what works.
The Congressional Budget Office (as well as all of the major professional macroeconomic analysts) has indicated that the American Reinvestment and Recovery Act (editor’s note: this is informally known as the “stimulus bill” of 2009) created more than 3 million jobs. We need more of these types of policies, since we have a current jobs deficit of about 10 million jobs.
But to break the 2-to-1 black-to-white unemployment-rate ratio, we will also need targeted investments in high-unemployment communities. There are many black communities that can best be described as economically depressed. They have not been depressed for two or three years, but two or three decades. For these communities, we need a modern Works Progress Administration. Only something of this sort can break the decades-long pattern of high unemployment in these communities.
Is the unemployment rate likely to shift significantly before Election Day, barring some major policy shift?
Barring some major policy shift, the projections were for this type of economic stagnation. Sadly, so far, the analysts have been correct.
Only when everyone who is unemployed, who is on food stamps, and who has seen their wages stagnate or decline puts pressure on our elected officials to implement the policies that the CBO knows will create jobs will we see dramatic changes. Only strong job creation will improve the economic circumstances for the average American.