Apr 5, 2023 - Economy

Job market milestone: Shrinking employment gap for Black workers

Gap between U.S. white and Black employment rates
Data: Bureau of Labor Statistics; Chart: Axios Visuals

The economy hit a quiet milestone in recent months: The labor market is seeing more equitable employment outcomes across racial groups than it has in years.

Where it stands: For the half-century data has been available, white workers have enjoyed higher rates of employment than Black workers. That gap still exists, but it has been shrinking notably.

Why it matters: Overall, America's labor market has continued to surprise, to the upside. One real-world effect is the lasting (favorable) job conditions for marginalized workers, including Black Americans, to reap benefits others get much sooner.

  • "The tighter that the labor market gets, the more incentivized employers are to pull [in] workers they have overlooked in the past," says Daniel Zhao, an economist at career site Glassdoor.

By the numbers: In the sluggish recovery that followed the 2008 financial crisis, the white employment-population ratio, or the share of that population with a job, was more than 8 percentage points above the comparable measure for Blacks, according to the Labor Department.

  • But as of February, that gap has nearly shut: it's 0.3 percentage points — the smallest differential on record, helped by huge employment gains for Black men.
  • Among the workers most likely to want a job, those aged between 25 and 54, the difference between white and Black employment is 3.5 percentage points — hovering just above the smallest in data that dates back to 1994. (Accounting for seasonal adjustments, the gap is the smallest in more than 45 years.)

What they're saying: "Not every issue of inequity is resolved here — not every job is equal," says Skanda Amarnath, executive director at research firm Employ America. "But employment is an important part of people's welfare."

Between the lines: Stronger gains in Black employment are the notable side effect of a white-hot labor market. That was also true in 2019, when the Black unemployment rate hit an all-time low after the decade-long expansion.

  • The unemployment rate among Black Americans was 2.1 percentage points higher than the overall rate in February, a narrower spread than any time on record (except for a four-month span in 2019, when it reached an all-time low of 1.6 percentage points).
  • "On the one hand, Black workers, largely men, are enjoying a fairly robust labor market," says Michelle Holder, an economics professor at John Jay College of Criminal Justice. But on the other hand, wage gains in some cases are being pressured by inflation, Holder adds.

What to watch: High inflation now — and the Federal Reserve's moves to cool it — complicates the outlook for workers.

  • "Layoffs tend to disproportionately impact Black workers, but it's also the slowdown in hiring that can have [an] almost invisible impact on how many people are actually employed," says Zhao. (So far, waves of layoffs have hit sectors where Black workers tend to be underrepresented.)

The bottom line: It's not enough to knock them off course, but the Fed has acknowledged moves to cool inflation could ultimately hit a subset of workers particularly hard.

  • That idea has appeared in minutes from the Fed's policy meetings since the end of last year: Some officials have said if the national unemployment rate were to rise, the jobless rate for Black Americans and Hispanics would likely increase even more.
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