America has much greater unemployment inequality than we think
The Black unemployment rate is consistently double the White unemployment rate. Job growth is not equally distributed.
🇺🇸 In May 2022, President Biden celebrated the most recent employment data by proclaiming in a press release, “The unemployment rate did not increase in any of our 50 states.” He was right, but he wasn’t telling the full story.
The US is currently experiencing historically low levels of unemployment. Only roughly 3 out of every 100 workers doesn’t have a job. The number of Americans relying on unemployment insurance is at its lowest level in half a century. But when we look at how unemployment shows up in more detailed regions, we see inequality.
Millions still left behind amidst job growth
The US added more than half a million jobs in July 2022, with many headlines declaring that America has now regained all of the jobs lost during the pandemic.
⚖️ Those gains are not equally distributed.
5.9 million people are not in the labor force and currently want a job, which is nearly a million more people than in February 2020 before the pandemic hit in the US. These individuals were not counted as unemployed because they were not actively looking for work during the prior 4 weeks. Just because you’re at your 5th week, doesn’t mean you aren’t trying to get back into work. The headline unemployment rate often obfuscates underlying inequality.
📍Imperial County, California has the highest unemployment rate in America at more than 3x the national average. Located at the southernmost tip of California, Imperial County is home to 175,000 residents, 1 in 4 of whom live in poverty. That is more than double California’s average poverty rate. The county is 85% Latinx and has 3x the percentage of foreign-born residents when compared with the national average.
Jonathan Lopez, who lives in Imperial County, explains that “A well-paying, full-time job is impossible to find.” He can’t afford to pay rent in the region without a job, so he lives at his mother-in-law’s home with his 3 children in neighboring Heber. While investors have built several real estate development projects in the region that were supposed to bring jobs, nearly all of them have failed and the shells of buildings now litter the region’s main highway.
The counties with the highest unemployment rates much more often have high Black or Latinx populations. The map above shows how the entire bottom border of Texas has much higher unemployment rates, a region where the Latinx communities often make up +70% of the population.
📉 The state with the highest unemployment rate is New Mexico, with a rate of 4.9%. But Luna County, New Mexico has an unemployment rate of 11.5%, more than double its state average and triple the national average. Median household income in Luna is $29,360 and 2 out of 3 residents there are Latinx.
🚨 The Black unemployment rate is almost always double the White unemployment rate. This fact of life has held true for half a century. One of the leading causes of the Black-White unemployment gap is the high incarceration rate of Black Americans. In 2018, formerly incarcerated individuals were unemployed at a rate of 28%. As I’ve discussed before, Black men are 5x more likely to be incarcerated than White men. 🚨
Distribution instead of Growth
🕐 Since the end of WW2, America continues to be obsessed with growth. The US wanted to increase the growth and production that it saw during the war years, and because Simon Kuznets had just invented the concept of GDP (Gross Domestic Product) in 1937, the measure gained traction because economists could actually measure the economy. Ever since, US policy has been dominated by maximizing GDP. More jobs. More production. More growth.
Not every American felt the growth of the “Golden Era” equally post WW2. Women wouldn’t enter the workforce in droves until decades later. In 1960 1 in 2 Black men worked as a janitor, freight handler, or something similar, and expanding suburbs left the inner city in shambles. 👨🔧
60 years later, all that growth would collapse seemingly overnight in the 2008 financial crisis. The stock market didn’t just get wiped out — millions of Americans lost their homes and their jobs and never recovered.
🌹 Without a holistic measure of inequality, our job markets continue to focus on what they can measure. In the meantime, we fail to account for huge swaths of employment inequality in the country. A 3.5% unemployment rate may look rosy, but digging deeper shows the challenges that exist in our communities.
Childcare makes it harder to keep a job
👩👧 Inequality for women and mothers in the workforce has grown during the pandemic. 2 out of 5 unemployed people cite childcare as their primary barrier to finding a job, a rate much higher than in January 2020 before the pandemic. Parents either can’t find sufficient childcare to cover their needs, or their job requires such challenging hours that they aren’t able to take care of their kids. Babysitting fees increased 11% in 2021 to an average of $20.57 per hour. According to the Bureau of Labor Statistics, 196,000 workers were forced to work part time due to child care disruptions in January. This challenge disproportionately keeps women out of the workforce.
The Path Forward
- 🎯 Target the Black unemployment rate — Rather than targeting unemployment writ large, the Federal Reserve can use its federal mandate granted by the Humphrey-Hawkins Act to target Black unemployment outright. The act states that “every effort shall be made to reduce differences between the rates of unemployment among youth women, minorities… and the overall rate unemployment which are caused by improper factors with the ultimate objective of removing such differentials.” The Fed, as advocated by the President of the Atlanta Fed, has latitude to focus on minority outcomes and can work to ensure that the Black unemployment rate does not consistently remain double that of the White unemployment rate.
- 💸 Cash is king — Americans who received increased unemployment benefits during the pandemic experienced less hardship in housing, food insecurity, anxiety, and depression. These cash infusions are a lifeline for Americans. Independent studies from Yale and from the Federal Reserve indicate that increased unemployment support for struggling individuals does not discourage work and instead provides tremendous support to those most in need. This has been true as far back as the Great Depression.
- 👨💻 Remote work makes it easier to keep a job: Remote work has made it easier for workers to live in less expensive areas while still maintaining the benefits of cities with high hiring rates and competitive compensation. 1 in 3 workers reported working remotely during the pandemic, and according to one study 66% of US companies were able to avoid at least 1 layoff due to remote work options. Remote works allows companies to hire across a more expansive geographic swath of the country as well as provide opportunity for those not living near expensive city centers.
Last year, the Federal Reserve decided to rename the “Natural Rate of Unemployment” to the “Noncyclical rate of unemployment” after more than half a century of using the term. Inequalities often emerge when we use a term like “natural” in the social sciences. There is nothing natural about the Black unemployment rate being double the White rate; there is nothing natural about predominantly immigrant communities struggling to find work; and there is nothing natural about unemployment policies that don’t recognize systemic inequality.
Jeremy Ney is the Author of American Inequality. Check out more articles like this at Americaninequality.io