Thursday, September 16, 2021
Sept. 16, 2021

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Black workers surpassed white workers in labor market participation for second time in history


The June jobs report brought good news and bad news.

Employers added 850,000 jobs — a sign of progress amid increasing vaccinations and fewer COVID-19 restrictions.

On the other hand, the overall labor force participation rate, which tracks the proportion of people 16 and older working or looking for jobs, remained unchanged from 61.6% in May—and down from 63.3% since before the pandemic. In other words, workers are taking their time returning to the labor market.

But the statistics for Black workers may tell a different story.

For the first time since 1972, the labor force participation rate for Black workers (61.6%) exceeded that of white workers (61.3%). While economists view the change as more than an anomaly, they caution against declaring a new reality for Black workers, who historically have been at an economic disadvantage.

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Janelle Jones, chief economist at the U.S. Department of Labor, stressed that the economy is still in a transitory phase.

“All of the data has been particularly volatile,” said Jones, a Lorain, Ohio, native who is the first Black woman to hold the position at the department. “Even the measures that we usually use for predictive behavior are just gone out the window, and we’re still trying to figure it out. It’s exciting to see the labor force participation rate increase (for Black workers), but we don’t want to say this is the new normal.”

Other statistics show Black workers still facing disadvantages

The employment-to-population ratio, or share of the population that is working and not looking anymore, has risen more slowly for Black workers since the pandemic. As of June, the ratio is 55.9% for Black workers, 58.1% for white workers and 58% overall. The general ratio was at 61.1% prior to the pandemic.

“If (the employment-to-population ratio) is low, it means that they’re not actually connecting to employment,” Jones said. “And this is honestly how we end up with an unemployment rate for Black workers that’s 9.2%, which is very high. If the overall unemployment rate was 9.2%, we would be running around like our hair is on fire. Sometimes I’m disappointed—not with this Labor Department and not with this White House—when folks say that we are on our way to recovery when Black workers at a 9.2% unemployment rate is still very much an economic crisis with millions of workers facing devastation.”

By comparison, the national unemployment rate is 5.9% and preliminary data indicated a 5.2% unemployment rate for Ohio in June.

Still, Black workers, like everyone else, may be feeling optimism as employers increase wages to lure people back to work, Jones said. Workers currently have increased bargaining power, and that is when Black workers do best.

“We’ve seen workers who have been out of work for maybe a year say, ‘Maybe I don’t want to work for $2.13 (minimum cash wage) plus tips and have to get coughed on and never get any paid leave and never have any sick time,’” Jones said. “I think that’s phenomenal. We’re seeing it in industries where Black and brown workers, particularly Black and brown women, are overrepresented.”

How age, wealth affect labor force participation

It is important to stress that the labor force participation rate also tracks people who are looking for work, and Black people may not be able to afford to stop looking—even for low-wage jobs.

“We know that Black workers, on average, are less likely to have a financial cushion, or less likely to have generational wealth that could be a cushion during this time,” Jones said.

The overall labor force participation rate has been declining for decades. The rate for white workers has been following that trend, while Black workers, specifically Black men, have been seeing an upward trend in recent years (excluding a sharp decline during the onset of the coronavirus).

The reason is an aging population, said economist Bill LaFayette, owner of the Columbus economic consulting firm Regionomics.

“The male participation rate has been declining for decades since the 1940s,” he said. “Men are living longer, and more of us have reached an age where we can retire. On the other hand, the female labor force participation rate rose steadily until about 2000, and then it started declining. And so what’s happened is the overall participation rate was rising until about 2000, and women were coming into the labor force. And now women’s retirements are dominating their entry into the labor force.”

LaFayette speculates that Black workers’ rising labor force participation rate is due to a difference in age between Black and white populations.

“The share of the U.S. Black population 65 or older is 10.6%, while 17.3% of white persons are 65 or older,” he said. “So the much more steady participation of Black workers in the labor force is certainly lessening the decline that would otherwise occur.”

Differences in life expectancy could explain this, he said.

“And the wealth of African Americans is a tiny fraction of the wealth of white households,” he added. “So it may be that African Americans need to work longer, and can’t retire as soon.”

But there may be a host of other explanations, said Trevon Logan, an economics professor at Ohio State University. There is even research co-authored by Yale School of Management Dean Kerwin Charles on the correlation between video game use and declining work hours for young men.

“I don’t think that we’ve necessarily cracked that nut yet about what it is,” Logan said. “I think this is a time for getting some qualitative information and asking people what’s happening. We know rates of post-secondary enrollment are going up, and yet we don’t see the (overall) labor force participation rate going up.”

As far as Black workers’ increased labor force participation rate, Logan said he’d like to see more research done across labor markets in the U.S.

“Some localities already had relatively high wages for essential employees,” he said. “Do we see faster growth in the areas where the wages have increased, on average, faster for essential employees? Do we see the labor force participation rate increasing faster there?”

Preliminary data shows that the overall labor force participation rate in Ohio was 60.2% in June, indicating an increase from 59.9% in May. However, the data isn’t broken out by demographic or by city.

“We don’t sample enough people to be able to do it by state,” Logan said. “And I can tell you that the Columbus labor market is probably very different than the Cincinnati labor market, the Cleveland labor market and the Youngstown labor market. So, you’d want to break it down at a much finer level.”

Logan said it’s important to keep an eye on the data over time to have a better sense of the outlook for Black workers.

“This is not an immediate revival of the American labor market and economy,” he said. “Economies do not run like a light switch.”