Transitions Into And Out Of The Labor Force
A major concern is that focusing narrowly on employment to unemployment transitions does not capture the complete effects of worsening or improving labor markets. As the economy worsens, one might expect a higher probability of movement from employment and unemployment to nonparticipation, and black and white men may differ in their likelihood of these responses to the business cycle. It might also be expected that during periods of tightening labor markets, more movements directly from nonparticipation to employment would be observed and that those transitions also might differ by race.
As the scope of the analysis is shifted to movement into and out of the labor force, the sample is expanded to include all black and white men ages 2555. contains transition probabilities between employment, unemployment, and nonparticipation over the entire sample period 19892004 separately for whites and blacks as well as for the combined sample. Several interesting patterns emerge. First, a larger percentage of blacks move from employment to nonparticipation than whites. The average probability of moving from employment to not in the labor force for blacks is .016, which is only slightly lower than the average probability of moving from employment to unemployment. Thus, excluding this transition from an analysis of black-white differences in labor force behavior over the business cycle is potentially an important omission.
What Explains Low Employment Among Black Men
For decades, a research literature by social scientist has documented earnings and employment gaps between Black and white Americans, and between Black men and other men more specifically, and analyzed their causes.
In my view, the major causes of lower employment and earnings among Black men than other groups can be summarized as follows:
- Proximate causes: Lower education, skills and work experience
- Ultimate causes: Discrimination and social/spatial isolation
- Mediating factors: Lower marriage/child custody rates and worse health
- Reinforcing long-run factors: Crime/incarceration and child support
While one could argue that all of these factors are the products of a long history and ongoing reality of systemic racism, focusing on these specific factors is important if we want to generate a practical policy agenda to mitigate these problems. And, though I lump together the predictors of earnings gaps with those of employment gaps between Black men and other groups, some of these factors affect employment and earnings together whereas others create barriers or disincentives to employment more specifically.7
It is widely known that education, skills, and work experience are major determinants of employment and earnings in the U.S. Indeed, gaps in human capital across race and class groups has increasingly driven the rising inequality in earnings that we observe over the past several decades.
Latinx Unemployment Is Highest Of All Racial And Ethnic Groups For The First Time On Record
Since the national emergency declaration for COVID-19, more than 33 million Americans have filed for unemployment insurance, and economic forecasts place the United States on the path to recession. No group has escaped the devastating economic effects of COVID-19, but todays US Bureau of Labor Statistics report on nationwide, industry-level job loss data show that job losses have hit Latinx workers harder than any other group.
For the first time since 1973, when the BLS began tracking unemployment by ethnicity, the Latinx unemployment rate is the highest of all racial and ethnic groups, at 18.9 percent in April. The unemployment rate is 16.7 percent for Black people, 14.5 percent for Asian people, and 14.2 percent for white people .
A long legacy of exploitation and occupational segregation of workers of color has disproportionately concentrated Latinx workers in low-wage industries, many of which have proven most vulnerable to layoffs during this crisis. Understanding the disproportionate unemployment risk facing Latinx people can inform strategies to help workers hit hardest by the COVID-19 employment crisis.
Latinx workers are least likely to have jobs that can be done from home
The high Latinx unemployment rate is largely driven by overrepresentation in the hard-hit leisure and hospitality industry
Unemployment data dont tell the whole story of employment-related cuts
How can we make sure relief reaches workers who have been hit hardest?
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Grow An Equitable Economy: Policies To Reach Full Employment For All
- Grow new good jobs by making smart investments in infrastructure projects, supporting economic development strategies to grow high-opportunity industries, and helping entrepreneurs of color start and scale-up their businesses.
- Reduce employment barriers for people with records by “banning the box” asking about conviction history on job applications .
Transitions From Unemployment To Employment
Panel B of reports linear regression estimates for the probability of exiting from unemployment. Specification 1 reports estimates for the base equation, which includes a dummy variable for black along with the business cycle control. Specification 2 includes an interaction between the dummy variable for black and the business cycle control. Results from these two models indicate that black men are less likely than whites to move from unemployment to employment even after we control for education, occupation, industry, and other individual characteristics.
Specification 3 again excludes the controls for age, education, industry, and occupation. By contrasting these results with those for Specification 2, the influence of the covariates on the estimated transition probabilities can readily been seen. Again, the exclusion of age, education, industry, and occupation from the equations has little impact on the reported parameter estimates.
Specification 4 includes interactions with periods of falling unemployment. Because the parameters associated with those interactions are statistically insignificant, there is no evidence that black men have a different degree of responsiveness than white men to periods of falling unemployment. In these estimates, black men have a lower probability of moving from unemployment to employment, which does not appear to be related to the business cycle.
