Politics

As new data shows early signs of economic recovery, black workers are being left out

Key Points
  • Markets cheered on Friday as new data showed a surprising decline in unemployment, but black workers have little to celebrate. 
  • The black unemployment rate rose slightly in May despite a decline of nearly two percentage points for white workers, a grim but familiar reminder of economic inequality that could serve as an early warning sign for the recovery to come. 
  • The new data comes as protests over the death of George Floyd, a black man killed in police custody in Minneapolis last week, continue in dozens of cities around the country. 
A Dana assembly technician wears a face mask as she assembles axles for automakers, as the auto industry begins reopening amid the coronavirus disease (COVID-19) outbreak, at the Dana plant in Toledo, Ohio, May 18, 2020.
Rebecca Cook | Reuters

Markets cheered on Friday as new data showed a surprising decline in unemployment, but black workers have little to celebrate. 

The black unemployment rate rose slightly in May despite a decline of nearly two percentage points for white workers, a grim but familiar reminder of economic inequality that could serve as an early warning sign for the recovery to come.

The new data comes as protests over the death of George Floyd, a black man killed in police custody in Minneapolis last week, continue in dozens of cities around the country. While protesters are directly responding to disparities in policing, they have also pointed to systemic problems of income and wealth inequality, which were exacerbated during the recovery from the 2008 financial crisis.

White unemployment fell to 12.4% in May from 14.2% the previous month, while black unemployment rose to 16.8% from 16.7%.

President Donald Trump, who is up for reelection in November, has touted his record overseeing an economy in which black workers have prospered, noting that under his watch the unemployment rate for that group hit record lows while wages rose. 

During a White House event on Friday to address the new economic data, Trump said he hoped that Floyd was looking down from heaven, pleased with what he saw.

Hopefully George is looking down right now and saying, ‘This is a great thing that’s happening for our country.’ It’s a great day for him, it’s a great day for everybody. It’s a great day for everybody. This is a great, great day, in terms of equality.
Donald Trump
President of the United States

"It's a great day for him, it's a great day for everybody. It's a great day for everybody. This is a great, great day, in terms of equality," Trump said. The president refused to answer questions from reporters on the rise in the black unemployment rate. 

While Trump paints a picture of a recovery where gains are equally shared, experts suggest a more dour outcome could be in store.

Economists are warning that the devastation wrought by the Covid-19 pandemic, which has already killed disproportionate numbers of black Americans, could also inflict long lasting economic damage, undoing the gains made by African-Americans over the last decade.

"The thing that disturbs me is how much longer it will take them to make up the gap," said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, who served on President Barack Obama's economic team.

Read more: May sees biggest jobs increase ever of 2.5 million as economy starts to recover from coronavirus

"It took 10 years to make back what they'd lost in the Great Recession," Bernstein said, referring to African Americans. "They lost that in two months, in March and April. It's the staircase up and the elevator down."

Bernstein warned that, for black workers, the recovery from the current downturn could take even longer than the recovery from the last crisis.

Though the most recent slide has been unique in its speed and severity, the trend of employment inequity along demographic lines is not new.

The unemployment rate has historically been twice as high for black workers as for white workers, a disparity seen in the data as far back as is available.

The unemployment rate, while widely cited as a key measure of U.S. economic health, is seen by some as a narrow definition that does not capture the full picture of the labor market.

This official rate published by the Bureau of Labor Statistics tracks the "number of unemployed as a percentage of the labor force," which only includes those working or actively seeking work.

Americans who have given up on looking for a job or have a part-time job without benefits, such as an Uber driver or Instacart shopper, are not included in the measure.

For this reason economists also look at broader measures of unemployment such as the underemployment rate, also known as the U-6 rate, for a more complete picture of the employment level.

This measure includes those previously mentioned groups — people who want to work but have stopped searching and those who would work more if they could — in addition to those traditionally defined as unemployed. 

Looking past the headline measure of unemployment paints an even bleaker picture for black workers.

While BLS does not publish monthly demographic data on underemployed workers, Bernstein estimates the underemployment rate for African Americans could now be above 30%.

Economists point to a variety of factors to explain the racial employment gap, such as exclusive housing policies, unequal access to education, and a lack of wealth passed on from prior generations. But the conventional explanations may not tell the full story. 

"If you factor in all the things that you can explain using conventional economic tools — education, age, gender, experience — you will explain only a relatively small part of that difference," said Bernstein, who has advised apparent Democratic presidential nominee Joe Biden during the campaign. "So you have to ask yourself what are you left with, and the answer is discrimination."

Valerie Wilson, director of the Economic Policy Institute's Program on Race, Ethnicity, and the Economy, pointed to the same explanation. "I can't call it anything other than racial discrimination in the labor market," she said.

For Wilson, one of the strongest signals of discrimination is the racial disparity in unemployment rates by education level. At every level of education, more black workers are unemployed than their white counterparts.

"At least in theory, they're doing everything they were told they should do," said Wilson of black Americans with high levels of education. "Yet they still face significantly higher levels of unemployment and gaps in wages."

A long road to recovery

As the U.S. struggles to make its way past the damage done by the coronavirus pandemic, lawmakers are considering policies that may offer additional relief to disadvantaged workers in the near-term, such as an extension of the unemployment benefits supplied by the CARES Act, and a possible second round of stimulus checks.

For programs designed to provide temporary relief or make longer-term contributions to narrowing the employment gap, Wilson notes the importance of making sure policies actually hit their targets.

"We really need to be aware and have to assume that no policy is race neutral because of all of these preexisting and underlying disparities generated by previous policy and legal decisions," she said. "In making policy, there should always be an eye toward how it will impact different communities."

Many, particularly on the left, say that regardless of specific policies, change will require the recognition of systemic inequalities, a point that has been central in the protests over George Floyd's death.

At Floyd's Minneapolis memorial service held on Thursday, the civil rights leader Rev. Al Sharpton made such a point by analogizing widespread systemic injustice against black Americans to the officer's knee held against Floyd's neck during his Memorial Day arrest, which prosecutors have alleged contributed to his death. 

"Ever since 401 years ago, the reason we could never be who we wanted and dreamed of being is you kept your knee on our neck," Sharpton said, referring to 1619, the year generally understood as the beginning of black slavery in the colonies that would become the United States. He added: "We could run corporations and not hustle in the street, but you had your knee on our neck. We had creative skills, we could do whatever anybody else could do, but we couldn't get your knee off our neck."

Nicole Smith, the chief economist at the Georgetown University Center on Education and the Workforce, said that it's frustrating that "most people recognize what it is, but are still reluctant to do anything about it."

"And that's because doing anything about it would really require us to engage in a serious conversation about social justice," she said. 

On that point, Trump and Biden, the former vice president, are a study in contrasts.

While Trump has argued that an economic recovery will, on its own, benefit black Americans, Biden has pressed for specifically targeting black communities with economic assistance, and collecting data on the race and sex of beneficiaries of federal recovery programs.

During an address in Philadelphia on Tuesday, Biden, who has faced scrutiny over his record on race, said the "moment has come for our nation to deal with systemic racism."

"To deal with the growing economic inequality in our nation. And to deal with the denial of the promise of this nation — to so many," Biden said. 

VIDEO5:1605:16
VP Mike Pence on addressing inequality, coronavirus relief for states

Clarification: This story was updated to clarify the movement of white and black unemployment rates to May from April.