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Black Economic Recovery Report

POSTED: March 05, 2012, 12:00 am

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This week two important reports will be released and serve as benchmarks for the nation’s economic recovery. On Wednesday payroll giant ADP will release its monthly Employment Report and on Friday the Bureau of Labor Statistics (BLS) will release the Employment Situation Summary for February. The last BLS report showed significant improvement in the lowering of the nation’s unemployment rate, including a much needed drop in Black unemployment. The ADP and BLS reports are preceded by the release of a Department of Labor Report on the Black labor force in the economic recovery.

African-Americans were at an economic disadvantage prior to the economic downturn and the recession exacerbated the dislocation of Blacks in the labor market. The persistence of Black unemployment has been one of the most stubborn aspects of the recovery for the Obama administration. Having been elected on a wave of Black support, the nation’s first African-American president has been in the unpleasant position of facing his most loyal constituency with little relief in hand for their economic woes. The employment crisis facing African-Americans has caused some members of the Congressional Black Caucus to question the President’s economic strategy and compelled some Black leaders, including those who are supporters of President Obama, to call on him to advance a race-specific economic strategy. The President has resisted such calls and now a Department of Labor report suggests African-Americans might be turning a corner in the economic recovery. The report is titled The African-American Labor Force in the Recovery and is available on the U.S. Department of Labor website.

The report notes that the improvement in the employment situation of African-Americans cited in the January BLS Employment Situation Summary still lags the position of Blacks prior to the start of the recession in November 2007 when the Black unemployment rate was 8.5 percent. In 2011 the report notes that half of Blacks aged 16 and older were employed, and 18 percent of those employed worked part-time. African-Americans are the only racial or ethnic group in which women represent a greater share of the employed; though Black women still earn less than Black men. While the gender wage gap among Blacks is smaller than for whites, it is closer mainly because Black men are paid less than white males. There is some good news in terms of educational attainment, as the number of African-Americans with a college degree has been growing faster than whites.

One of the challenges facing African-Americans in the current recovery is the propensity of Blacks to work in the public sector. This reliance on public sector employment is problematic given the retrenchment in jobs in local and state government. The report notes that in 2011 nearly 20 percent of employed Blacks worked for state, local or federal government compared to 14.2 percent of whites and 10.4 percent of Hispanics. Although Blacks are nearly as likely as whites, but less likely than Hispanics to work in the private sector, barriers to employment in the private sector cause for an overreliance on public sector jobs. While business ownership remains a popular pursuit for African-Americans; only 3.8 percent of Blacks reported being self-employed in 2011.

The report acknowledges the persistence of Black unemployment. The average Black unemployment rate was 15.8 percent in in 2011, compared to 7.9 percent for whites and 11.5 percent for Hispanics. The slower recovery for Blacks is attributed to government layoffs after the end of the recession. Blacks are also underrepresented in all of the sectors, with the exception of health care, that have had the greatest job growth during the recovery. These sectors include manufacturing and professional and business services.

Not only have African-Americans faced high unemployment but joblessness is taking on a long-term profile among many Blacks. African-Americans remained unemployed longer than whites and Hispanics in 2011. The median duration of unemployment for Blacks was 27 weeks compared to 19.7 for whites and 18.5 for Hispanics. In other words, once out of the labor market, Blacks find it incredibly difficult to find work. Nearly half (49.5 percent) of all unemployed Blacks were unemployed 27 weeks or longer in 2011. The report cites a number of factors that impede upon the successful reentry of African-Americans into the labor market, including the lack of a sufficient network of employed friends and family, a lack of monetary resources to actually engage in a job search, and the psychological impact of long periods of joblessness.

There are some signs of improving fortunes for Blacks in the labor market though they must be considered with caution given the factors described above. The report notes the unemployment rate for Blacks has been trending downward since the summer of 2011. The unemployment rate for Blacks in January 2012 (13.6 percent) was down 3.1 percent from a peak of 16.7 percent in August 2011. By comparison, the unemployment rate for the nation peaked at 10 percent in October 2009 and for whites it peaked at 9.3 percent at the same time. The Black recovery is two years behind other groups. Gains in the health care sector, an industry in which African-Americans have had success and a sector poised for growth, helped bring down the Black unemployment rate. African-Americans also saw some gains in employment in professional and business services, education and financial services.

Joblessness among Black youth and young adults continues to pose significant challenges for the African-American community and nation. The unemployment rate for Black youth (16-24) peaked at 49.1 percent in November 2009 and has fallen to 38.5 percent as of January 2012. Still, the unemployment rate for Black teens remains unacceptably high and a large number of youth are no longer in the labor force, either working or looking for work. The drop-outs from the labor market help partially explain the recent drop in the Black teen unemployment rate. The report notes that in 2007 the labor market participation rate of Black teens was 30.3 percent, and had declined to 24.9 percent in 2011. One bright spot is the increase in Black teen enrollment in school. For Black youth age 16 to 19, 85.4 percent were enrolled in school in October 2011, compared to 80.7 percent in 2007 when the recession began.

One of the challenges facing unemployed Blacks is they are more likely to live in areas that are economically depressed. The report notes that between 2008 and 2010, African-Americans were 60 percent more likely to live in a local area with double-digit unemployment. In addition, Blacks have longer commute times to work and are more likely than whites to face commutes of over an hour. Blacks face the highest unemployment rates in Wisconsin (25 percent), Nevada (22.1 percent), West Virginia (21.5 percent), Oregon (21.3 percent) and New Mexico (20.8 percent). The states with the largest numbers of unemployed Blacks in 2011 were Florida, Georgia, California, New York and Texas. The unemployment rate for Blacks in these states was also high. For example, the Black unemployment rate in Florida was 17.1 percent, 15.8 percent in Georgia, 19.6 percent in California, 13.8 percent in New York and 13.4 percent in Texas.

How badly did the recession harm African-Americans? In 2011 manufacturing, education and health services, transportation, warehousing and construction, and the financial sector employed 1 million fewer Blacks in 2009 than they did in 2007. In recent months there have been signs of improvement for Black workers. The number of employed African-Americans grew by 700,000 over the year ending January 2012. There have been employment gains for Blacks across all sectors of the economy and the pace of job losses in state and local government has slowed. The three sectors that are the most promising for future job growth between now and 2020 are professional, scientific and technical services, education services and health care and social services. Respectively, the Black percent of total employment in those industries in 2011 was 16 percent, 8.4 percent and 5.9 percent. To recover fully, African-Americans are going to have to gain access to jobs in areas of job growth in which they are currently underrepresented and particularly make progress in science, technology, engineering and mathematical (STEM) occupations. The Obama administration has made careers in STEM a priority for today’s secondary school students.

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