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Why Do These Disparities Exist
While traditional explanations for employment rate disparities focus on education and training gaps, whites tend to be employed at higher rates than Blacks and other people of color at every education level . This has led many researchers to focus on labor market discrimination as a primary cause of higher unemployment among people of color. However, it is also true that education levels are generally lower for people of color, suggesting that the education system’s failure to equitably serve people of color is also a contributing factor.
Us Unemployment Rate History
Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact.
The Balance / Julie Bang
The unemployment rate is the percentage of unemployed workers in the labor force. It’s a key indicator of the health of the country’s economy. Unemployment typically rises during recessions and falls during periods of economic prosperity. It also declined during five U.S. wars, especially World War II. The unemployment rate rose in the recessions that followed those wars.
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Latinos Have The Second Highest Rate Of Unemployment Of All Racial And Ethnic Groups
The Latino unemployment rate is the second highest;among communities of color. In the first quarter of 2017,;the Latino unemployment rate dropped considerably to 4.8 percent. Yet this rate is still higher than the national average of 4.4 percent.
In the aftermath of the recession, Latino unemployment;rate continued to grow, peaking in 2010 at 13 percent. While Latino mens unemployment rate peaked at 13.9;percent in 2009, Latina womens unemployment peaked at 11.9 percent in 2010. Currently, the unemployment;rate for Latino men is 4.1 percent while that of Latina;women is 5.7 percent.
The changing structure of the labor market has had an adverse effect on Latinos job prospects. Since the recession, there has been a hollowing out of good-paying, low-skilled jobs in favor of job growth at the bottom and top of the labor market.15
On average, Latinos have lower levels of education than other communities. Typically, Latinos have 11 years of education versus 13.7 years of education among all adults ages 25 and older. There are also gaps in education between Latino men and women and between those who were born in the United States and those who were not.;The disappearance of middle class jobs has added another layer of structural challenges in socio-economic mobility. A reform of the labor market to favor higher pay for service sector jobs combined with more investment in the education of Latinos would allow them to develop the skills needed to compete for better jobs.16
Despite Junes Positive Jobs Numbers Black Workers Continue To Face High Unemployment
The Bureau of Labor Statistics jobs report for June, released today, showed a continuation of the steady economic recovery from the COVID-19 pandemic. Nationally, 850,000 jobs were added last month, while the unemployment rate ticked up slightly, to 5.9%, after falling from 6.1% in April to 5.8% in May.
This recovery, however, continues to be uneven across racial lines. Black workers had Junes highest unemployment rate, at 9.2%. Table 1 and Graph 1 show the U.S. unemployment rate by race for April, May, and June 2021.
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Job Loss By Race And Ethnicity In Recessions
Both recessions have had lasting impact on labor force participation rates as well. Labor force participation rates for all groups have not returned to pre-Great Recession levels and had in fact been falling nearly every year until 2016 as many people never returned to searching for work. However, labor force participation rates fell more for white Americans than for Black Americans.
In the current recession, labor force participation rates have fallen the most for Black Americans who lost a greater percentage of participation;in four months than in the 10 years following the Great Recession. Asian Americans have left the labor force at nearly the same rates as Black people in recent months, a pattern out of the norm for Asian Americans. White Americans have experienced the smallest decrease in labor force participation in response to most recent recession.
Job Losses Due To The Coronavirus Shutdown Have Fallen Unequally On Americans According To Age Gender Educational Attainment And Race
As the unemployment rate soared in April to its highest levels since the Great Depression, with 14.7 percent of workers without jobs, the coronavirus shutdown fell unequally on Americans according to age, gender, educational attainment as well as race.
Women became unemployed at higher rates than men. Hispanics and blacks were hit harder than whites and Asians. Those without high school diplomas fared the worst. As did teenagers, of whom nearly a third are now out of work.
The numbers, released Friday by the Labor Department, are the first to capture an entire month of stalled business activity, offering the clearest illustration to date of how economic pain is distributed among Americans.
And yet, while the numbers demonstrate a collective crisis, they still dont fully capture employment despair, said Darrick Hamilton, an economist and executive director for the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University.
The race-related differences have not completely come to light given the abruptness and manner in which this employment crisis emerged, Hamilton said.
Hispanics posted the highest unemployment rate, 18.9 percent, in April, compared with 16.7 percent for blacks, 14.5 percent for Asians and 14.2 percent for whites record highs for all groups except for blacks.
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Gap In Us Black And White Unemployment Rates Is Widest In Five Years
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– The United States saw the widest gap in unemployment rates for African Americans and whites in five years in June, underscoring an uneven nascent recovery from historic job losses triggered by the coronavirus pandemic.
Jobless rates for both groups fell in June, but the rate for whites came down at a much faster rate. The white unemployment rate fell 2.3 percentage points to 10.1% from 12.4%, while the rate for Blacks dropped 1.4 points to 15.4% from 16.8%, according to data released by the Labor Department on Thursday.
