A more inclusive jobs rebound
Illustration: Rebecca Zisser/Axios
Job prospects are finally rising for people of color in the U.S, a development with big implications for 2020 political races.
Why it matters: African-Americans, Hispanics, Latinx and others left behind are finally starting to reap rewards from the economic boom. And in a major shift, the Federal Reserve is listening to people who say the central bank should use its policies to help sustain the record-long expansion that's still in the early stages for low-income communities of color.
Driving the news: June's hiring surge calmed fears that the labor market is rapidly slowing down. But falling jobless rates haven’t caused the usual upswell in wages, and thus, inflation. Low unemployment alongside inflation near the Fed's target is typically a trigger for the central bank to raise interest rates, but this dynamic hasn't occurred.
- In an unprecedented series of events called “Fed Listens,” Chairman Jerome Powell and colleagues are hearing from community leaders who say their residents were hit hardest by the recession.
- They’re being told that economic growth needs to continue so that people in impoverished neighborhoods can see the same benefits as wealthy whites.
- Poor people and people of color tend to be "the first ones into the recession and the last ones out," Rachel Flum, executive director of the Economic Progress Institute, tells Axios.
The big picture: Marginalized communities begin to prosper the longer an economic expansion goes on.
- "Those left behind don't have a chance to benefit from an economic expansion until there's persistent high pressure in labor markets," Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, wrote in an article for Vox.
- Bernstein’s article quoted Powell’s remarks after a “Fed Listens” event in Chicago: “The reason why we say sustain the expansion is, you’re seeing now for the first time … communities that are being brought into the benefits of this expansion that hadn’t been earlier.”
- One of the people who talked to the Fed in Chicago about the on-the-ground experience was Maurice Jones, CEO of Local Initiatives Support Corporation. “For folks in the neighborhood that are disinvested or underinvested, the prolonged low unemployment is what gives them a chance to get jobs,” Jones tells Axios. “What we're getting now is businesses that are coming to us” because companies need employees.
Of note: The labor force participation rate for African-Americans — which counts both people with jobs and those who are actively looking for work — has been catching up to the labor force participation rate for whites at a rapid pace, reflecting optimism about prospects for employment.
- Minority women in particular, as the New York Times notes, have started to notch gains in the labor market as the expansion continues.
But, but, but: Pay hasn't picked up much. Wage growth, which has accelerated in recent months, pales in comparison to previous economic expansions. And that doesn't bode well for inflation, which has undershot the Fed's 2% target, supporting the argument that the Fed should let the economy run a bit hotter for longer.
- People of color are among the groups least likely to have recovered the money lost in the wake of the financial crisis, as the Washington Post points out.
- And the unemployment rate for white people is still far lower than the rates for African-Americans, Hispanics and Latinx, though the gap has been shrinking.
What’s next: The Fed’s next listening session will be July 16 in Atlanta, weeks before the FOMC convenes on July 30 for a highly-anticipated meeting that may result in the first interest rate cut since 2008.