At 5.3 percentage points, the gap is now the widest since May 2015 and exposes an important economic component of racial inequality at a pivotal moment in U.S. race relations. The country has been rocked by nationwide protests over police brutality against African Americans in recent weeks, following the death of a Black man in police custody in Minneapolis.
Unfortunately that is consistent with the pattern that we have observed for decades in this country, said Valerie Wilson, director of the Economic Policy Institutes program on race, ethnicity, and the economy.
For a graphic on Black vs white unemployment:
The coronavirus pandemic brought an abrupt end to the record-long U.S. economic expansion just as it was creating better job opportunities for Black workers and other minorities. Job losses fell hardest on women and workers of color.
For a graphic on The African American jobless rate:
Unemployment Rate By Race
This interactive chart compares the historical unemployment rate for the three largest ethnic groups in the United States. Note: Statistics for Asian unemployment are not included here as the Bureau of Labor Statistics did not start including this measure until 2000 and does not provide a seasonally adjusted series as yet. The current as of August 2021 is 8.80.
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Effective Health Economic Policies Needed To Combat Widening Racial Labor Market Disparities
The CARES Act enhanced unemployment insurance in various ways, providing crucial support for unemployed workers and the economy. None of these enhancements is scheduled to last beyond years end, however; the weekly $600 UI benefits boost expired July 31, and Republican policymakers have proposed far less than that in their initial offer for the next relief package. The Congressional Budget Office estimates that without further relief or stimulus legislation, unemployment in the first quarter of 2021 will exceed 9 percent and will not fall below 6 percent until the second half of 2024.
Experience from past recessions strongly suggests that even if the economy is formally out of the recession and economic activity is expanding, unemployment will still be high and racial employment disparities still widening, as discussed further below. This is what happened in the Great Recession. Congress and Presidents Bush and Obama enacted substantial stimulus measures starting in 2008, most notably the American Recovery and Reinvestment Act in February 2009, which had its peak impact on the economy in 2010. As shown in Figure 1, unemployment continued to rise after the recession formally ended in June 2009. The gap between the Black and white unemployment rates continued to widen through 2011 and didnt fall below its pre-recession level until much later in the long 2009-2020 expansion.
Composition Of The Labor Force
Among Asians participating in the labor force, the largest group was Asian Indian, making up 24 percent of all Asians. Chinese made up 22 percent, followed by Filipinos , Vietnamese , Koreans , and Japanese . The remainder17 percentwas classified as Other Asians, a category that includes individuals in an Asian group not listed abovesuch as Hmong, Laotian, Thai, Pakistani, and Cambodianand those who were of two or more Asian groups.
People of Hispanic or Latino ethnicity, who may be of any race, made up 18 percent of the total labor force. The majority of Hispanics in the labor force were White , Black , and Asian . By detailed ethnicity, the majority of Hispanics in the labor force were Mexican . Central Americans made up another 10 percent, over a third of whom were Salvadorans. Eight percent of Hispanics in the labor force were Puerto Rican, and 7 percent were South American. People of Cuban and Dominican ethnicity each represented 4 percent of the Hispanic labor force. An additional 5 percent were classified as Other Hispanic or Latino.
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List Of Countries By Unemployment Rate
This is a list of countries by unemployment rate. Methods of calculation and presentation of unemployment rate vary from country to country.Some countries count insured unemployed only, some count those in receipt of welfare benefit only, some count the disabled and other permanently unemployable people, some countries count those who choose not to work, supported by their spouses and caring for a family, some count students at college and so on. There may also be differences in the minimum requirements and some consider people employed even if only marginally associated with employment market .
There can be differences in the age limit. For example, Eurostat uses 15 to 74 years old when calculating unemployment rate, and the Bureau of Labor Statistics uses anyone 16 years of age or older . Unemployment rates are often seasonally adjusted to avoid variations that depend on time of year.Employment rate as a percentage of total population in working age is sometimes used instead of unemployment rate.
Summary Of Unemployment By Ethnicity Over Time Summary
The data shows that:
- in every year between 2004 and 2019, White people aged 16 to 24 had a lower unemployment rate than people from all other ethnic groups combined
- 2013 saw the biggest difference in the rate between White 16 to 24 year olds and those from all other ethnic groups combined, at 17 percentage points â by 2019, the gap had reduced to 7 percentage points
- between 2018 and 2019, the unemployment rate for White 16 to 24 year olds went down from 11% to 10% â the rate for 16 to 24 year olds from all other ethnic groups combined went up from 18% to 19%
- the highest unemployment rate for White 16 to 24 year olds was 20%
- the highest unemployment rate for 16 to 24 year olds from all other ethnic groups combined was 35%
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